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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NO. 0-20740
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EPICOR SOFTWARE CORPORATION
(FORMERLY NAMED PLATINUM SOFTWARE CORPORATION)
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(Exact name of registrant as specified in its charter)
DELAWARE 33-0277592
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
195 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618-2402
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(Address of principal executive offices, zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 585-4000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of May 1, 1999, there were 40,440,869 shares of common stock outstanding.
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INDEX
<TABLE>
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Page
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<S> <C>
PART I - FINANCIAL INFORMATION......................................................... 3
Item I - Financial Statements.................................................... 3
Unaudited Condensed Consolidated Balance Sheets......................... 3
Unaudited Condensed Consolidated Statements of Operations............... 4
Unaudited Condensed Consolidated Statements of Cash Flows............... 5
Notes to Unaudited Condensed Consolidated Financial Statements.......... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 9
PART II - OTHER INFORMATION............................................................ 19
Item 1 - Legal Proceedings....................................................... 19
Item 6 - Exhibits and Reports on Form 8-K........................................ 19
SIGNATURE .......................................................................... 20
</TABLE>
2
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PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS:
EPICOR SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,432 $ 22,175
Short-term investments 29,872 30,511
Accounts receivable, net 79,063 84,789
Inventories 1,213 971
Prepaid expenses and other 12,118 13,826
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Total current assets 139,698 152,272
Property and equipment, net 13,575 13,388
Software development costs, net 6,955 5,572
Intangible assets, net 30,320 32,056
Other assets 9,187 8,989
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$ 199,735 $ 212,277
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,041 $ 16,490
Accrued expenses 20,377 24,741
Accrued merger and restructuring costs 9,914 15,090
Deferred revenue 33,322 36,845
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Total current liabilities 76,654 93,166
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Long-term liabilities 885 1,116
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Stockholders' equity:
Preferred stock 7,501 7,501
Common stock 40 40
Additional paid-in capital 233,745 232,042
Less: notes receivable from officers for issuance of
restricted stock (11,563) (11,563)
Accumulated other comprehensive income (loss) 178 (245)
Accumulated deficit (107,705) (109,780)
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Total stockholders' equity 122,196 117,995
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$ 199,735 $ 212,277
==============================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
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EPICOR SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
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Three Months Ended
March 31,
--------------------------
1999 1998
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<S> <C> <C>
Revenues:
License fees $25,638 $15,410
Services 38,702 10,828
Other revenue 1,765 135
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Total revenue 66,105 26,373
Cost of revenues 28,004 7,726
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Gross profit 38,101 18,647
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Operating expenses:
Sales and marketing 20,645 10,292
Software development 5,559 2,943
General and administrative 10,539 1,219
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Total operating expenses 36,743 14,454
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Income from operations 1,358 4,193
Other income, net 1,083 150
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Income before provision for income taxes 2,441 4,343
Provision for income taxes 366 --
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Net income $ 2,075 $ 4,343
==============================================================================================
Basic net income per share $ 0.05 $ 0.18
==============================================================================================
Shares used in computing basic net income per share 40,433 24,713
==============================================================================================
Diluted net income per share $ 0.05 $ 0.15
==============================================================================================
Shares used in computing diluted net income per share 41,935 29,945
==============================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
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EPICOR SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
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Three Months Ended
March 31,
------------------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,075 $ 4,343
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation and amortization 4,072 1,162
Changes in operating assets and liabilities:
Accounts receivable, net 5,726 (6,023)
Inventories (242) (18)
Prepaid expenses and other 1,708 (413)
Other assets (198) (177)
Accounts payable (3,449) 77
Accrued expenses (4,364) 751
Accrued restructuring costs (5,176) (240)
Deferred revenue (3,523) 2,562
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Cash (used in) provided by operating activities (3,371) 2,024
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Cash flows from investing activities:
Capital expenditures, net (2,444) (621)
Capitalized software development costs (1,598) (192)
Purchase of short-term investments (15,000) (6,000)
Proceeds from sale and maturity of short-term investments 15,639 7,062
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Cash (used in) provided by investing activities (3,403) 249
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Cash flows from financing activities:
Exercise of common stock options 1,280 2,736
Issuance of common stock under the Employee Stock
Purchase Plan 423 --
Payments of long-term liabilities (231) (14)
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Cash provided by financing activities 1,472 2,722
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Effect of exchange rates on cash 559 (414)
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Net (decrease) increase in cash and cash equivalents (4,743) 4,581
Cash and cash equivalents, beginning of period 22,175 4,466
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Cash and cash equivalents, end of period $ 17,432 $ 9,047
==============================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
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EPICOR SOFTWARE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements present
the financial position of Epicor Software Corporation (the "Company") as of
March 31, 1999 and December 31, 1998 and the results of its operations and its
cash flows for the three months ended March 31, 1999 and 1998. These financial
statements have been prepared by the Company in accordance with generally
accepted accounting principles and pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures in these financial statements are adequate to make the information
presented not misleading. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Transitional Report on
Form 10-K for the transition period July 1, 1998 to December 31, 1998.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position, results of operations and cash flows.
Current and future financial statements may not be directly comparable to the
Company's historical financial statements. The results of operations for the
three months ended March 31, 1999, are not necessarily indicative of the results
of operations to be expected for the entire year ending December 31, 1999.
COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, Reporting Comprehensive Income as of December
31, 1998. SFAS No. 130 requires disclosure of the total non-stockholder changes
in equity resulting from revenue, expenses, and gains and losses, including
those which do not affect retained earnings. The following table sets forth the
components of comprehensive income (amounts in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
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<S> <C> <C>
Net income $ 2,075 $ 4,343
Foreign currency translation adjustment 423 (414)
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Comprehensive income $ 2,498 $ 3,929
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</TABLE>
BASIC AND DILUTED NET INCOME PER SHARE
Basic net income per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. Diluted
income per share is computed by dividing net income by the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period.
6
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EPICOR SOFTWARE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MARCH 31, 1999
The following table sets forth the computation of basic and diluted net income
per share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
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<S> <C> <C>
Numerator:
Net income - numerator for basic $ 2,075 $ 4,343
and diluted net income per share
Denominator:
Denominator for basic net income 40,433 24,713
per share - weighted average shares
Effect of dilutive securities:
Employee stock options 549 2,162
Preferred stock 953 3,070
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Dilutive potential common shares 1,502 5,232
Denominator for diluted net income per share 41,935 29,945
======= =======
Basic net income per share $ 0.05 $ 0.18
======= =======
Diluted net income per share $ 0.05 $ 0.15
======= =======
</TABLE>
In July 1998, the remaining outstanding Series B Preferred Stock automatically
converted to common stock.
ACQUISITION
On December 31, 1998, the Company acquired DataWorks Corporation ("DataWorks") a
publicly traded provider of enterprise resource planning software based in San
Diego, California. As consideration for the acquisition, the Company issued
11,739,459 shares of common stock in exchange for all of the outstanding shares
of common stock of DataWorks. The exchange ratio used with respect to the
conversion of the DataWorks shares was 0.794 (i.e., each share of DataWorks
common stock converted into 0.794 shares of the Company's common stock). In
addition, options and warrants to acquire DataWorks common stock were converted
as a result of the acquisition into equivalent options and warrants for the
Company's common stock, based upon the exchange ratio. The acquisition was
accounted for as a purchase for financial reporting purposes, and the results of
operations of DataWorks are included with the results of the Company's
operations subsequent to the date of acquisition.
RESTRUCTURING
In December 1998, the Company underwent a restructuring as a result of the
DataWorks acquisition. This resulted in a restructuring charge of $5.95 million,
which was recorded in the three months ended December 31, 1998. Such amount
included approximately $5.5 million for severance and other extended benefit
costs related to a reduction in force of approximately 30 people, and
approximately $0.45 million in lease terminations and buyout costs related to
the closure of duplicate facilities.
At December 31, 1998, the Company also recorded $7.1 million in accrued costs
related to the DataWorks acquisition. These costs included investment banking
fees, legal and accounting fees, severance payments, lease terminations and
various estimated costs accrued by DataWorks during the three months ended
December 31, 1998 associated with the acquisition of DataWorks by the Company.
During the three months ended March 31, 1999, the Company paid $5.1 million in
previously-accrued transaction fees, severance, lease termination and other
costs related to the 1998 acquisition and restructuring. In addition, the
Company also paid $0.1 million in duplicate facility costs related to
restructuring charges accrued in 1996 and 1997. At March 31, 1999, the Company
has $9.9 million in cash obligations related to severance payments, lease
7
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EPICOR SOFTWARE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MARCH 31, 1999
terminations and other estimated costs of the 1996, 1997 and 1998 restructurings
and the 1998 acquisition which the Company expects to fund from existing cash
reserves and working capital during the year 1999.
SETTLEMENT OF PENDING TRADEMARK LITIGATION
In February 1999, the Company and PLATINUM technology International, Inc.
(PLATINUM technology) settled all claims under pending trademark litigation
between the two companies. Under terms of the settlement, the Company has
transferred all rights to the PLATINUM trademark to PLATINUM technology.
PLATINUM technology granted the Company a one-year license to use Platinum
Software Corporation as its corporate name and agreed to pay the Company $4
million to offset costs associated with changing the Company's name, which the
Company is obligated to do under the settlement. Because of this obligation, the
Company has deferred the recognition of the settlement and at March 31, 1999,
recorded a receivable in the amount of $4 million and an equivalent accrued
liability to reflect the obligation. Costs associated with the name change will
be offset by the accrued liability as incurred. Upon completion of all costs
associated with the name change, any remaining amount will be recorded as a
gain. Additionally, PLATINUM technology has granted the Company a license to use
the Platinum mark in connection with the marketing and sale of certain products.
Finally, the Company entered into a reseller agreement with PLATINUM technology
as part of the settlement, whereby the Company will distribute PLATINUM
technology products, and in connection with this provision, the Company will
receive certain credits based on the level of product sold.
CONTINGENCIES
DataWorks, and certain of its officers, directors and former officers, have been
named as defendants in two lawsuits alleging violations of the federal
securities laws. The complaints were filed in the United States District Court
for the Southern District of California. They purport to be brought on behalf of
classes of stockholders who purchased DataWorks stock, and allege that between
October 30, 1997 and July 16, 1998, the defendants issued misleading statements
concerning DataWorks' acquisition of the Interactive Group, Inc. and sales of
certain products. The complaints do not specify the dollar amount of damages
alleged or relief requested. The Company is also named in the lawsuit as a
defendant as a successor of DataWorks.
The Company is subject to miscellaneous legal proceedings in the normal course
of business and other legal proceedings. The Company is currently defending
these proceedings and claims, and anticipates that it will be able to resolve
these matters in a manner that will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.
SUBSEQUENT EVENT
On April 29, 1999, the Company filed a certificate of amendment to its
Certificate of Incorporation in which the Company changed its corporate name to
Epicor Software Corporation. This name change was approved by the Company's
stockholders at a duly held meeting on April 29, 1999.
8
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
OVERVIEW
Acquisition
On December 31, 1998, the Company acquired DataWorks Corporation ("DataWorks") a
publicly traded provider of enterprise resource planning software based in San
Diego, California. As consideration for the acquisition, the Company issued
11,739,459 shares of common stock in exchange for all of the outstanding shares
of common stock of DataWorks. The exchange ratio used with respect to the
conversion of the DataWorks shares was 0.794 (i.e., each share of DataWorks
common stock converted into 0.794 shares of the Company's common stock). In
addition, options and warrants to acquire DataWorks common stock were converted
as a result of the acquisition into equivalent options and warrants for the
Company's common stock, based upon the exchange ratio. The acquisition was
accounted for as a purchase for financial reporting purposes, and the results of
operations of DataWorks are included with the results of the Company's
operations subsequent to the date of acquisition. The acquisition of DataWorks
resulted in a material increase in the Company's revenues and expenses for the
three months ended March 31, 1999; accordingly, current and future financial
statements are not directly comparable to the Company's historical financial
statements.
RESULTS OF OPERATIONS
Net income for the first quarter of 1999 was $2.1 million, or $0.05 per diluted
share, as compared to net income of $4.3 million, or $0.15 per diluted share,
for the comparable quarter of 1998. The following summarizes the significant
aspects related to the Company's results of operations.
Revenues
Revenues were approximately $66.1 million and $26.4 million for the three months
ended March 31, 1999 and 1998, respectively, representing an increase of 150%.
The increase for the three months ended March 31, 1999 was primarily a result of
the DataWorks acquisition as stated above.
Total license fee revenue was approximately $25.6 million and $15.4 million for
the three months ended March 31, 1999 and 1998, respectively, representing an
increase of 66%. The growth in license fee revenue was attributable to the
DataWorks suite of software products licensed during the three months ended
March 31, 1999 which consisted primarily of the Avante product and to a lesser
extent, the Vantage and Vista products. An increase in license fee revenue from
the Company's Clientele product also contributed to the growth. Although license
fee revenue increased in absolute dollars, as a percentage of total revenues,
license fee revenue decreased from 58% to 39% for the three months ended March
31, 1999. The change in revenue mix was impacted by the acquisition of DataWorks
which in recent quarters reported relatively less license fees as a percentage
of total revenues than the Company's previous results. In addition, the change
in revenue mix was due to reduced license fee revenue experienced during the
three months ended March 31, 1999, due to unusually high attrition of the Avante
sales force following the acquisition and to a lesser extent, reduced Vantage
license fees attributable to a sales force reorganization. A decrease in license
fee revenue from the Company's Platinum ERA product line also contributed to the
change in revenue mix. The reduced license fees experienced from the Platinum
ERA product line was attributable to increased competition and uncertainty in
the marketplace over the integration of applications following the DataWorks
acquisition.
International license fee revenue increased $5.0 million or 119% to $9.2 million
for the three months ended March 31, 1999. As a percentage of total license fee
revenue, International represented 36% and 27% for the three months ended March
31, 1999 and 1998, respectively. The increases were primarily attributable to
the DataWorks acquisition as DataWorks had a larger European sales force and
marketing presence then the Company prior to the acquisition.
Services revenue increased $27.9 million or 257% to $38.7 million for the three
months ended March 31, 1999 from $10.8 million for the same period in the prior
year. The increase was primarily a result of the DataWorks acquisition and to a
lesser extent, revenue growth realized from the existing customer base. Services
revenue attributable to the DataWorks acquisition derived from the Avante,
Vantage and Vista customer base, totaled approximately $22.2 million for the
three months ended March 31, 1999. The remaining increase of approximately
9
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$5.7 million in services revenue was generated primarily from the Company's
Platinum ERA customer base and attributable to an overall rise in the installed
base of end-users and an increase in the number of revenue-generating
professional service personnel.
Other revenue increased $1.7 million to $1.8 million in the three months ended
March 31, 1999 from $0.1 million for the same period in 1998. The increase was
attributable to the DataWorks acquisition and consisted primarily of third-party
hardware sales.
Gross Profit
Gross profit as a percentage of revenues was 58% and 71% for the three months
ended March 31, 1999 and 1998, respectively. The decrease was primarily
attributable to the acquisition of DataWorks which historically reported lower
gross profit percentages then the Company compounded by a change in the overall
revenue mix experienced during the three months ended March 31, 1999. The
overall gross profit percentage was unfavorably impacted by a higher cost
structure underlying services revenue generated from the Avante, Vantage and
Vista customer base combined with lower gross profit percentage realized from
third-party hardware sales. In addition, the reduction in gross margin
percentage was due to a higher proportion of overall revenues recognized from
services revenue during the three months ended March 31, 1999, which bear a
lower gross margin percentage then license fee revenue.
Operating Expenses
Total operating expenses increased from $14.5 million for the three months ended
March 31, 1998 to $36.7 million for the three months ended March 31, 1999. The
increase was primarily a result of the DataWorks acquisition. Total operating
expenses as a percentage of revenues increased from 55% to 56% for the three
months ended March 31, 1999 and was attributable to increased expenses
undertaken to position the Company for possible growth.
Sales and marketing expenses were $20.6 million and $10.3 million for the three
months ended March 31, 1999 and 1998, respectively, or 31% and 39% of total
revenues. The absolute dollar increase was a result of the DataWorks
acquisition. The decrease as a percentage of total revenues was attributable to
lower marketing related infrastructure costs due to a current refinement in cost
alignments as discussed below.
Software development expenditures were $7.2 million and $3.1 million or 11% and
12% of total revenues for the three months ended March 31, 1999 and 1998,
respectively, before capitalization of software costs of $1.6 and $0.2 million.
Upon the release for general availability of the Company's software products,
the Company amortizes capitalized software development costs over a five-year
period. Such amortization is included in cost of revenues. The percentage of
capitalized software development costs to total software development costs was
22% for the three months ended March 31, 1999 and 6% for the three months ended
March 31, 1998. During the three months ended March 31, 1999, costs were
capitalized for the localization and translation into different languages of the
Platinum ERA product and certain applications of the Platinum ERA 7.0a release.
General and administrative expenses were $10.5 million and $1.2 million for the
three months ended March 31, 1999 and 1998, respectively, or 16% and 5% of total
revenues. The increases were primarily attributable to the acquisition of
DataWorks, which included a higher general and administrative cost
infrastructure. In connection with the acquisition, the Company broadened its
qualified pool of general and administrative costs in order to report results of
operations more consistent with the Company's actual operating infrastructure.
Other Income
Other income for the three months ended March 31, 1999 and 1998, was $1.1
million and $0.2, respectively. Other income included $0.7 million in realized
foreign currency gains due to the strengthening of the U.S. dollar against
primarily the Canadian dollar and Iris punt and $0.3million of interest earned
on the Company's cash, cash equivalents and short-term investments held during
the three months ended March 31, 1999.
Provision for Income Taxes
The Company has recorded a provision for income taxes of $366,000 for the three
months ended March 31, 1999 for expected federal alternative minimum taxes
payable and expected certain foreign taxes payable. For the comparable period in
1998, the Company's tax expense was offset by a reduction of valuation
allowances related to net deferred tax assets recorded in prior years.
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Liquidity and Capital Resources
As of March 31, 1999, the Company's principal sources of liquidity included cash
and cash equivalents and short-term investments of $47.3 million. These
resources decreased by $5.4 million from the December 31, 1998 balance primarily
due to the payment of accrued restructuring and merger costs, 1998 bonuses,
sales commissions and capital expenditures, offset in part by the collection of
accounts receivable. The Company had working capital of $59.1 million at
December 31, 1998 compared to working capital of $63.0 million at March 31,
1999.
During the three months ended March 31, 1999, the Company paid $5.1 million for
severance, lease termination and other costs related to the 1998 restructuring.
In addition, the Company also paid $0.1 million in duplicate facility costs
related to restructuring charges accrued in 1996 and 1997. At March 31, 1999,
the Company has $9.9 million in cash obligations related to severance payments,
lease terminations and other costs of the 1996, 1997 and 1998 restructurings.
The Company believes that these obligations will be funded from existing cash
reserves, working capital and operations.
The Company is dependent upon its ability to generate cash flow from license
fees and other operating revenues, as well as the collection of its outstanding
accounts receivable to maintain current liquidity levels. The Company believes
that its current cash reserves, together with existing sources of liquidity,
will satisfy the Company's projected short-term liquidity and other cash
requirements for the next 12 months.
