<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1996
REGISTRATION NO. 333-14027
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SEEC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 7372 55-0686906
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
5001 BAUM BOULEVARD
PITTSBURGH, PENNSYLVANIA 15213
(412) 682-4991
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RAVINDRA KOKA
PRESIDENT
SEEC, INC.
5001 BAUM BOULEVARD
PITTSBURGH, PENNSYLVANIA 15213
(412) 682-4991
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copies to:
<TABLE>
<S> <C>
DANIEL L. WESSELS, ESQ. JEFFREY P. SOMERS, ESQ.
COHEN & GRIGSBY, P.C. MORSE, BARNES-BROWN & PENDLETON, P.C.
2900 CNG TOWER RESERVOIR PLACE
625 LIBERTY AVENUE 1601 TRAPELO ROAD
PITTSBURGH, PENNSYLVANIA 15222 WALTHAM, MASSACHUSETTS 02154
(412) 394-4900 (617) 622-5930
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1996
PROSPECTUS
1,000,000 SHARES
[SEEC LOGO]
COMMON STOCK
The 1,000,000 shares of common stock, par value $.01 per share (the "Common
Stock"), offered hereby are being issued and sold by SEEC, Inc. (the "Company"
or "SEEC"). Prior to the offering contemplated hereby (the "Offering"), there
has been no public market for the Common Stock of SEEC. It is currently
estimated that the initial public offering price will be in the range of $9.00
to $11.00 per share. For a discussion of the factors to be considered in
determining the initial public offering price for the Common Stock, see
"Underwriting." SEEC has applied to list the Common Stock for quotation on the
Nasdaq Small-Cap Market under the symbol "SEEC."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share.................................... $ $ $
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Total(3)..................................... $ $ $
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</TABLE>
(1) Excludes a non-accountable expense allowance equal to three percent (3%) of
the total proceeds from the sale of the common stock ($ per share)
payable to H.C. Wainwright & Co., Inc., representative of the Underwriters
(the "Representative"), and the value of warrants to be issued to the
Representative to purchase the number of shares of Common Stock equal to ten
percent (10%) of the number of shares being offered hereby at an exercise
price of 120% of the public offering price (the "Representative's Warrant").
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses of the Offering estimated to be $675,000,
including the Representative's non-accountable expense allowance.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
150,000 additional shares of its Common Stock at the Price to Public, less
the Underwriting Discount shown above, solely to cover over-allotments, if
any. If the Underwriters exercise such option in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
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The shares of Common Stock are offered severally by the Underwriters named
herein, when, as and if received and accepted by them, subject to their right to
reject orders in whole or in part and subject to other conditions. It is
expected that delivery of the certificates for the shares of Common Stock will
be made against payment therefor at the offices of the Representative in
Boston, Massachusetts on or about , 1996.
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H.C. WAINWRIGHT & CO., INC.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
SEEC PROVIDES PC-BASED SOFTWARE ANALYSIS TOOLS
TO ENABLE CUSTOMERS TO MAINTAIN AND REDEVELOP LEGACY
COBOL APPLICATIONS AND RELATED DATABASES.
A diagram describing SEEC's products and illustrating their use on a PC/LAN to
maintain and redevelop COBOL applications which are downloaded from a mainframe
to a LAN Server.
SEEC, COBOL ANALYST(TM), COBOL ANALYST 2000(TM), SMART CHANGE FACTORY(TM),
COBOL SLICER(TM), AND DATE ANALYZER(TM) ARE TRADEMARKS, SERVICE MARKS OR
REGISTERED TRADEMARKS OF SEEC. THIS PROSPECTUS ALSO INCLUDES TRADEMARKS, TRADE
NAMES AND REFERENCES TO INTELLECTUAL PROPERTY OWNED BY OTHER COMPANIES.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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2
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Prospective investors should consider carefully the information
discussed under "Risk Factors." Except as otherwise indicated, all information
in this Prospectus assumes that (i) prior to the effectiveness of the
Registration Statement of which this Prospectus is a part the Company's charter
will be amended to increase its authorized Common Stock to 20,000,000 shares and
to authorize 10,000,000 shares of preferred stock and the Company will effect a
1-for-3.3183 reverse split of the Company's Common Stock and (ii) the
Underwriters' over-allotment option is not exercised. See "Description of
Capital Stock" and "Underwriting." References herein to fiscal years are
references to the fiscal year of SEEC ended March 31 of the year specified
(e.g., "fiscal 1996" refers to the fiscal year ended March 31, 1996).
THE COMPANY
SEEC provides a suite of software products and business solutions for
maintaining and redeveloping legacy COBOL software applications and related
databases, including solutions for year 2000 compliance. SEEC also provides
solutions for the migration of existing COBOL applications from mainframe to
client/ server environments. The Company's software products and solutions are
designed to minimize the time and cost of maintenance and redevelopment by
automating various functions and utilizing well-defined and repeatable
processes.
COBOL applications require continual maintenance and redevelopment in order
to satisfy constantly changing information requirements and to incorporate
advances in technology. The installed base of software applications written in
the COBOL programming language is enormous. Industry sources estimate that more
than 150 billion lines of COBOL code are in use worldwide. Industry sources
indicate that a substantial portion of COBOL application resources are dedicated
to maintenance and redevelopment. An immediate maintenance requirement is caused
by the inability of most legacy applications to process accurately calculations
and logic involving the year 2000 and beyond. Date dependent programs are
ubiquitous in many existing COBOL applications. SEEC anticipates that demand for
year 2000 compliance products and solutions, such as those provided by SEEC,
will increase rapidly over the next few years. Industry sources estimate that
total costs to industry and government to address year 2000 compliance could
total $300 billion to $600 billion worldwide.
The Company's software products, which are based on the Company's core
COBOL analysis technology, automate many of the procedures required for COBOL
application maintenance and redevelopment, including year 2000 compliance. The
Company's products analyze and modify COBOL source code, which is downloaded
from a mainframe to a PC/LAN Microsoft Windows environment where it is stored in
application dictionaries for performance of maintenance and redevelopment
functions. SEEC has also developed software tools that enable customers to
extract business rules and functions from legacy COBOL applications for reuse in
object-oriented client/server environments.
SEEC provides year 2000 solutions through its Smart Change Factory, a
repeatable process that combines the Company's proprietary software tools and
third-party software tools with well-defined procedures to efficiently utilize
customer information resources. The Smart Change Factory provides an end-to-end
solution, including impact assessment, planning, source code correction and
testing. The Company's products and solutions may be integrated with the
customer's existing organization, allowing the customer to retain control of
critical software applications. The Company's products and solutions may also be
used for complete application outsourcing by the customer to SEEC or to licensed
third-party solution providers.
3
<PAGE> 5
The Company's primary objective is to become a leading provider of software
products and business solutions for the maintenance and redevelopment of legacy
software applications and related databases. The key elements of the Company's
strategy to achieve its objective are (i) pursuing a broad-based distribution
strategy, (ii) efficiently utilizing customer information resources and
maximizing customer options and flexibility with the Smart Change Factory
approach, and (iii) providing PC/LAN-based software tools with a graphical user
interface that are easier to use and learn than mainframe-based tools and
conserve valuable mainframe resources. SEEC anticipates that the knowledge and
close working relationship developed with customers in providing year 2000
solutions will provide additional opportunities for SEEC to provide ongoing
solutions for COBOL maintenance and redevelopment and for migration from
mainframe to client/server environments.
SEEC sells and licenses its products and solutions predominantly to Fortune
1000 or similarly-sized companies, government organizations, and third-party
service providers worldwide. Representative customers for the Company's year
2000 solutions include Wheeling Pittsburgh Corporation, Mack Trucks, Rockwell
International Corporation, Northern Illinois Gas, Foremost Insurance Company
(through IBM's Integrated Systems and Solutions Corp.), and Aluminum Company of
America (ALCOA). Representative customers for which SEEC has provided general
COBOL maintenance and redevelopment products and solutions include Sallie Mae,
American Savings Bank, Mellon Bank, N.A., Securities Industry Automation
Corporation, Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corporation, Deere & Co., Illinois Department of Employment Security and
Columbia Gas. SEEC has licensed its software products to several service
providers, including Complete Business Solutions, Inc., IBM's Integrated Systems
and Solutions Corp. and Coopers & Lybrand.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered by SEEC........ 1,000,000 shares
Common Stock to be outstanding after the
Offering................................ 2,868,535 shares (1)
Use of proceeds........................... To expand sales and marketing, hire new
personnel, increase capital expenditures and for
working capital and other general corporate
purposes.
Proposed Nasdaq Small-Cap Market Symbol... SEEC
</TABLE>
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(1) Excludes (i) 57,096 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the SEEC, Inc. 1994 Stock Option
Plan (the "Stock Option Plan") at a weighted average exercise price of $2.66
per share, (ii) 111,494 shares of Common Stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $0.03 per
share, (iii) 100,000 shares (115,000 shares if the Underwriters'
over-allotment option is exercised) of Common Stock issuable upon exercise
of the Representative's Warrant at an exercise price equal to 120% of the
public offering price, (iv) 6,026 shares of Common Stock issuable upon
exercise of options granted to non-employee directors, and (v) 91,323 shares
of Common Stock reserved for the grant of additional options under the Stock
Option Plan. See "Management--Stock Option Plan," "Management--Compensation
of Directors" and "Description of Capital Stock--Warrants and Conversion
Rights."
4
<PAGE> 6
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
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1992 1993 1994 1995 1996 1995 1996
----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................... $ 363 $ 456 $ 948 $ 961 $1,265 $ 531 $1,206
Costs and expenses............... 544 831 1,054 1,159 1,363 624 1,057
Income (loss) from operations.... (181) (375) (106) (198) (98) (93) 149
Other expense, net............... (13) (41) (49) (58) (55) (25) (24)
Net income (loss)................ (194) (416) (155) (256) (153) (118) 125
Net income (loss) per common and
common share equivalent....... $(.12) $(.23) $ (.09) $ (.14) $ (.09) $ (.07) $ .06
Weighted average number of common
and common equivalent shares
outstanding................... 1,599 1,780 1,780 1,780 1,784 1,782 1,973
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
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AS
ACTUAL ADJUSTED(1)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................... $ 822 $ 9,447
Working capital..................................................... 549 9,174
Total assets........................................................ 1,480 9,972
Total long-term obligations......................................... 213 213
Total shareholders' equity.......................................... 379 9,004
</TABLE>
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(1) Adjusted to give effect to the sale of 1,000,000 shares of Common Stock
offered by SEEC hereby at an assumed public offering price of $10.00 per
share, after deducting the estimated underwriting discount and estimated
offering expenses. See "Use of Proceeds."
5
<PAGE> 7
RISK FACTORS
In evaluating the Company and the Offering, potential investors should
carefully consider the following factors, among other things, before purchasing
the Common Stock offered by this Prospectus.
HISTORY OF NET OPERATING LOSSES; ACCUMULATED DEFICIT; ANTICIPATED LOSSES
The Company has incurred a net loss in each of the last three fiscal years,
and as of March 31, 1996 and September 30, 1996, the Company had an accumulated
deficit of approximately $1.3 million and $1.2 million, respectively. While the
Company had net income for the first six months of fiscal 1997, the Company
anticipates that it will incur a net loss for the current fiscal year as the
Company substantially increases expenditures for sales and marketing and hiring
new personnel. There can be no assurance that the Company will be profitable in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Financial Statements.
POSSIBLE FLUCTUATION OF OPERATING RESULTS; FUTURE OPERATING RESULTS UNCERTAIN
The Company has experienced fluctuations in revenue and operating results.
These fluctuations are due, in part, to the budgeting and purchasing practices
of the Company's customers, which affect the volume and timing of product orders
and solution engagements received by the Company. The Company's solutions
business may be characterized by significant customer concentration and
relatively large projects. The timing of product shipments or completion of
customer solution engagements, especially at or near the end of any accounting
period, could cause variations in operating results from period to period and
could result in quarterly losses. In addition, variations in the Company's
revenue and operating results may occur as a result of a number of other
factors, such as employee hiring and utilization rates and the number of working
days in a quarter, demand for the Company's products and solutions, and
competitive conditions in the industry. Many of these factors are not within the
Company's control. Fluctuations in operating results may also adversely affect
and cause volatility in the market price of the Company's Common Stock. The
Company believes that quarter-to-quarter comparisons of its financial results
are not necessarily meaningful and should not be relied upon as an indication of
future performance. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Financial Statements.
INTENSE COMPETITION
The market for the Company's software products and solutions, including its
solutions for the year 2000 problem and client/server migration, is intensely
competitive and is characterized by rapid change in technology and user needs
and the frequent introduction of new products. The Company's principal
competitors in the software tools market include VIASOFT, Inc., Micro-Focus
Group Public Limited Company and Computer Associates International, Inc. The
Company also competes with large service providers such as IBM's Integrated
Systems and Solutions Corp., Cap Gemini America, Computer Horizons Corp. and the
Big Six accounting firms. Certain of these service providers have developed or
acquired proprietary software tools. Many of the Company's competitors are more
established, benefit from greater name recognition and have substantially
greater financial, technical and marketing resources than the Company. The
Company believes that the principal factors affecting competition in its markets
include product performance and reliability, product functionality, ability to
respond to changing customer needs, ease of use, training, quality of support
and price. Other than technical expertise and, with respect to the year 2000
compliance market, the limited time available to enter the market, there are no
significant proprietary or other barriers to entry that could keep potential
competitors from developing or acquiring similar tools or providing competing
solutions in the Company's market.
The Company's ability to compete successfully in the sale of products and
solutions will depend in large part upon its ability to attract new customers,
sell products and services, deliver and support product enhancements to its
existing and new customers and respond effectively to continuing technological
change by developing new products and solutions. There can be no assurance that
the Company will be able to compete successfully in the future, or that future
competition for product sales and solutions will not have a material
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adverse effect on the business, results of operations and financial condition of
the Company. See "Business-- Competition."
CURRENT AND FUTURE DEMAND FOR YEAR 2000 SOLUTIONS
The Company is currently focusing significantly on the marketing and sale
of products and solutions for year 2000 assessment, planning, correction and
testing. Although the Company believes that the market for solutions to the year
2000 problem will grow significantly as the year 2000 approaches, there can be
no assurance that this market will develop to the extent anticipated by the
Company. In addition, organizations affected by the year 2000 problem may not be
willing or able to allocate the financial or other resources required to address
the problem in a timely manner. Many organizations may attempt to resolve the
problem internally rather than purchase tools and solutions from outside firms
such as the Company. Due to these factors, development of the market for
solutions to the year 2000 problem is uncertain and unpredictable. If the market
fails to increase, or increases more slowly than anticipated, the Company's
business, operating results and financial condition could be materially and
adversely affected. Furthermore, the demand for year 2000 products and solutions
is likely to diminish rapidly after the year 2000. As a result, the Company
could experience a significant decline in revenues unless it is able to offset
declines in year 2000 related revenues with increased sales of products and
solutions for general legacy system maintenance and redevelopment or for
migration of COBOL applications from mainframe systems to client/server systems.
There can be no assurance that the Company will be able to replace revenues
related to year 2000 products and solutions after the year 2000.
MARKET ACCEPTANCE OF SEEC'S PRODUCTS AND SOLUTIONS
Failure of the Company to achieve market acceptance of its products and
solutions will have a material adverse effect on the Company's business, results
of operations and financial condition. Future revenues from sales of products
and solutions are dependent on the use of PCs by large organizations as a
solution platform for COBOL maintenance and redevelopment. Currently most
maintenance and redevelopment software tools are designed for use on mainframe
platforms. The Company believes that PC-based tools and solutions have certain
advantages over mainframe-based solutions but are relatively new and not widely
used. A large number of decision-makers who might evaluate the Company's
products and solutions are experienced in mainframe operating environments and
may not readily accept PC-based products and solutions. Additional marketing and
educational activities will be necessary to convince the COBOL maintenance and
redevelopment market of the advantages of PC-based solutions. Failure to achieve
wider market acceptance of PC-based solutions could have a material adverse
effect on the Company's business, results of operations and financial condition.
The Company's year 2000 products and solutions provide automated solutions
for many year 2000 assessment, planning, correction and testing tasks and
procedures. There can be no assurance that potential customers will perceive the
benefits of automation of various year 2000 compliance tasks, and therefore they
may determine to perform manually all aspects of the year 2000 compliance
process.
The Company has developed products for the migration of existing COBOL
software applications from mainframe to client/server architectures. The Company
has not attempted to market and sell such products to date and there can be no
assurance that they will achieve market acceptance. The Company anticipates that
migration from mainframe systems to client/server systems will be gradual,
particularly for customized applications. Many organizations perceive a high
degree of risk and expense in migrating entire applications from a mainframe to
a client/server. As a result, the market for client/server migration tools and
solutions may not develop to the extent or in the time periods anticipated by
the Company.