Year 2000 Issues
OVERVIEW. The Year 2000 Problem generally involves whether a computer system,
software product or business system, when working alone or in conjunction with
other software or hardware systems, accepts input of, stores, manipulates and
outputs dates in the Year 2000 or thereafter without error or interruption (the
"Year 2000 Problem"). The Year 2000 Problem potentially impacts the Company in
the following principal areas: (i) The Company's software products, including
products manufactured by third parties that are resold by the Company; (ii) the
Company's internal technology systems; (iii) the Company's non-internal
technology systems which contain embedded computer devices; and (iv) the
business systems of the Company's distributors, resellers and customers. The
Company's Year 2000 efforts are being managed by a team of internal staff and
third party consultants specializing in Year 2000 issues.
COMPANY PRODUCTS. As a leading supplier of client/server enterprise resource
planning software for the middle market, the Company is aware of the Year 2000
Problem and is committed to offering software products that are Year 2000
compliant. The Company presently believes that the current releases of its
Platinum ERA, Platinum ERA and Platinum for Windows software products are Year
2000 compliant. The Company's Platinum for DOS product, which was initially
released in the mid-1980s was not Year 2000 compliant until the release of
version 4.6 in August 1998. The version 4.6 release is being offered for free to
all existing Platinum for DOS users on maintenance. The Company believes that
the current releases of the products acquired in the DataWorks merger are also
Year 2000 compliant. While the Company's products are the subject of a
continuing testing program, there can be no assurance that these products do not
contain undetected errors associated with the year 2000-date functions that may
result in material costs to the Company. See "Certain Factors that May Affect
Future Results - Risks Associated with Year 2000 Compliance."
As part of its Platinum ERA, Platinum ERA and Platinum for Windows product lines
the Company resells certain products that are manufactured by third parties,
both on an OEM and reseller basis. In addition, such products, in certain cases,
include third party technology. The Company has received assurances from such
third parties regarding the Year 2000 compliance of the third party products.
Despite these assurances, there can be no guaranty that the third party products
do not contain undetected errors associated with Year 2000 date functions. The
Company is in the process of formally querying the suppliers of third party
products that are resold with or embedded in the DataWorks software products as
to their progress in identifying and addressing Year 2000 Problems. It is
possible that such formal inquiries will uncover unanticipated Year 2000 issues.
INTERNAL TECHNOLOGY SYSTEMS. The Company's internal technology systems include
telecommunications (phones, voice mail and network connections), computer
hardware (personal computers and network servers) and software. The Company has
assessed the Year 2000 Problem with respect to telecommunications with the
exception of its Louisville, Kentucky and New York offices. The assessment with
respect to these offices is scheduled to be completed prior to July 31, 1999.
The Company has identified fixes that need to be made to its telecommunications
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systems to make them Year 2000 compliant. These fixes relate primarily to
upgrades to voice mail and phone systems at some of the Company's international
offices and sales offices. It is anticipated that these fixes will be
implemented by September 1, 1999 and fully tested by September 30, 1999. In
addition, the Company has assessed approximately 90 percent of its hardware used
for Year 2000 compliance and has not uncovered any material non- compliance. The
assessment of the remaining 10 percent is scheduled to be completed by July 31,
1999. The Company's principal software systems include accounting, customer
support, order entry and desktop productivity (e-mail, word processing,
spreadsheets, etc.). The Company uses Microsoft Corporation products for desktop
productivity which have been certified by Microsoft as Year 2000 compliant with
minor issues. The Company, for the most part, uses its own products for its
accounting, order entry and customer support software needs. Certain former
DataWorks offices use third party accounting software and the Company is in the
process of converting to its own accounting software for internal use.
NONINTERNAL TECHNOLOGY SYSTEMS. Noninternal technology systems include security
systems, elevators and other systems which contain an embedded computer or
computer like device which is used to control the operation of plant, machinery
and equipment. Most of embedded systems on which the Company relies in its daily
operations are owned and managed by the lessors of the facilities in which the
Company's operations are located. The Company has not assessed completely
whether there are any Year 2000 Problems with its noninternal technology systems
and anticipates that the full assessment will be completed by July 31, 1999. The
Company is in the process of completing a contingency plan for its internal and
non-internal technology systems which it expects to complete by September 1,
1999.
THIRD PARTY RELATIONSHIPS. The Company has over 350 resellers of its software
products, including distributors and VARs. No one of the resellers is
responsible for a material amount of the Company's license fees. The Company,
from time to time, queries its resellers as to their progress in identifying and
addressing Year 2000 Problems. Although the Company feels confident that its
internal technology will be Year 2000 ready, the Company does recognize that it
is vulnerable, as are most organizations, to the inability of significant
suppliers and utility organizations to become Year 2000 ready. For example, the
failure or interruption of electrical services would disrupt the Company's
ability to communicate with its customers, suppliers, business partners and
others and would adversely affect the Company's operations.
To date the Company has incurred approximately $100,000 in Year 2000 remediation
costs which was funded from working capital. The Company expects to incur an
additional $225,000 by September 1, 1999 to upgrade voice mail and phone systems
at some of the Company's international offices and sales offices. The Company
recently engaged a third party consulting firm to assist with Year 2000
readiness efforts. These efforts include continued product testing and
contingency planning. The Company anticipates spending between approximately
$1.5 million and $2.0 million for this effort. These fees will be expensed as
incurred during the remainder of 1999 and the first quarter of 2000.
FORWARD LOOKING STATEMENTS. The Company has made forward looking statements
regarding its Year 2000 readiness, anticipated dates for completion of
assessment, testing, and implementation of fixes and anticipated costs to be
incurred. The Company has described many of the risks associated with these
forward looking statements. See "Certain Factors that May Affect Future Results
- - Risks Associated with Year 2000 Compliance." The Company wishes to caution the
reader that there are many factors that could cause its actual results to differ
materially from those stated in the forward looking statements. This is
especially the case because many aspects of Year 2000 readiness are outside the
control of the Company, such as the performance of third party suppliers. All of
these factors make it impossible for the Company to ensure that it will be able
to resolve all Year 2000 problems in a timely manner to avoid materially
adversely affecting its operations or business.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
FORWARD LOOKING STATEMENTS. Certain statements in this Quarterly Report,
including statements regarding the anticipated dates of product releases and
commercial shipments, and the anticipated dates of completion of Year 2000
assessments, testing and implementation of fixes are forward looking statements
within the meaning of Section 27A of the Securities and Exchange Act of 1993, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended,
that involve risks and uncertainties. Any statements contained herein (including
without limitation statements to the effect that the Company or Management
"estimates," "expects," "anticipates," "plans," "believes," "projects,"
"continues," "may," or "will" or statements concerning "potential" or
"opportunity" or variations thereof or comparable terminology or the negative
thereof,) that are not statements of historical fact should be construed as
forward looking statements. Actual results could differ materially and adversely
from those
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<PAGE> 13
anticipated in such forward looking statements as a result of certain factors
including the factors listed at pages 12-17. Because of these and other factors
that may affect the Company's operating results, past performance should not be
considered an indicator of future performance and investors should not use
historical results to anticipate results or trends in future periods.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company's quarterly operating
results have fluctuated in the past. The Company's operating results may
fluctuate in the future as a result of many factors that may include:
o The demand for the Company's products
o The size and timing of orders for the Company's products
o The number, timing and significance of new product announcements by
the Company and its competitors
o The Company's ability to introduce and market new and enhanced
versions of its products on a timely basis
o The level of product and price competition
o Changes in operating expenses of the Company
o Changes in average selling prices
In addition, the Company will most likely record a significant portion of its
revenues in the final month of a quarter with a concentration of such revenues
recorded in the final 10 business days of that month.
Due to the above factors, among others, the Company's revenues will be difficult
to forecast. The Company, however, will base its expense levels, in significant
part, on its expectations of future revenue. As a result, the Company expects
its expense levels to be relatively fixed in the short run. The Company's
failure to meet revenue expectations could adversely affect operating results.
Further, an unanticipated decline in revenue for a particular quarter may
disproportionately affect the Company's net income because a relatively small
amount of the Company's expenses will vary with its revenues in the short run.
As a result, the Company believes that period-to-period comparisons of the
Company's results of operations are not and will not necessarily be meaningful,
and you should not rely upon them as an indication of future performance. Due to
the foregoing factors, it is likely that in some future quarter the Company's
operating results will be below the expectations of public market analysts and
investors. Such an event would likely have a material adverse effect upon the
price of the Company's Common Stock.
INTEGRATION OF DATAWORKS. On December 31, 1998, a wholly owned subsidiary of the
Company was merged with DataWorks and DataWorks became a subsidiary of the
Company. The Company is still in the process of integrating the operations of
the two companies. During the first quarter of 1999, a significant number of
Avante sales representatives and certain sales management employees have
resigned from the Company. The Company expects that these departures will
materially adversely effect the Company's revenues from the Avante product in
the near term, as well as the Company's financial results. There can be no
assurance that other employees will not resign from the Company. There may be
substantial difficulties, costs and delays involved in integrating the
operations of DataWorks. These difficulties, costs and delays may include:
o Distracting management from the business of the Company
o Potential incompatibility of business cultures
o Perceived and potential adverse change in client service standards,
business focus, billing practices or service offerings available to
clients
o Potential inability to successfully coordinate the research and
development and sales and marketing efforts
o Costs and delays in implementing common systems and procedures,
including financial accounting systems
o Costs and inefficiencies in delivering services to the clients of the
Company
o Inability to retain and integrate key management, technical sales and
customer support personnel
o Potential conflicts in direct sales channels and VARs
Further, there is no assurance that the Company will retain and successfully
integrate its key management, technical, sales and customer support personnel,
or that it will realize any of the anticipated benefits of the DataWorks Merger.
Any one or all of the factors identified above may cause increased operating
costs, lower than anticipated financial performance or the loss of customers and
employees. The failure to integrate the Company and DataWorks will have a
material adverse effect on the business, financial condition and results of
operations of the Company.
HORIZONTAL PRODUCT STRATEGY. As part of its business strategy, the Company
intends to expand its product offerings to include application software products
that are complementary to its existing client/server enterprise resource
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<PAGE> 14
planning applications, such as human resources and payroll products. This
strategy may involve acquisitions, investments in other businesses that offer
complementary products, joint development agreements or licensing of technology
agreements. The risks commonly encountered in the acquisitions of businesses
would accompany any future acquisitions or investments by the Company. Such
risks may include, the following:
o The difficulty of integrating previously distinct businesses into one
business unit
o The substantial management time devoted to such activities
o The potential disruption of the Company's ongoing business
o Undisclosed liabilities
o Failure to realize unanticipated benefits (such as synergies and cost
savings)
o Issues related to product transition (such as development,
distribution and customer support)
The Company expects that the consideration it would pay in such future
acquisitions would consist of stock, rights to purchase stock, cash or some
combination. If the Company issues stock or rights to purchase stock in
connection with these future acquisitions, earnings per share and then-existing
holders of the Company's Common Stock may experience dilution.
DEPENDENCE ON DISTRIBUTION CHANNELS. The Company distributes its Platinum for
Windows product exclusively through third-party distributors and VARs, and
distributes its Platinum ERA product, including Clientele, through a direct
sales force as well as through VARs and distributors. The Company's distribution
channel includes distributors, VARs and authorized consultants, which consist
primarily of professional firms. The Company's agreements with its VARs and
authorized consultants do not require such VARs and consultants to offer
exclusively or recommend the Company's products, and either party can terminate
such agreements with or without cause. If the Company's VARs or authorized
consultants cease distributing or recommending the Company's products or
emphasize competing products, the Company's results of operations could be
materially and adversely affected. In addition, Platinum ERA, a client/server
ERP application, requires additional skill and training for successful
implementation. Although the Company is actively seeking additional VARs to sell
Platinum ERA, delays in training or recruiting VARs could adversely impact the
Company's ability to generate license revenue from its Platinum ERA line of
products.
In the fourth quarter of fiscal 1996, the Company reestablished a direct sales
force for Platinum ERA. There can be no assurance that the direct sales force
will not lead to conflicts with the Company's VAR channel.
DEPENDENCE ON PRINCIPAL PRODUCTS. The Company derives a substantial portion of
its revenue from the sale of information systems and related support services.
Accordingly, any event that adversely affects fees derived from the sale of such
systems would materially and adversely affect the Company's business, results of
operations and performance. These events may include:
o Competition from other products
o Significant flaws in the Company's products
o Incompatibility with third-party hardware or software products
o Negative publicity or evaluation of the Company or its products
o Obsolescence of the hardware platforms or software environments in
which the Company's systems run.
RISKS OF PRODUCT DEFECTS. Software products as complex as those ERP products
offered by the Company may contain undetected errors or failures when first
introduced or as new versions are released. Despite testing by the Company, and
by current and potential customers, any of the Company's products may contain
errors after their commercial shipment. Such errors may cause loss of or delay
in market acceptance of the Company's products. The Company has been informed by
customers of certain errors with respect to its Avante product which the Company
is addressing. The inability of the Company to correct such errors in a timely
manner could have a material adverse effect on the Company's results of
operations. In addition, technical problems with the current release of the
database platforms on which the Company's products operate could impact sales of
these products, which could have a material adverse effect on the Company's
results of operations.
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<PAGE> 15
RELIANCE ON THIRD-PARTY SUPPLIERS. The Company's products incorporate and use
software products developed by other entities. The Company cannot assure you
that such third parties will:
o Remain in business
o Support the Company's product line
o Maintain viable product lines
o Make their product lines available to the Company on commercially
acceptable terms
Any significant interruption in the supply of such third-party technology could
have a material adverse effect on the Company's business, results of operation
and financial condition.
RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT. The
market for the Company's software products is subject to ongoing technological
developments, evolving industry standards and rapid changes in customer
requirements. As companies introduce products that embody new technologies or as
new industry standards emerge, existing products may become obsolete and
unmarketable. The Company's future business, operating results and financial
condition will depend on its ability to:
o Enhance its existing products
o Develop new products that address the increasingly sophisticated needs
of its customers
o Develop products for additional platforms
Further, if the Company fails to respond to technological advances, emerging
industry standards and end-user requirements, or experiences any significant
delays in product development or introduction, the Company's competitive
position and revenues could be adversely affected. The Company's success will
depend on its ability to develop and successfully introduce new products and
services. The Company cannot assure you that it will successfully develop and
market new products on a timely basis, if at all. Any such delay or failure
could have a material adverse effect on the Company's business, results of
operations and financial condition. From time to time, the Company or its
competitors may announce new products, capabilities or technologies that have
the potential to replace or shorten the life cycles of the Company's existing
products. The Company cannot assure you that such announcements will not cause
customers to delay or alter their purchasing decisions, which could have a
material adverse effect on the Company's business, operating results and
financial condition.
DEPENDENCE ON CLIENT/SERVER ENVIRONMENT. The Company's development tools,
application products and consulting and education services help organizations
build, customize or deploy solutions that operate in a client/server computing
environment. The Company cannot assure you that these markets will continue to
grow or that the Company will be able to respond effectively to the evolving
requirements of these markets. If the market for client/server application
products and services does not grow in the future, or grows more slowly than the
Company anticipates, or if the Company fails to respond effectively to evolving
requirements of this market, the Company's business, financial condition and
results of operations will be materially and adversely affected.
HIGHLY COMPETITIVE INDUSTRY. The business information systems industry in
general and the ERP computer software industry in particular are very
competitive and subject to rapid technological change. Many of the Company's
current and potential competitors have (1) longer operating histories, (2)
significantly greater financial, technical and marketing resources, (3) greater
name recognition, (4) larger technical staffs, and (5) a larger installed
customer base than the Company has. A number of companies offer products that
are similar to the Company's products and that target the same markets. In
addition, any of these competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, and to devote
greater resources to the development, promotion and sale of their products than
the Company. Furthermore, because there are relatively low barriers to entry in
the software industry, the Company expects to experience additional competition
from other established and emerging companies. Such competitors may develop
products and services that compete with those offered by the Company or may
acquire companies, businesses and product lines that compete with the Company.
It also is possible that competitors may create alliances and rapidly acquire
significant market share. Accordingly, the Company cannot assure you that the
Company's current or potential competitors will not develop or acquire products
or services comparable or superior to those that the Company develops, combine
or merge to form significant competitors, or adapt more quickly than will the
Company to new technologies, evolving industry trends and changing customer
requirements. Competition could cause price reductions, reduced margins or loss
of market share for the Company's products and services, any of which could
materially and adversely affect the Company's business, operating results and
financial condition. The Company cannot assure you that the Company will be able
to compete successfully against current and future competitors or that the
competitive pressures that the Company may face will not materially adversely
affect its business, operating results and financial condition.
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<PAGE> 16
DEPENDENCE ON MANUFACTURING INDUSTRY. The Company's business depends, in large
part, upon the capital expenditures of mid-range discrete manufacturers, which
in part depend upon the demand for such manufacturers' products. A recession or
other adverse event that affects the manufacturing industry in the United States
or in other markets that the Company serves could affect such demand. Decreased
demand could force manufacturers in the Company's target markets to curtail or
postpone capital expenditures on business information systems. Any such change
in the amount or timing of capital expenditures in its target markets could
materially and adversely affect the Company's business and operations.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE. Significant uncertainty exists in
the software industry concerning the potential effects of the "Year 2000" issue.
The "Year 2000" issue exists because the date codes used in some computer
software and hardware systems use only two digits so that many computer systems
cannot distinguish between the years 1900 and 2000. The Company believes that
the current versions of its products are Year 2000 compliant. However, despite
its belief and although the Company has conducted or is conducting its own
quality testing procedures, we cannot assure you that the Company's software
products contain all necessary date code changes or do not contain errors
related to the Year 2000. If any of the Company's software products fail to
perform, including failures due to the onset of calendar year 2000 there would
likely be a material adverse effect on the Company's business, financial
condition and results of operations.
The Company is currently evaluating its information technology infrastructure
for Year 2000 compliance, including reviewing what actions are required to make
all software systems used internally Year 2000 compliant as well as actions
necessary to make the Company less vulnerable to Year 2000 compliance problems
associated with third parties' systems. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations Year 2000 Issues." We
cannot assure you that such measures will alleviate all Year 2000 problems which
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company believes that as the Year 2000 approaches, potential purchasers of
ERP software systems may curtail or delay their purchases of ERP software until
the Year 2000 passes and the potential purchaser is comfortable that its
business operations are not negatively impacted by the Year 2000. As a result,
it is possible that in the remainder of calendar 1999 and into the first six
months of 2000 the Company may experience a reduction in revenues from ERP
software sales and such reduction may materially and adversely affect the
Company's financial results.
DEPENDENCE ON RETENTION AND INTEGRATION OF KEY PERSONNEL. The Company's success
depends on the continued service of key management personnel, including L.
George Klaus, William Pieser, Ken Lally, Stuart W. Clifton and Norman R.
Farquhar. Messrs. Klaus, Pieser, Lally and Farquhar are not subject to an
employment agreement for a specified time duration with the Company. In
addition, the competition to attract, retain and motivate qualified technical,
sales and operations personnel is intense. During the first quarter of 1999, a
significant number of Avante sales representatives and certain sales management
employees have resigned from the Company. The Company expects that these
departures will materially adversely affect the Company's revenues from the
Avante product in the near term as well as the Company's financial results. The
Company is actively seeking qualified replacements. The Company has at times
experienced, and continues to experience, difficulty in recruiting qualified
personnel, particularly in software development and customer support. There is
no assurance that the Company can replace the departed employees in a timely
manner or retain its key personnel or attract other qualified personnel in the
future. The failure to attract or retain such persons could have a material
adverse effect on the Company's business, operating results, cash flows and
financial condition.
RISKS ASSOCIATED WITH INTERNATIONAL SALES. The following table compares
international sales of the Company to the total revenues of the Company for the
periods indicated.
International Sales as a Percentage of Total Revenues
-----------------------------------------------------
Six Months ended December 31, 1998 -- 27%
Three Months ended March 31, 1999 -- 29%
The Company believes that any future growth of the Company will be dependent, in
part, upon its ability to increase revenues in international markets. The
Company will continue to expand its operations outside of the United States. The
expansion will require significant management attention and financial resources
and could adversely affect the Company's margins. To increase international
sales in subsequent periods, the Company must establish additional foreign
operations, hire additional personnel and recruit international resellers. The
Company cannot assure you that the Company will maintain or expand its
international sales. If the revenues that the Company generates from
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<PAGE> 17
foreign activities are inadequate to offset the expense of maintaining foreign
offices and activities, the Company's business, financial condition and results
of operations could be materially and adversely affected. International sales
are subject to inherent risks, including:
o Unexpected changes in regulatory requirements
o Tariffs and other barriers
o Unfavorable intellectual property laws
o Fluctuating exchange rates
o Difficulties in staffing and managing foreign sales and support
operations
o Longer accounts receivable payment cycles
o Difficulties in collecting payment
o Potentially adverse tax consequences, including repatriation of
earnings
o Lack of acceptance of localized products in foreign countries
o Burdens of complying with a wide variety of foreign laws
o Effects of high local wage scales and other expenses
Any one of these factors could materially and adversely affect the Company's
future international sales and, consequently, the Company's business, operating
results, cash flows and financial condition. In the recent past, the financial
markets in Asia, Latin America and other world regions have experienced
significant turmoil. Such turmoil in the Asian financial markets, in particular,
may negatively affect the Company's sales to that region. A portion of the
Company's revenues from sales to foreign entities, including foreign
governments, has been in the form of foreign currencies. The Company does not
have any hedging or similar foreign currency contracts. Fluctuations in the
value of foreign currencies could adversely impact the profitability of the
Company's foreign operations.
RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS PROTECTION.
The Company relies on a combination of copyright, trademark and trade secret
laws, employee and third-party nondisclosure agreements and other industry
standard methods for protecting ownership of its proprietary software. However,
the Company cannot assure you that in spite of these precautions, an
unauthorized third party will not copy or reverse-engineer certain portions of
the Company's products or obtain and use information that the Company regards as
proprietary. The Company cannot assure you that the mechanisms that the Company
uses to protect its intellectual property will be adequate or that the Company's
competitors will not independently develop products that are substantially
equivalent or superior to the Company's products.
The Company may from time to time receive notices from third parties claiming
that its products infringe upon third-party intellectual property rights. The
Company expects that as the number of software products in the country increases
and the functionality of these products further overlaps, the number of these
types of claims will increase. Any such claim, with or without merit, could
result in costly litigation and require the Company to enter into royalty or
licensing arrangements. The terms of such royalty or license arrangements, if
required, may not be acceptable to the Company.
In addition, in certain cases, the Company provides the source code for its
application software under licenses to its customers to enable them to customize
the software to meet particular requirements. Although the source code licenses
contain confidentiality and nondisclosure provisions, we cannot assure you that
such customers will take adequate precautions to protect the Company's source
code or other confidential information.
SHARES ELIGIBLE FOR FUTURE SALE. As of May 1, 1999, the Company had 40,440,869
shares of common stock outstanding. There are presently 95,305 shares of Series
C Preferred Stock outstanding. Each share of Series C Preferred Stock is
convertible into ten shares of common stock, as adjusted for stock dividends,
combinations or splits at the option of the holder. As a result, the Series C
Preferred Stock is convertible into 953,050 shares of common stock. The holders
of the Series C Preferred Stock have the right to cause the Company to register
the sale of the shares of common stock issuable upon conversion of the Series C
Preferred Stock. Also, the Company has a substantial number of options or shares
issuable to employees under employee option or stock grant plans. As a result, a
substantial number of shares of common stock will be eligible for sale in the
public market at various times in the future. Sales of substantial amounts of
such shares could adversely affect the market price of the Company's Common
Stock.
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POSSIBLE VOLATILITY OF STOCK PRICES. The market prices for securities of
technology companies, including the Company, have been volatile. Quarter to
quarter variations in operating results, changes in earnings estimates by
analysts, announcements of technological innovations or new products by the
Company or its competitors, announcements of major contract awards and other
events or factors may have a significant impact on the market price of the
Company's Common Stock. In addition, the securities of many technology companies
have experienced extreme price and volume fluctuations, which have often been
unrelated to the companies' operating performance. These conditions may
adversely affect the market price of the Company's Common Stock.
Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered an indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
INTEREST RISK. The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's investment portfolio. The Company does
not use derivative financial instruments in its investment portfolio. The
Company places its investments with high credit quality issuers and, by policy,
limits the amount of credit exposure to any one issuer. The Company is adverse
to principal loss and ensures the safety and preservation of its invested funds
by limiting default risk, market risk, and reinvestment risk. The Company
mitigates default risk by investing in only the safest and highest credit
quality securities and by constantly positioning its portfolio to respond
appropriately to a significant reduction in a credit rating of any investment
issuer or guarantor. The portfolio includes only corporate debt securities and
municipal bonds.
FOREIGN CURRENCY RISK. The Company transacts business in various foreign
currencies, primarily in certain European countries, Canada and Australia. The
Company does not have any hedging or similar foreign currency contracts.
Although international revenues approximated 29% of the Company's total revenues
for the three months ended March 31, 1999, less than 20% of the revenues are
denominated in foreign currencies. Significant currency fluctuations could
adversely impact foreign revenues; however the Company does not foresee or
expect any significant changes in foreign currency exposure in the near future.
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PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS:
DataWorks, and certain of its officers, directors and former officers have been
named as defendants in two lawsuits alleging violations of the federal
securities laws. The complaints were filed in the United States District Court
for the Southern District of California. They purport to be brought on behalf of
classes of stockholders who purchased DataWorks stock, and allege that between
October 30, 1997 and July 16, 1998, the defendants issued misleading statements
concerning DataWorks' acquisition of the Interactive Group, Inc. and sales of
certain products. The complaints do not specify the dollar amount of damages
alleged or relief requested. The Company is also named in the lawsuit as a
defendant as a successor of DataWorks.
In February 1999, the Company and PLATINUM technology International, Inc.
(PLATINUM technology) settled all claims under pending trademark litigation
between the two companies. Under terms of the settlement, the Company has
transferred all rights to the PLATINUM trademark to PLATINUM technology.
PLATINUM technology granted the Company a one-year license to use Platinum
Software Corporation as its corporate name and agreed to pay the Company
$4 million to offset costs associated with changing the Company's name, which
the Company is obligated to do under the settlement. Because of this obligation,
the Company has deferred the recognition of the settlement and at March 31,
1999, recorded a receivable in the amount of $4 million and an equivalent
accrued liability to reflect the obligation. Costs associated with the name
change will be offset by the accrued liability as incurred. Upon completion of
all costs associated with the name change, any remaining amount will be
recorded as a gain. Additionally, PLATINUM technology has granted the Company a
license to use the Platinum mark in connection with the marketing and sale of
certain products. Finally, the Company entered into a reseller agreement with
PLATINUM technology as part of the settlement, whereby the Company will
distribute PLATINUM technology products, and in connection with this provision,
the Company will receive certain credits based on the level of product sold.
The Company is subject to miscellaneous legal proceedings in the normal course
of business. The Company is currently defending these proceedings and claims,
and anticipates that it will be able to resolve these matters in a manner that
will not have a material adverse effect on the Company's financial position,
results of operations or cash flows.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
10.63 1999 Merger Transition Nonstatutory Stock Option Plan and
Form of Nonstatutory Stock Option Agreement
10.64 Trademark License Agreement between the Company and
Platinum Technology, Inc. dated as of January 14, 1999
10.65 Value Added Reseller Agreement with Ardent Software
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EPICOR SOFTWARE CORPORATION
----------------------------
(Registrant)
Date: May 17, 1999 /s/ Norman R. Farquhar
--------------------------------
Norman R. Farquhar
Principal Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.63 1999 Merger Transition Nonstatutory Stock Option Plan and
Form of Nonstatutory Stock Option Agreement
10.64 Trademark License Agreement between the Company and
Platinum Technology, Inc. dated as of January 14, 1999
10.65 Value Added Reseller Agreement with Ardent Software
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.63
PLATINUM SOFTWARE CORPORATION
1999 MERGER TRANSITION NONSTATUTORY STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Merger Transition
Nonstatutory Stock Option Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan will be Nonstatutory Stock Options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Platinum Software Corporation, a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
<PAGE> 2
(j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers, employed by
the Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute employment by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(o) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "Option" means a nonstatutory stock option granted pursuant
to the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.
(q) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
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(r) "Optioned Stock" means the Common Stock subject to an Option.
(s) "Optionee" means the holder of an outstanding Option granted
under the Plan.
(t) "Parent" means a parent corporation, whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(u) "Plan" means this 1999 Merger Transition Nonstatutory Stock
Option Plan.
(v) "Service Provider" means an Employee including an Officer,
Consultant or employee Director.
(w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(x) "Subsidiary" means a subsidiary corporation, whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is nine hundred thousand (900,000) Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated).
4. Administration of the Plan.
(a) Administration. The Plan shall be administered by (i) the
Board or (ii) a Committee, which committee shall be constituted to satisfy
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock;
(ii) to select the Service Providers to whom Options may
be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Common Stock
to be covered by each Option granted hereunder;
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(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price (which
shall not be less than 100% of Fair Market Value), the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(ix) to modify or amend each Option (subject to Section
14(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to determine the terms and restrictions applicable
to Options;
(xii) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Options may be granted to Service Providers; provided,
however, that Option grants to Service Providers with a corporate rank of
Vice-President or higher shall be limited to Option grants to former DataWorks
employees as an essential inducement to their entering into an employment
agreement with the Company.
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6. No Guarantee of Continued Service Relationship. Neither the Plan nor
any Option shall confer upon an Optionee any right with respect to continuing
the Optionee's relationship as a Service Provider with the Company, nor shall
they interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
7. Term of Plan. The Plan shall become effective on February 4, 1999. It
shall continue in effect for ten (10) years, unless sooner terminated under
Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, but shall in no event be less than 100% of Fair Market Value.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement (after the payment of any applicable tax withholding);
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(vii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws; or
(viii) any combination of the foregoing methods of
payment.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In
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<PAGE> 7
the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization or Change of Control.
(a) In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of merger, consolidation or reorganization in which the Company is the
surviving corporation or of a recapitalization, stock split, combination of
shares, reclassification, reincorporation, stock dividend (in excess of 2%), or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors in the aggregate number and kind of
shares subject to this Plan, and the number and kind of shares and the price per
share subject to outstanding Options in order to preserve, but not to increase,
the benefits to persons then holding Options.
(b) In the event that a Change of Control (as defined below)
occurs, the vesting of all Options shall be accelerated immediately prior
thereto and Optionees holding such Options shall have
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<PAGE> 8
the right to exercise their Options in respect to any or all of the Shares then
subject thereto. To the extent possible, the Administrator shall cause written
notice of the Change of Control to be given to the persons holding Options not
less than ten (10) days prior to the anticipated effective date of the Change of
Control. In the event of a Change of Control, the Administrator may take such
other action as is equitable and fair.
(c) For the purposes of this Agreement, the term "Change of
Control" shall mean the occurrence of any of the following:
(i) Any "person," as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, a Company subsidiary, or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (or a successor to
the Company) representing fifty percent (50%) or more of the combined voting
power of the then outstanding securities of the Company or such successor; or
(ii) At least a majority of the directors of the Company
constitute persons who were not at the time of their first election to the
Board, candidates proposed by a majority of the Board of Directors in office
prior to the time of such first election; or
(iii) A merger or consolidation in which the Company is
not the surviving entity, except for a transaction, the principal purpose of
which is to change the state in which the Company is incorporated; or
(iv) A sale, transfer or other disposition of assets
involving fifty percent (50%) or more in value of the assets of the Company; or
(v) The dissolution of the Company, or liquidation of
more than fifty percent (50%) in value of the Company; or
(vi) Any reverse merger in which the Company is a
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from the persons holding those
securities immediately prior to such reverse merger.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
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<PAGE> 9
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of
an Option the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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EXHIBIT 10.64
TRADEMARK LICENSE AGREEMENT
This License Agreement (the "License Agreement") is entered into as of
January 14, 1999 (the "Effective Date") by and between PLATINUM technology,
inc., a Delaware corporation with its principal place of business at 1815 South
Meyers Road, Oakbrook Terrace, Illinois 60181 ("PTI"), on the one hand, and
Platinum Software Corporation, a Delaware corporation with its principal place
of business at 195 Technology Drive, Irvine, California, 92618 ("PSC"), on the
other hand.
BACKGROUND
PTI and PSC previously entered into that certain settlement agreement in
August, 1993 (the "1993 Settlement Agreement"), which specified the parties'
respective rights of ownership and use of the mark PLATINUM, and related marks
incorporating the word "Platinum," in connection with the sale of computer
software and related services. Subsequently, disputes arose regarding ownership
and use of the term "Platinum" and related marks. PTI and PSC, concurrently with
this License Agreement, are entering into a Settlement Agreement (the
"Settlement Agreement") and related agreements, in which PTI and PSC have
settled their disputes, PSC has assigned all of its right, title and interest to
the mark PLATINUM and related marks to PTI, and PSC has agreed to terminate its
use of the term "Platinum" in its trade name, corporate name, and as a mark,
except as expressly permitted under the terms and conditions of this License
Agreement. As part of the Settlement Agreement, and in partial exchange for the
consideration provided therein, PTI has agreed to license PSC to use the
trademark PLATINUM (and related marks), only under the terms and conditions set
forth herein.
The parties agree as follows:
1. DEFINITIONS
1.1. "Territory" shall mean the United States and all foreign countries.
Territory is intended to mean worldwide, including all foreign and domestic
jurisdictions.
1.2. "Mark(s)" shall mean any and all trademarks, service marks, designs
or emblems, now existing or hereafter created, and all registrations and
applications for registration therefor, and all reissues, renewals or extensions
thereof.
1.3. "PLATINUM Mark" shall mean the word "Platinum," in any design,
font, and/or style. The term "PLATINUM-Related Mark" shall mean a Mark that
consists of a combination of the PLATINUM Mark with any other words or phrases
(including, without limitation, a Brand Identifier (as defined below), used by
PSC as specified in Schedule B-3 hereto (to be updated by agreement of PSC and
PTI pursuant to Section 5.1 below).
1.4. "Brand Identifier" shall mean a word or phrase that functions as a
trademark and/or brand name for a good or service, which would qualify for
trademark protection and registration without the addition or inclusion of any
other word or words (irrespective of whether
PAGE 1 OF 25
<PAGE> 2
trademark registration exists or is sought for said word or phrase). A Brand
Identifier may never incorporate the PLATINUM Mark in whole or in part.
1.5. "Trade Name" shall mean a trade name, corporate name, and/or any
name that refers to an entire business, rather than a term used to identify
particular goods or services.
2. LICENSE GRANT
2.1. Licensed Mark. In partial consideration for the terms of the
Settlement Agreement and subject to the terms and conditions set forth in this
License Agreement, PTI grants to PSC a fully paid, royalty free, perpetual,
limited, and non-transferable (except as set forth in Section 9.10 below)
license to use the PLATINUM Mark and PLATINUM-Related Marks within the
Territory, as provided herein.
2.2. PSC's Right To Use PLATINUM Mark. PSC shall have the right to use
the PLATINUM Mark and PLATINUM-Related Marks in connection with the marketing
and sale of PSC's products and services, subject to the terms and conditions set
forth herein.
2.3. PTI's Retained Rights. In their sole discretion, PTI and/or its
subsidiaries, parents, holding entities, affiliates, partners, distributors,
licensees, resellers, joint venturers, and/or related entities (whether such
entities or relationships are now existing or hereafter created)
("PTI-Affiliated Parties" or, individually, "PTI-Affiliated Party") shall have
the absolute and unconditional right to use the PLATINUM Mark and any
PLATINUM-Related Mark without any restriction whatsoever, except that PTI agrees
to not use or license the following marks, which PSC presently uses to market
its products and services: "Platinum SQL," "Platinum ERA," "Platinum for DOS"
and "Platinum for Windows." Subject to the foregoing sentence, PTI and/or any
PTI-Affiliated Party shall have the absolute and unconditional right to license
the use of the PLATINUM Mark, including, but not limited to, licensing to any
party which (a) sells, markets, and/or offers PTI goods or services, and/or (b)
any party who is otherwise affiliated with PTI and/or any PTI-Affiliated Party.
2.4. Trade Name Limitation.
2.4.1. The PLATINUM Mark and any PLATINUM-Related Mark may only
be used by PSC as a trademark or service mark to brand a particular
product or service (subject to the terms and conditions set forth
herein), and not as all or part of a Trade Name. Thus, PSC, its
subsidiaries, parents, holding entities, majority owned affiliates, and
joint ventures in which PSC controls by majority ownership
("PSC-Affiliated Parties" or, individually, "PSC-Affiliated Party") are
not permitted to use the PLATINUM Mark, any part of the PLATINUM Mark,
any PLATINUM-Related Mark, or any word or Mark confusingly similar to
the PLATINUM Mark in their Trade Name (except as provided in Section
2.4.2).
2.4.2. Notwithstanding the above, PTI grants PSC a short-term
license to use the Trade Name "Platinum Software Corporation" for 365
days after the Effective Date of this License Agreement. Promptly
following the Effective Date (with the objective of
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<PAGE> 3
completing the Trade Name changes within 180 days following the Effective
Date), PSC agrees to commence the process of changing its Trade Name, and the
Trade Name of any PSC-Affiliated Party, to remove the PLATINUM Mark therefrom
(except as provided in Section 2.6.2). After PSC and PSC-Affiliated Parties have
changed their Trade Name, they may add the following notations to their new
Trade Names: "(formerly Platinum Software Corporation) or (formerly Platinum
subsidiary name)" for the period remaining in the short-term license under this
paragraph, but under no circumstances longer than 365 days after the Effective
Date of this Agreement. After the 365th day following the Effective Date, PSC
and each and every PSC-Affiliated Party shall be absolutely precluded from using
any Trade Name that includes the PLATINUM Mark, or any confusingly similar
variation thereof. Additionally, PTI grants to PSC permission to use the
Internet domain name "platsoft.com" for 180 days following the Effective Date of
this License Agreement. Thereafter, the obligations of PTI and PSC with respect
to Internet domain names shall be as set forth in Section 7 of that certain
Settlement Agreement between PSC and PTI dated January 14, 1999.