DEPENDENCE ON MAJOR CUSTOMERS AND LARGE CONTRACTS
Historically, a large portion of the Company's annual revenues have been
derived from a relatively small number of customers. During fiscal 1994, 1995
and 1996, and the six months ended September 30, 1996, revenues from VIASOFT,
Inc. ("VIASOFT"), including amortization of an advance royalty payment, were
$86,000, $279,000, $314,000 and $147,000, which accounted for approximately 9%,
29%, 25% and 12%,
7
<PAGE> 9
respectively, of the Company's revenues in each of these periods. The Company
does not expect that it will continue to receive revenues from VIASOFT after
fiscal 1997. During fiscal 1994, 1995 and 1996, and the six months ended
September 30, 1996, revenues from Complete Business Solutions, Inc. were
$181,000, $319,000, $330,000 and $256,000, which accounted for 19%, 33%, 26% and
21%, respectively, of the Company's total revenues in each of these periods. If
the Company is unable to broaden its customer base and reduce its dependence on
large orders from relatively few customers, the loss of, or significant
reduction in orders from, any of such customers could materially and adversely
affect the Company's business, operating results and financial condition. See
"Business--Customers" and Notes 3 and 6 to Financial Statements.
DEPENDENCE ON KEY PERSONNEL
The Company's success will depend in part upon its ability to hire and
retain key senior management and skilled technical, professional services and
marketing personnel. Although the Company believes it will be able to hire
qualified personnel for such purposes, an inability to do so could materially
adversely affect the Company's ability to market, sell and enhance its products
and solutions. The market for qualified personnel has historically been, and the
Company expects that it will continue to be, intensely competitive. The demand
for experienced COBOL project managers and programmers is expected to continue
to increase significantly over the next several years, particularly as a result
of the year 2000 problem. The Company has recently hired several senior
management personnel, including a Chief Financial Officer, and the Company's
success will depend in part on the successful assimilation and performance of
these individuals. The loss of one or more of its key employees or the Company's
inability to hire and retain other qualified employees could have a material
adverse effect on the Company's business. The Company has employment agreements
with certain key employees, but does not maintain key man life insurance on any
of these persons. See "Management-- Employment Agreements."
ABILITY TO MANAGE CHANGE AND RAPID GROWTH
The Company expects its business and the industry in which it competes to
continue to undergo rapid change. The Company plans to expand significantly
distribution and marketing capabilities, solutions capabilities, the number of
Smart Change Factories and management and personnel infrastructure. In light of
the business opportunities presented by the year 2000 problem, the Company's
business strategy contemplates rapid growth. If the Company experiences rapid
growth, its ability to be profitable may depend, among other things, on its
ability to manage a large number of personnel, a number of Smart Change
Factories and other maintenance and redevelopment projects concurrently on a
worldwide basis. The failure of the Company's management to respond effectively
to and manage changing technological and business conditions could have a
material adverse impact on the Company's business, results of operations and
financial condition. See "Business."
ABILITY TO ADDRESS TECHNOLOGICAL CHANGES AND CUSTOMER REQUIREMENTS
The Company's future success will depend significantly on its ability to
enhance its current products and develop or acquire new products to satisfy
evolving industry standards, technological developments and changing customer
needs. There can be no assurance that the Company will be successful in
developing or acquiring product enhancements or new products, that it can
introduce such products or enhancements on a timely basis, or that any such
products or enhancements will be successful in the marketplace. The Company's
delay or failure to develop or acquire technological improvements or to adapt
its products to technological change would have a material adverse effect on its
business, results of operations and financial condition. There can also be no
assurance that new technologies will not be developed by one or more third
parties that render the Company's tools and solutions for COBOL maintenance and
redevelopment or client/server migration technologically obsolete.
POSSIBLE VOLATILITY OF STOCK PRICE
The Company believes factors such as general conditions in the computer
hardware and software industries and announcements of new products by the
Company or by its competitors may cause the market
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<PAGE> 10
price of the Common Stock to fluctuate, perhaps substantially. In addition, in
recent years the stock market in general, and the shares of technology companies
in particular, have experienced extreme price fluctuations. These broad market
and industry fluctuations, over which the Company has no control, may adversely
affect the market price of the Common Stock.
IMPORTANCE OF PROPRIETARY RIGHTS
The Company regards its software products and solutions as proprietary and
attempts to protect them under a combination of copyright, trade secret and
trademark laws as well as by contractual restrictions on employees and third
parties. Despite these precautions, it may be possible for unauthorized parties
to copy the Company's software or to reverse engineer or otherwise obtain and
use information the Company regards as proprietary. The Company has no patents,
and existing trade secret and copyright laws provide only limited protection.
Certain provisions of the license and distribution agreements generally used by
the Company, including provisions protecting against unauthorized use, copying,
transfer and disclosure, may be unenforceable under the laws of certain
jurisdictions, and the Company is required to negotiate limits on these
provisions from time to time. In addition, the laws of some foreign countries do
not protect the Company's proprietary rights to the same extent as do the laws
of the United States. There can be no assurance that the steps taken by the
Company will be adequate to deter misappropriation of proprietary information or
that the Company will be able to detect unauthorized use and take appropriate
steps to enforce its intellectual property rights.
Significant and protracted litigation may be necessary to protect the
Company's intellectual property rights, to determine the scope of the
proprietary rights of others or to defend against claims for infringement.
Although the Company is not currently involved in any litigation with respect to
intellectual property rights, infringement claims against software developers
are likely to increase as the number of functionally similar products in the
market increases. There can be no assurance that third-party claims, with or
without merit, alleging infringement will not be asserted against the Company in
the future. Such assertions can be time consuming and expensive to defend and
could require the Company to cease the manufacture, use and sale of infringing
products and services, to incur significant litigation costs and expenses and to
develop or acquire non-infringing technology or to obtain licenses to the
alleged infringing technology. There can be no assurance that the Company would
be able to develop or acquire alternative technologies or to obtain such
licenses on commercially acceptable terms. See "Business--Product Protection."
POTENTIAL FOR PRODUCT LIABILITY
The Company's products and solutions relate to key aspects of its
customers' information systems. The Company has never been the subject of a
damages claim related to its products. However, any failure in a customer's
system could result in a claim for substantial damages against the Company,
regardless of the Company's responsibility for such failure. In connection with
the sale of its products and services, the Company attempts to limit
contractually its liability for damages arising from negligent acts, errors,
mistakes or omissions. Despite this precaution, there can be no assurance that
the limitations of liability set forth in its customer contracts would be
enforceable or would otherwise protect the Company from liability for damages.
Additionally, the Company maintains general liability insurance coverage with
limits of $1 million. However, there can be no assurance that such coverage will
continue to be available on acceptable terms, or will be sufficient to cover one
or more large claims, or that the insurer will not disclaim coverage as to any
future claim. The successful assertion of one or more large claims against the
Company that exceed available insurance coverages or changes in the Company's
insurance policies, such as premium increases or the imposition of large
deductible or co-insurance requirements, could materially and adversely affect
the Company's business, operating results and financial condition.
SIGNIFICANT UNALLOCATED NET PROCEEDS
The Company intends to use the net proceeds of this Offering to expand
sales and marketing efforts, hire management, sales and technical personnel,
increase capital expenditures and for working capital and other general
corporate purposes. In addition, the Company may use a portion of the net
proceeds of this Offering to acquire businesses, products or technologies
complementary to its business. Although the Company has from
9
<PAGE> 11
time to time engaged in discussions with respect to possible acquisitions, it
has no present plans, intentions, understandings, commitments or agreements, nor
is it currently engaged in any negotiations, with respect to any such
transaction. Pending such uses, the Company intends to invest the net proceeds
from this Offering in short-term, investment-grade, interest-bearing securities.
The Company has no other specific uses for the proceeds of this Offering, and
the exact use of the proceeds will be subject to the discretion of management.
See "Use of Proceeds."
INFLUENCE BY EXISTING SHAREHOLDERS
After the sale of shares of Common Stock offered hereby, the Company's
officers, directors and principal shareholders with whom certain directors are
affiliated will own beneficially an aggregate of approximately 46% of the
outstanding shares of Common Stock (approximately 44% if the Underwriters'
over-allotment option is exercised in full). As a result, these shareholders, if
they act together, will be able to elect all of the Company's directors and
generally to direct its affairs. This concentration of ownership by existing
shareholders may also have the effect of delaying or preventing a change in
control of the Company. See "Principal Shareholders and Holdings of Management."
PRIOR DEFAULTS
The Company is a party to a Term Loan Agreement with the Industrial Credit
and Investment Corporation of India Limited ("ICICI") dated May 3, 1994 (the
"ICICI Loan Agreement") and a Cooperation and Project Financing Agreement with
ICICI and ERA Software Systems Private Limited ("ERA") dated June 1, 1990 (the
"Cooperation Agreement"). During fiscal 1996, the Company defaulted on certain
covenants and obligations under the ICICI Loan Agreement. At March 31, 1996, the
Company was in arrears on interest payments totaling $20,250 and at June 30,
1996 on interest payments totalling $27,000. Pursuant to a letter dated
September 25, 1996 (the "ICICI Waiver Letter") ICICI agreed that it would not
declare an event of default if the unpaid interest was paid on or before
September 30, 1996. All such payments were brought current prior to September
30, 1996. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
The ICICI Loan Agreement also contains covenants (a) prohibiting the
Company from issuing any equity securities or changing its capital structure,
(b) requiring the Company to submit annual audited financial statements to
ICICI, (c) requiring the Company to submit an auditor's certificate for the
utilization of certain funds, (d) prohibiting the Company from prepaying any
loan from any other party, and (e) requiring the Company to notify ICICI of any
event or condition that would constitute an event of default under the ICICI
Loan Agreement. At March 31, 1996 the Company was in default of one or more of
these covenants. Pursuant to the ICICI Waiver Letter, ICICI waived compliance
with the foregoing covenants or consented to modifications of the relevant
provisions of the ICICI Loan Agreement in order to permit noncompliance.
Pursuant to the Cooperation Agreement, the Company is required to make
royalty payments to ICICI on January 15 and July 15 of each year. ICICI agreed
that these payments may be deferred until January 1997 and waived any previous
defaults for nonpayment of royalties. ICICI also provided a written waiver of
the Company's noncompliance for all years through March 31, 1996 with the
requirement that the Company provide ICICI with certain financial statements.
The Company does not anticipate that it will default in the future in the
performance or observance of any of the covenants of the ICICI Loan Agreement or
in the Cooperation Agreement, each as modified pursuant to the ICICI Waiver
Letter.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital stock
and does not anticipate paying any cash dividends in the foreseeable future. The
Company currently anticipates that it will retain future earnings, if any, to
fund the development and growth of its business. In addition, the ICICI Loan
Agreement prohibits the Company from declaring dividends on its capital stock at
any time when it is in
10
<PAGE> 12
default of its payment obligations under the ICICI Loan Agreement. In 1996, the
Company was in default of certain payment and other obligations under the ICICI
Loan Agreement, but as of September 30, 1996 brought such payment obligations
current and received a written waiver from ICICI of all existing and prior
defaults. See "Risk Factors--Prior Defaults" and "Dividend Policy."
DILUTION OF NEW INVESTORS; BENEFITS TO CURRENT SHAREHOLDERS
New investors purchasing Common Stock in the Offering will experience
immediate and substantial dilution in the net tangible book value of each share
of the Common Stock purchased by them. The Company's current shareholders will
benefit from an immediate increase in the net tangible book value per share of
their Common Stock and will also benefit from the development of any public
market for their Common Stock as a result of the Offering. The holders of
outstanding stock options and warrants to purchase shares of the Common Stock
will similarly benefit upon the exercise thereof. The average price per share of
outstanding Common Stock paid by the Company's existing shareholders is $.85.
The Company's existing shareholders will have an unrealized average gain of
$9.15 per share, based upon an assumed initial public offering price of $10.00
per share, for an aggregate unrealized gain of $17,097,000. Assuming the
exercise of all outstanding options and warrants, the average price per share
paid by the Company's shareholders would be $.87, resulting in average
unrealized appreciation of $9.13 per share and aggregate unrealized appreciation
of $18,654,000, based upon such assumed initial public offering price. See
"Dilution" and "Shares Eligible for Future Sale."
ABSENCE OF PRIOR MARKET FOR COMMON STOCK
There has been no public market for the Common Stock prior to the Offering
and there can be no assurance that a public market will develop or, if
developed, will be sustained following the Offering. The Company has applied to
list the Common Stock for quotation on the Nasdaq Small-Cap Market under the
symbol "SEEC." The price of the Common Stock offered hereby will be determined
through negotiation between the Company and the Representative and may not be
indicative of the market price for the Common Stock after the Offering. The
factors to be considered in determining the Offering price will be the
preliminary demand for the Common Stock, prevailing market and economic
conditions, the Company's revenue and earnings, estimates of its business
potential and prospects, the present state of its business operations, an
assessment of its management, the consideration of these factors in relation to
the market valuation of comparable companies in related businesses and the
current condition of the markets in which it operates. Certain factors, such as
subsequent sales of Common Stock into the market by existing shareholders and
market conditions generally, could cause the market price of the Common Stock to
vary substantially. Certain existing shareholders and the Representative have
registration rights for the Common Stock they own or may acquire and accordingly
will have the ability to exercise such rights and sell such shares free of
securities law restrictions. See "Certain Transactions," "Shares Eligible for
Future Sale" and "Underwriting."
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON FUTURE MARKET PRICES
Sales of a substantial number of shares of the Common Stock in the public
market following this Offering could adversely affect the market price for the
Common Stock. Of the 1,868,535 shares of Common Stock that will be held by the
Company's current shareholders immediately after the completion of the Offering,
(representing approximately 65% of the Common Stock outstanding after the
Offering, or approximately 62% if the Underwriters' over-allotment option is
exercised in full), 1,356,116 shares will be eligible for sale in the public
market after the expiration of the 270-day lock-up period described below,
subject to certain volume and other limitations, pursuant to Rule 144
promulgated under the Securities Act ("Rule 144"). Certain of the existing
shareholders of the Company and the Representative have registration rights for
the Common Stock they own and accordingly will have the ability to exercise such
rights and sell their Common Stock free of such volume and other limitations
after the 270-day lock-up period expires. Except for the exercise of stock
options pursuant to the Stock Option Plan and the exercise of certain
outstanding warrants, the Company and its directors, executive officers, and
holders of substantially all of its outstanding shares of Common Stock, stock
options and warrants, have agreed with the Underwriters not to sell any Common
Stock for 270 days
11
<PAGE> 13
from the date of this Prospectus without the prior written consent of the
Representative. See "Shares Eligible for Future Sale" and "Underwriting."
ANTITAKEOVER MEASURES
The Company's Bylaws divide the Board of Directors into three classes, with
each class to be as equal in number of directors as possible. At each annual
meeting of shareholders, directors will be elected for three-year terms to
succeed the directors of the class whose terms are expiring. In accordance with
the Pennsylvania Business Corporation Law, directors serving on classified
boards of directors may only be removed from office for cause. In addition,
under the Company's Articles of Incorporation, the Board of Directors has the
authority to fix the rights and preferences of, and issue shares of, Preferred
Stock without further action of the shareholders. Therefore, Preferred Stock
could be issued, without shareholder approval, that could have voting,
liquidation and dividend rights superior to that of the Common Stock. The
issuance of Preferred Stock could adversely affect the voting power of holders
of Common Stock and the likelihood that such holders of Common Stock would
receive dividend payments and payments on liquidation. The Company has no
present plan to issue any shares of Preferred Stock. One or all of these
provisions could, under certain circumstances, operate to delay, deter or
prevent a change in control of the Company or limit the price that potential
acquirors or investors may be willing to pay in the future for the Company or
shares of its Common Stock.
CERTAIN TRANSACTIONS
The Company has engaged in certain material transactions with certain of
its management and shareholders and maintains certain material business
relationships with ERA Software Systems Private Limited ("ERA"), a significant
shareholder of the Company. Ravindra Koka, the President, a director and a
principal shareholder of the Company, and Shankar Krish, an employee of the
Company, are directors and significant shareholders of ERA. See
"Business--Research and Development," "Certain Transactions--ERA Relationship"
and Notes 5 and 6 to Financial Statements.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus contains certain forward-looking statements, including (i)
the potential size of and anticipated growth in the year 2000 compliance market;
(ii) anticipated trends in the Company's financial condition and results of
operations (including expected changes in the Company's gross margin and
general, administrative and selling expenses); (iii) the Company's business
strategy for growth in the market for year 2000 compliance, other COBOL
maintenance and redevelopment and client/server migration; and (iv) the
Company's ability to distinguish itself from its current and future competitors.
These forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties. In addition
to the other risks described elsewhere in this "Risk Factors" discussion,
important factors to consider in evaluating such forward-looking statements
include (i) the shortage of reliable market data regarding the market for year
2000 solutions, other COBOL maintenance and redevelopment and client/ server
migration; (ii) changes in external competitive market factors which might
impact trends in the Company's results of operations; (iii) unanticipated
working capital or other cash requirements; (iv) changes in the computer
hardware and software industries and the year 2000 solutions market; and (v)
various competitive factors that may prevent the Company from competing
successfully in the marketplace. In light of these risks and uncertainties, many
of which are described in greater detail elsewhere in this "Risk Factors"
discussion, actual results could differ materially from the forward-looking
statements contained in this Prospectus.