2.5. Limitation on the Manner in Which the PLATINUM Mark Can Be Used.
2.5.1. PSC and any PSC-Affiliated Party shall be barred from ever using
all or part of the PLATINUM Mark alone and/or by itself (in any form), except as
may be provided herein and in the Reseller Agreement being entered into between
PSC and PTI. For any use of the PLATINUM Mark by PSC and/or a PSC-Affiliated
Party, the PLATINUM Mark must be immediately followed by a Brand Identifier
(which, as set forth above, may itself never incorporate the PLATINUM Mark, in
whole or in part).
2.5.2. Notwithstanding the above, for a period of 180 days following the
Effective Date, PSC, PSC-Affiliated Parties and PSC Resellers (as defined below)
may continue to use existing sales, marketing, promotional and packaging
materials (whether in hard copy form or contained on the party's web site) which
do not comply with the guidelines specified in this Section 2.5 for the purposes
of exhausting existing supplies of collateral materials.
2.5.3. PSC shall only be permitted to use the PLATINUM Mark either (a)
in connection with a specific product or service, or (b) in connection with a
brand or line of products or services. In the case of a specific product or
service, the PLATINUM Mark must immediately be followed by a Brand Identifier
and a product name (e.g., "Platinum ERA Sales Order"). In the case of a brand or
line of products, the PLATINUM Mark must be immediately followed by a Brand
Identifier (e.g., "Platinum ERA").
2.5.4. The first time that the PLATINUM Mark appears in any particular
document or material (e.g., press release, product documentation, Internet page,
marketing brochure), the word Platinum must be immediately preceded or followed
by PSC's then-current Trade Name (eg., "Newco's Platinum ERA" or "Platinum ERA
by Newco"), unless the document or material is clearly identified as being from
PSC by virtue of the conspicuous and prominent display of PSC's then-current
Trade Name in the
PAGE 3 OF 25
<PAGE> 4
document or material, such that an ordinary consumer would understand and would
not be confused that the source of the goods or services is PSC rather than PTI.
2.5.5. PSC and the PSC-Affiliated Parties may not display the PLATINUM
Mark in connection with any goods or service (or in any other manner), unless
PSC's new Trade Name and any applicable Brand Identifier (none of which shall
incorporate the PLATINUM Mark) also are prominently displayed in the same
material and/or packaging.
2.5.6. PSC and the PSC-Affiliated Parties are expressly prohibited from
using the PLATINUM Mark and any PLATINUM-Related Mark in any way that is likely
to cause confusion among PTI's and/or PSC's customers as to whether PSC's
products originate from or are sponsored, approved and/or authorized by PTI. In
order to avoid such confusion, PSC and the PSC Affiliated Parties shall:
2.5.6. 1. Include, on any and all marketing, promotional, sales,
and/or packaging materials on which the PLATINUM Mark and any
PLATINUM-Related Mark appears or is displayed, a reasonably prominent
statement of origin indicating that the products and/or services are
supplied by PSC, such as "the products in the enclosed package are
produced by Newco Software Corporation.";
2.5.6.2. In the event that PSC becomes aware of such confusion,
it will promptly notify PTI of such confusion, and take all steps
reasonably necessary or useful under the circumstances to eliminate such
confusion (including terminating such confusing use, if necessary),
after obtaining PTI's advance approval of PSC's proposed steps to
eliminate such confusion.
2.5.7. PTI and PSC expressly agree that PSC shall be permitted to use on
PSC's existing goods and services the following marks: "Platinum SQL," "Platinum
ERA," "Platinum for Dos" and "Platinum for Windows." Use of these marks in
connection with PSC's goods and services existing as of the Effective Date will
not constitute breach of this Agreement, notwithstanding the requirements of
Section 2.5.1 or 2.5.3.
2.5.8. PTI and PSC expressly agree that PSC's use of PTI's brand names
in connection with PSC's resale of PTI's products under the Reseller Agreement
shall not constitute a breach of this Section 2.5.
2.5.9. The provisions of this Section apply to use of the PLATINUM Mark
and any PLATINUM-Related Mark in any materials in connection with the sale,
marketing, promotion, and/or support of any good or service by PSC and/or a
PSC-Affiliated Party (including, without limitation, use on the Internet, a
press release, a marketing brochure, and/or a user manual).
PAGE 4 OF 25
<PAGE> 5
2.6. Sublicenses, Existing International PSC Distributors Using the
PLATINUM Mark in Their Trade Name.
2.6.1. PSC shall have no right to grant any sublicense to use or
re-license the PLATINUM Mark and/or any PLATINUM-Related Mark.
2.6.2. To the extent that any existing international distributor
of PSC products previously has been authorized by PSC to use the
PLATINUM Mark and/or any PLATINUM-Related Mark in its Trade Name, that
distributor shall be listed on Schedule B-1 hereto (the "Existing PSC
Distributors"). PSC shall revoke and terminate any such license or
authorization within 180 days of the Effective Date (unless such action
would be a violation or breach of the agreement with the PSC
Distributor). Notwithstanding the terms of any agreement between PSC and
any PSC Distributor, PSC shall use its best efforts to have each
Existing PSC Distributor remove the PLATINUM Mark and/or any
PLATINUM-Related Mark from its Trade Name. However, to the extent that
PSC is unsuccessful in having an Existing PSC Distributor remove the
PLATINUM Mark and/or any PLATINUM-Related Mark from its Trade Name, the
continued use of the PLATINUM Mark and/or any PLATINUM-Related Mark by
such an Existing PSC Distributor shall not constitute a breach of this
License Agreement, and PTI agrees not to take any action against such
Existing PSC Distributor for use of the PLATINUM Mark and/or any
PLATINUM-Related Mark in its Trade Name. With respect to any
distributorship agreement between PSC and an international distributor
entered into (or renewed) after the Effective Date, all such agreements
shall expressly prohibit the distributor from using the PLATINUM Mark
and/or PLATINUM-Related Mark (in any form) in its Trade Name.
2.6.3. PSC presently has authorized resellers, distributors
and/or partners (the "PSC Resellers") that have existing rights to
either refer to themselves as an authorized "Platinum Reseller" or
similar designation, and/or to identify the PSC products acquired for
resale from PSC under a reseller agreement between PSC and the PSC
Reseller as "Platinum" products or similar designations. No later than
240 days following the Effective Date of this License Agreement, PSC
shall obtain written amendments to any existing agreement with PSC
Resellers which have such provisions: (i) to confirm that PSC Resellers
are no longer authorized to refer to themselves as a "Platinum Reseller"
or similar designation; and (ii) to require that such PSC Resellers
comply with the requirements of Section 2.5 of this License Agreement as
if they were bound thereby. PSC shall use its best efforts to cause the
PSC Resellers to agree to the written amendments and to comply with the
requirements of Section 2.5. It shall not be considered a breach of this
License Agreement, however, if a PSC Reseller refuses to execute such an
amendment or to comply with the terms of Section 2.5, provided that PSC
has undertaken its best efforts to obtain compliance with this Agreement
as required herein. With respect to agreements entered into or renewed
by PSC after the Effective Date, all such reseller agreements regarding
products or services which use a Platinum Mark shall require the PSC
Reseller to comply with the provisions of Section 2.5 of this
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<PAGE> 6
License Agreement and shall expressly prohibit the PSC Reseller to refer
to themselves as an authorized "Platinum Reseller" or similar
designation.
2.6.4. To the extent that any existing international distributor
of PSC products previously has been authorized by PSC to use "platsoft"
in its Internet domain name, that distributor shall be listed on
Schedule B-2 hereto. PSC shall revoke and terminate any such license or
authorization within 180 days of the Effective Date and shall use its
best efforts to have such distributor remove "platsoft" from its
Internet domain name. However, to the extent that PSC is unsuccessful in
having such distributor remove "platsoft" from its Internet domain
name, the continued use of "platsoft" in the Internet domain name by
such distributor shall not constitute a breach of this License
Agreement.
3. PRESERVATION OF THE PLATINUM MARK
3.1. Ownership.
3.1.1. PSC hereby agrees and acknowledges that the PLATINUM
Mark (and any PLATINUM-Related Marks) are valid and enforceable and are
the exclusive intellectual property of PTI, and agrees not to challenge
their validity or PTI's ownership thereof in any form or manner. PSC
expressly agrees to assist PTI in perfecting and/or recording PTI's
ownership of all right, title, and interest in and to the PLATINUM Mark
(and any PLATINUM-Related Marks), whether now or hereafter existing,
including, without limitation, by executing such forms of assignment or
other documentation as may be necessary. PTI will pay for all costs
associated with preparing and recording the assignments, including legal
fees and recording fees. PSC further acknowledges that any use of the
PLATINUM Mark and/or any PLATINUM-Related Marks by PSC not expressly
permitted under this License Agreement will cause irreparable harm and
significant injury to PTI to an extent that may be extremely difficult
to ascertain. Accordingly, PSC agrees that PTI will have, in addition to
any other rights or remedies available to it at law or in equity, the
right to seek injunctive relief, including without limitation, an
injunction against any unauthorized use of the PLATINUM Mark and/or any
PLATINUM-Related Mark by PSC or a PSC-Affiliated Party. PSC expressly
agrees that PTI shall not be obligated to post a bond or other security
in connection with any injunction issued in a proceeding by PTI to
enforce a term of this License Agreement, or any of PTI's rights
hereunder.
3.1.2. Except as otherwise expressly provided in Section 2, no
rights, express or implied, are granted to PSC hereunder, and PTI
reserves all rights in and to the PLATINUM Mark and any and all
PLATINUM-Related Marks, including without limitation the right to use or
to license others to use, the PLATINUM Mark and any PLATINUM-Related
Mark in connection with any products or services or otherwise, except as
provided herein. All goodwill associated with the PLATINUM Mark and any
and all PLATINUM-Related Marks -- including goodwill that results from
PSC's and/or any PSC-Affiliated Party's use (whether authorized or
unauthorized) of the PLATINUM Mark and/or any PLATINUM-Related Mark --
shall remain the exclusive property of
PAGE 6 OF 25
<PAGE> 7
PTI. Neither PSC nor any PSC-Affiliated Party shall acquire any
ownership rights in the PLATINUM Mark or any PLATINUM-Related Mark (or
the goodwill associated therewith), or any other right adverse to PTI's
interest by virtue of this License Agreement or by virtue of PSC's use
of the PLATINUM Mark.
3.2. Avoidance of Adverse Actions. Neither PSC nor any PSC-Affiliated
Party shall, at any time:
3.2.1. Use the PLATINUM Mark (and/or any PLATINUM-Related Mark)
in any way that may tend to impair its validity as a proprietary Mark
within the Territory;
3.2.2. Take any action that would jeopardize or impair PTI's
ownership of the PLATINUM Mark (and/or any PLATINUM-Related Mark) or its
legality or enforceability;
3.2.3. Directly or indirectly incorporate the PLATINUM Mark
(and/or any PLATINUM-Related Mark) as part of a Trade Name;
3.2.4. Either directly or indirectly, (i) attempt to register
the PLATINUM Mark; (ii) attempt to register (without PTI's prior
consent) a Mark which incorporates the PLATINUM Mark in whole or in
part; (iii) attempt to register any Mark that is confusingly similar to
the PLATINUM Mark or any contraction or abbreviation thereof; or (iv)
use, advertise, or promote any Mark, Trade Name and/or trade dress that
is confusingly similar to the PLATINUM Mark or any contraction or
abbreviation thereof, other than as expressly permitted under this
License Agreement.
4. PROMOTION OF GOODWILL; STANDARDS OF CONDUCT; QUALITY CONTROL
4.1. Compliance with Law. PSC shall comply with all applicable laws,
regulations, standards and decrees of any governmental authorities in the
Territory in connection with the use of the PLATINUM Mark and/or any
PLATINUM-Related Mark and the performance of PSC's rights and obligations under
this License Agreement.
4.2. Quality Control Standards.
4.2.1. PSC shall not take any action and/or shall cease taking
any action that may: (i) Impair the quality of products and services
with which the PLATINUM Mark and/or any PLATINUM-Related Mark is used,
or (ii) In any way disparage the PLATINUM Mark, any PLATINUM-Related
Mark, or PTI's goods and services.
4.2.2. PSC shall use the PLATINUM Mark and/or any
PLATINUM-Related Mark only in connection with goods and services that
are of a nature and quality equivalent or better than the nature and
quality of PSC's current goods and services.
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<PAGE> 8
4.2.3. PSC shall adequately monitor all goods and services
provided in connection with the PLATINUM Mark and/or any
PLATINUM-Related Mark for the purposes of meeting the quality control
standards set forth in this License Agreement.
4.3. PTI's Right to Inspect.
4.3.1. In order to determine whether PSC and/or any
PSC-Affiliated Party is maintaining the quality control standards set
forth herein or otherwise complying with this License Agreement, upon
fifteen (15) business days' prior written notice by PTI, PSC shall: (i)
provide to PTI copies, photographs or representative samples of PSC
and/or any PSC-Affiliated Party's advertising copy, promotional
materials or other materials bearing the PLATINUM Mark and/or any
PLATINUM-Related Mark; (ii) allow PTI to monitor any service provided
under the PLATINUM Mark and/or any PLATINUM-Related Mark in a manner
that does not unreasonably interfere with the business of PSC and (iii)
afford PTI the ability to inspect samples of any products on which the
PLATINUM Mark and/or any PLATINUM-Related Mark appears in a manner that
does not unreasonably interfere with the business of PSC.
4.3.2. PSC shall promptly, but in no event later than forty-five
(45) days notice from PTI, make any changes reasonably requested by PTI
pursuant to the terms of this License Agreement or with respect to the
use of the PLATINUM Mark and/or any PLATINUM-Related Mark or the goods
and/or services related thereto, and will reasonably cooperate with PTI
regarding such requests.
4.4. Expenses. Unless otherwise expressly provided in this License
Agreement, any and all expenses, costs and charges incurred by PSC in the
performance of any of its obligations under this License Agreement shall be
borne and paid for by PSC, without any right of contribution, indemnity, or
reimbursement from PTI.
5. INTELLECTUAL PROPERTY PROTECTION OF THE PLATINUM MARK
5.1. Maintenance of the Registration of the PLATINUM Mark. PTI will have
the right and the obligation to seek, maintain and renew protection for its
existing proprietary and intellectual property rights in the PLATINUM Mark in
any jurisdiction worldwide. Schedule B-3 hereto sets forth all PLATINUM-Related
Marks which PSC currently uses in commerce, and lists all relevant jurisdictions
in which the PLATINUM Mark and each PLATINUM-Related Mark is used and/or
registered as of the Effective Date. PTI will have the obligation to maintain
and renew at PTI's expense (i) any registrations for the PLATINUM Mark in any
applicable jurisdictions, and (ii) existing registrations for any
PLATINUM-Related Marks (excluding "Sequel to Platinum" and "Access to
Platinum"), so long as such marks are used in commerce by PSC. PTI shall
prosecute to completion at PSC's cost and expense all in-process registrations
listed on Schedule B-4 hereto, and thereafter PTI shall maintain and renew
protection for such registrations at PTI's expense, so long as such Marks are
used in commerce by PSC.
5.2. Pending Oppositions To Trademark Registration Filed By PSC. PTI
shall have the right, but not the obligation, to prosecute any pending
oppositions filed by PSC to the
PAGE 8 OF 25
<PAGE> 9
attempted registration of the PLATINUM Mark (or any variations thereof) by any
third party. Any such oppositions (or analogous proceedings) are set forth
hereto in Schedule B-5. Upon request of PTI, PSC will execute any documents
necessary to substitute PTI as the successor to PSC's interest in any such
proceeding. However, in the event that such a substitution cannot be effected
without an adverse effect on PTI's rights in any such proceeding, PSC will
remain as the named party in any such proceeding (the prosecution, defense,
and/or settlement of which shall be controlled exclusively by PTI and will be
conducted entirely at PTI's expense) but PSC shall assign to PTI at the
conclusion of the proceeding any rights secured thereunder.
5.3. Registration of New PLATINUM-Related Marks. PSC may request that
PTI register with the U.S. Patent and Trademark Office a PLATINUM-Related Mark
not registered (or the subject of a pending application) as of the Effective
Date. PSC's request shall be in writing to PTI, and shall specify the Mark and
proposed goods and/or services to be offered in connection with the Mark; PSC's
use of any such Mark shall be in conformity with this License Agreement. PSC
must obtain PTI's prior written consent to the registration of such a Mark,
which consent shall not be unreasonably withheld. However, under no
circumstances is PSC permitted to register or attempt to register a Mark that is
confusingly similar to any Mark held by PTI (whether or not in use at the time
of PSC's attempted registration), and the parties expressly agree that PTI's
withholding of consent on this basis is reasonable. PSC shall bear all costs and
expenses of obtaining, maintaining, and renewing the registration for Marks
under this provision. In the event any such Marks are registered, Schedule B-3
shall be amended and updated to add those Marks. Any and all Marks registered
under this provision shall be registered for the benefit of PTI and in PTI's
name, and all goodwill from the use of such marks shall be the exclusive
property of PTI.
5.4. Notification of Infringement.
5.4.1. PSC shall notify PTI within twenty (20) days after PSC
becomes aware of (i) any use or registration of any word or phrase,
symbol, logo or design, or any combination of any of the foregoing, that
PSC believes or has reason to believe might constitute infringement of
the PLATINUM Mark and/or any PLATINUM-Related Mark; (ii) any claim of
any rights in the PLATINUM Mark and/or any PLATINUM-Related Mark, or in
any confusingly similar Mark; and/or (iii) any action, publication or
statement that PSC believes or has reason to believe might be adverse or
detrimental to PTI's rights in the PLATINUM Mark and/or any
PLATINUM-Related Mark or which PSC believes or has reason to believe
might dilute or impair the value of the PLATINUM Mark and/or any
PLATINUM-Related Mark.
5.4.2. In any litigation related to the PLATINUM Mark and/or any
PLATINUM-Related Mark, whether brought by or against PSC and/or any
PSC-Affiliated Party, PTI shall have the sole right to control the
prosecution, defense, and/or settlement of any and all claims.