12
<PAGE> 14
THE COMPANY
The Company was incorporated under the name Software Engineering and
Enhancement Center, Inc., as a West Virginia corporation, in 1988. In 1989, the
Company changed its name to SEEC, Inc. and in 1992 reincorporated in
Pennsylvania. When used in this Prospectus, unless the context requires
otherwise, the terms "Company" and "SEEC" refer to SEEC, Inc. and its
predecessor. The Company's executive offices
are located at 5001 Baum Boulevard, Pittsburgh, Pennsylvania 15213 and its
telephone number is
(412) 682-4991.
USE OF PROCEEDS
The net proceeds to SEEC from the sale of the Common Stock offered hereby
(based upon an assumed public offering price of $10.00 per share (the mid-point
of the price range on the cover of this Prospectus) and after deducting the
estimated underwriting discount and estimated expenses of the Offering) are
estimated to be approximately $8,625,000 (approximately $10,020,000 if the
Underwriters' over-allotment option is exercised in full). SEEC anticipates that
the net proceeds of the Offering will be utilized over an approximately two-year
period. Approximately $3.0 million to $5.0 million of such proceeds are
anticipated to be used to market the Company's products and services,
approximately $1.0 million for capital expenditures and approximately $1.0
million to hire management, sales and technical personnel. The remainder of the
net proceeds will be used for working capital and general corporate purposes.
Although SEEC has no current understandings, commitments or agreements, and is
not currently engaged in any negotiations, with respect to any acquisition
transaction, a portion of the proceeds may be used for the acquisition of
complementary businesses, products or technologies. Pending such uses, SEEC
intends to invest the net proceeds from this Offering in short-term,
investment-grade, interest-bearing securities.
DIVIDEND POLICY
SEEC has never declared or paid any cash dividends on its Common Stock.
SEEC intends to continue to retain its earnings, if any, to finance the
development and growth of its business. Consequently, SEEC does not expect to
pay cash dividends in the foreseeable future. The Company's Loan Agreement with
ICICI prohibits it from declaring any dividends on its capital stock at any time
when it is in default of its payment obligations under such Loan Agreement. In
1996, the Company was in default of certain payment and other obligations under
the ICICI Loan Agreement, but as of September 30, 1996 brought such payment
obligations current and received a written waiver from ICICI of all existing and
prior defaults. See "Risk Factors--Prior Defaults," "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and Note 9 to Financial Statements.
13
<PAGE> 15
DILUTION
The pro forma net tangible book value of SEEC as of September 30, 1996 was
approximately $.20 per share of Common Stock. Pro forma net tangible book value
per share of the Common Stock is equal to the book value of SEEC's total assets
less the book value of its total liabilities, divided by the total number of
shares of Common Stock outstanding as of September 30, 1996. After giving effect
to the sale by SEEC of the 1,000,000 shares of Common Stock offered hereby
(assuming a public offering price of $10.00) and after deducting the estimated
underwriting discount and the estimated offering expenses payable by SEEC, the
pro forma net tangible book value of SEEC at September 30, 1996 would have been
$9,004,000, or $3.14 per share. This represents an immediate increase in the net
tangible book value of $2.94 per share to existing holders of Common Stock and
an immediate dilution of $6.86 per share to the persons purchasing shares of
Common Stock at the assumed public offering price. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price................................................ $10.00
Pro forma net tangible book value before the Offering...................... $ .20
Increase attributable to new investors..................................... 2.94
-----
Pro forma net tangible book value after the Offering......................... 3.14
------
Dilution to new investors (68.6%)............................................ $ 6.86
======
</TABLE>
The following table compares, as of September 30, 1996, the number of
shares of Common Stock purchased from SEEC by its existing shareholders prior to
the Offering and to be purchased by new investors in the Offering, the total
consideration paid or to be paid to SEEC and the average price per share paid or
to be paid to SEEC by SEEC's current shareholders and by new investors
purchasing shares in the Offering, at an assumed public offering price of $10.00
per share, and assuming no exercise of the Underwriters' over-allotment option:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders......................... 1,868,535 65% $ 1,587,000 14% $ .85
New investors................................. 1,000,000 35 10,000,000 86 $ 10.00
------
--------- ----- -----------
Total......................................... 2,868,535 100% $11,587,000 100%
========= ===== =========== ======
</TABLE>
The foregoing table assumes no exercise of outstanding options or warrants.
As of September 30, 1996, there were (i) 36,001 shares of Common Stock reserved
for issuance upon exercise of outstanding options granted under the Stock Option
Plan, (ii) 111,494 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants, (iii) 112,418 shares of Common Stock reserved for issuance
upon the grant of additional options under the Stock Option Plan, and (iv) 6,026
shares of Common Stock reserved for issuance upon exercise of outstanding
options granted to non-employee directors. Subsequent to September 30, 1996,
SEEC granted options to purchase 21,095 shares of Common Stock under the Stock
Option Plan. In addition, SEEC will issue to the Representative, effective upon
consummation of this Offering, the Representative's Warrant. See
"Management--Stock Option Plan," "Principal Shareholders and Holdings of
Management" and "Underwriting."
14
<PAGE> 16
CAPITALIZATION
The following table presents the capitalization of SEEC as of September 30,
1996, as adjusted to give effect to the sale by SEEC of the 1,000,000 shares of
Common Stock offered hereby at an assumed public offering price of $10.00 per
share after deducting the estimated underwriting discount and the estimated
offering expenses payable by SEEC.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1996
-----------------------
ACTUAL AS ADJUSTED
------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term obligations:
Long-term debt, less current maturities............................ $ 180 $ 180
Accrued royalties.................................................. 33 33
------- ------------
Total........................................................... 213 213
------- ------------
Shareholders' Equity:
Preferred Stock, $.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding................................... -- --
Common Stock, $.01 par value, 20,000,000 shares authorized,
1,868,535 shares issued and outstanding; as adjusted, 2,868,535
shares issued and outstanding (1)............................... 19 29
Additional paid-in capital......................................... 1,569 10,184
Accumulated deficit................................................ (1,209) (1,209)
------- ------------
Total shareholders' equity...................................... 379 9,004
------- ------------
Total capitalization............................................ $ 592 $ 9,217
======= ===========
</TABLE>
- ---------
(1) Does not include 57,096 shares of Common Stock issuable upon exercise of
outstanding options granted under the Stock Option Plan, 6,026 shares of
Common Stock issuable upon exercise of options granted to non-employee
directors, 111,494 shares of Common Stock issuable upon exercise of
outstanding warrants, 91,323 shares of Common Stock reserved for issuance
upon the grant of additional options under the Stock Option Plan, and the
shares of Common Stock issuable upon exercise of the Representative's
Warrant. See "Management--Stock Option Plan" and "Principal Shareholders and
Holdings of Management."
15
<PAGE> 17
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the Company's Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus. Portions of the selected financial data
presented below have been derived from the Company's financial statements which
have been audited by BDO Seidman, LLP, independent certified public accountants,
whose report covering the balance sheets as of March 31, 1995 and 1996 and the
statements of operations, changes in capital deficit and cash flows for each of
the three years in the period ended March 31, 1996 is included elsewhere herein.
The statement of operations data for the year ended March 31, 1993 and September
30, 1995 and the balance sheet data as of March 31, 1993 and September 30, 1995
are derived from unaudited financial statements of the Company not included
herein. The statement of operations data for the year ended March 31, 1992 and
the balance sheet data as of March 31, 1992 are derived from audited financial
statements of the Company not included herein. The statement of operations data
for the six months ended September 30, 1995 and 1996 and the balance sheet data
as of September 30, 1996 are derived from unaudited financial statements of the
Company which are included herein. Management believes that the unaudited
financial statements of the Company include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
condition and results of operations of the Company for the periods presented.
The results for the six months ended September 30, 1996 are not necessarily
indicative of results that may be realized for any other interim period or for
the full year.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER
YEARS ENDED MARCH 31, 30,
-------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1995 1996
----- ----- ------ ------- ------- ------- ------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software license fees........................ $ 43 $ 187 $ 481 $ 463 $ 506 $ 223 $ 492
Software maintenance fees.................... -- 13 64 106 102 58 76
Professional services--product related....... -- 68 40 42 181 32 266
Professional services--other................. 182 138 363 350 476 218 372
Grant revenue................................ 138 50 -- -- -- -- --
----- ----- ------ ------- ------- ------- ------
Total revenues......................... 363 456 948 961 1,265 531 1,206
----- ----- ------ ------- ------- ------- ------
Operating expenses:
Cost of software license and maintenance
fees....................................... -- 29 108 127 148 68 117
Professional services--product related....... -- 37 10 14 59 13 136
Professional services--other................. 156 77 255 243 440 182 303
General and administrative................... 46 150 149 132 142 75 87
Sales and marketing.......................... 46 221 215 236 237 108 276
Research and development..................... 296 317 317 407 337 178 138
----- ----- ------ ------- ------- ------- ------
Total operating expenses............... 544 831 1,054 1,159 1,363 624 1,057
----- ----- ------ ------- ------- ------- ------
Income (loss) from operations.................. (181) (375) (106) (198) (98) (93) 149
----- ----- ------ ------- ------- ------- ------
Other expense, net:
Interest expense............................. (16) (42) (50) (63) (75) (38) (31)
Other income................................. 3 1 1 5 20 13 7
----- ----- ------ ------- ------- ------- ------
Total other expense, net............... (13) (41) (49) (58) (55) (25) (24)
----- ----- ------ ------- ------- ------- ------
Net income (loss).............................. $(194) $(416) $ (155) $ (256) $ (153) $ (118) $ 125
===== ===== ====== ======= ======= ======= ======
Net income (loss) per common share
equivalent................................... $(.12) $(.23) $ (.09) $ (.14) $ (.09) $ (.07) $ .06
===== ===== ====== ======= ======= ======= ======
Weighted average number of common shares
outstanding.................................. 1,599 1,780 1,780 1,780 1,784 1,782 1,973
===== ===== ====== ======= ======= ======= ======
BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 18 $ 26 $ 45 $ 328 $ 111 $ 146 $ 822
Working capital (deficit)...................... (37) (28) (86) (122) (228) (148) 549
Total assets................................... 100 128 235 571 395 404 1,480
Due to officers and shareholders............... 137 146 155 164 172 168 --
Notes payable to related parties (current and
long-term portions).......................... 155 488 525 562 600 581 --
Total long-term obligations.................... 306 702 810 1,038 1,084 1,125 213
Total shareholders' equity (deficit)........... (257) (720) (875) (1,129) (1,280) (1,246) 379
</TABLE>
16
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis should be read in
conjunction with the preceding "Selected Financial Data" and the Company's
Financial Statements and the Notes thereto and the other financial data included
elsewhere in this Prospectus. Information for the six months ended September 30,
1996 is not necessarily indicative of results that may be realized for any other
interim period or for the full fiscal year.
OVERVIEW
The Company was founded in 1988 to develop tools and solutions for
maintenance and redevelopment of legacy COBOL applications. In 1992, the Company
commercially introduced its first product, COBOL Analyst. From 1992 to 1996, the
Company devoted significant resources to developing its proprietary suite of
products for COBOL maintenance and redevelopment, including products for year
2000 impact analysis. In 1995 and 1996, the Company introduced its COBOL Analyst
2000, COBOL Slicer, LAN version of COBOL Analyst, and Date Analyzer products.
The Company has continually enhanced its COBOL Analyst product line. The Company
began to increase its commitment to providing year 2000 related professional
services in fiscal 1996 as a result of the increased awareness of and demand for
year 2000 solutions.
The Company derives its revenues primarily from software license fees,
professional services fees and royalties from distributors of the Company's
software products. The Company's software is licensed primarily to Fortune 1000
companies, governmental organizations and service providers. The Company's
product related services are provided to customers in conjunction with its
software products and its other professional services are primarily programming
services provided on a contract basis to similar large organizations. The
Company's products and services are marketed through its sales force directly in
the United States and Canada and through product distributors, service providers
and systems integrators worldwide. To date, substantially all of the Company's
revenues have come from sales in the United States.
The Company's revenues from software license fees and product-related
professional services increased significantly in the six months ended September
30, 1996. This increase is attributable to the investments made since July 1995
in marketing year 2000 tools and solutions. The Company anticipates that this
trend will continue as it continues to build its sales and marketing
infrastructure. The demand for the Company's year 2000 products and solutions
are expected to increase significantly as market awareness of the year 2000
problem continues to grow.
The Company recognizes software license fees upon shipment of the software
to the customer. Revenues from software maintenance are deferred and recognized
straight-line over the contract support period, which is generally one year.
Software maintenance contracts are generally renewable on an annual basis,
although the Company also negotiates long-term maintenance contracts from time
to time. Revenues from professional services are recognized as the services are
provided or on achievement of performance milestones. See Note 1 to Financial
Statements.
17
<PAGE> 19
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain income and expense items.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
---------------------- -------------
1994 1995 1996 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Software license fees............................. 51 % 48 % 40 % 42 % 41%
Software maintenance fees......................... 7 11 8 11 6
Professional services fees--product related....... 4 4 14 6 22
Professional services fees--other................. 38 37 38 41 31
---- ---- ---- ---- ----
Total revenues................................. 100 100 100 100 100
---- ---- ---- ---- ----
Operating expenses:
Cost of software license and maintenance fees..... 11 13 12 13 10
Professional services--product related............ 1 2 5 3 11
Professional services--other...................... 27 25 35 34 25
Sales and marketing............................... 23 25 19 20 23
Research and development.......................... 33 42 26 33 12
General and administrative........................ 16 14 11 14 7
---- ---- ---- ---- ----
Total operating expenses....................... 111 121 108 117 88
---- ---- ---- ---- ----
Income (loss) from operations....................... (11 ) (21 ) (8 ) (17 ) 12
---- ---- ---- ---- ----
Total other income (expense), net................... (5 ) (6 ) (4 ) (5 ) (2 )
---- ---- ---- ---- ----
Net income (loss)................................... (16 )% (27 )% (12 )% (22 )% 10%
==== ==== ==== ==== ====
</TABLE>
COMPARISON OF SIX MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Revenues. Total revenues were $1,206,000 in the first six months of fiscal
1997, an increase of 127% from $531,000 in the first six months of fiscal 1996.
Software license fees were $492,000 in the first six months of fiscal 1997, an
increase of 121% from $223,000 in the first six months of fiscal 1996. The
increase in software license fees was attributable to the Company's decision to
market its products and solutions directly to end users, and to increased
customer awareness of the year 2000 problem and resulting demand for the
Company's year 2000 tools and solutions. Software license fees include royalties
from distributors of the Company's products. Royalties were $201,000 in the
first six months of fiscal 1997, an increase of 56% from $129,000 in the first
six months of fiscal 1996. This increase is attributable to the commencement of
marketing by ERA, the Company's distributor in India, in the third quarter of
fiscal 1996. VIASOFT, which was the Company's only distributor during the first
six months of fiscal 1996, accounted for $129,000 of royalties in the first six
months of each of fiscal 1997 and 1996.
Software maintenance fees were $76,000 in the first six months of fiscal
1997, an increase of 31% from $58,000 in the first six months of fiscal 1996.
The increase in software maintenance fees is attributable to the increase in
software license fees during the quarter and during all of fiscal 1996.
Professional services-product related revenues increased to $266,000 in the
first six months of fiscal 1997 from $32,000 in the first six months of fiscal
1996. This increase is primarily attributable to increased customer awareness of
the year 2000 problem and acceptance of the Company's Smart Change Factory
process and tools. The number of customers for year 2000 services increased from
two in the first six months of fiscal 1996 to ten in the first six months of
fiscal 1997. Revenues from professional services--other were $372,000 in the
first six months of fiscal 1997, an increase of 71% from $218,000 in the first
six months of fiscal 1996. This increase is attributable to increased demand for
C++ and Windows programming services. The Company does not expect this rate of
increase to be sustained through fiscal 1997 as it shifts its resources to meet
the expected increase in demand for its year 2000 products and services.
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Cost of Revenues. Cost of revenues includes cost of software license and
maintenance fees, cost of professional services--product related and cost of
professional services--other. Included in the cost of software license and
maintenance fees are royalties which the Company pays to ICICI and ERA for each
product which the Company sells, and to VIASOFT for certain products. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations--Liquidity and Capital Resources."
The Company's total cost of revenue was $556,000 in the first six months of
fiscal 1997, an increase of 111% from $263,000 in the first six months of fiscal
1996. Cost of software license and maintenance fees increased 72%, from $68,000
in the first six months of fiscal 1996 to $117,000 in the first six months of
fiscal 1997. This increase is primarily attributable to increased royalty
expenses, in particular those payable to ICICI, ERA and VIASOFT. Professional
services--product related costs increased from $13,000 in the first six months
of fiscal 1996 to $136,000 in the first six months of fiscal 1997, corresponding
to the increase in revenues for year 2000 services discussed above. Professional
services--other costs increased by 66%, from $182,000 in the first six months of
fiscal 1996 to $303,000 in the first six months of fiscal 1997. The increases in
professional services--product related and professional services--other are both
due to the additional costs of professional staff required to provide the
services. See Note 6 to Financial Statements.