5.5. Use of PLATINUM Mark in Foreign Jurisdictions. In the event PSC
uses the PLATINUM Mark and/or any PLATINUM-Related Mark in a foreign
jurisdiction in which
PAGE 9 Of 25
<PAGE> 10
neither PSC nor PTI has previously used and/or registered the PLATINUM Mark and
PSC desires to register the PLATINUM Mark and/or any PLATINUM-Related Mark in
such foreign jurisdiction, PSC shall: (i) notify PTI of PSC's use and desire for
registration and shall cooperate with PTI in registering the PLATINUM Mark
and/or any PLATINUM-Related Mark for PTI's benefit and in PTI's name, should PTI
determine to secure such registration; (ii) bear the expense of such a
registration by PTI; (iii) execute any documents necessary to complete the
application for registration; and (iv) in connection with the use of the
PLATINUM Mark and/or any PLATINUM-Related Mark in any foreign jurisdiction,
indicate to consumers PTI's ownership of the PLATINUM Mark. In addition, PTI
agrees to execute any documents necessary to complete the application for
registration as appropriate. PSC shall be responsible for filing registered user
agreements as required in connection with PSC's use of the PLATINUM Mark and
shall bear all costs and fees associated with such filing.
6. DEFENSE AND INDEMNIFICATION
6.1. PSC represents and warrants to PTI that: (i) PSC has not received
notice from any third party (excluding PTI) that PSC's use of the PLATINUM Mark
prior to the Effective Date infringes or misappropriates any trademark, Trade
Name and/or other Mark or other intellectual property right of any third party;
and (ii) to the knowledge of PSC, PSC's use of the PLATINUM Mark prior to the
Effective Date did not infringe upon or misappropriate any trademark, Trade Name
and/or other Mark or other intellectual property right of any third party
(excluding PTI) (except as otherwise provided in Schedule B-6 hereto). The
warranty provided in this Section 6.1 shall expire on the three (3) year
anniversary of the Effective Date.
6.2. PSC shall defend, indemnify, and hold harmless PTI and its
subsidiaries, affiliates, directors, officers, employees, affiliates, agents and
contractors from and against any and all claims, liabilities, damages,
penalties, losses, costs and expenses (including, but not limited to, court
costs, reasonable attorneys' fees, and expert witness fees) ("Claims") arising
out of, or in connection with, any third party claim which results, in whole or
in part, or is claimed to result, in whole or in part, from: (i) any breach by
PSC of the warranty made in Section 6.1; and (ii) any third party claim which
results, in whole or in part, or is claimed to result, in whole or in part, from
any of the following (collectively the "PSC Indemnified Claims"):
6.2.1. Any actual or alleged infringement of any copyright,
patent or claim of patent rights, or any trademark, Trade Name and/or
other Mark, or any other third party intellectual property right,
related to PSC's and/or any PSC-Affiliated Party's use of the PLATINUM
Mark and/or any PLATINUM-Related Mark, except as provided in Section 6.3
below;
6.2.2. Any actual or alleged failure of any of PSC's products or
services sold or marketed under the PLATINUM Mark and/or any
PLATINUM-Related Mark to comply with this License Agreement, any law,
statute, ordinance, administrative order, rule, or regulation in force
in the Territory;
6.2.3. Any breach of this License Agreement by PSC and/or any
PSC-Affiliated Party;
PAGE 10 OF 25
<PAGE> 11
6.2.4. Any actual or alleged failure of any of PSC's products or
services using the PLATINUM Mark and/or any PLATINUM-Related Mark to
function and perform properly, causing any type of injury to customers
or third parties; and
6.2.5. PSC's and/or any PSC-Affiliated Party's use of the
PLATINUM Mark and/or any PLATINUM-Related Mark, except as provided in
Section 6.3 below.
6.3 PSC's obligation to indemnify PTI for a Claim arising under Section
6.2.1 and/or 6.2.5 shall expire on the two (2) year anniversary of the
Effective Date. Thereafter, PTI shall be responsible for defending any third
party Claim of infringement relating to the PLATINUM Mark and/or any
PLATINUM-Related Mark, regardless of whether the Claim relates to the use of the
PLATINUM Mark on PSC's goods or services or PTI's goods or services.
6.4. Except with respect to such matters which are subject to
indemnification under Section 6.1 or Section 6.2, or which result from a breach
by PSC or any PSC-Affiliated Party of that certain Settlement Agreement between
PSC and PTI entered into on January 14, 1999 or that certain Reseller Agreement
between PSC and PTI entered into on January 14, 1999, PTI shall defend,
indemnify, and hold harmless PSC and its subsidiaries, affiliates, directors,
officers, employees, affiliates, agents and contractors from and against any and
all Claims arising out of, or in connection with, any third party claim which
results, in whole or in part, or is claimed to result, in whole or in part, from
any of the following (the "PTI Indemnified Claims"):
6.4.1. Any actual or alleged infringement of any copyright,
patent or claim of patent rights, or any trademark, Trade Name and/or
other Mark, or any other third party intellectual property right,
related to PTI's and/or any PTI-Affiliated Party's use of the PLATINUM
Mark with PTI goods and services;
6.4.2. Any breach of this License Agreement by PTI and/or any
PTI-Affiliated Party; and
6.4.3. Any actual or alleged failure of any of PTI's products or
services using the PLATINUM Mark to function and perform properly,
causing any type of injury to customers or third parties.
6.5. In the event that either PTI or PSC asserts the existence of any
right to indemnity under Sections 6.2 or 6.4 ("Indemnifiable Damages"), such
party ("Indemnitee") shall give written notice thereof to the other
("Indemnitor") of the nature and amount of the Claim asserted promptly, and, in
the case of any claim relating to a third party action, within ten (10) days
prior to the date a response or answer thereto is due, in writing, thereof. The
failure, refusal or neglect of the Indemnitee to notify the Indermnitor within
the time period specified above of any such claim or action shall not relieve
the Indemnitor from any liability which it may have to the Indemnitee in
connection therewith, unless the Indemnitor was prejudiced by such delay, and
then only to the extent of the harm suffered by such delay. After such notice,
if the Indemnitor shall acknowledge in writing to the Indemnitee that the
Indemnitor shall be obligated under the terms of its indemnity hereunder in
connection with such Claim, demand or assessment, then the Indemnitor shall be
entitled, if it so elects at its own cost, risk and expense to: (i) take control
of
PAGE 11 OF 25
<PAGE> 12
the defense and investigation of such lawsuit or action; (ii) employ and engage
attorneys of its own choice, subject to the consent of the indemnified party,
such consent not to be unreasonably withheld, to handle and defend the same
unless the named parties to such action or proceeding include both the
Indemnitor and the Indemnitee and the Indemnitee believes in good faith that (a)
there may be one or more legal defenses available to such Indemnitee that are
different from or additional to those available to the Indemnitor, (b) there is
a potential conflict of interests, or (c) in the case of PTI as the Indemnitee,
Section 5 of this License Agreement would otherwise allow PTI to control the
defense and/or conduct of such proceeding, in which event the Indemnitee shall
be entitled, at the Indemnitor's cost, risk and expense, to separate counsel of
its own choosing; and (iii) compromise or settle such claim, which compromise or
settlement shall be made only with the written consent of the Indemnitee, such
consent not to be unreasonably withheld; provided, however, if the compromise,
settlement or resolution of any such Claim is reasonably expected to have,
individually or in the aggregate, a direct and significant adverse effect on the
Indemnitee's business operations or, in the case where PTI is the Indemnitee, a
direct and significant adverse effect on any rights in the PLATINUM Mark and/or
any PLATINUM-Related Mark, then, notwithstanding the foregoing, the Indemnitee
shall be entitled to control such compromise, settlement or resolution,
including without limitation to take control of the defense and investigation of
such lawsuit or action, to employ and engage attorneys of its own choice to
handle and defend the same, at the Indemnitor's cost, risk and expense, and to
compromise or settle such Claim. In the event that the Indemnitor does not so
assume the defense, conduct or settlement of any Claim, demand or assessment
within thirty (30) days after receiving notice of any Claim relating to a third
party action as set forth above, the Indemnitee shall be entitled to defend,
conduct or settle such Claim, demand or assessment without the written consent
of the Indemnitor and without relieving the Indemnitor from any of the
obligations to indemnify the Indemnitee under Sections 6.2 or 6.4. In the event
of any conflict between the terms of this Section 6.5 and Section 5 as to
control of defense of a Claim, Section 5 shall control.
7. TERM AND TERMINATION OF AGREEMENT
7.1. Term of License. Unless sooner terminated in accordance with the
terms of this Article 7, this License Agreement shall commence on the Effective
Date and remain in full force and effect until the earlier of (a) PSC ceases use
of the PLATINUM Mark in commerce for eighteen continuous months, or (b) PSC
notifies PTI in writing of a decision to stop using the PLATINUM Mark.
7.2. PTI's Right To Terminate Agreement. Notwithstanding any other
provision of this License Agreement, PTI may terminate this License Agreement by
giving written notice of termination to PSC for any of the following reasons:
7.2.1. PSC and/or any PSC-Affiliated Party has failed to comply
with law or has breached any of the provisions of this License
Agreement, or the parties' Settlement Agreement to be executed
concurrently with this License Agreement, and PSC fails to cure such
breach and notify PTI of such cure and the manner of such cure within a
period of sixty (60) days following PTI's notice of breach;
PAGE 12 OF 25
<PAGE> 13
7.2.1.1. In the case of a breach involving or consisting of
the publication, dissemination or use of materials in violation of
Sections 2 or 4 of this Agreement, it shall be a sufficient cure if PSC,
after receiving notice of breach: (i) disseminates a statement of
clarification to all parties who received the violative materials (which
statement shall be approved in advance by PTI); and (ii) takes
reasonable steps to ensure that the offending material is not further
disseminated, published or used, including destruction of the offending
material if practicable, and notifies PTI of the steps that it has
taken. However, the cure procedures of this Paragraph herein shall not
be sufficient after PSC avails itself of the cure procedures of this
Paragraph herein three times during the first year following the
Effective Date, or a total five times during the term of this License
Agreement (including any availment during the first year).
7.2.2. PSC becomes insolvent or if PSC enters into a voluntary
suspension of payments or voluntary or involuntary bankruptcy, makes an
assignment for the benefit of its creditors, has a receiver or trustee appointed
for it or any of its property, adopts a resolution for winding-up or
dissolution, or becomes the subject of any proceedings relating to its
insolvency, suspension of payments, bankruptcy, reorganization, or dissolution
which are not dismissed within sixty (60) days after their commencement;
7.2.3. All or a material part of the assets of PSC are condemned,
expropriated, or otherwise taken over by a governmental authority or are
repossessed, foreclosed upon or otherwise seized by a creditor of PSC;
7.2.4. Except as expressly provided herein, PSC and/or any
PSC-Affiliated Party attempts to register (without the prior written consent of
PTI) the PLATINUM Mark and/or any Mark that incorporates the PLATINUM Mark (in
whole or in part), or asserts or claims ownership or control of the PLATINUM
Mark or any Mark that incorporates the PLATINUM Mark (in whole or in part);
7.2.5. PSC and/or any PSC-Affiliated Party challenges the validity of
the PLATINUM Mark and/or PTI's ownership thereof,
7.2.6. PSC assigns, encumbers, or licenses any of its rights or
delegates any of its obligations under this License Agreement, except as
expressly authorized by Section 9.10.1 herein; and/or
7.2.7. PSC attempts to assign or assigns (whether voluntarily or by
operation of law) this License Agreement, or any rights hereunder, to; merges
with; is acquired by; all or a material part of PSC's assets are acquired by;
and/or all or a material part of PSC's common stock is acquired by any of the
following parties and/or any of their parents, holding companies, affiliates,
divisions, and/or subsidiaries: Computer Associates International, Inc.,
International Business Machines Corporation, Tivoli Systems, Inc., Compuware
Corporation, BMC Software, Inc., Rational Software Corporation, Network
Associates, Inc., Cognos Incorporated, Business Objects S.A., VERITAS Software
Corporation, VIASOFT, Inc., Sterling Software, Inc., and/or Hyperion Solutions
PAGE 13 OF 25
<PAGE> 14
Corporation. PTI shall be entitled to terminate this License Agreement
in the event that PSC enters into a joint venture, partnership, or other
business relationship with any of the foregoing entities and, as part of
such arrangement, either (a) purports to assign any rights under this
License Agreement in connection therewith, or (b) the joint venture,
partnership, or other business relationship relates in any way to use of
the PLATINUM Mark.
7.3. Effect of Termination. Upon any expiration or termination of this
License Agreement for any reason whatsoever, the following provisions shall
apply:
7.3.1. Termination of License. The licenses granted hereunder
shall immediately and automatically terminate, and within a reasonable
period, but in no event more than one-hundred and eighty (180) days
from the date of termination or expiration, PSC and any PSC-Affiliated
Party shall:
7.3.1.1. Cease using the PLATINUM Mark and any and all
PLATINUM-Related Marks;
7.3.1.2. Take action to change the Marks on its products
and services to Marks which do not include the PLATINUM Mark
and/or any PLATINUM- Related Mark and are not similar to, and do
not cause confusion with, the PLATINUM Mark and/or any
PLATINUM-Related Mark;
7.3.1.3. Destroy all advertising, marketing and
promotional materials bearing the PLATINUM Mark and/or any
PLATINUM-Related Mark;
7.3.1.4. Obliterate each and every PLATINUM Mark from,
or destroy, any PSC products and services and any other items
bearing the PLATINUM Mark and/or any PLATINUM-Related Mark;
7.3.1.5. Furnish PTI with evidence reasonably
satisfactory to PTI demonstrating compliance with the foregoing
obligations.
7.3.2. No Compensation. PSC acknowledges and agrees that no
indemnities or compensation of any kind shall be due to PSC as a result
of the termination or expiration of the terms of this License Agreement.
7.4. Survival Of Certain Provisions. The provisions of Sections 3, 6, 8,
and 9 shall survive the termination of this License Agreement for any reason.
8. NO IMPLIED WARRANTIES; LIMITATION OF LIABILITY
8.1. DISCLAIMER OF WARRANTY. EXCEPT AS EXPRESSLY SET FORTH HEREIN (AND
EXCEPT AS MAY BE REQUIRED BY LAW), PTI EXPRESSLY DISCLAIMS ALL REPRESENTATIONS
AND WARRANTIES, EXPRESS OR IMPLIED, IN CONNECTION WITH THE LICENSED MARKS AND
THIS AGREEMENT, INCLUDING,
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<PAGE> 15
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF VALIDITY, NONINFRINGEMENT,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. GIVEN THAT PSC ASSIGNED TO
PTI ALL OF THE RIGHTS LICENSED HEREUNDER, PSC EXPRESSLY WAIVES ANY CLAIMS
AGAINST PTI ON THE GROUNDS THAT THE RIGHTS LICENSED HEREUNDER ARE INVALID OR
DEFECTIVE IN ANY WAY.
8.2. LIMITATION OF LIABILITY. EXCEPT FOR BREACHES BY PSC OF SECTIONS
2,3.2,4.1 OR OBLIGATIONS ARISING OUT OF SECTION 6 THAT ARE BASED ON PSC
INDEMNIFIED CLAIMS OR PTI INDEMNIFIED CLAIMS, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY OR THEIR AFFILIATES, SUCCESSORS OR SUBLICENSEES FOR ANY
INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING
WITHOUT LIMITATION, LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE
SAME) ARISING FROM ANY CLAIM RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT,
WHETHER A CLAIM FOR SUCH DAMAGES IS BASED ON WARRANTY, CONTRACT, OR TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE OR STRICT LIABILITY). EXCEPT FOR
BREACHES BY PSC OF SECTIONS 2, 3.2, 4.1 OR OBLIGATIONS ARISING OUT OF SECTION 6
THAT ARE BASED ON PSC INDEMNIFIED CLAIMS OR PTI INDEMNIFIED CLAIMS, BOTH PARTIES
ACKNOWLEDGE AND AGREE THAT PAYMENT BY THE DEFAULTING PARTY OR RETENTION BY THE
NON-DEFAULTING PARTY OF DIRECT DAMAGES, AS LIMITED BY THE FOREGOING SENTENCE,
SHALL BE THE NON-DEFAULTING PARTY'S SOLE AND EXCLUSIVE REMEDY IN EXHAUSTION OF
ALL OTHER REMEDIES UNDER THIS AGREEMENT, AT LAW OR IN EQUITY AND THAT SUCH
REMEDY SHALL NOT BE DEEMED OR ALLEGED BY THE NON-DEFAULTING PARTY TO HAVE FAILED
OF ITS ESSENTIAL PURPOSE.
9. GENERAL PROVISIONS
9.1. Choice of Law. This Agreement shall be construed and governed in
accordance with the laws of the State of Illinois and the United States of
America.
9.2. Jurisdiction and Venue. Any dispute regarding this License
Agreement and PTI's, PSC's, and/or any PSC-Affiliated Party's performance
hereunder, shall be subject to the exclusive Jurisdiction of the United States
District Court for the Northern District of Illinois. Each party hereby
irrevocably and unconditionally (a) consents to the jurisdiction of that court
for any such dispute; and (b) waives any objection which such party may have to
the laying of venue of any such dispute in that court. In the event the United
States District Court for the Northern District of Illinois declines
jurisdiction over any dispute relating to the enforcement and/or interpretation
of this Settlement Agreement, any such litigation shall be brought in state
court in Illinois, in the County of DuPage, and the parties hereto expressly
consent to the jurisdiction of that court and waive any objection thereto.
PAGE 15 OF 25
<PAGE> 16
9.3. No Agency. PTI and PSC are acting as independent contractors under
this License Agreement, and neither PSC nor PTI are employees or agents of the
other. Nothing herein is intended to make either party a general or special
agent, legal representative, subsidiary, joint venturer, partner, fiduciary,
employee or servant of the other for any purpose. Neither PSC nor PTI is
authorized or empowered to act as an agent for the other or to enter into
agreements, transact business, or incur obligations for or on behalf of the
other, nor to accept legal service of process for or on behalf of the other, nor
to bind the other in any manner whatsoever. Neither PSC nor PTI shall do or omit
to do anything that might imply or indicate that they are an agent or
representative of the other, or a branch, division, or affiliate of the other,
or that they in any manner, either directly or indirectly, own, control, or
operate the other or are in any way responsible for the other's acts or
obligations. In the event that either party violates this provision, the
violating party shall indemnify and hold the other harmless from any and all
Claims (as defined above) which result from any of the violating party's acts or
omissions, and shall reimburse the non-violating party for any and all
attorneys' fees and expenses (including expert witness fees) that the
non-violating party incurs in its defense of any such Claims.
9.4. Costs And Expenses. Except as otherwise expressly stated herein,
each party will bear its own costs and expenses in connection with this License
Agreement.
9.5. Entire Agreement. This License Agreement, together with all
schedules hereto (which are incorporated herein by this reference) and the
related Settlement Agreement, Trademark Assignment Agreement, and Reseller
Agreement, are intended as the complete, final and exclusive statement of the
terms of the agreement between PSC and PTI with regard to the subject matter
hereof, and supersedes all prior oral and written agreements, understandings,
commitments, negotiations and practices between the parties relating to such
subject matter, including, without limitation, the 1993 Settlement Agreement.
9.6. Amendment and Waiver. None of the terms of this License Agreement
shall be deemed to be waived, modified, and/or amended by either party unless
such a waiver, modification, and/or amendment specifically references this
License Agreement and is in writing signed by the party to be bound.
9.7. Non-Waivers. Any waiver of either party's rights or remedies under
this License Agreement shall be effective only if made in writing signed by an
authorized officer of such party, and no failure or delay by either party in
exercising any right or remedy hereunder nor any custom or course of performance
shall operate as a waiver of any such right or remedy, nor shall any single or
partial exercise or waiver of any right preclude any other or further exercise
thereof or the exercise of any other right or remedy.
9.8. Severability. If any clause or provision of this License Agreement
is declared illegal, invalid or unenforceable under present or future laws
effective during the term hereof, it is the intention of the parties hereto to
reach agreement to terms that will lawfully carry out the intended purpose of
any such clause or provision, and to take such action as may be necessary to do
so. The parties further intend that the remainder of this License Agreement
shall not be affected thereby, and shall remain in full force and effect.
PAGE 16 OF 25
<PAGE> 17
9.9. Notices. All notices required or permitted to be given hereunder
shall be given in writing and shall be sent by prepaid first class registered
air mail, express courier, personal delivery, or facsimile to the following
addresses:
PTI: Larry S. Freedman, Esq.
Vice President and General Counsel
PLATINUM technology, inc.
1815 South Meyers Road,
Oakbrook Terrace, Illinois 60181
Fax: (630) 691-0704
With copies to: Matthew W. Walch, Esq.
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Fax: (312) 993-9767
and
Mark A. Flagel, Esq.
Latham & Watkins
633 West Fifth St., Suite 4000
Los Angeles, California 90071
Fax: (213) 891-8763
PSC: Perry Tarnofsky, Esq.
Vice President and General Counsel
195 Technology Drive
Irvine, California 92618
Fax: (949) 450-4447
With a copy to: Julie McCoy Akins, Esq.
Stradling Yocca
Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Fax: (949) 725-4100
In the case of notice by facsimile transmission, notice shall be
confirmed immediately by prepaid courier service (e.g. Federal Express) or U.S.
mail. All notices shall be effective upon receipt when delivered at the address
so specified; provided, however, that any notice sent by mail shall be deemed to
have been received ten (1O) business days after dispatch; any notice sent by
courier shall be deemed to have been received one (1) business day after
dispatch; and any notice sent by facsimile transmission shall be deemed to have
been received when such facsimile is confirmed electronically. Any party may
change the address to which notices are to be sent by so notifying the other
party in writing in the manner provided herein.
PAGE 17 OF 25
<PAGE> 18
9.10. Successors and Assigns.
9.10.1. PSC shall be permitted to assign its right sunder this
License Agreement only in connection with a transaction involving the
merger or consolidation of PSC into another entity or the acquisition of
PSC (or all or substantially all of its assets) by another entity,
provided that the transferee of the Agreement agrees in writing to be
bound by and subject to all of the terms and provisions of this
Agreement. Notwithstanding the foregoing, PSC expressly agrees that
under no circumstances shall this License Agreement, nor any right
hereunder, be assigned (whether voluntarily or by operation of law),
including, without limitation, by merger or acquisition, to any of the
parties identified in Section 7.2.7, and/or any of their parents,
holding companies, affiliates, divisions, and/or subsidiaries,
9.10.2. In the event of a permitted assignment pursuant to this
Section, each and every obligation of PSC shall be assigned along with
any rights of PSC under this License Agreement. Except as set forth in
Section 9. 1 0.1 above (where the consent of PTI is not required), PSC
shall have no right to assign its rights under this License Agreement to
any third party, including, without limitation, an assignment by
operation of law, unless otherwise consented to by PTI in writing. PTI
shall have absolute and sole discretion whether to provide such consent.
9.10.3. The obligations and duties of this License Agreement
shall be binding upon the parties, their successors and assigns
(including, without limitation, any successor to PSQ, and the rights of
this License Agreement shall inure to the benefit of permitted
successors and assigns. The parties expressly agree that PTI shall be
permitted to assign, transfer, and/or encumber this License Agreement,
including assignments, transfers, or encumbrances by operation of law,
to any party, for any purpose, and without exception or limitation,
provided that the transferee agrees in writing to be bound by and
subject to all of the terms and provisions of this Agreement.
9.11. Further Assurances And Cooperation. Each of the parties agrees to
execute and deliver such other documents and to take all such other actions as
any of the other parties, its successors, assigns or other legal representatives
may reasonably request to effect the terms of this License Agreement and the
execution and delivery of any and all affidavits, testimonies, declarations,
oaths, samples, exhibits, specimens and other documentation as may be reasonably
required.
9.12. Confidentiality. This License Agreement and all of its terms shall
be treated as confidential and may not be shown to or discussed with persons or
entities other than those in a privileged setting, or as may be required by law
or regulation or in response to governmental inquiries or legitimate legal
process. In the event that a disclosure regarding this License Agreement or any
of its terms is required (for example, to comply with SEC filing requirements),
the disclosing party shall (a) provide at least fifteen (15) days advance
notice to the non-disclosing party of the intent to disclose; and (b) send the
proposed disclosure to the
PAGE 18 OF 25
<PAGE> 19
non-disclosing party and shall permit non-disclosing party at least ten (1O)
days to review and comment on the proposed disclosure before it is made.
9.13. No Strict Construction. The language used in this License
Agreement shall be deemed to be the language chosen by both parties hereto to
express their mutual intent and no rule of strict construction against either
party shall apply to any term or condition of this License Agreement.
9.14. Counterparts. This License Agreement may be executed in
counterparts, any one of which need not contain the signatures of more than one
party, but all of which, taken together, shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this License
Agreement to be signed by duly authorized officers or representatives as of the
date first above written.
PLATINUM technology, inc. PLATINUM SOFTWARE CORPORATION
By: /s/ LARRY S. FREEDMAN By: /s/ WILLIAM R. PRESER
------------------------------- -------------------------------
Print Name: LARRY S. FREEDMAN Print Name: WILLIAM R. PRESER
----------------------- -----------------------
Title: SENIOR VICE PRESIDENT & Title: EXEC VP PRODUCT DEVELOPMENT
GENERAL COUNSEL & MARKETING
--------------------------- ---------------------------
Date: Date: 01/19/99
----------------------------- -----------------------------
PAGE 19 OF 25
<PAGE> 20
SCHEDULE B-1
EXISTING PSC DISTRIBUTORS
Platinum China, Ltd. (Internet domain name is platsoft.com.hk)
Platinum China Holdings, Ltd.
Platinum Systems (Shanghai) Co., Ltd.
Platinum Russia, Ltd.
ADA Platinum
PAGE 20 OF 25
<PAGE> 21
SCHEDULE B-2
EXISTING PSC DISTRIBUTORS PREVIOUSLY AUTHORIZED
TO USE "PLATSOFT" IN THEIR INTERNET DOMAIN NAME
Platinum China, Ltd., (Internet domain name: [[platsoft.com.hk]])
PAGE 21 OF 25
<PAGE> 22
SCHEDULE B-3
PLATINUM-RELATED MARKS AND RELEVANT JURISDICTIONS
PAGE 22 OF 25
<PAGE> 23
Page 1 of 4
SCHEDULE B-3(A)
PLATINUM SQL
PLATINUM ERA
PLATINUM FOR DOS
PLATINUM FOR WINDOWS
PLATINUM EXPLORER
ACCESS TO PLATINUM
SEQUEL TO PLATINUM
PLATINUM SQL NT
PLATINUM SQL ENTERPRISE
<PAGE> 24
Page 2 of 4
SCHEDULE B-3(B)
Jurisdictions in which PSC has registered the PLATINUM mark
United States Federal Trademark Applications and Registrations
January 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
MARK APP. NO. REG. NO. RENEWAL CLASS STATUS
APP. DATE REG. DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PLATINUM EXPLORER 75/535,065 09 Pending.
08/12/98
- -------------------------------------------------------------------------------------
PLATINUM ERA 75/488,612 09 Pending.
05/20/98
- -------------------------------------------------------------------------------------
PLATINUM 73/662,965 1499288 08/09/08 09 Registered.
05/26/87 08/09/88
- -------------------------------------------------------------------------------------
SEQUEL TO PLATINUM 74/184,715 1773457 05/25/03 09 Registered.
07/15/91 05/25/93
- -------------------------------------------------------------------------------------
</TABLE>
State Trademark Registration
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
STATE MARK CLASS FILING REG. NO. REG. DATE RENEWAL STATUS
DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California PLATINUM 38 05/20/87 084970 10/02/87 10/02/07 Registered.
- -------------------------------------------------------------------------------------------------
</TABLE>
Foreign Trademark Applications and Registrations
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
COUNTRY MARK APP. NO. REG. NO. RENEWAL CLASS STATUS
APP. DATE REG. DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARGENTINA PLATINUM 1707912 1656693 01/26/08 9 Registered
10/17/89 01/26/98
- -------------------------------------------------------------------------------------------------
AUSTRALIA PLATINUM 504363 A504363 02/07/06 9 Registered
2/7/89 2/7/89
- -------------------------------------------------------------------------------------------------
BAHAMAS PLATINUM 13643 13643 10/18/03 9 Registered
10/18/89 10/18/89
- -------------------------------------------------------------------------------------------------
BARBADOS PLATINUM N/A 9 Pending
1/9/90
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 25
Page 3 of 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
COUNTRY MARK APP. NO. REG. NO. RENEWAL CLASS STATUS
APP. DATE REG. DATE DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BRAZIL PLATINUM 816833613 9 Pending
8/14/92
- -------------------------------------------------------------------------------------------------
BENELUX PLATINUM 724980 457806 02/07/99 9 Registered
2/7/89 2/7/89
- -------------------------------------------------------------------------------------------------
CANADA PLATINUM 632590 447491 09/15/10 N/A Registered
5/24/89 9/15/95
- -------------------------------------------------------------------------------------------------
CANADA ACCESS TO 696470 420033 11/26/08 9 Registered
PLATINUM 1/2/92 11/26/93
- -------------------------------------------------------------------------------------------------
CANADA SEQUEL TO 696471 440754 03/24/10 9 Registered
PLATINUM 1/2/92 3/24/95
- -------------------------------------------------------------------------------------------------
CHILE PLATINUM 175843 402526 2/24/03 9 Registered
ABM 2/24/93 2/24/93
- -------------------------------------------------------------------------------------------------
CHINA PLATINUM 960066891 1066102 7/27/07 9 Registered
6/6/96 7/28/97
- -------------------------------------------------------------------------------------------------
COLOMBIA PLATINUM 395875 155554 3/28/04 9 Registered
7/12/93 3/29/94
- -------------------------------------------------------------------------------------------------
DENMARK PLATINUM 282/90 VR 04/08/04 9 Registered
1/12/90 021871994
4/8/94
- -------------------------------------------------------------------------------------------------
EUROPEAN PLATINUM 464651 9 Pending
COMMUNITY 2/17/97
- -------------------------------------------------------------------------------------------------
GERMANY PLATINUM A45853/9WZ 1170341 02/08/99 9, 42 Registered
2/8/89 1/3/91
- -------------------------------------------------------------------------------------------------
HONG KONG PLATINUM 45491/1989 02175-1992 06/03/10 9 Registered
6/3/89 6/3/89
- -------------------------------------------------------------------------------------------------
INDIA PLATINUM 518425 9 Pending
10/16/89
- -------------------------------------------------------------------------------------------------
ITALY PLATINUM 47970-C/89 560733 02/14/09 9, 42 Registered
2/14/89 2/17/92
- -------------------------------------------------------------------------------------------------
JAMAICA PLATINUM 9/1204 24132 10/25/10 9 Registered
10/28/89 9/27/93
- -------------------------------------------------------------------------------------------------
JAPAN PLATINUM 14275/1989 4220633 12/11/08 11 Registered
2/9/89 12/11/98
- -------------------------------------------------------------------------------------------------
KOREA PLATINUM 89-2845 199191 08/28/00 39 Registered
2/9/89 8/28/90
- -------------------------------------------------------------------------------------------------
MALAYSIA PLATINUM 89/00793 9 Pending
2/11/89
- -------------------------------------------------------------------------------------------------
NETH. ANTIL PLATINUM 2/21/90 16587 02/21/00 9 Pending
1/27/92
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 26
Page 4 of 4
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
COUNTRY MARK APP. NO. REG. NO. RENEWAL CLASS STATUS
APP. DATE REG. DATE DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEW ZEALAND PLATINUM 190700 190700 02/07/10 9 Registered
2/7/89 2/7/89
- -------------------------------------------------------------------------------------------------
PERU PLATINUM 269414 85441 05/30/05 9 Registered
10/18/89 5/30/90
- -------------------------------------------------------------------------------------------------
PHILIPPINES PLATINUM 70614 51041 7/24/11 9 Registered
1/22/90 7/24/91
- -------------------------------------------------------------------------------------------------
PORTUGAL PLATINUM 317683 317683 3/5/07 9 Registered
6/11/96 3/5/97
- -------------------------------------------------------------------------------------------------
PUERTO RICO PLATINUM 629879 029493 02/06/00 9 Registered
2/6/90 2/6/90
- -------------------------------------------------------------------------------------------------
RUSSIA PLATINUM 96709421 9 Pending
7/19/96
- -------------------------------------------------------------------------------------------------
SINGAPORE PLATINUM S4525/89 4525/89 07/18/96 9 Registered
7/18/89 7/18/89
- -------------------------------------------------------------------------------------------------
SPAIN PLATINUM 1303355 1303355 02/20/99 9 Registered
2/20/89 5/20/91
- -------------------------------------------------------------------------------------------------
TAIWAN PLATINUM (78)5518 473168 01/16/00 39 Registered
2/11/89 1/16/90
- -------------------------------------------------------------------------------------------------
TRINIDAD PLATINUM 18521 18521 10/17/03 9 Registered
10/18/89 6/30/93
- -------------------------------------------------------------------------------------------------
UNITED PLATINUM 1372516 1372516 02/08/06 9 Registered
KINGDOM 02/8/89 6/23/95
- -------------------------------------------------------------------------------------------------
VENEZUELA PLATINUM 15431-89 154929-F 02/21/97 50 Registered
1/11/89
- -------------------------------------------------------------------------------------------------
ZAIRE PLATINUM 2140/90 2140/90 02/22/00 9 Registered
2/22/90 2/22/90
</TABLE>
<PAGE> 27
SCHEDULE B-4
IN-PROCESS APPLICATIONS FOR REGISTRATION OF PLATINUM-RELATED
MARKS AND RELEVANT JURISDICTIONS
PAGE 23 OF 25
<PAGE> 28
SCHEDULE B-4
Pending United States Trademark Applications
January 14, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
MARK APPLICATION NUMBER APPLICATION DATE STATUS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
PLATINUM EXPLORER 75/535,065 08/12/98 Pending.
- -------------------------------------------------------------------------------------
PLATINUM ERA 75/488,612 05/20/98 Pending.
- -------------------------------------------------------------------------------------
</TABLE>
Pending Foreign Trademark Applications
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
COUNTRY MARK APPLICATION APPLICATION CLASS STATUS
NUMBER DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BARBADOS PLATINUM N/A 01/09/90 9 Pending
- -------------------------------------------------------------------------------------
BRAZIL PLATINUM 816833613 08/14/92 9 Pending
- -------------------------------------------------------------------------------------
EUROPEAN PLATINUM 464651 02/17/97 9 Pending
COMMUNITY
- -------------------------------------------------------------------------------------
INDIA PLATINUM 518425 10/16/89 9 Pending
- -------------------------------------------------------------------------------------
MALAYSIA PLATINUM 89/00793 02/11/89 9 Pending
- -------------------------------------------------------------------------------------
RUSSIA PLATINUM 96709421 07/19/96 9 Pending
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
SCHEDULE B-5
PENDING OPPOSITIONS BY PSC TO THIRD-PARTY APPLICATIONS FOR REGISTRATION
OF THE PLATINUM MARK (OR VARIATIONS THEREOF)
PAGE 24 OF 25
<PAGE> 30
Page 1 of 3
SCHEDULE B-5
Pending Trademark Oppositions - Foreign
(Not including those filed against Platinum Technology, Inc.)
January 14, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
COUNTRY MARK CLASS APPLICATION OWNER STATUS
NO.
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina PLATINUM 42 2028069 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 9 2028070 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 41 2028071 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 37 2028072 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 35 2028073 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 41 2029524 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS & Representacoes LTDA.
LOGO
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 37 2029525 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS & Representacoes LTDA.
LOGO
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 42 2029526 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS & Representacoes LTDA.
LOGO
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 9 2029527 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS & Representacoes LTDA.
LOGO
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 35 2029528 Paradigm Systems Brasil Comercio E Pending
SOLUTIONS & Representacoes LTDA.
LOGO
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 9 2027204 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 35 2027205 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 37 2027206 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
Argentina PLATINUM 42 2027207 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY Representacoes LTDA.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
Page 2 of 3
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COUNTRY MARK CLASS APPLICATION OWNER STATUS
NO.
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina PLATINUM 37 2027775 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY & Representacoes LTDA.
LOGO
- ---------------------------------------------------------------------------------------------------------
Argentina PLATINUM 42 2027776 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY & Representacoes LTDA.
LOGO
- ---------------------------------------------------------------------------------------------------------
Argentina PLATINUM 42 2027777 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY & Representacoes LTDA.
LOGO
- ---------------------------------------------------------------------------------------------------------
Argentina PLATINUM 35 2027778 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY & Representacoes LTDA.
LOGO
- ---------------------------------------------------------------------------------------------------------
Argentina PLATINUM 9 2027779 Paradigm Systems Brasil Comercio E Pending
TECHNOLOGY & Representacoes LTDA.
LOGO
- ---------------------------------------------------------------------------------------------------------
Argentina PLATINUM BY 9 2.097.030 Bio Byte SRL Pending
BIO BYTE
- ---------------------------------------------------------------------------------------------------------
Brazil PLATINUM 9, 16 9282758 Paradigm Systems Brasil Comercio Pending
SOLUTIONS E Representa
- ---------------------------------------------------------------------------------------------------------
Brazil PLATINUM 9, 16 9282820 Paradigm Systems Brasil Comercio Pending
SOLUTIONS E Representa
- ---------------------------------------------------------------------------------------------------------
Brazil PLATINUM 9, 16 9282723 Paradigm Systems Brasil Comercio Pending
TECHNOLOGY E Representa
- ---------------------------------------------------------------------------------------------------------
Brazil PLATINUM 9, 16 9282871 Paradigm Systems Brasil Comercio Pending
TECHNOLOGY E Representa
- ---------------------------------------------------------------------------------------------------------
Brazil PLATINUM 9 819632040 Platinum Teleinformatica LTDA Pending
- ---------------------------------------------------------------------------------------------------------
Costa Rica PLATINUM 9 173795 Rivan D.C.R., Sociedad Anonima Pending
- ---------------------------------------------------------------------------------------------------------
Costa Rica PLATINUM 37 173793 Rivan D.C.R., Sociedad Anonima Pending
- ---------------------------------------------------------------------------------------------------------
Costa Rica PLATINUM 42 173794 Rivan D.C.R., Sociedad Anonima Pending
- ---------------------------------------------------------------------------------------------------------
Germany PLATINUM 9, 38, 42 39552578 Gesellschaft Fur Medizinishe Pending
Datenberarbeitung
- ---------------------------------------------------------------------------------------------------------
Korea PLATINUM 9, 42 96003626 Platinum Korea, Inc. Pending
- ---------------------------------------------------------------------------------------------------------
Paraguay PLATINUM 9 94003791 Impex Internacional Pending
- ---------------------------------------------------------------------------------------------------------
Venezuela PLATINUM 9 93012338 Comercializadora Sogul Pending
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
Page 3 of 3
Pending Oppositions -- United States
(Not including those filed against Platinum Technology, Inc.)