The Company's gross margin (total revenues less cost of revenues) as a
percentage of revenue was 54% in the first six months of fiscal 1997 compared to
50% in the first six months of fiscal 1996. Gross margin percentages were 79%
and 76% for software license and maintenance fees, 49% and 59% for professional
services--product related, and 19% and 17% for professional services--other,
respectively, for the first six months of fiscal 1997 and the first six months
of fiscal 1996. Gross margin percentages for software license and maintenance
fees will fluctuate depending on the mix of software products and the varying
royalty expenses associated with those products. The gross margin percentages
for professional services--product related will vary depending on the type of
services provided. Services that are relatively highly automated, such as year
2000 inventory and impact assessments, typically require fewer professional
hours to perform than services involving planning, source correction or testing.
Furthermore, the Company's pricing for product related services will vary based
on the complexity and scope of the engagement, and competitive considerations.
The gross margin percentage of 59% for professional services--product related in
the first six months of fiscal 1996 was generated from $32,000 in revenues. In
contrast, the gross margin percentage of 49% in the first six months of fiscal
1997 was generated from $266,000 in revenues, and is more representative of the
gross margin that can be expected for this category of revenue as it reflects
the experience of providing a wider range of services over a larger number of
engagements. The gross margin percentages for professional services--other will
fluctuate based on the prices of the individual service contracts, the Company's
payroll and other costs of professional staff providing the services, and the
proportionate contribution of each contract to the total revenue for this
category in a period. The increase in gross margin percentage to 19% in the
first six months of fiscal 1997 from 17% in the first six months of fiscal 1996
is due to an increased proportion of higher margin contracts.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and related benefits allocated to the Company's sales and
marketing personnel, plus the costs of advertising and promotional activities.
Sales and marketing expenses were $276,000 in the first six months of fiscal
1997, an increase of 156% from $108,000 in the first six months of fiscal 1996.
The increase is due primarily to the Company's decision to increase the direct
marketing of its products and solutions to customers. During the first six
months of fiscal 1997, the Company's expenditures for sales compensation, trade
shows, advertising, and recruiting sales personnel each increased compared to
the same period in fiscal 1996.
General and Administrative. General and administrative expenses include
the costs of finance and accounting, rental of office space and other
administrative functions of the Company. General and administrative expenses
were $87,000 in the first six months of fiscal 1997, an increase of 16% from
$75,000 in the first six months of fiscal 1996. This increase is due primarily
to additional payroll and rent costs, and also legal expenses associated with
contract negotiations.
Research and Development. Total expenditures for research and development
were $138,000 in the first six months of fiscal 1997 as compared to $178,000 in
the first six months of fiscal 1996, a decrease of 22%. The
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decrease was due to a reduction in the total number of Company personnel
allocated to research and development. The Company has temporarily re-directed
some professional staff to meet the increased demand for year 2000 services,
while additional professional staff is being recruited and trained.
Interest Expense. Interest expense was $31,000 in the first six months of
fiscal 1997, compared to $38,000 in the first six months of fiscal 1996. The
expense in both periods includes interest on various obligations, including
notes and advances payable to certain directors and shareholders, and deferred
salaries of two operating officers and shareholders. Certain of the
interest-bearing obligations were converted to shares of the Company's Common
Stock in July 1996. See Notes 6, 8, 9 and 11 to Financial Statements.
COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1996 AND MARCH 31, 1995
Revenues. The Company's total revenues were $1,265,000 in fiscal 1996
compared to $961,000 in fiscal 1995, an increase of 32%. This growth resulted
principally from an increase in professional services fees related to year 2000
compliance and, to a lesser extent, increases in software license fees and
distributor royalties. Total software license fees were $506,000 in fiscal 1996
compared to $463,000 in fiscal 1995. The modest increase reflected the Company's
decision to defer further development of its internal sales infrastructure until
VIASOFT's limited exclusive distribution rights expired in May 1995 and the
limited resources available to build additional sales infrastructure. Total
distributor royalties were $274,000 in fiscal 1996 as compared to $257,000 in
fiscal 1995, an increase of 7%. Distributor royalties included the amortization
of advance royalties from VIASOFT in the amount of $257,000 for each period and,
during fiscal 1996, royalties from ERA's distribution activities in India. The
growth in distributor royalties was affected by VIASOFT's limited exclusive
distribution rights which restricted the Company from appointing other
distributors until May 1995. Since that time, the Company has pursued a
distribution strategy of licensing its software products to third-party service
providers and to end-user customers.
Maintenance revenue was $102,000 in fiscal 1996 compared to $106,000 in
fiscal 1995, a decrease of 3%. The decrease is attributable to the timing of
recognition of maintenance revenue, typically ratably over a 12-month period
following the software license sale. Software license fee revenue declined by 4%
in fiscal 1995 which resulted in reduced maintenance fees over the following 12
months. Total product-related professional service fees were $181,000 in fiscal
1996 compared to $42,000 in fiscal 1995, an increase of 331%. This increase is
attributable to the Company's introduction of year 2000 compliance services and
the increase in the demand for these services. Other professional services
revenue was $476,000 in fiscal 1996 compared to $350,000 in fiscal 1995, an
increase of 36%. The increase was attributable to increased demand for C++ and
Windows programming services. The Company does not expect this rate of increase
to be sustained through fiscal 1997 as it shifts resources to meet the expected
increase in demand for its year 2000 products and services.
Cost of Revenues. The Company's total cost of revenues was $647,000 in
fiscal 1996 compared to $384,000 in fiscal 1995, an increase of $263,000, or
69%. This increase was primarily attributable to the Company hiring additional
professional staff to meet the increased customer demand for services.
Royalties and other fees for products and professional services were
$148,000 in fiscal 1996, an increase of 18% from $127,000 in fiscal 1995. The
increase is due to increased royalty costs and additional material costs related
to software license sales and maintenance. Professional services--product
related costs and expenses were $59,000 in fiscal 1996 compared to $14,000 in
fiscal 1995, an increase of 321%. This is due to the Company's hiring additional
professional staff to perform services. Professional services--other costs
increased by $197,000, or 81%, to $440,000 in fiscal 1996 from $243,000 in
fiscal 1995. The increase in costs is attributable to growth in the volume of
services provided, coupled with increases in personnel costs, including
non-recurring recruiting and placement expenses. The cost of personnel and
recruiting and placement expenses are expected to increase due to anticipated
additions to the Company's professional staff and increased market demand for
qualified personnel.
The Company's gross margin as a percentage of revenue was 49% in fiscal
1996 compared to 60% in fiscal 1995. Gross margin percentages were 75% and 78%
for software license and maintenance fees, 68% and 67% for professional
services--product related, and 8% and 31% for professional services--other,
respectively,
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for fiscal 1996 and fiscal 1995. The three percentage point decline in gross
margin percentage for software license and maintenance fees is attributable to
the mix of products sold and the varying royalty expenses associated with the
various products. The gross margin percentages for professional
services--product related were comparable in fiscal 1996 and fiscal 1995. The
gross margin percentage for professional services--other declined by 23
percentage points from fiscal 1995 to fiscal 1996 as a result of the increased
costs incurred in fiscal 1996 of hiring and compensating qualified personnel, as
described above.
Sales and Marketing. Sales and marketing expenses were $237,000 in fiscal
1996, approximately equal to expenses of $236,000 in fiscal 1995. These expenses
did not increase between fiscal 1995 and fiscal 1996 due to the Company's
decision not to develop its internal sales infrastructure.
General and Administrative. General and administrative expenses were
$142,000 in fiscal 1996 compared to $132,000 in fiscal 1995, an increase of 8%.
This increase is due primarily to additional costs for accounting services.
Research and Development. Total expenditures for research and development
were $337,000 in fiscal 1996 compared to $407,000 in fiscal 1995, a decrease of
17%. The decline is primarily attributable to the Company's completion of
development of many of its year 2000 products and the COBOL maintenance and
redevelopment products, and to the resulting temporary reallocation of personnel
to providing professional services.
Interest Expense. Interest expense increased by 19%, to $75,000 in fiscal
1996 from $63,000 in fiscal 1995. The interest expense in fiscal 1996 and 1995
includes interest on various obligations, including indebtedness to ICICI, notes
and advances payable to certain directors and shareholders, and deferred
salaries of two officers. Such notes, advances and deferred salaries were
converted into shares of Common Stock during the second quarter of fiscal 1997.
See Notes 6, 8, 9 and 11 of Notes to Financial Statements.
COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1995 AND MARCH 31, 1994
Revenues. The Company's total revenues were $961,000 in fiscal 1995
compared to $948,000 in fiscal 1994, an increase of 1%. Software license fees
were $463,000 in fiscal 1995 compared to $481,000 in fiscal 1994, a decrease of
4%. During fiscal 1994, the Company entered into a license agreement that
provided limited exclusive distribution rights to VIASOFT. As a result, the
Company deferred efforts to further develop its sales infrastructure. The
decline in direct sales of software licenses was partially offset by VIASOFT
distributor royalties in fiscal 1995 and 1994 of $257,000 and $86,000,
respectively. Maintenance revenue was $106,000 in fiscal 1995, an increase of
66% from $64,000 in fiscal 1994. Maintenance revenue is recognized ratably,
typically over a 12-month contract maintenance period following the license of
the software. As a result, the change in maintenance revenues during the current
fiscal year generally corresponds to the trend in software license fees,
excluding royalties, during the previous fiscal year. Professional
services--product related revenues increased by 5%, from $40,000 in fiscal 1994
to $42,000 in fiscal 1995, as the Company focused primarily on product
development, training and support during fiscal years 1995 and 1994.
Professional services--other revenues decreased by 4%, from $363,000 in fiscal
1994 to $350,000 in fiscal 1995. The Company did not actively pursue business in
this category, focusing its efforts instead on the areas detailed above.
Cost of Revenues. The Company's total cost of revenues was $384,000 in
fiscal 1995 compared to $373,000 in fiscal 1994, an increase of 3%. Royalty and
other fees for products and professional services were $127,000 in fiscal 1995
compared to $108,000 in fiscal 1994, an increase of 18%. The increase is
primarily attributable to increased royalty expenses. Professional
services--product related costs and expenses increased by 40%, to $14,000 in
fiscal 1995 from $10,000 in fiscal 1994. This increase is due to additional
professional staff costs. Professional services--other costs decreased by
$12,000 or 5% to $243,000 in fiscal 1995 from $255,000 in fiscal 1994. The
decline corresponds to the 4% decrease in revenue for this category.
The Company's gross margin as a percentage of revenue was 60% in fiscal
1995 compared to 61% in fiscal 1994. Gross margin percentages were 78% and 80%
for software license and maintenance fees, 67% and 75% for professional
services--product related and 31% and 30% for professional services--other,
respectively, for
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fiscal 1995 and fiscal 1994. The two percentage point decline in gross margin
percentage for software license and maintenance fees is attributable to the mix
of products sold and the varying royalty expenses associated with the various
products. The gross margin percentage for professional services--product related
declined by eight percentage points, the result of increased costs of $4,000
versus increased revenues of $2,000 from fiscal 1994 to fiscal 1995. The decline
in gross margin percentage is due to the increased costs of professional staff.
The gross margin percentages for professional services--other were comparable in
fiscal 1995 and fiscal 1994.
Research and Development. Total expenditures for research and development
were $407,000 in fiscal 1995 as compared to $317,000 in fiscal 1994, an increase
of $90,000, or 28%. The Company focused on developing and introducing new
products and solutions during fiscal 1995, including those in the Smart Change
Factory year 2000 compliance package.
Sales and Marketing. Sales and marketing expenses were $236,000 in fiscal
1995 compared to $215,000 in fiscal 1994, an increase of 10%. The increase is
primarily attributable to management devoting additional time to sales and
marketing activities during fiscal 1995.
General and Administrative. General and administrative expenses were
$132,000 in fiscal 1995 as compared to $149,000 in fiscal 1994, a decrease of
11%. This decrease is due primarily to increased allocations of management time
to sales and marketing efforts.
Interest Expense. Interest expense increased by 26%, to $63,000 in fiscal
1995 from $50,000 in fiscal 1994. The interest expense in fiscal 1995 and 1994
includes interest on various obligations, including notes and advances payable
to certain directors and shareholders, and deferred salaries of two officers.
Such notes, advances and deferred salaries were converted into shares of Common
Stock during the second quarter of fiscal 1997. See Notes 6, 8, 9 and 11 to
Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Since its organization, the Company has funded its operations and its
product development from the following principal sources: (i) proceeds from the
sale of shares of Common Stock, (ii) the ICICI grants and loan described below,
(iii) payments received from the sale of products and services, including
$900,000 in advance royalties from VIASOFT, (iv) proceeds from the issuance of
subordinated and demand notes and (v) deferral of payments of salaries to the
Company's executive officers. As of March 31, 1996, the Company had a working
capital deficit of $228,000, total liabilities of $1,674,000 and cash and cash
equivalents of $111,000. However, since March 31, 1996, $225,000 of the
Company's 10% Subordinated Notes, $220,000 of unsecured notes and advances
payable to certain directors and shareholders, and $127,106 of deferred salaries
payable to two officers, together with accrued interest, were converted into
157,809 shares of Common Stock. In addition, since March 31, 1996, the Company
sold 140,765 shares of Common Stock for an aggregate of $747,440. As a result of
these transactions and profitable results of operations for the six months ended
September 30, 1996, the Company's working capital, total liabilities and cash
and cash equivalents at September 30, 1996 had improved to $549,000, $1,101,000
and $822,000, respectively.
The Company's initial development of its COBOL maintenance products was
funded in part by grants totaling $255,000 from ICICI pursuant to a Cooperation
and Project Financing Agreement dated June 1, 1990 (the "Project Financing
Agreement") among ICICI, the Company and ERA. The Project Financing Agreement
requires the Company to pay royalties to ICICI equal to 10% of the Company's
gross revenues from product sales and 5% of gross revenues from maintenance and
services, up to a maximum royalty payment of $525,000. Through September 30,
1996, the Company paid royalties of approximately $77,000 to ICICI and, with the
approval of ICICI, had accrued but not paid royalties of approximately $68,000.
All accrued and unpaid royalties bear interest at the prime rate (as announced
in The Wall Street Journal) plus 2.5% per annum, subject to a maximum rate of 9%
and minimum rate of 6%, and are payable by February 1, 1997. See Note 6 to
Financial Statements.
During fiscal 1995, the Company funded its operations in part through a
$300,000 term loan from ICICI. The loan is collateralized by the Company's
accounts receivable and certain of its tangible personal property. The loan
bears interest at the prime rate (as published in The Wall Street Journal) plus
2.5% per annum,
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subject to a maximum rate of 9% and a minimum rate of 6%. The interest rate
applicable to the loan was 9% at September 30, 1996 and March 31, 1996. Interest
is payable quarterly on the 15th of each January, April, July and October. The
principal amount of the loan is payable in quarterly installments of $30,000
each on the 15th of each March, June, September and December, commencing
December 15, 1996, with the final payment due March 15, 1999. If the Company is
in default under the ICICI Loan Agreement, ICICI has the right to convert all
unpaid principal and interest into shares of Common Stock of the Company at fair
value as determined by an independent evaluator. In 1996, the Company was in
default of certain payment and other obligations under the ICICI Loan Agreement,
but as of September 30, 1996 brought such payment obligations current and
received a written waiver from ICICI of all existing and prior defaults. The
Company does not have any indebtedness other than to ICICI and is not a party to
a line of credit. See "Risk Factors-- Prior Defaults."
The Company's cash flows have been used primarily for general operating
expenses, equipment purchases and internal research and development funding. At
September 30, 1996 and September 30, 1995, the Company had cash, cash
equivalents, and temporary investments of $822,000 and $250,000, respectively.
The Company had a net deferred tax asset at September 30, 1996 of approximately
$523,000, offset by a valuation allowance of the same amount since the Company
has not determined that it is more likely than not that it will be realized.
The Company intends to use the net proceeds of the Offering in order to
market its products and solutions, expand its property, plant and equipment,
hire personnel to market and perform year 2000 compliance services and for
working capital and general corporate purposes. Management believes that cash
flows from operations and the net proceeds of the Offering will be sufficient to
meet the Company's future cash flow needs for at least one year following the
Offering. In the longer term, the Company may require additional sources of
liquidity to fund future growth. Such sources of liquidity may include
additional equity offerings or debt financings.
IMPACT OF INFLATION
Increases in the inflation rate are not expected to affect the Company's
operating expenses. Although the Company has no current plans to borrow funds,
if it were to do so at variable interest rates, any increase in interest rates
would increase the Company's cost of borrowed funds.
SEASONALITY
The Company's operations are not affected by seasonal fluctuations,
although the Company's cash flows may at times be affected by fluctuations in
the timing of cash receipts from large contracts.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." The Company has determined that
it will continue to account for stock-based compensation for employees under
Accounting Principles Board Opinion No. 25 and elect the disclosure-only
alternative under SFAS No. 123. The Company will be required to disclose the pro
forma net income or loss and per share amounts in the notes to the financial
statements using the fair-value-based method beginning in the year ending March
31, 1997, with comparable disclosures for the year ended March 31, 1996. The
Company has not determined the impact of these pro forma adjustments.
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BUSINESS
GENERAL
SEEC provides a suite of software products and business solutions for
maintaining and redeveloping legacy COBOL software applications and related
databases, including solutions for year 2000 compliance. SEEC also provides
solutions for the migration of existing COBOL applications from mainframe to
client/ server environments. The Company's software products and solutions are
designed to minimize the time and cost of maintenance and redevelopment by
automating various functions and utilizing well-defined and repeatable
processes.
The Company's software products, which are based on the Company's core
COBOL analysis technology, automate many of the procedures required for COBOL
application maintenance and redevelopment, including year 2000 compliance. In
1992, SEEC introduced the first PC Windows-based product for COBOL maintenance
and redevelopment as an alternative to existing mainframe-based tools. The
Company's products analyze and modify COBOL source code, which is downloaded
from the mainframe to a PC/LAN Microsoft Windows environment where it is stored
in application dictionaries for performance of maintenance and redevelopment
functions. SEEC has also developed software tools that enable customers to
extract business rules and functions from legacy COBOL applications for reuse in
object-oriented client/server environments. SEEC markets and sells its products
and solutions primarily to Fortune 1000 companies and similarly-sized business
and governmental organizations.
INDUSTRY BACKGROUND
GENERAL COBOL MAINTENANCE AND REDEVELOPMENT
Most large business and governmental organizations utilize large mainframe
computer systems for the informational requirements of their businesses. These
systems contain the core knowledge and processes that support the major
operations of these organizations. Examples of such systems include insurance
claims processing systems, airline reservation systems, on-line banking systems,
manufacturing systems and utility billing systems. These computer systems are
primarily run on large, mainframe computers using programs written in the COBOL
programming language. The organizations that rely on these legacy systems
typically have made enormous investments in their systems.
Organizations that rely on large mainframe systems must continually
maintain and redevelop their legacy applications to meet constantly changing
information requirements and to incorporate advances in technologies. The
maintenance and redevelopment process is time consuming and labor intensive.
Industry sources estimate that worldwide there are more than 10,000 IBM
mainframe sites and more than 150 billion lines of COBOL code currently in use.
Industry sources also indicate that a substantial portion of COBOL application
resources are dedicated to the maintenance and redevelopment of these systems.
An immediate maintenance requirement is caused by the inability of most legacy
applications to process accurately calculations and logic involving the year
2000 and beyond.
The use of substantial resources in the maintenance and redevelopment
process limits the resources available to large organizations for other
important informational tasks, such as developing new software applications.
Consequently, many large organizations are seeking to improve the maintenance
and redevelopment process in order to reduce costs, improve productivity and
preserve information systems investments. These trends have resulted in
increased demand for automated software tools for maintenance and redevelopment
that supplement traditional, mostly manual, methods that are often tedious, time
consuming and error-prone. Many organizations lack the internal resources to
incorporate new and developing technologies, train personnel, and develop
efficient methodologies to perform or improve legacy applications maintenance
and redevelopment. As a result, certain organizations have outsourced certain
functions to third-party service providers which have developed efficient,
state-of-the-art approaches to legacy system maintenance and redevelopment.
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YEAR 2000 OPPORTUNITY
Awareness and recognition of the year 2000 problem has been spreading
rapidly as the millennium approaches. The year 2000 problem relates to the
highly-publicized inability of many existing computer systems to process
information or logic completely or accurately involving the year 2000 and
beyond. The problem results from the traditional use of two-digit date fields to
perform computations and decision-making functions. For example, a program using
a two-digit date field may misinterpret "00" as the year 1900 rather than 2000.
As a result, many legacy systems are at risk. For example, unless year 2000
compliance is completed in certain systems, credit cards and ATM cards will
expire prematurely and insurance policies that span three to seven years cannot
be written. These date-dependent programs are ubiquitous in legacy software
applications used in many critical business operations.
Many organizations lack the internal resources to address adequately the
year 2000 problem in a timely manner. One industry source estimates that the
overall cost of solving the year 2000 problem worldwide will be in the range of
$300 to $600 billion. Another industry source estimates that for an average
company with 35,000 programs, it would take 75 to 150 person-years to complete
the necessary analysis and coding for year 2000 compliance, which translates
into a three-year period for a team of 25 to 50 programmers. A number of
solutions providers, including SEEC, have developed special programs to meet the
needs of year 2000 compliance.
SEEC believes that over the next three years most organizations will
attempt to acquire cost-effective solutions for the year 2000 problem. As a
result, SEEC anticipates that demand for year 2000 tools and solutions will grow
significantly. Since the problem requires a large number of programs and systems
to be corrected, it is anticipated that most organizations will not have
adequate internal resources to perform all the year 2000 conversion tasks.
Consequently, most organizations will attempt to utilize highly-automated
solutions and in many cases to outsource the conversion to service providers who
can achieve economies of scale by setting up procedures, or "factories", that
utilize automation tools and well-defined processes for year 2000 compliance. In
addition, SEEC believes that the year 2000 problem will cause many organizations
to explore further the possibility of migrating all or portions of their legacy
systems to client/server systems.
CLIENT/SERVER MIGRATION
As computing technology evolves and information processing requirements
expand, large organizations are seeking to preserve the investment in their
existing systems by integrating their mainframe computers with modern
distributed computer processing architectures, such as client/server systems.
Distributed computing refers to computer transactions that may take place among
different types of computers at one or more locations, thereby permitting
enterprise-wide information exchanges to occur that otherwise might not be
possible. In a client/server environment, a mid-range computer serves as a
network's hub or server. The server is connected to several desktop PCs or
workstations known as "clients" throughout an organization.
SEEC believes that the client/server approach has several benefits over
mainframe-based systems, including user friendliness, flexibility in creating
new applications in response to changes in an organization's informational
requirements, accessibility of corporate data from a variety of databases, and
the ability to present data in a variety of formats. Client/server architectures
are becoming more cost effective as a result of technological advances made in
PCs, networking, disk storage, operating systems and software applications.
SEEC expects many large organizations to adopt a strategy of retaining many
key COBOL applications on existing mainframe systems, migrating all or part of
other existing applications to a client/server environment and pursuing new
application development in both mainframe and client/server environments.
Although the year 2000 problem will require organizations to focus on mainframe
systems maintenance, SEEC anticipates that it will also provide an impetus to
replace some mainframe systems with client/server systems. SEEC anticipates that
many organizations that engage in client/server migration will attempt to reduce
their costs and risks by utilizing software tools that extract business rules
and functions from legacy COBOL applications for reuse in object-oriented
client/server environments. (Object-oriented technology is a new paradigm for
designing a software system by describing the attributes of concepts, things and
actions and then broadly reusing that description and its software code.) SEEC
has developed software tools for this
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purpose and intends to market and sell its solutions and tools to new and
existing customers engaged in client/ server migration.
COMPANY STRATEGY
SEEC's objective is to become a leading provider of software products and
business solutions for the maintenance and redevelopment of legacy software
applications and related databases. Key elements of the Company's strategy to
achieve its objective are the following:
Broad Based Distribution Strategy. SEEC intends to continue to pursue a
broad based distribution strategy for its software tools and solutions,
including selling directly to end-user customers, licensing to third-party
service providers such as Complete Business Solutions, Inc., IBM's Integrated
Systems and Solutions Corp. and Coopers & Lybrand, and utilizing product
distributors.
Customer Partnerships. A key element of the Company's strategy is to work
in partnership with its customers to minimize the time and cost of legacy
application maintenance and redevelopment. SEEC's Smart Change Factory combines
the Company's software tools with well-defined procedures to efficiently utilize
customer information resources. The Smart Change Factory provides a customer
with a complete end-to-end solution and an analytical approach to year 2000
conversion whereby appropriate solutions for different software applications may
be adopted and implemented in order to save the customer time and expense. The
Smart Change Factory approach provides a range of options that address customer
concerns regarding control over critical software applications. End-user
customers have the option of implementing the Company's tools and solutions in
house or of outsourcing the maintenance work to SEEC or a licensed third party
service provider. See "Business--Products and Solutions--Smart Change Factory."
PC/LAN Microsoft Windows-Based Software Tools. SEEC introduced the first
PC-based COBOL maintenance and redevelopment tools in 1992. SEEC believes
PC-based tools offer certain advantages over mainframe based tools, including
the ability to (i) utilize a graphical user interface that is easier to use and
learn, (ii) analyze source code in a high-performance, interactive PC
environment that conserves valuable mainframe resources and (iii) provide
cost-effective solutions for maintenance and redevelopment.
GROWTH STRATEGY
SEEC believes that year 2000 compliance will significantly increase the
awareness of issues regarding legacy COBOL system maintenance and redevelopment.
In addition, SEEC believes that the trend to outsource certain legacy
application maintenance and redevelopment functions by Fortune 1000 or
similarly-sized companies and government organizations will continue. The
following are key elements of the Company's growth strategy.
Increase Sales to Existing Customers. SEEC intends to increase its sales of
software tools and solutions to existing customers, including year 2000
compliance tools and solutions. Many of SEEC's existing customers are currently
examining the year 2000 problem or are engaged in year 2000 impact assessments
and planning. The Company will also continue to provide customers with tools and
solutions for year 2000 correction and testing.
Target New Customers with Year 2000 Products and Solutions. SEEC intends to
take advantage of the opportunity presented by the year 2000 problem by
vigorously marketing the Smart Change Factory approach to year 2000 compliance
and the benefits of PC-based solutions. In addition to expanding its direct
marketing and sales activities, SEEC intends to establish additional marketing
and distribution channels through additional distributors and strategic
relationships with third party service providers.
Leverage Expanded Customer Base. SEEC anticipates that the knowledge and
close working relationship it develops with its new and existing customers in
providing solutions for year 2000 compliance will provide additional
opportunities for SEEC to provide tools and solutions for on-going COBOL
maintenance and redevelopment and for the longer-term process of migration from
large mainframe to client/server environments. SEEC believes client/server
systems will be implemented in an object-oriented environment and will create
demand for extracting and reusing business objects. SEEC has already developed
products
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such as COBOL Slicer and SEEC Object Designer in furtherance of this aspect of
its business strategy. SEEC believes that these opportunities will sustain
growth beyond the year 2000 although there can be no assurance that such growth
will materialize.
Enhance Technological Leadership and Excellence. SEEC intends to continue
to expand the functionality of its products and solutions by developing new
products and solutions that build on both its core technology and its experience
with maintenance and redevelopment processes. SEEC also plans to pursue
opportunities for product and technology acquisitions or alliances that
complement its existing products or allow expansion into new product areas and
markets.
PRODUCTS AND SOLUTIONS
CORE SOFTWARE TECHNOLOGY
SEEC's software products, which are based on its core COBOL analysis
technology, provide a comprehensive and integrated approach to automating many
of the procedures required for COBOL application maintenance and redevelopment,
including year 2000 compliance. The diagram below depicts the process utilized
by SEEC's core COBOL analysis technology.
A diagram depicting the process utilized by SEEC's core COBOL analysis
technology.
Download. COBOL and related source code resides in libraries on the
mainframe. SEEC utilizes third party tools to download COBOL source code,
database definitions, screen definitions and job control language to a PC or LAN
server for capture into SEEC's application dictionary. SEEC provides interfaces
with source control software to synchronize the sources with the version stored
in the application dictionary.
The Application Capture Facility. The application capture facility
processes the downloaded source code to create an application dictionary that
stores all of the information that represents the data and business logic of
legacy COBOL systems. The Company's software utilizes proprietary parsing and
data flow technology to create the relationships between the entity-related
information reflected in a customer's files and databases, as well as the
processes that use them. Most organizations have very little documentation of
their legacy systems. The application dictionary enables users to understand the
business intent of the existing systems by providing
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documentation of the legacy programs. Information about the flow of control
among programs is also stored in the application dictionary, enabling users to
group the items by business function.
Application Dictionary. The application dictionary is a repository that
stores all key design objects in a COBOL application, such as COBOL source code,
database definitions, screen definitions and job control language, which is a
set of instructions which helps the computer in managing the execution of
programs and the use of computer resources.
The Application Analysis Facility. The application analysis facility
performs system and program, impact and logic analysis functions, each of which
is described below:
System and Program Analysis. The application analysis facility
generates several views of programs and systems that help customers
understand the logic of a program or the flow of control between programs
and systems. It provides an interactive graphical view of the logic and
data structures and enables a user to navigate through the application to
locate execution patterns relating to a particular function. Program
execution is simulated through a code walk-through feature whereby a user
can trace program logic without data. It also identifies data and program
anomalies such as dead code and dead data.
Three examples of system and program analysis are control flow, data
structure analysis and documentation. The control flow is based on job
flows or analysis of transaction flow among programs. This documents the
relationships between various program steps in a system and the files and
databases processed in each step. The information regarding the screen
dialog can also be obtained for on-line systems. The data structure
analysis derives graphical views of database schema as represented in
sequential files and databases. The databases which the system and program
analysis facility supports are IBM's Information Management System ("IMS"),
Database/2 ("DB2") and virtual sequential access method ("VSAM"). The user
can view the data definitions and obtain information regarding where a data
structure is used and the transformations performed on data by various
programs. The application analysis facility automatically generates
documentation of programs and systems. Most legacy systems have very little
documentation. The documentation generated by the Company's core COBOL
analysis technology increases the productivity of a programmer who is
required to make changes or enhancements to a system unfamiliar to the
programmer. Industry standard metrics to measure complexity of programs are
also generated to assist in estimating effort required to maintain a legacy
COBOL system.
Impact Analysis. Impact analysis provides the ability to assess the
impact of making changes to an application by analyzing the data flow and
interrelationships between different components of an application. For
example, this facility assesses the impact of expanding a database from
two-digit date fields to four-digit date fields. The impact analysis will
accurately identify the programs, affected items and affected logical
statements in the application. The application analysis facility supports a
wide range of databases such as IMS, DB2 and VSAM; Computer Associates IDMS
and Software AG's ADABAS. The impact analysis reports can be loaded into
any relational database for further analysis.
Logic Analysis. Logic analysis is used to derive several program views
which can be displayed or printed. Logic analysis is useful in conjunction
with data flow analysis to understand and extract business rules and is
useful in understanding and documenting programs.
PC Test Environment. Once COBOL applications are modified, they must be
tested to ensure proper performance. SEEC's goal is to provide an integrated
workgroup environment for COBOL maintenance in the PC/LAN setting. To facilitate
the programmer's task of using different tools that are customized for the
programmer's installation, the Company's software products interface with
testing tools from other software vendors.
Upload. Third party tools are used to upload the redeveloped COBOL source
code, database definitions, screen definitions and job control language from the
PC/LAN server to the mainframe where additional testing may be performed.
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PRODUCTS
SEEC COBOL Analyst. COBOL Analyst is based upon the Company's core COBOL
analysis technology. COBOL Analyst is a PC/LAN-based application maintenance and
redevelopment software tool that is used for performing system-wide change
impact analysis, program and system understanding, business rule extraction and
documentation. Organizations use COBOL Analyst either to enhance existing legacy
applications or to rewrite these applications in a client/server architecture
based on business rules extracted from the legacy application. COBOL Analyst
comes with several additional features to ease maintenance and redevelopment
tasks. COBOL Analyst's Code Walk-thru facility guides programmers through
multiple execution scenarios and records traversed paths for future analysis and
follow-up. The Synonym Processor detects and identifies redundant data across
programs, screens, files and databases in an application. COBOL Analyst's DB2
Analyzer loads and analyzes the DB2 data definitions and the structured query
language ("SQL") embedded within the program in an application with drill-down
capability to explore design details. The Inventory/Analysis tool allows users
to feed system-level cross reference information into a relational database,
enabling programmed and ad hoc queries.
SEEC COBOL Analyst 2000. COBOL Analyst 2000 is an enhanced version of COBOL
Analyst that contains all the capabilities of COBOL Analyst, as well as several
additional features designed to address year 2000 compliance. Currently, COBOL
Analyst 2000 assists in the assessment, planning and correction phases of year
2000 compliance. SEEC is currently enhancing the capabilities of COBOL Analyst
2000 to enable it to automate further the correction phase of year 2000
compliance. COBOL Analyst 2000 includes a feature to scan for date patterns in
order to locate date items and a synonym processing feature to identify indirect
references to date items.
SEEC COBOL Slicer. COBOL Slicer, which is derived from the core COBOL
analysis technology, utilizes "program slicing" technology to provide an
interactive PC-based slicing tool designed to increase productivity in
understanding program logic while redeveloping applications. COBOL Slicer
assists in the documentation of valuable business rules embedded in legacy COBOL
systems. SEEC's COBOL Slicer allows customers to understand the program, data
structures and input/output screens of an application. Business rules can then
be identified by locating appropriate slicing criteria and understanding the
code slice, control flow and the logical data model. COBOL Slicer is also being
used for testing, including testing for year 2000 compliance. SEEC is currently
enhancing COBOL Slicer to further automate the generation of test cases.