There are no pending oppositions in the United States. PSC has been monitoring
the following federal trademark applications for potential opposition:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MARK APPLICATION FILING DATE OWNER
NUMBER
===============================================================================================
<S> <C> <C> <C>
PLATINUM SERIES 75/536,493 August 14, 1998 Warner Steel Vision, Inc.
- -----------------------------------------------------------------------------------------------
WEB PLATINUM 75/410,261 December 23, 1997 Interaccess Co.
- -----------------------------------------------------------------------------------------------
PLATINUM PLUS 75/379,958 October 27, 1997 Warner-Elektra-Atlantic Corporation
CERTIFIED
- -----------------------------------------------------------------------------------------------
PLATINUM PLUS 75/379,957 October 27, 1997 Warner-Elektra-Atlantic Corporation
CERTIFIED and Design
- -----------------------------------------------------------------------------------------------
PLATINUM CONNECT 75/328,597 July 22, 1997 First USA Bank
PLUS
- -----------------------------------------------------------------------------------------------
PLATINUM PREMIUM 75/328,594 July 22, 1997 First USA Bank
- -----------------------------------------------------------------------------------------------
PLATINUM FIRST 75/328,576 July 22, 1997 First USA Bank
- -----------------------------------------------------------------------------------------------
PLATINUM BONUS 75/328,575 July 22, 1997 First USA Bank
- -----------------------------------------------------------------------------------------------
PLATINUM CONNECT 75/323,185 July 11, 1997 First USA Bank
- -----------------------------------------------------------------------------------------------
PLATINUM OPTION 75/323,184 July 11, 1997 First USA Bank
- -----------------------------------------------------------------------------------------------
PLATINUM 16 74/466,347 December 3, 1993 Multiwave Innovation, Inc.
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
SCHEDULE B-6
EXCEPTIONS TO REPRESENTATION AND WARRANTY OF SECTION 6.1
PAGE 25 OF 25
<PAGE> 34
SCHEDULE B-6
In 1989, PSC learned that a French Company named Platinum S.A. owned French
Registration No. 1,474,026 for the mark PLATINUM on computer software. Further
investigation revealed that Platinum S.A. was formed in March 1988 with the
corporate objective of "edition of vertical software packages, diffusion of
micro computer equipment, and services/advice in advanced techniques." Platinum
S.A.'s software appeared to be designed for the MacIntosh platform. PSC decided
not to file an application for, or use, the PLATINUM mark in France at that
time.
In 1994, PSC investigated Platinum S.A. once again to determine if it was
still using the PLATINUM mark. It learned that Platinum S.A. was operating an
"Apple Center" where it sold and maintained Apple Computers. To date, PSC has
not filed an application for, or used, the PLATINUM mark in France.
<PAGE> 1
EXHIBIT 10.65
VALUE ARDENT ADDED RESELLER
AGREEMENT Software, Inc.
This Value Added Reseller Agreement is entered into and becomes effective the
first day of January 1999 ("Agreement"), by and between Ardent Software, Inc.,
(ARDENT), with its principal place of business at 50 Washington Street,
Westboro, Massachusetts, 01581-1021 and Platinum Software ("VAR") with its
principal place of business at 195 Technology Dr., Irvine, California 92618 and
governs the computer programs and related documentation provided by ARDENT to
VAR under the Agreement.
1. DEFINITIONS
1.1 "Product(s)" means the ARDENT software products, revisions and upgrades
including Documentation, which VAR is authorized to promote under the Agreement
which are more fully set forth in the Product and Services Schedule attached
hereto.
1.2 "Documentation" means the manuals, publications and other materials that
accompany a Product, as well as updates to such materials.
1.3 "VAR" means an entity that remarkets Products with Value Add to unaffiliated
third party End Users in the regular course of business.
1.4 "End User" means an unaffiliated entity that will use Products and services
for internal business purposes and not for resale.
1.5 "Application(s)" means a computer program which is developed, owned or
licensed by VAR and substantially uses features and capabilities of Products.
"Value Add" is the Application which is licensed in conjunction with the
Products, and "Solution" means the combination of the Application(s) with the
Product(s).
1.6 "Price List" means the most current version of ARDENT's published Price
List, as revised from time to time, for the territory in which the product is to
be used.
1.7 "Warranty Period" means the ninety (90) day period commencing as of the
shipment or electronic transfer date. No additional warranty attaches to Product
which is transferred to a new platform, upgraded or is reconfigured for a
different number of users.
2. EFFECTIVE DATE AND TERM
2.1 This Agreement is accepted when it is signed by ARDENT, becomes effective
as of January 1, 1999 ("Effective Date") and continues for three (3) years
("Initial Term") from the Effective Date and shall automatically continue
thereafter for successive one (1) year renewal terms subject to ARDENT's
prices, discounts and policies then in effect ("Renewal Terms") unless
earlier terminated as provided herein or by either party upon 90 days
written notice to the other party prior to the commencement of any Renewal
Term.
2.2 Upon the Effective Date of this Agreement, prior reseller and maintenance
service agreements entered into between Ardent Software, Inc., including
its predecessor company, Unidata, Inc., and Vmark Software, Inc. and
Platinum Software, Inc., including its predecessor companies, Dataworks,
Inc., and Interactive Group, Inc., are hereby terminated with the
exception of (i) any provisions contained in any of those agreements which
are expressly stated to survive and (ii) any payment obligations
outstanding including resolution on maintenance fee issues for the System
Builder (SB) runtime VIP customer base.
3. APPOINTMENT AND MARKETING TERRITORY
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3.1 ARDENT appoints VAR to actively promote and solicit orders for Products and
services directly to End Users or indirectly through its dealers, if any, who
may in turn remarket to their End Users, and VAR accepts such appointment in
accordance with the terms and conditions herein. VAR's appointment is
nonexclusive and in no way limits ARDENT's rights to sell (directly or through
others) to End Users or to appoint other resellers.
3.2 VAR's Marketing Territory for promotion of Products and services and
ARDENT's obligations are worldwide.
4. VAR WARRANTY AND RESPONSIBILITIES
4.1 VAR warrants that it is a value added reseller and shall order Products for
incorporation with its or its dealers' Applications to be remarketed to End
Users in the regular course of business.
4.2 VAR represents and warrants that each Solution remarketed to End Users that
contain Products procured under this Agreement will include Value Add. Upon
request, VAR shall demonstrate such Value Add to each sublicensee at the time of
the sale of Product(s). If such Value Add cannot be demonstrated within fifteen
business days of receipt of written request, VAR will be considered in breach of
the Agreement.
4.3 VAR shall have trained and maintain a sufficient number of technical and
sales personnel qualified to perform its obligations and responsibilities. VAR
shall use its best efforts to actively market the Product(s).
5. RELATIONSHIP OF THE PARTIES
5.1 Neither ARDENT nor VAR is a franchisee, partner, broker, employee, servant
or agent of the other party and neither has nor will either party represent that
it has any power, right or authority to bind, assume or create any obligations,
express or implied, on behalf of the other party or make any claims, commitments
or representations about Products that are inconsistent with the information
provided in documentation and promotional material. VAR shall not use, modify or
alter any advertising, artwork, promotional materials, logos, or trademarks of
ARDENT without its prior written consent. This Agreement confers no third party
right of action on any other party and there are no intended third party
beneficiaries except as expressly created under sublicense agreements.
5.2 VAR will indemnity and hold ARDENT harmless from any and all claims, damages
and expenses of every kind and nature, including attorneys' fees, arising from
acts of commission or omission by VAR in relation to license, use or possession
of Products, Documentation, and services sold by VAR to others to the extent not
covered by ARDENT's Product warranty under the Agreement.
6. ORDERING AND SHIPMENT
6.1 All orders for Products are subject to acceptance by ARDENT, fulfillment of
its credit requirements and are governed by the terms and conditions of this
Agreement, which are automatically incorporated, even if VAR fails to reference
this Agreement on its order. Any other terms and conditions on any order for
Products submitted during this Agreement are superseded and nonbinding unless
accepted in writing by Ardent.
6.2 ARDENT delivers Product F.O.B. point of shipment in accordance with a
mutually agreeable delivery schedule. Risk of loss for Product passes to VAR
upon shipment. In the absence of shipping instructions, ARDENT will select a
common carrier.
6.3 If at any time subsequent to ARDENT's acceptance of any order and prior to
delivery, VAR is in default under this Agreement, the order shall be deemed to
be vacated and canceled.
7. PRICES AND DISCOUNTS
7.1 Prices and discounts for Products and services and other terms and
conditions are contained in Attachment A, Letter regarding wintegrate
Maintenance dated February 16, 1999, Letter regarding special DataStage products
purchased dated March 30, 1998, email regarding the inclusion of UniServer and
Object call at no charge for DataStage orders dated September 14, 1998, Letter
regarding 15% commission on RedBack and DataStage services dated August 5, 1998
which are incorporated and made a part of this Agreement.
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7.2 Prices for Products and services during the Initial Period other than those
provided in 7.1 above are contained in ARDENT's then current published Price
List.
7.3 Prices stated are exclusive of any taxes, duties, excises or tariffs for or
on the service or use of Product. ARDENT reserves the right to change prices
upon ninety (90) days prior written notification.
8. PAYMENT TERMS
8.1 Charges for Products, unless otherwise specified in the Agreement or
Attachments hereto, shall be paid within forty-five (45) days from receipt of
invoice and services are to be paid within thirty (30) days from the receipt of
invoice. Other charges are due upon receipt of invoice unless otherwise mutually
agreed.
8.2 VAR is to: (a) pay all shipping and related Product charges; (b) reimburse
for all taxes exclusive of taxes on ARDENT's net income or provide evidence of
exemption. Unless otherwise agreed ARDENT shall prepay shipping charges.
8.3 If VAR does not pay when due and nonpayment continues 30 days after written
notice, then all unpaid charges are immediately due and payable, including any
collection costs and reasonable attorneys' fees.
9. PROPRIETARY RIGHTS AND TITLE
9.1 Title and ownership and all the proprietary rights and interests in and to
Products, including but not limited to, patent, copyright, trademark and trade
secrets, are and remain with ARDENT, and do not pass to VAR and VAR acquires no
rights or interests except those expressly granted herein.
10. COPYRIGHT AND TRADE SECRET NOTICES AND LEGENDS
10.1 VAR shall retain on all copies of Products the notice or legend contained
therein. If reproduction is allowed, each such notice shall be reproduced in
human readable form on the media on which Products are reproduced and in machine
readable form embedded on object code such that the notice is displayed on the
terminal when Products are first logged-on.
10.2 VAR agrees to notify ARDENT immediately of any possession or use of Product
that VAR believes is unauthorized and to provide ARDENT all information in its
possession regarding unauthorized possession or use.
11. LICENSE GRANT
11.1 Subject to the terms of the Agreement, ARDENT grants to VAR a nonexclusive,
nontransferable license to use, display, distribute and/or sublicense Products
or portions thereof on each single identified physical computer ("Server"),
and copy only for archival and backup purposes, as more fully set forth herein.
Each Product licensed hereunder may be distributed only one time by VAR to its
dealers and/or End Users. Otherwise each license is nontransferable.
Except as expressly authorized under this Agreement, VAR, its dealers, and
sublicensees are prohibited from copying or distributing Product and
Documentation.
11.2 Database Products. Licenses granted are determined by the number of users
and users are based upon the maximum number of actual connections to the Server,
which are measured by either the number of Devices or Sessions, as applicable.
"Device" means the number of hardware input units which access Product; and,
"Session" means the number of actual connections to the Devices.
User licenses required for Product are determined as follows: Product, except as
described below, must equal Sessions or Devices, as applicable; and, Product,
used in conjunction with multiplexing products, must equal Sessions or Devices,
as applicable, calculated at the multiplexing front-end.
11.3 DataStage Products. Licenses granted are based upon the number of single
designated physical computer systems ("Server"), tier size, and/or server
created projects, and depending upon the component category, datastage products
are licensed for use either on a server basis or for multiple use on an
unlimited number of workstations, all as more fully set forth in ARDENT's then
current policies and programs then in effect.
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11.4 VAR agrees not to:
(i) disseminate or publish Product benchmarks of any kind without advance
written consent of ARDENT;
(ii) modify or alter Products, in source or object code form;
(iii) reverse engineer or disassemble, decompile, decode or translate Product
source code from object code or, from any other information or;
(iv) sublicense (other than provided herein), assign, lease or use Products to
provide processing services to third parties.
Licenses granted herein are subject either (i) to the License Agreement
which accompanies the Product, or (ii) the licensing provisions contained in
Section 11.7 below, as applicable, and (iii) all of the provisions of this
Section.
11.5 Audit. ARDENT may, on reasonable advance notice, at its expense, and during
normal business hours, examine copies of Product in use on VAR's premises and
excerpts of VAR's records relating to Product. If VAR distributes third party
products, ARDENT's suppliers may have certain rights to audit the accuracy of
the number of copies of Product distributed, the number of users licensed, and
compliance with copyright, confidentiality and similar restrictions contained in
the Agreement. Any person performing such audit shall protect VAR's Confidential
Information and abide by VAR's reasonable security procedures. If an audit
discloses the necessity of an increase in license fees, such fees will be paid
within thirty (30) days from the date of invoice. If the total adjustment to
fees is greater than five percent (5%) of the amounts previously accrued for
the affected Product due to under-reporting, then VAR agrees to pay reasonable
expenses associated with the audit.
11.6 Dedicated Use
A. VAR is hereby granted a license right subject to the provisions of the
Agreement to make a reasonable number of copies of Ardent products for Dedicated
Use on its internal computer systems and laptop personal computers at no charge
for products or maintenance during the term of the Agreement. "Dedicated Use"
means that the exclusive use of the Ardent products shall be for internal
business use, demonstration, promotion, and/or development purposes by VAR in
order to promote the remarketing of Products to End Users.
B. VAR may make only one copy of any of the Ardent products on each of its
designated computer systems and/or laptop personal computers.
C. VAR may not copy the Ardent products, in whole or part, for
distribution or sublicensing to its End Users. Upon request by ARDENT, VAR shall
promptly report to ARDENT in writing the number, type, platform, system, and
location of the Ardent products copied for Dedicated Use.
D. VAR may copy such Ardent products at no charge. The purchase price of
such licenses, however, shall not contribute toward fulfillment of any VAR
Annual Minimum Commitment product License Revenue.
E. Upon termination or expiration of the Agreement, VAR shall have no
further right to use the Ardent products and shall immediately discontinue such
use and destroy all originals and copies, including all compilations,
translations, documentation, and partial copies. VAR shall certify in writing
within ten (10) days following the termination or expiration that it has
complied with this paragraph.
11.7 Distribution Rights
A. For Products which are accompanied by a License Agreement, VAR may
distribute Products to End Users, and shall also (i) provide the License
Agreement which accompanies the Product, and (ii) upon request by ARDENT,
provide End User's name, address and delivery location.
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B. VAR may also distribute Products to VAR's authorized dealers provided
the dealers further distribute only to End Users and comply fully with this
subsection.
11.8 Sublicense Rights
A. For certain Products which are not accompanied by a License Agreement,
ARDENT shall deliver to VAR only one copy of the Product. ARDENT grants to VAR a
right to distribute such copy of the Product for use on a single microcomputer
or central processing unit and to sublicense its End Users or dealers who may,
in turn, sublicense their End Users but no further.
B. Each sublicense must be executed by VAR and sublicensee on ARDENT's
standard sublicense agreement forms attached hereto, which may be amended from
time to time or on another form approved by ARDENT, which shall not contain
terms any less restrictive than provided by ARDENT. VAR shall submit fully
signed copies of each sublicense promptly upon request. ARDENT agrees that VARs
current Business Information System sales agreement satisfies the sublicense
requirement.
11.8 If VAR falls to fulfill any of its obligations under this Section 11,
ARDENT may, in addition to any other remedies, notify VAR in writing of such
breach and terminate this Agreement and all of the rights granted hereunder.
12. MAINTENANCE SERVICES AND OTHER SUPPORT
12.1 ARDENT shall make Maintenance Services and other support Services available
to VAR, its dealers or their End Users. Such services shall be provided by
ARDENT at its then current prices and policies in effect at the time of such
election. Any service that is outside the scope of this Agreement may be
provided, as available, in accordance with ARDENT's then current terms,
conditions and charges.
13. PROPRIETARY INFORMATION
13.1 Any information or documentation received by either party in connection
with this Agreement marked "Confidential" or "Proprietary" or the like,
("Proprietary Information"), is not to be disclosed to any person other than
employees and/or contractors of either party who have a need to know and is only
to be used in performance of this Agreement and for no other purpose. The
foregoing does not apply to information (i) rightfully known prior to receipt or
(ii) becomes public knowledge by acts other than those of the parties after
receiving such information (iii) is independently developed by recipient without
a breach of obligations hereunder, (iv) is rightfully received by the receiving
party from a third party without restriction and without breach of this
Agreement, or (v) must be disclosed pursuant to a court order or as required by
any governmental or administrative authority or regulatory agency. Originals and
all copies are to be returned upon expiration or termination of this Agreement.
13.2 Each party agrees that with respect to the Proprietary Information of the
other party during the term of this Agreement and thereafter, such party shall
at all times maintain its confidentiality using the same degree of care that
such party uses to protect is own such information; and shall not use (except in
performance of the Agreement) or disclose to any third party except as may be
required by law or court order. Each party shall cause its contractors to
execute a non-disclosure agreement to maintain the confidentiality of all
Proprietary Information disclosed hereunder.
14. MODIFICATION OR DISCONTINUANCE
14.1 ARDENT reserves the right without prior notice to change, or modify
Products, and to discontinue any Product upon at least 90 days prior written
notice.
15. PATENTS AND COPYRIGHTS
15.1 ARDENT will defend, indemnify and hold VAR harmless from and against any
claim that Product infringes a US patent, copyright or other intellectual
property right provided (i) VAR promptly notifies ARDENT in writing and gives
full information and assistance relating to the claim and (ii) ARDENT retains
sole and exclusive
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control of the defense, including the right to select counsel and settle. ARDENT
shall pay actual damages awarded or settlement made by ARDENT, but shall not be
responsible for any compromise made without its written consent. ARDENT may,
should VAR or its End User be enjoined by a court from continued use of the
Product due to infringement at its sole option (i) provide VAR the right to use
Product or (ii) replace or modify Product so that it is non-infringing, or (iii)
if not commercially practical, accept the return, terminate the license and
issue a prorata refund (using a 5-year amortization period) for the Product.