SEEC Date Analyzer. Date Analyzer is a stand-alone product which provides
year 2000 impact analysis for non-COBOL applications. Date Analyzer examines the
various programs or source files across languages using a pattern-matching
scheme, and then analyzes the language rules to detect the items and statements
which are potentially affected by the year 2000. Pre-defined language rules can
be extended, and rules may be defined for languages not included as a part of
the product. Date Analyzer can be used to perform year 2000 analysis on ten
programming languages, including Software AG's NATURAL and Information Builders'
FOCUS. The Company intends to enhance Date Analyzer to analyze other languages
as market opportunities present themselves.
SEEC Object Designer. Object Designer is a stand-alone product that
interfaces with the Company's core COBOL analysis technology. Object Designer
utilizes an object modeling technique to represent the business model and
generate the database design for relational databases such as Oracle and Sybase.
Object Designer allows the user to specify methods in C++ language, and generate
objects which are reusable by applications in PC-based visual languages such as
Microsoft's Visual Basic and Sybase's Power Builder. The object model can be
populated by mapping objects to entities in the legacy application using the
application dictionary. Object Designer may be utilized in conjunction with
COBOL Analyst and COBOL Slicer and/or third party software tools to extract
business rules to build reusable objects for client/server migration. Object
Designer is currently in the beta testing stage of development and has not been
marketed and sold to date. SEEC expects that its first sales of Object Designer
will be in the first half of 1997.
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SMART CHANGE FACTORY
The year 2000 problem presents a significant marketing opportunity for
SEEC. SEEC provides year 2000 compliance solutions through its Smart Change
Factory, a repeatable process that combines the Company's proprietary software
tools with certain third-party software tools and well-defined procedures
designed to efficiently utilize customer information resources. The Company's
Smart Change Factory products and solutions may be integrated with a customer's
existing organization, allowing the customer to retain control of critical
software applications. The Company's products and solutions may also be used for
complete application outsourcing by the customer to SEEC or to licensed
third-party solution providers.
The year 2000 compliance process involves four phases: (1) inventory and
impact assessment, (2) planning, (3) source correction and (4) testing. The
inventory and impact assessment and source correction phases can be automated to
a greater extent using software tools than the planning and testing phases,
which tend to be more labor intensive and require more expert intervention. The
Company's approach to each of these phases is discussed below.
Inventory and Impact Assessment Phase. This phase, which is highly
automatable, involves identification of the applications, programs, files,
databases and external interfaces that are or may be affected by the use of
two-digit date fields, assessment of potential program or system failures that
may occur, identification of programs that must be corrected, and a preliminary
estimate of the timing and cost of implementing required corrections. SEEC's
COBOL Analyst 2000 automates various functions, including identification of date
items, synonyms and year 2000 affected source code. That information is then
imported to Microsoft Access or other relational databases, and is used to
create a set of technical assessment reports identifying in detail affected
programs, data items and logic statements, as well as a preliminary estimate of
source correction and testing budgets.
Planning Phase. The planning phase involves analysis of the data generated
in the impact assessment phase in order to generate a comprehensive plan for
implementation of the correction process, including tools and procedures to be
used, sequencing of programs for the correction phase, and test procedures to be
followed. This phase is critical to developing an efficient correction and test
phase plan to minimize customer expenses and maximize utilization of customer
information resources. On an outsourced project, SEEC will work very closely
with the customer during this phase to develop a plan that takes into
consideration the nature of the organization, its informational requirements and
budget constraints. It is during this phase that the Smart Change Factory
approach described below will be applied analytically to determine the most
appropriate correction for each application, which may be program logic changes
for certain applications and date field expansion for others. During the
planning phase SEEC may also recommend phasing out particular programs,
replacement of particular programs, redevelopment of programs, or no correction
at all. COBOL Analyst 2000 is used as an assistance tool in the planning
process, but this process necessarily involves a significant amount of judgment
and decision-making.
Source Correction Phase. This phase involves implementation of the
corrective steps decided upon in the planning phase. Software tools can
significantly improve productivity in this phase, and SEEC is enhancing COBOL
Analyst 2000 and related tools to further automate source code correction. In
the Smart Change Factory process, this phase is a well defined, assembly
line-like process, with repeatable steps. The Company's tools for implementing
procedural application changes utilize a rule-based editing scheme in which
program logic changes can be implemented by SEEC or the customer.
Testing Phase. In this phase, all corrected and functionally related
programs must be tested to ensure proper functionality and continued operation
using the year 2000 and beyond. SEEC and industry sources estimate that this
phase of the year 2000 compliance process will be the most time consuming, the
most labor intensive and the least susceptible to automation. SEEC is enhancing
its software tools to add features that will automate certain steps in the
testing phase. Testing parameters will vary for each customer, depending on
industry and legacy applications in place.
The Smart Change Factory approach to year 2000 compliance may be
distinguished from the so-called "mass change" approach which involves the
automatic expansion of all two digit date fields in all applications
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to four digit date fields. The Smart Change Factory approach, on the other hand,
involves analysis of the impact of the year 2000 on each application and a
determination of the most appropriate solution for each application. Under the
Smart Change Factory approach, the Company's tools are utilized to help
determine the technical feasibility of implementing program logic changes to
particular applications that enable the applications to become year 2000
compliant without expanding date fields. The Company's tools are then utilized
to assist in implementing date field expansion where appropriate and program
logic changes where appropriate. The Smart Change Factory approach typically
involves more time and effort in the planning phase of the process, while the
mass change approach typically involves considerably more time and effort in the
correction and testing phases. Since the source correction and testing phases
tend to be much larger and more labor intensive than the planning phase, the
mass change approach can result in significantly higher costs to the customer.
SEEC'S CLIENT-SERVER MIGRATION SOLUTION
SEEC's client/server migration solution is based on SEEC's redevelopment
process which leverages the entity information and the business rules embedded
in legacy COBOL software applications. SEEC's tools avoid the re-creation of
entity information and business rules, a costly and time consuming process.
SEEC's methodology enables the user to rapidly build an object model utilizing
SEEC's Object Designer product, which reuses information from the legacy COBOL
systems stored in the COBOL Analyst Application Dictionary.
SEEC's client/server solutions are based on a three-tiered architecture
where the business objects created from the legacy COBOL systems in conjunction
with visual and database objects enable a user to build an application rapidly.
SEEC's redevelopment process enables an information systems organization to
extract business rules for reuse in the client/server environment using the
COBOL Slicer tool.
PRICING OF PRODUCTS AND PROFESSIONAL SERVICES
SEEC's software products are typically licensed to customers. License
agreements generally limit the use of products to a user or number of users. The
LAN license will permit concurrent use which is monitored by the LAN server
component of the product. Some of the software components are licensed for use
on designated servers or a number of servers at a specified site. The price for
a typical workgroup license for COBOL Analyst is approximately $25,000, and for
COBOL Analyst 2000 is approximately $35,000.
The Company's professional services are generally priced on a time and
materials basis. Year 2000 impact assessments are conducted for a fixed price
based on the number of lines of code in a customer's legacy system. A typical
assessment for a Fortune 1000 company is priced in the $100,000 to $150,000
range. Year 2000 planning and conversion projects, which typically represent a
significantly larger share of the total cost of year 2000 compliance, are priced
either on a time and material or fixed price basis. System integration testing
and implementation support is done on a time and materials basis. Customers
generally pay travel and living expenses for SEEC's personnel working at the
customer site.
CUSTOMER AND TECHNICAL SUPPORT
SEEC offers maintenance for each of its products, which entitles the
customer to receive technical support and advice, including problem resolution
services, installation assistance, error corrections and any product
enhancements released during the maintenance period. Maintenance and support
services are provided primarily by telephone or e-mail from SEEC's Pittsburgh,
Pennsylvania headquarters.
SEEC's standard license agreement does not require SEEC to provide
maintenance for any period of time and does not provide express or implied
warranties for SEEC's product software. In connection with the sale of its
products, SEEC offers optional annual maintenance support, including major
program updates and technical support.
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CUSTOMERS
SEEC's products and services are used by information systems departments of
Fortune 1000 companies and similarly sized business and governmental
organizations. Customers who have purchased at least $25,000 of products and/or
services from SEEC and for whom SEEC currently provides maintenance, including
product updates and technical support, include the following:
YEAR 2000 SOLUTIONS
Wheeling Pittsburgh Corporation
Mack Trucks
Rockwell International
Corporation
Northern Illinois Gas
Foremost Insurance Company
(through IBM's Integrated
Systems and Solutions Corp.)
Aluminum Company of America
Weirton Steel Corporation
University of Pittsburgh
GENERAL COBOL MAINTENANCE
AND REDEVELOPMENT
Sallie Mae
American Savings Bank
Mellon Bank, N.A.
Securities Industry
Automation Corporation
Deere & Co.
Pershing Division of Donaldson,
Lufkin & Jenrette Securities
Corporation
Illinois Department of
Employment Security
Columbia Gas
SERVICE PROVIDERS
Complete Business
Solutions, Inc.
IBM's Integrated Systems and
Solutions Corp.
Coopers & Lybrand
Silverline Industries
During fiscal 1996, revenues from Complete Business Solutions, Inc.,
VIASOFT and ASD International accounted for 26%, 25% and 11%, respectively, of
SEEC's total revenues. During the six months ended September 30, 1996, revenues
from those same customers accounted for 21%, 12% and 5%, respectively, of SEEC's
total revenues. No other customer during such periods accounted for more than
10% of SEEC's total revenues.
SALES, MARKETING AND DISTRIBUTION
SEEC markets its products and services primarily to Fortune 1000 companies
and similarly-sized business and governmental organizations. SEEC's marketing
efforts are implemented through its direct sales force utilizing a direct mail
campaign supported by promotion through trade articles and trade shows that
address the software maintenance market. SEEC's marketing efforts are also
implemented through software licenses and other arrangements with service
providers that provide solutions to COBOL maintenance. SEEC sells and supports
its products and services from its Pittsburgh, Pennsylvania headquarters. As of
November 1, 1996, SEEC had four employees engaged in sales and marketing.
Prior to fiscal 1996, SEEC deferred efforts to further develop its sales
and marketing infrastructure due to VIASOFT's limited exclusive distribution
rights, which expired in May 1995, and the limited resources available to SEEC.
SEEC intends to use a substantial portion of the proceeds of the Offering to
expand the sales and marketing of its products and services. See "Use of
Proceeds."
SEEC intends to continue to pursue a broad-based distribution strategy for
its software tools and solutions. In addition to making direct sales to end-user
customers, SEEC licenses its products and solutions to several third-party
solutions providers such as Complete Business Solutions, Inc., IBM's Integrated
Systems and Solutions Corp. and Coopers & Lybrand. These third-party solutions
providers utilize the Company's tools and solutions in connection with COBOL
maintenance and redevelopment engagements, including year 2000 compliance, with
their own customers. SEEC also intends to utilize product distributors for sales
of its products. SEEC has product distribution agreements with ERA Software
Systems Private Limited, SEEC's product distributor in India, and VIASOFT.
In November 1993, SEEC entered into a five-year International Software
Marketing and License Agreement (the "VIASOFT Agreement") with VIASOFT, pursuant
to which SEEC granted VIASOFT a worldwide license to use and market all of
SEEC's products that address the COBOL maintenance market, including the COBOL
Analyst product line, under VIASOFT's private label "ESW/PC". The license
granted
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to VIASOFT limited exclusive marketing rights through June 1, 1995 and
non-exclusive rights thereafter. Pursuant to the VIASOFT Agreement, VIASOFT pays
SEEC a royalty of 30% of all license or maintenance fees related to its
distribution of SEEC's products up to a maximum of $2 million and thereafter a
royalty of 25% of license fees and 30% of maintenance fees related to SEEC's
products. During fiscal 1994, 1995 and 1996, and for the first six months of
fiscal 1997, revenue from VIASOFT accounted for approximately 9%, 29%, 25% and
12%, respectively, of SEEC's total revenue.
SEEC may terminate the VIASOFT Agreement after the third or fourth
anniversaries of the commencement of the VIASOFT Agreement if VIASOFT does not
make minimum payments of at least $1 million during the 12 months preceding the
third or fourth anniversaries. The VIASOFT Agreement, which expires in December
1998, is subject to automatic renewal for five successive one-year periods if
VIASOFT has made minimum payments of at least $1 million during the 12 months
preceding the applicable expiration date.
The VIASOFT Agreement permitted SEEC to use VIASOFT's proprietary COBOL
Parser Validation Suite to test SEEC's products. In exchange for such use, SEEC
agreed to pay to VIASOFT a royalty of 5% of SEEC's sales of products which
contain or use a COBOL parser, subject to a maximum royalty payment of $1
million and a minimum royalty payment of $100,000, during the five-year period
ending November 30, 1998.
SEEC has granted several organizations the non-exclusive right to market
SEEC's products in connection with COBOL maintenance and redevelopment
solutions, including year 2000 solutions. SEEC intends to enter into additional
distribution, license and/or marketing agreements, particularly with service
providers or strategic systems integrators, for its software products.
COMPETITION
The market for SEEC's software products and solutions, including its
solutions for the year 2000 problem and client/server migration, is intensely
competitive and is characterized by rapid change in technology and user needs
and the frequent introduction of new products. SEEC's principal competitors in
the software tools market include VIASOFT, Micro-Focus Group Public Limited
Company and Computer Associates International, Inc. The Company also competes
with large service providers such as IBM's Integrated Systems and Solutions
Corp., Cap Gemini America, Computer Horizons Corp. and the Big Six accounting
firms. Certain of these service providers have developed or acquired proprietary
software tools.
SEEC believes that the principal factors affecting competition in the
software tools market include product performance and reliability, product
functionality, ability to respond to changing customer needs, ease of use,
training, quality of support and price. The primary competitive factors in the
solutions markets, including the year 2000 compliance market, are price,
service, the expertise and experience of the service personnel and the ability
of such personnel to provide solutions to applications problems. Other than
technical expertise and, with respect to the year 2000 compliance market, the
limited time available until the year 2000 arrives, there are no significant
proprietary or other barriers to entry that could prevent potential competitors
from developing or acquiring similar tools or providing competing solutions in
the Company's market.
The Company's ability to compete successfully in the sale of products and
solutions will depend in large part upon its ability to attract new customers,
deliver and support product enhancements to its existing and new customers and
respond effectively to continuing technological change by developing new
products and solutions. SEEC believes that its PC-based tools should enable it
to compete effectively in certain segments of the year 2000 market with various
other tool vendors, including those that offer mainframe solutions. SEEC's
PC-based tools provide a graphical user interface, are easy to use and are
offered at a lower price than mainframe solutions, while providing similar
functionality. PC-based tools also enable valuable mainframe resources to be
conserved by moving maintenance and redevelopment functions to the PC.
RESEARCH AND DEVELOPMENT
SEEC plans to continue significant research and development to enhance the
functionality and performance of its COBOL Analyst product line. In fiscal 1997,
the emphasis will be on enhancing the
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automation in source correction for year 2000 compliance for COBOL systems,
enhancement of COBOL Slicer for test coverage analysis, and increased support
for non-COBOL languages. In fiscal 1998, the Company intends to enhance its
Object Designer product for client/server migration based on customer feedback
and technology trends in the industry.
SEEC's development of new products has been accomplished primarily with
in-house development personnel and resources in conjunction with ERA. The
initial development of SEEC's COBOL maintenance products was funded in part by a
grant from ICICI pursuant to the Project Financing Agreement among ICICI, SEEC
and ERA. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
The Project Financing Agreement provided for joint ownership by SEEC and
ERA of all products developed with funds provided thereunder. In March 1996,
SEEC and ERA entered into a Product Purchase Agreement (the "Product Purchase
Agreement"), pursuant to which ERA transferred its ownership interest in SEEC's
products and technologies to SEEC and agreed to assist SEEC in developing new
products and technologies. Pursuant to the Product Purchase Agreement, ERA has
the nonexclusive right to perform design and development work with respect to
SEEC's products pursuant to specified development schedules. In addition, ERA
has agreed to maintain in India the necessary infrastructure and personnel to
support such design and development work. ERA has also agreed to transfer to
SEEC the necessary manpower for product support and to maintain a team of
personnel in India for maintenance of SEEC's products.
SEEC has the right to purchase ERA's research and development facility,
including personnel, equipment and information utilized by ERA for design,
development and maintenance of products, upon the occurrence of certain events
including a change of control of ERA, a termination of the Product Purchase
Agreement by ERA upon 12 months notice, certain defaults by ERA, an initial
public offering by ERA or the failure by the parties to agree upon maintenance
fees after the first six years of the Product Purchase Agreement. See "Certain
Transactions."
As of November 1, 1996, SEEC had four employees engaged in product
development and ten employees of ERA were engaged in product development for
SEEC. All of SEEC's research and development employees are located at SEEC's
Pittsburgh, Pennsylvania headquarters. In addition to developing new products,
SEEC continually updates its existing products through enhancements and new
releases.
During fiscal 1994, 1995 and 1996, and the six months ended September 30,
1995 and 1996, research and development expenditures, including research and
development fees paid to ERA, were $317,000, $407,000, $337,000, $178,000 and
$138,000, respectively.
PRODUCT PROTECTION
SEEC relies on a combination of copyright, trade secret and trademark laws,
and contractual provisions to establish and protect its rights in its software
products and proprietary technology. SEEC protects the source code version of
its products as a trade secret and as an unpublished copyrighted work. Despite
these precautions, it may be possible for unauthorized parties to copy certain
portions of SEEC's products or reverse engineer or obtain and use information
that SEEC regards as proprietary. SEEC has no patents and existing copyright and
trade secret laws offer only limited protection. Certain provisions of the
license and distribution agreements generally used by SEEC, including provisions
protecting against unauthorized use, copying, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions, and SEEC is required to
negotiate limits on these provisions from time to time. In addition, the laws of
some foreign countries do not protect SEEC's proprietary rights to the same
extent as do the laws of the United States. SEEC has been and may be required
from time to time to enter into source code escrow agreements with certain
customers and distributors, providing for release of source code in the event
SEEC breaches its support and maintenance obligations, files bankruptcy or
ceases to continue doing business. SEEC licenses its products for PCs pursuant
to "shrink-wrap" license agreements that are not negotiated with or signed by
licensees and may therefore be unenforceable in certain jurisdictions.
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SEEC's competitive position may be affected by its ability to protect its
proprietary information. However, because the software industry is characterized
by rapid technological change, SEEC believes that patent, trademark, copyright,
trade secret and other legal protections are less significant to SEEC's success
than other factors such as the knowledge, ability and experience of SEEC's
personnel, new product and service development, frequent product enhancements,
customer service and ongoing product support.
While SEEC has no knowledge that it is infringing the proprietary rights of
any third party, there can be no assurance that such claims will not be asserted
in the future with respect to existing or future products. Any such assertion by
a third party could require SEEC to pay royalties, to participate in costly
litigation and defend licensees in any such suit pursuant to indemnification
agreements, or to refrain from selling an alleged infringing product or service.
EMPLOYEES
SEEC had 22 employees as of November 1, 1996, including four in sales and
marketing, four in research, development and support, ten in professional
services and four in corporate operations and administration. In light of SEEC's
plans for rapid expansion and growth in order to capture a significant share of
the year 2000 compliance market, the future success of SEEC will depend in large
part upon its continued ability to attract and retain highly skilled and
qualified personnel. Competition for such personnel is intense in the computer
software industry, particularly for talented software developers, service
consultants and sales and marketing personnel. None of SEEC's employees is
represented by a collective bargaining agreement. SEEC believes that its
relations with its employees are good.
FACILITIES
SEEC's principal administrative, research and development, customer support
and marketing facilities are located in approximately 3,000 square feet of space
in Pittsburgh, Pennsylvania. SEEC occupies these premises under a lease
agreement expiring July 31, 1998. SEEC believes that its facilities are adequate
for its current needs and that suitable additional space will be available as
needed.
LEGAL PROCEEDINGS
As of the date of this Prospectus, SEEC is not a party to any litigation
and is not aware of any pending or threatened litigation.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of SEEC and their ages and positions
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- ---- ------------------------------------------------------------
<S> <C> <C>
Raj Reddy 59 Chairman and Director
Ravindra Koka 46 President, Chief Executive Officer, Treasurer and Director
John D. Godfrey 47 Vice President, Operations and Customer Services,
Secretary and Director
Richard J. Goldbach 41 Chief Financial Officer
Radha Ramaswami Basu 46 Director
Stanley A. Young 69 Director
Abraham Ostrovsky(1) 53 Director Elect
</TABLE>
- ---------
(1) Elected to serve as a director of SEEC effective immediately after the
consummation of the Offering.
Raj Reddy is a co-founder of SEEC and has served as a director since SEEC's
inception in 1988 and as Chairman since 1989. Dr. Reddy serves as a consultant
in a scientific or engineering capacity from time to time on projects for SEEC.
Dr. Reddy has been Dean of the Carnegie Mellon University School of Computer
Science since 1992 and is the Herbert A. Simon University Professor of Computer
Science and Robotics. Dr. Reddy joined Carnegie Mellon University's Department
of Computer Science in 1969 and served as Director of the Robotics Institute
from 1979 to 1992. Dr. Reddy is Chairman of the Board of Directors of Carnegie
Group, Inc., a member of the Board of Directors of Telxon Corporation and
Industry.Net, Inc. and a member of the Technical Advisory Board of Microsoft
Corporation.
Ravindra Koka is a co-founder of SEEC and has been President and Chief
Executive Officer and a director of SEEC since its inception in 1988. Mr. Koka
is a founding shareholder and director of ERA, a software consulting firm based
in India and a shareholder of SEEC, and a founding shareholder and director of
ACS Technologies Limited, an Indian company engaged in providing computer
hardware maintenance and service. Prior to founding SEEC, Mr. Koka was a program
analyst with System Development Corp., a senior systems analyst and mainframe
application developer for Roan Consolidated Mines and a visiting scientist and
Adjunct Associate Professor at Carnegie Mellon University's Department of
Computer Science.
John D. Godfrey has been Vice President, Operations and Customer Services,
and Secretary of SEEC since 1989, and was elected a director of SEEC in March
1996. Prior to joining SEEC, Mr. Godfrey served in various management positions
at Cimflex Teknowledge Corp., was director of engineering for American Auto-
Matrix, Inc. and PERQ Systems Corp. and served as manager of graphic information
systems for Mellon Bank, N.A.
Richard J. Goldbach joined SEEC in October 1996 as Chief Financial Officer.
Mr. Goldbach had previously served as Finance Director for ADVO, Inc., a direct
mail marketing company, from May 1991 to September 1996, and as Chief Financial
Officer and Treasurer of Scribe Systems, Inc., a computer software publishing
company, from January 1986 to December 1990. Prior to that time, Mr. Goldbach
was senior manager in the audit department of Arthur Andersen. He is a certified
public accountant.
Radha Ramaswami Basu was elected a director of SEEC in August 1996. Ms.
Basu is the general manager of Hewlett Packard Company's International Software
Operation, a position she has held since February 1994. Ms. Basu has held
various positions since joining Hewlett Packard in 1978, including worldwide
account manager for international programming from 1990 to 1994.
Stanley A. Young has been a director of SEEC since it was founded in 1988.
Mr. Young has been active as a consultant and venture capital investor for the
past five years and is Chairman, President and Chief Executive Officer of Young
Management Group, Inc., a management consulting firm. Mr. Young is a director
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<PAGE> 38
of JetForm Corporation, Andyne Computer, Inc. and Cable-Sat Systems, Inc. Mr.
Young was formerly a director and seed investor in Parametric Technology
Corporation.
Abraham Ostrovsky has been elected to serve as a director of SEEC effective
immediately after the consummation of the Offering. Mr. Ostrovsky has been
Chairman and Chief Executive Officer of Cable-Sat Systems, Inc. since February
1996. Mr. Ostrovsky is also Chairman of JetForm Corporation, a provider of
forms-based workflow automation software, a position he has held since 1993. He
joined JetForm in 1991 as Chief Operating Officer and was Chief Executive
Officer from 1991 to 1995. Prior to joining JetForm, Mr. Ostrovsky was
concurrently the Senior Vice President of Erskine House PLC, an office equipment
dealership, and the Chairman of Savin Florida, a subsidiary of Erskine House,
from 1988 to 1990.
TERMS OF DIRECTORS AND OFFICERS
The Company's directors are elected by the shareholders. Effective upon the
closing of the Offering, the Company's Board of Directors will be divided into
three classes, with the members of each class serving staggered three-year
terms. The Board of Directors will consist of two Class I directors (Abraham
Ostrovsky and Stanley A. Young), two Class II directors (Radha R. Basu and John
D. Godfrey), and two Class III directors (Ravindra Koka and Raj Reddy), whose
terms will expire at the 1997, 1998 and 1999 Annual Meeting of Shareholders,
respectively. SEEC's Bylaws provide that the number of directors shall be fixed
from time to time by a majority of the Board of Directors and that vacancies on
the Board of Directors (including vacancies created by an increase in the number
of directors) may be filled by a majority of the Board of Directors then in
office or by the sole remaining director, or, if the Board of Directors or the
sole remaining director fails to act, by the shareholders.
Upon the occurrence of a default under the ICICI Loan Agreement, it has the
right to appoint one director of SEEC. In 1996, the Company was in default of
certain payment and other obligations under the ICICI Loan Agreement, but as of
September 30, 1996 brought such payment obligations current and received a
written waiver from ICICI of all existing and prior defaults. See "Risk
Factors--Prior Defaults" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources".
Officers are appointed by the Board of Directors and, except for those
officers with which SEEC has entered into employment agreements, serve at the
pleasure of the Board. See "Management--Employment Agreements."
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established two standing committees: a
Compensation Committee and an Audit Committee. SEEC's Bylaws provide that all
committees must have two or more members and that the Audit Committee must have
at least two members who are not employees of SEEC. The members of the
Compensation and Audit Committees serve at the pleasure of the Board of
Directors.
The Compensation Committee is responsible for administering the Stock
Option Plan, to the extent provided in the authorizing Board resolutions for
such plan, and for reviewing and making recommendations to the Board with
respect to the salaries, bonuses and other compensation of executive officers,
including the terms and conditions of their employment, and other compensation
matters. The members of the Compensation Committee are Radha R. Basu and Raj
Reddy.
The Audit Committee is responsible, to the extent provided in the
authorizing Board resolutions, for making an annual recommendation, based on a
review of qualifications, to the Board for the appointment of independent public
accountants to audit the financial statements of SEEC and to perform such other
duties as the Board may from time to time prescribe. The Audit Committee will
also be responsible for reviewing and making recommendations to the Board with
respect to (i) the scope of audits conducted by SEEC's independent public
accountants and (ii) the accounting methods and the system of internal control
used by SEEC. In addition, the Audit Committee will review reports from SEEC's
independent public accountants concerning compliance by management with
governmental laws and regulations and with SEEC's policies
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<PAGE> 39
relating to ethics, conflicts of interest and disbursements of funds. The
members of the Audit Committee are Raj Reddy and Stanley A. Young.
STRATEGIC ADVISORY BOARD
In 1996, the Company appointed a Strategic Advisory Board comprised of Mr.
Glen Chatfield and Ms. Radha R. Basu. The Strategic Advisory Board advises the
Company's Board of Directors and management on business and product strategy.
Mr. Chatfield is a director of Carnegie Group, Inc. Mr. Chatfield was
President of Chatfield Enterprises from April 1990 to November 1992, and has
been President of Optimum Power Technology, Inc. since December 1992, Chairman
of Emprise Technologies, Inc. since December 1992, and General Partner of CEO
Venture Fund since January 1986. He was a founder of Duquesne Systems, Inc., a
predecessor of LEGENT Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was formed in
September 1996. Radha R. Basu and Raj Reddy, who were not at any time during the
year ended March 31, 1996, or at any other time, officers or employees of SEEC,
are the only members of the Compensation Committee. No executive officer of SEEC
serves as a member of the board of directors or compensation committee of
another entity which has one or more executive officers serving as a member of
the Company's Board of Directors or Compensation Committee.
COMPENSATION OF DIRECTORS
Following completion of the Offering, SEEC intends to pay its non-employee
directors $2,000 per Board meeting attended in person and $1,000 per Board
meeting attended by telephone. Directors who are employees do not receive any
compensation for services performed in their capacity as directors. SEEC
reimburses each director for reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors and any of its committees.
In connection with their agreeing to serve on the Board of Directors, on
September 30, 1996, SEEC granted to each of Radha R. Basu and Abraham Ostrovsky
ten-year options to purchase 3,013 shares of Common Stock at $5.44 per share.
The options vest 50% each on the first and second anniversaries of their
commencement of service as directors.
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by SEEC during the
fiscal year ended March 31, 1996 to Ravindra Koka, the Company's Chief Executive
Officer. No executive officer received total salary and bonus in excess of
$100,000 during the fiscal year ended March 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
NAME AND PRINCIPAL POSITION SALARY
- ------------------------------------------------------------------------------ ------------
<S> <C>
Ravindra Koka................................................................. $ 86,980
(President and Chief Executive Officer)
</TABLE>
No stock options were granted to Mr. Koka during the fiscal year ended
March 31, 1996. As of March 31, 1996, SEEC had not awarded stock appreciation
rights to any employee. Also, SEEC currently has no defined benefit or actuarial
plans.
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<PAGE> 40
The following table sets forth certain information with respect to the
value of stock options held by Mr. Koka at March 31, 1996. Mr. Koka did not
exercise any options to purchase Common Stock during the fiscal year ended March
31, 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END (#) AT FISCAL YEAR-END ($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ravindra Koka................................ 3,616 -- $15,360 --
</TABLE>
- ---------
(1) Represents the difference between the fair market value of the Common Stock
underlying the options as of March 31, 1996 and the exercise price of the
options.
EMPLOYMENT AGREEMENTS
Effective October 1, 1996, SEEC entered into a two-year employment
agreement with Ravindra Koka pursuant to which he agreed to serve as SEEC's
President and Chief Executive Officer at a base annual salary of $98,000, which
will increase to $107,800 upon the closing of this Offering. The agreement
renews automatically at the end of the initial two year term and each renewal
term for a one year period unless either party gives 30 days notice of intent
not to renew. The agreement is terminable by SEEC immediately for cause. The
agreement prohibits Mr. Koka from directly or indirectly selling products that
compete with SEEC's products for two years following termination under specified
circumstances of his employment with SEEC, and from improperly disclosing or
using SEEC's proprietary information. Mr. Koka's employment agreement also
includes the provisions relating to severance described below. SEEC has also
entered into employment agreements with Messrs. Godfrey and Goldbach.
The employment agreements with each of Messrs. Koka, Godfrey and Goldbach
provide that if, on or after the date of a "Change in Control" (as defined
below), SEEC, for any reason, terminates the employee's employment or the
employee resigns "for good reason" (as defined below), then SEEC shall pay to
the employee within five days following the date of termination or date of
resignation: (i) the employee's salary and benefits through the termination date
or resignation date, both as in effect on the date prior to the date of the
Change in Control, and (ii) the amount of any bonus payable to the employee for
the year in which the Change in Control occurred, pro rated to take into account
the number of days that have elapsed in such year prior to the termination date
or resignation date. In addition, during a specified period following the
termination or resignation date, SEEC shall continue to pay to the employee his
annual salary, as in effect on the day prior to the date of the Change in
Control on the dates when such salary would have been payable had the employee
remained employed by SEEC and shall continue to provide to the employee during
such specified period, at no cost to the employee, the benefits the employee was
receiving on the day prior to the date of the Change in Control, or benefits
substantially similar thereto. The specified period is twelve months for Mr.
Koka and nine months for Messrs. Godfrey and Goldbach.
For purposes of the employment agreements, a "Change in Control" is deemed
to occur upon any of the following events: (i) any individual, corporation,
partnership, association, trust or other entity becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of SEEC representing 50% or more of the combined voting power of
SEEC's then outstanding voting securities; (ii) the individuals who as of the
date of the agreements are members of the Board of Directors of SEEC (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors of SEEC (provided, however, that if the election, or
nomination for election by SEEC's shareholders, of any new director was approved
by a vote of at least a majority of the Incumbent Board, such new director will,
for purposes of such agreements, be considered as a member of the Incumbent
Board); (iii) an agreement by SEEC to consolidate or merge with any other entity
pursuant to which SEEC will not be the continuing or surviving corporation or
pursuant to which shares of the Common Stock of SEEC would be converted into
39
<PAGE> 41
cash, securities or other property, other than a merger of SEEC in which holders
of the Common Stock of SEEC immediately prior to the merger would have the same
proportion of ownership of Common Stock of the surviving corporation immediately
after the merger; (iv) an agreement of SEEC to sell, lease, exchange or
otherwise transfer in one transaction or a series of related transactions
substantially all of the assets of SEEC; (v) the adoption of any plan or
proposal for a complete or partial liquidation or dissolution of SEEC; or (vi)
an agreement to sell more than 50% of the outstanding voting securities in one
or a series of related transactions other than an initial public offering of
voting securities registered with the Securities and Exchange Commission.
The term "good reason" means (i) a material diminution by SEEC of the
employee's title or responsibilities, as that title and those responsibilities
existed on the day prior to the date of a Change in Control; (ii) a material
diminution by SEEC in the employee's salary, benefits or incentive or other
forms of compensation, all as in effect on the day prior to the date of a Change
in Control; or (iii) any reassignment of the employee or relocation of SEEC's
principal executive offices outside of the greater Pittsburgh area.