ARDENT will not indemnify VAR for infringement if VAR has modified Products
without ARDENT's assistance, uses Products in conjunction with other products
not authorized by ARDENT, or if the claim is based upon any release other than
the current releases if the claim could have been avoided by using the current
release of Product, unless Product originally provided or alone would be
infringing.
15.2 VAR will indemnify and hold harmless ARDENT from any loss, cost or expense,
including reasonable attorney's fees, incurred in connection with any claim,
suit or proceeding brought against ARDENT that Product(s) modified, altered or
combined by VAR with any equipment, device or software not supplied by ARDENT
hereunder is likely to or constitutes an infringement because of such
modification, alteration or combination.
16. USE OF ARDENT'S NAME
16.1 VAR may use or refer to ARDENT, its trademarks, and tradenames, service
marks and marketing logos solely to promote Products and services under this
Agreement. Any such use or reference is subject ARDENT's policies and guidelines
then in effect and must be submitted to ARDENT for its prior written consent
with respect to each intended use or reference.
17. PRODUCT WARRANTY
17.1 ARDENT warrants that Product as delivered under this Agreement, which is
unmodified, is Year 2000 performance compliant and thus shall accurately process
date data (including, but not limited to, calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
including leap year calculations. This warranty is extended to VAR under the
condition that any and all other computer products, platforms, equipment, and/or
application software which is processing date data in connection with Product is
Year 2000 performance compliant as defined herein. ARDENT shall extend
commercially reasonable efforts to correct or repair any Product or part thereof
whose non-compliance is discovered and immediately made known to ARDENT after
written notice from VAR stating with particularity the nature and extent of the
noncompliance.
17.2 ARDENT warrants to VAR that (i) Product, as shipped, will substantially
conform to their published technical specifications, and (ii) the magnetic
medium or diskette on which Product is shipped Will be free from defects in
material and workmanship under normal use, during the Warranty Period which is
ninety (90) days from the date of shipment or electronic transfer. Warranty
claims must be submitted by VAR during the Warranty Period. VAR agrees to
provide details and circumstances of any breach of a warranty claim.
17.3 ARDENT does not warrant that the operation of Product will be uninterrupted
or error free and makes no other warranty or representation of any kind other
than provided herein.
18. WARRANTY EXCLUSIONS
18.1 EXCEPT AS SET FORTH IN SECTION 17.1 ABOVE, ARDENT AND ITS SUPPLIERS
DISCLAIM ALL EXPRESS OR IMPLIED WARRANTIES, GUARANTEES AND REPRESENTATIONS
INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE NOT SPECIFIED HEREIN RESPECTING THIS AGREEMENT OR
PRODUCTS, DOCUMENTATION OR SERVICES PROVIDED.
19. LIMITATION OF LIABILITY
19.1 VAR's sole and exclusive remedy and ARDENT's entire liability is within the
Warranty Period to correct or exchange Products which are non-conforming or
inoperable. If ARDENT is unable to correct or exchange, then ARDENT shall pay
VAR actual damages not to exceed charges paid by VAR for affected Products upon
return.
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19.2 ARDENT is not liable for any indirect, special, reliance, punitive, or
consequential damages, whether or not foreseeable, including lost profits,
goodwill, loss or inaccuracy of data or use, business interruption or
procurement of substitute products or services, however caused and whether based
in contract, tort, or any other legal theory, to anyone arising out of or in
connection with this Agreement, its performance, use of Products, or
Documentation or services provided even if notified in advance of the
possibility of such damages. The total liability, if any, of ARDENT and its
suppliers occurring out of or in connection with the distribution, use or
performance of Product or with the Agreement for any reason shall not exceed the
total amount paid by VAR to ARDENT during the previous twelve (12) month period.
19.3 The remedies provided in the Agreement are VAR's sole and exclusive
remedies and ARDENT's entire liability in contract, tort or otherwise. The
foregoing limitations shall not apply to amounts ARDENT may be obligated to pay
under Section 15.1.
20. TERMINATION
20.1 If either VAR or ARDENT breaches any provision of this Agreement and fails
to cure the breach within thirty (30) days of written notice of the alleged
breach, the non-breaching party may elect to terminate this Agreement in writing
and exercise any other remedy existing at law or in equity. Notwithstanding any
allegation of Breach or right to Terminate, however, the parties hereto mutually
agree that in the event of a dispute or alleged breach, and prior to any such
termination taking effect, the parties will implement and in good faith
participate in the Dispute Resolution procedure described in Section 22 below.
The Parties hereto specifically agree that before the rights granted to VAR
hereunder, including the license, are terminated for any alleged breach by VAR,
the parties will fully, completely and in good faith participate in the dispute
resolution arrangement outlined in Section 22 below, including up to and
receiving a ruling from an arbitrator and/or court of competent jurisdiction
prior to effective termination. Additionally, either party hereto may terminate
this Agreement if the other party becomes insolvent, bankrupt or, if any
proceeding is commenced by or against that party under any law to relieve it as
a debtor which is not dismissed within forty-five (45) days from the filing date
thereof.
20.2 In the event of termination of this Agreement, VAR will have no further
right to use Product(s), ARDENT's trademarks and trade names, and immediately
upon termination discontinue such use and return all originals and copies of
Product(s), including all compilations, translations, Documentation, and partial
copies, whether or not modified or merged into other software or documentation.
VAR shall certify in writing within ten (10) days following termination that
VAR has complied with this paragraph.
21. US EXPORT RESTRICTIONS
21.1 VAR agrees that ARDENT is subject to regulation by agencies of the US
Government, which prohibit export or diversion of certain products and
technology to certain countries. VAR shall not export directly or indirectly any
technical data, information or items acquired under this Agreement to any
country for which US Government (or any agency thereof) prohibits export or
requires an export license or approval without first obtaining same. VAR shall
incorporate in all export shipping documents the applicable destination control
statements. VAR will defend, hold harmless and indemnify ARDENT from and against
any costs and damages resulting to ARDENT from a breach under this Section.
22. DISPUTE RESOLUTION
22.1 Any and all existing and future claims, demands or disputes arising out of
or relating to this Agreement, its breach, or in any way relating to the
relationship between and/or among ARDENT, VAR and its dealers or End Users, even
though some or all of such claims, demands or disputes arise ancillary to or
independently of this Agreement, whether in contract, tort or otherwise, at law
or in equity, whether under state or federal law, shall be resolved and
determined exclusively under the provisions of this Section 22. The prevailing
party in any arbitration or adjudication of rights under this agreement shall be
entitled to recover its reasonable attorneys fees and costs incurred in such
exercise.
22.2 If there is a controversy between VAR and ARDENT relating to this
Agreement, the parties agree to use all reasonable efforts to resolve such
controversy amicably at senior management levels of both parties.
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22.3 If the parties fail to reach a mutually acceptable resolution of the
controversy within sixty (60) days of the first formal notice of the
controversy, then either party may request settlement by arbitration.
Arbitration will take place in Westboro, Massachusetts, in accordance with the
Center for Public Resources Rules for Non-Administered Arbitration of Business
disputes (the "CPR Rules"), by a single arbitrator acceptable to both parties
(acceptance not to be unreasonably withheld or delayed) knowledgeable in
computer software disputes. If the parties fail to agree on the appointment of
an arbitrator then an arbitrator shall be appointed under CPR rule 6. The
language of the arbitration shall be in English. The arbitrator may make no
finding, ruling or award that does not conform to the terms of this Agreement,
and may award no punitive damages. The parties hereby agree to submit to such
arbitration and to the enforcement of any award resulting therefrom by any court
of competent jurisdiction. Nothing contained in this Section shall prohibit
either party from seeking equitable relief without first resorting to
arbitration under circumstances in which that party believes that its interests
under this Agreement and/or its property will be compromised, and the contrary
notwithstanding in this Section, the arbitrator shall make no finding, ruling or
award respecting any parties' intellectual or other property rights, title and
interests. The arbitrator shall apply Massachusetts law without regard to its
conflict of laws, or federal law, as applicable.
23. GENERAL
23.1 Any written notice or communication permitted or required is to be sent
first class mail to the locations specified herein. Any amendment is to be in
writing and signed by both parties. If any provision is deemed unlawful, void or
unenforceable for any reason, that provision shall be enforced to the extent
permissible to effect the intent of the parties, and the remainder of the
Agreement shall remain in effect.
23.2 Neither party is liable for any failure or delay in performance due to any
cause beyond its control and has no obligation arising out of the abnormal use
of any items, site conditions nonconforming to specifications, or any cause
external to any item, including but not limited to accident, acts of God, fire
or water damage, criminal conduct, neglect, acts of war, riots, strikes,
lightening, electrical disturbances or other similar causes. Such events,
occurrences or causes do not include inability to meet financial obligations.
The time of performance hereunder is extended by a period of time lost because
of such delay.
23.3 No delay or failure to exercise any right or remedy constitutes a waiver.
No remedy is intended to be exclusive and every remedy will be cumulative and is
in addition to any other remedy. Except for an action for non-payment of taxes,
no action arising out of this Agreement may be instituted more than 1 year from
the date the action first arose, or in the case of non-payment more than 2 years
from the date of last payment or promise to pay.
23.4 Sections 5.2, 11, 13, 15, 16, 18, 19, and 21 survive the Agreement.
23.5 VAR may assign or transfer this Agreement in whole or part only with the
prior written consent of ARDENT which consent shall not be unreasonably withheld
or delayed. ARDENT may assign or transfer this Agreement in whole or part and
all or part of the payments to the extent that ARDENT's obligations to VAR are
not affected upon written notification to VAR.
23.6 This Agreement shall be governed and construed by Massachusetts law without
regard to its conflicts of law statute, is the complete and exclusive statement
of the agreement between the parties and supersedes all prior and
contemporaneous oral and written proposals and communications respecting the
subject matter hereof. The provisions of this Agreement are confidential in
nature and neither VAR nor ARDENT shall divulge any of its provisions to any
third parties except as may be required by law.
24. OTHER DOCUMENTS
The following Other Documents attached hereto are incorporated and made a part
of the Agreement:
24.1 Database Sublicense Agreement Form
24.2 DataStage Sublicense Agreement Form
24.3 Vantage Service Provider Schedule
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BOTH PARTIES ACKNOWLEDGE READING THIS AGREEMENT INCLUDING ITS OTHER DOCUMENTS,
SIGN BY THEIR AUTHORIZED REPRESENTATIVES AND AGREE TO BE BOUND THEREBY.
VAR: ARDENT:
BY: /s/ RICK RUSSO BY:
------------------------ ---------------------------
PRINT NAME: RICK RUSSO PRINT NAME:
---------------- -------------------
TITLE: VP FINANCE TITLE:
---------------------- -------------------------
DATE 3-17-99 DATE:
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ARDENT
Software, Inc. (TM)
VANTAGE SERVICE PROVIDER SCHEDULE
VAR: Platinum Software
VAR hereby elects to be a VANTAGE SERVICE PROVIDER and agrees to the terms and
conditions herein.
Definitions
"VANTAGE SERVICE PROVIDER" is the service relationship between VAR and
ARDENT wherein VAR elects to provide FIRST LEVEL MAINTENANCE SUPPORT.
"TOTAL MAINTENANCE CHARGE" is the sum of the annual MAINTENANCE CHARGES
for all licenses sold by VAR under this VAR Agreement, and any prior
Agreement(s), between VAR and ARDENT.
"VAR PERCENTAGE" is that percentage of all licenses of Product(s) sold by
VAR under this VAR Agreement, and any prior Agreement(s), between VAR and
ARDENT deemed to be subject to TOTAL MAINTENANCE CHARGES, which VAR
retains for providing FIRST LEVEL MAINTENANCE SUPPORT.
"ARDENT PERCENTAGE" is the share of TOTAL MAINTENANCE CHARGE that is
payable to ARDENT by VAR for ARDENT providing SECOND LEVEL MAINTENANCE
SUPPORT.
"FIRST LEVEL MAINTENANCE SUPPORT" is the level of maintenance support
which VAR provides directly to its End Users and which is described in
ARDENT's then current Valued Partner Handbook.
"SECOND LEVEL MAINTENANCE SUPPORT" is the level of maintenance support
which ARDENT provides directly to VAR in support of VAR's FIRST LEVEL
MAINTENANCE SUPPORT, and which is described in ARDENT's then current
Valued Partner Handbook.
1. Duties and Obligations
1.1 VAR provides FIRST LEVEL MAINTENANCE SUPPORT for Product(s)
sublicensed to its End Users. ARDENT provides SECOND LEVEL
MAINTENANCE SUPPORT.
1.2 VAR may request and ARDENT shall provide, service and/or maintenance
support which may require greater expertise and knowledge of
Product(s) than VAR is trained or certified to provide. Such
additional service shall be provided by ARDENT at its then current
prices, terms and conditions.
1.3. VAR shall request SECOND LEVEL MAINTENANCE SUPPORT only after all
reasonable efforts to resolve problems in a timely manner have
failed.
1.4 FIRST LEVEL MAINTENANCE SUPPORT. VAR shall provide telephone
assistance to its End Users for the Products (Help Desk); institute
a call logging and tracking system to verify support coverage and
track the type of call; institute escalation and priority problem
resolution procedures; and, provide
Vantage Service Provider Schedule 1 of 3
<PAGE> 11
problem detection, diagnosis and resolution, including (i)
collection and verification of all problem details prior to
escalating to ARDENT, (ii) problem isolation to the software and
Product involved, (iii) reproduction of a product defect within a
reasonable test case, (iv) provide resolution of a known and fixed
defect, and (v) packaging and reporting of a product defect in a
clear and concise manner.
VAR shall provide FIRST LEVEL MAINTENANCE SUPPORT and ARDENT shall
provide SECOND LEVEL MAINTENANCE SUPPORT for the products as
outlined in Schedule A.
1.5 SECOND LEVEL MAINTENANCE SUPPORT. ARDENT shall provide toll-free
technical assistance via telephone local time in accordance with the
Service Option elected for the installation site, and revisions,
updates, and enhancements for Products, and Documentation and
updates for the Products specified in the Schedule(s). Maintenance
Service shall include in addition problem determination and
resolution, problem call handling and tracking, temporary fixes
and/or workarounds, status reports on Product defects and
enhancements, Technical Tips and Technical Bulletins and any other
support features which may be provided in accordance with ARDENT's
policies then in effect for the Service Option selected.
VAR agrees to provide ARDENT with remote access to its system in
order to facilitate problem determination and resolution. Remote
access shall include, but not be limited to, modem access or access
via Internet connection.
2. Qualifications
2.1 VAR shall meet and maintain the following criteria:
- Comply with the provisions as described in the then current Valued
Partner Handbook.
- VAR support personnel shall be certified for each Product(s) by
ARDENT during the term of the Agreement.
- VAR must be in full compliance with the terms and conditions of the
Agreement.
- VAR may not sell maintenance support for the Products to other than
End Users to whom VAR has sublicensed the Products.
3. Total Maintenance Charge Distribution
3.1 As a VANTAGE SERVICE PROVIDER, VAR shall be entitled to receive a
discount ("VAR PERCENTAGE") as outlined in Attachment A for
providing FIRST LEVEL MAINTENANCE SUPPORT, and ARDENT shall receive
the remainder of the TOTAL MAINTENANCE CHARGE ("ARDENT PERCENTAGE")
as outlined in Attachment A for providing SECOND LEVEL MAINTENANCE
SUPPORT.
3.2 If VAR fails to meet any of the above requirements, ARDENT may
provide written notice, effective upon receipt that VAR shall be
treated under the Vantage Reseller Program.
3.3 Upon each anniversary, VAR may elect to change to a Vantage Reseller
status. Such election requires 90 days prior written notice. If VAR
elects to change to a Vantage Reseller status, payments of TOTAL
MAINTENANCE CHARGES prior to the effective date of change shall be
in effect prior to the change.
4. Payments
4.1 Upon the issuance of any license for Products under the Agreement,
VAR shall be invoiced the result of the following calculation:
Annual Charge = (VAR PERCENTAGE x TOTAL MAINTENANCE CHARGE).
The Annual Charge shall be invoiced upon the Effective Date for each
license issued by ARDENT.
Vantage Service Provider Schedule 2 of 3
<PAGE> 12
4.2 All licenses as well as any additional users to an existing license
that VAR orders under the Agreement will automatically be invoiced a
MAINTENANCE CHARGE which shall be included in the Annual Charge
(co-terminous with the MAINTENANCE CHARGE for the existing license).
4.3 Upon at least ninety (90) days written notice prior to the
commencement of any annual term, VAR may cancel FIRST LEVEL
MAINTENANCE SUPPORT for any system that End Users have ceased to
elect SECOND LEVEL MAINTENANCE SUPPORT for the Product from VAR due
to (i) Product discontinuance, (ii) written notice of service
cancellation or termination, (iii) bankruptcy, insolvency, (iv)
non-election of maintenance service, or (v) substitution of
competitive product(s). Notification shall state in particular End
User account name, Product serial number, basis for non-maintenance,
and any other relevant information requested by ARDENT to verify the
circumstance.
5. Vantage Reseller
As a VANTAGE RESELLER, for each Maintenance Agreement which VAR procures
for ARDENT from its sublicensees who are End Users for qualifying
Product(s), VAR shall receive a fifteen percent (15%) discount from the
MAINTENANCE CHARGE.
The following Products quality: Cognos products, Unidata Journaling, UV
Net, and Unidata RFS.
VAR's sub-licensee must enter into and sign a Maintenance Agreement with
ARDENT and the Maintenance Agreement must be delivered by VAR to ARDENT
within thirty (30) days of the date of ARDENT's issuance of the license.
ARDENT shall perform FIRST LEVEL MAINTENANCE SUPPORT under the Agreement.
VAR shall sell, administer and obtain the signature of its End User, and
invoice its End User for the MAINTENANCE CHARGE. ARDENT shall invoice and
VAR shall pay to ARDENT the MAINTENANCE CHARGE less the fifteen percent
(15%) discount.
6. All other terms and conditions of the Agreement shall remain in full force
and effect.
VAR: Ardent Software, Inc.:
RICK RUSSO
- -------------------------------------- ------------------------------
Name (print) Name (print)
/s/ RICK RUSSO
- -------------------------------------- ------------------------------
Signature Signature
VP FINANCE
- -------------------------------------- ------------------------------
Title Title
3-17-99
- -------------------------------------- ------------------------------
Date Date
Vantage Service Provider Schedule 3 of 3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 17,432
<SECURITIES> 29,872
<RECEIVABLES> 89,641
<ALLOWANCES> 10,578
<INVENTORY> 1,213
<CURRENT-ASSETS> 139,698
<PP&E> 37,984
<DEPRECIATION> 24,409
<TOTAL-ASSETS> 199,735
<CURRENT-LIABILITIES> 76,654
<BONDS> 885
0
7,501
<COMMON> 40
<OTHER-SE> 114,655
<TOTAL-LIABILITY-AND-EQUITY> 199,735
<SALES> 27,403
<TOTAL-REVENUES> 66,105
<CGS> 5,282
<TOTAL-COSTS> 28,004
<OTHER-EXPENSES> 36,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 2,441
<INCOME-TAX> 366
<INCOME-CONTINUING> 2,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,075
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