STOCK OPTION PLAN
On September 12, 1994, the Board of Directors adopted, and the shareholders
of SEEC approved, the SEEC, Inc. 1994 Stock Option Plan (the "Stock Option
Plan"). Under the Stock Option Plan, a committee designated by the Board of
Directors or, if no committee is designated, the full Board (the "Committee") is
authorized to grant stock options. The Stock Option Plan has a 10-year term and,
subject to anti-dilution adjustments, a maximum of 150,679 shares of Common
Stock may be awarded under the Stock Option Plan. Employees of SEEC who, in the
opinion of the Committee, are responsible for the continued growth, development
and financial success of SEEC are eligible to receive stock options under the
Stock Option Plan. The Committee has the discretion to determine the persons to
whom grants of options shall be made and, subject to the terms of the Stock
Option Plan, the terms and conditions of each stock option grant. All options
will be fully vested upon a Change of Control (as defined in the Stock Option
Plan) of SEEC.
Options. The Committee will establish the exercise price of options at the
time of each grant. The exercise price of incentive stock options must be no
less than 100% of the fair market value of a share of Common Stock on the grant
date. The exercise price of incentive stock options granted to a shareholder of
SEEC that owns more than 10% of the total combined voting power of all classes
of stock of SEEC (a "Significant Shareholder"), must be no less than 110% of the
fair market value of a share of Common Stock on the grant date. Options become
exercisable at such times and in such installments as the Committee shall
provide at the date of grant. Options have a maximum term of 10 years (5 years
for an incentive stock option granted to a Significant Shareholder). The option
exercise price may be paid (i) in cash, (ii) with the Committee's approval, in
stock held by the optionee for at least six months prior to the exercise date or
(iii) otherwise as the Committee may approve. Options may be designated by the
Committee as incentive stock options for which the amount of option "spread" at
the time of exercise, assuming no disqualifying disposition, is generally not to
be taxable income to the grantee (except for possible alternative minimum tax
liability) and is not deductible by SEEC for federal income tax purposes.
Exercise after Termination of Employment. If an optionee's employment by
SEEC is terminated for cause, all unvested or unexercised options will terminate
and be forfeited. In the event an optionee ceases to be an employee because of
death or disability, all options will vest and any unexercised option may be
exercised for twelve months following the date of his or her death or
disability. If an optionee's employment terminates by reason of retirement under
SEEC's normal retirement policy, all vested and unexercised options may be
exercised for three months following such termination in the case of an
incentive stock option or twelve months in the case of a nonqualified stock
option. If an optionee's employment terminates for any other reason, any portion
of an option then unexercisable will be forfeited and the then-exercisable
portion of any unexercised option may be exercised for 30 days following such
termination. The Committee has the discretion to extend such post-termination
exercisability.
Company's Right to Purchase Shares. The Stock Option Plan provides SEEC
with certain rights to repurchase shares acquired through the exercise of stock
options granted under the Stock Option Plan and a
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<PAGE> 42
right of first refusal with respect to shares acquired through exercise of stock
options granted under the Stock Option Plan. Such rights will terminate upon the
closing of this Offering.
Amendments. The Stock Option Plan may be amended by the Board of Directors
without shareholder approval except as may be required to permit incentive stock
options to continue to be issued under the Stock Option Plan.
As of November 1, 1996, SEEC had granted options to purchase an aggregate
of 59,356 shares of Common Stock under the Stock Option Plan, of which 57,096
remained outstanding and unexercised.
CERTAIN TRANSACTIONS
The following is a summary of certain transactions to which SEEC was or is
a party and in which certain executive officers, directors or shareholders of
SEEC had or have a direct or indirect material interest.
ERA RELATIONSHIP
SEEC has certain relationships and has engaged in certain transactions with
ERA, an Indian software development company. SEEC owns approximately 8%,
Ravindra Koka, the President, a director and a principal shareholder of SEEC,
approximately 14% and Shankar Krish, an employee of SEEC, approximately 8% of
the outstanding capital stock of ERA. Mr. Koka and Mr. Krish are also directors
of ERA. In addition, ERA owns 150,679 shares of Common Stock of SEEC and the ERA
Foundation for the Administration of the SEEC, Inc. Stock Option Plan (the "ERA
Foundation") owns 180,815 shares of Common Stock of SEEC. Of the shares held by
the ERA Foundation, 150,679 shares are held for the benefit of ERA and will be
distributed to ERA or to ERA's shareholders (other than Mr. Koka) upon
termination of the ERA Foundation, which will occur upon the consummation of
this Offering. The other 30,136 shares of Common Stock held by the ERA
Foundation are held in trust for the employees of ERA. The trustees of the ERA
Foundation, one of whom is Mr. Koka, may grant ERA employees options to purchase
some or all of the 30,136 shares. SEEC issued the 180,815 shares of Common Stock
to the ERA Foundation in 1992 in consideration for shares of stock of ERA
representing a 10% interest in ERA and cash in the amount of $1,000.
Since SEEC's inception in 1988, ERA has provided certain research and
development services to SEEC. SEEC's initial development of its COBOL
maintenance products was funded in part by a grant from ICICI pursuant to the
Project Financing Agreement among ICICI, SEEC and ERA. The Project Financing
Agreement provided that SEEC and ERA would each have an ownership interest in
all products developed with funds provided thereunder. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and Notes 5 and 6 to Financial
Statements.
In March 1996, SEEC and ERA entered into the Product Purchase Agreement,
pursuant to which ERA transferred to SEEC its 35% ownership interest in
jointly-owned products and technologies, including COBOL Analyst, COBOL Slicer,
Object Designer, Date Analyzer and related derivative and add-on products, all
products developed pursuant to the Project Financing Agreement and all products
covered by the VIASOFT Agreement. In consideration of ERA's transfer of its
ownership interest in the products and technology, SEEC issued 150,679 shares of
Common Stock to ERA.
ERA also agreed to assist SEEC in developing new products and technologies.
Pursuant to the Product Purchase Agreement, ERA has the non-exclusive right to
perform design and development work with respect to SEEC's products pursuant to
specified development schedules. In addition, ERA has agreed to maintain in
India the necessary infrastructure and personnel to support such design and
development work. ERA has also agreed to transfer to SEEC the necessary manpower
for product support and to maintain a team of personnel in India for maintenance
of SEEC's products.
In consideration of ERA's developmental obligations under the Product
Purchase Agreement, SEEC agreed to pay ERA certain research and development
fees. SEEC is obligated to pay ERA, through December 31, 1996, a research and
development fee equal to 10% of its gross receipts from the products so
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<PAGE> 43
developed by ERA prior to the date of the Product Purchase Agreement, but not
less than $12,000 per quarter, and thereafter on mutually agreed terms. SEEC
also agreed to pay to ICICI on behalf of ERA 5% of its gross receipts from
products and services derived from COBOL redevelopment, and from all data-base
reengineering and reverse engineering products and services. As of September 30,
1996, the balance of the maximum royalty payable to ICICI on behalf of ERA was
$128,275. In addition, during the first three years of the Product Purchase
Agreement, SEEC has agreed to pay ERA a maintenance fee at a flat rate of $5,000
per month, and, in the next three years, $6,000 per month as long as the Product
Purchase Agreement remains in effect. Each party has the right to terminate the
Product Purchase Agreement upon certain events of default, upon the change of
control of the other party or upon 12 months notice. SEEC incurred a total of
$108,000, $104,000, $103,000 and $75,000 in royalties and fees due to ERA during
fiscal 1994, 1995 and 1996 and the six months ended September 30, 1996,
respectively. See "Business--Research and Development".
Pursuant to the Product Purchase Agreement, upon a change of control of
ERA, SEEC has the right to repurchase some or all of the shares of Common Stock
owned by ERA. SEEC also has the right to purchase ERA's research and development
facilities upon the occurrence of certain events including a change of control
of ERA, a termination of the Product Purchase Agreement by ERA upon 12 months
notice, certain defaults by ERA, an initial public offering by ERA or the
failure by the parties to agree upon maintenance fees after the first six years
of the Product Purchase Agreement. In the event SEEC does not purchase ERA's
facilities, ERA has agreed to maintain those facilities at a minimum of the same
size and quality as prior to the change of control. In the event of a change of
control of SEEC, ERA has the right to request a renegotiation of any or all of
the research and development provisions of the Product Purchase Agreement.
Pursuant to a Marketing Agreement dated March 1, 1996, SEEC granted ERA the
non-exclusive right to distribute SEEC's products in India only. Under such
agreement, ERA pays SEEC a royalty of 50% (40% during the first six months of
the agreement) of SEEC's suggested international list price for all products
distributed by ERA. During fiscal 1996 and the first six months of fiscal 1997,
ERA paid $11,500 and $39,820, respectively, in royalties to SEEC. The agreement
is for a term of three years. SEEC may terminate the agreement (i) for cause;
(ii) at any time after the first 12 months by paying ERA an amount equal to 150%
of ERA's gross revenues for the previous 12 months from sales of SEEC's
products; (iii) at any time after the first 18 months upon failure of the
parties to agree upon minimum sales by ERA or upon a business plan for ERA's
marketing of the products; or (iv) upon failure of ERA to achieve the agreed
upon minimum sales of SEEC's products.
SEEC, ERA and certain of the shareholders of SEEC have entered into a
Shareholders Agreement dated March 31, 1996. The agreement prohibits ERA from
transferring any of its shares of Common Stock without the prior written consent
of SEEC. Further, SEEC and the other parties to the Agreement have the right to
purchase the shares of Common Stock held by ERA in the event ERA wishes to sell
such shares. The Shareholders Agreement will terminate upon consummation of this
Offering.
SEEC anticipates that in the future decisions must be made with respect to
various categories of transactions between SEEC and ERA, such as the terms and
conditions under which ERA may provide research and development for SEEC
following December 31, 1996, whether SEEC will acquire ERA's research and
development facilities and whether SEEC and ERA will enter into a business
combination. All future transactions between SEEC and its officers, directors
and principal shareholders and their affiliates, including future transactions
between SEEC and ERA outside the ordinary course, will be approved by a majority
of the Board of Directors, including a majority of the disinterested directors,
and will be on terms no less favorable to SEEC than could be obtained from
unaffiliated third parties.
STOCK PURCHASES
In March 1996, Dr. Reddy, Chairman of the Board of SEEC, and Mr. Koka and
Mr. Godfrey, each an officer and director of SEEC, purchased from SEEC 22,602,
23,066 and 15,238 shares of Common Stock, respectively, at a price of $0.03 per
share, pursuant to the exercise of warrants issued to them in April 1993.
In July 1996, Dr. Reddy purchased from SEEC 20,097 shares of Common Stock
at a price of $4.98 per share by converting $75,000 in advances, plus accrued
interest, made by Dr. Reddy to SEEC from
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August 1990 to September 1992. The advances were deemed to have accrued interest
at a rate of 7% per annum.
In July 1996, Mr. Koka and Mr. Godfrey purchased from SEEC 21,246 and
13,927 shares of Common Stock, respectively, at a price of $4.98 per share. Mr.
Koka and Mr. Godfrey paid for their shares by converting demand notes issued to
them by SEEC in March 1992 to evidence deferred salaries owed to them. The
demand notes bore interest at a rate of 7% per annum and were in the respective
principal amounts of $76,541 and $50,565.
In July 1996, Stanley Young, a director of SEEC, purchased from SEEC 20,355
shares of Common Stock at a price of $4.98 per share by converting two demand
notes issued to him by SEEC in August 1990 and June 1991 in connection with two
$25,000 loans by Mr. Young to SEEC, and by converting the principal and accrued
interest of a $25,000 10% Subordinated Note purchased by Mr. Young in September
1992.
In July 1996, Amar Foundation, a shareholder of SEEC, purchased from SEEC
25,892 shares of Common Stock at a price of $4.98 per share by converting a
demand note issued by SEEC in June 1991 in connection with a $95,000 loan by
Amar Foundation to SEEC. The note bore interest at a rate of 7% per annum.
In July 1996, Abraham Ostrovsky, who will become a director of SEEC
following the closing of the Offering, purchased from SEEC 1,771 shares of
Common Stock at a price of $4.98 per share by converting a $6,250 10%
Subordinated Note purchased by Mr. Ostrovsky in April 1992.
In September 1996, Radha R. Basu, a director of the Company, purchased
2,756 shares of Common Stock at a price of $5.44 per share.
In September 1996, Shyamala Reddy and Geetha Reddy, each of whom is a
daughter of Dr. Raj Reddy, purchased 21,697 and 7,232 shares of Common Stock,
respectively, at a price of $5.44 per share.
REGISTRATION RIGHTS AGREEMENT
SEEC has entered into a Registration Rights Agreement, dated as of August
15, 1996 (the "Registration Rights Agreement"), with certain holders of its
Common Stock. The Registration Rights Agreement provides that each of the
parties will have the right, commencing on the date which is 270 days following
the date of this Prospectus, to demand registration of some or all of their
shares under the Securities Act in connection with the offering thereof on a
firm commitment underwritten basis, subject to the demand being made by the
holders of at least a majority of the securities registerable thereunder. As of
the date of this Prospectus, the aggregate number of shares of Common Stock
outstanding as to which such demand registration rights may be exercised is
298,574. The Registration Rights Agreement also provides that each of the
parties has the right, whenever SEEC proposes to register any of its securities,
to require that SEEC include in such registration some or all of each of the
parties' shares. The expenses of such registrations (other than underwriting
discounts and commissions) will be borne by SEEC. SEEC has agreed to indemnify
the parties to the Registration Rights Agreement for losses caused by (i) any
untrue or alleged untrue statement or omission of material fact in any
registration statement and (ii) with certain exceptions, any violation by SEEC
of the Securities Act or any rule or regulation thereunder in connection with a
registration.
43
<PAGE> 45
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of SEEC's Common Stock at November 1, 1996, by each person
known by SEEC to be the beneficial owner of more than 5% of the outstanding
Common Stock, by each director and director-elect of SEEC, by the Chief
Executive Officer of SEEC and by all directors, director nominees and executive
officers of SEEC as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF SHARES PERCENT OF SHARES
COMMON STOCK OUTSTANDING OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PRIOR TO OFFERING(2) AFTER OFFERING(3)
- ------------------------------------------- --------------------- -------------------- -----------------
<S> <C> <C> <C>
Ravindra Koka (4).......................... 530,102 28.3% 18.5%
Raj Reddy (5).............................. 344,058 18.4 12.0
Adam D. Young (6).......................... 303,619 16.3 10.6
Amar Foundation (7)........................ 205,201 10.8 7.1
ERA Foundation for the Administration of
the SEEC, Inc. Stock Option Plan (8)..... 180,815 9.7 6.3
John D. Godfrey (9)........................ 152,963 8.2 5.3
ERA Software Systems Private Limited
(10)..................................... 150,679 8.1 5.3
Adam D. Young Qualified Annuity Trust
(11)..................................... 100,453 5.4 3.5
Ravindra Koka Retained Annuity Trust
(12)..................................... 100,000 5.4 3.5
Stanley A. Young (13)...................... 42,956 2.3 1.5
Radha R. Basu (14)......................... 2,756 .2 .1
Abraham Ostrovsky (15)..................... 3,654 .2 .1
All directors, directors-elect and
executive officers as a group (7 persons)
(16)..................................... 1,076,489 56.7 37.1
</TABLE>
- ---------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Shares of Common Stock subject to
options or warrants exercisable within 60 days are deemed outstanding for
computing the percentage of the person or group holding such options or
warrants, but are not outstanding for computing the percentage of any other
person. Except as noted, each shareholder has sole voting power and sole
investment power with respect to all shares beneficially owned by such
shareholder.
(2) Based upon 1,868,535 shares outstanding prior to the Offering.
(3) Based upon 2,868,535 shares outstanding after the Offering. Does not
reflect shares, if any, to be purchased by any such individual in the
Offering.
(4) Includes 3,616 shares of Common Stock issuable upon the exercise of
outstanding options and 100,000 shares of Common Stock owned by Ravindra
Koka Retained Annuity Trust of which Mr. Koka is trustee. Also includes
180,815 shares of Common Stock owned by ERA Foundation, of which Mr. Koka
is a co-Trustee, with respect to which Mr. Koka disclaims any financial
interest. Does not include 150,679 shares of Common Stock owned by ERA, of
which Mr. Koka is a director and stockholder, with respect to which Mr.
Koka disclaims any beneficial interest. Mr. Koka's address is in care of
SEEC, Inc., 5001 Baum Boulevard, Pittsburgh, Pennsylvania 15213.
(5) Mr. Reddy's address is in care of SEEC, Inc., 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213.
(6) Includes 100,453 shares of Common Stock owned by Adam D. Young Qualified
Annuity Trust, of which Mr. Young's wife is trustee. Adam D. Young's
address is 10 Riverside Drive, Marblehead, Massachusetts 01945.
(7) Includes 28,629 shares of Common Stock issuable upon the exercise of
outstanding warrants. Amar Foundation's address is 630 Los Trancos Road,
Portola Valley, California 94025.
44
<PAGE> 46
(8) ERA Foundation's address is in care of Ravindra Koka, Trustee, SEEC, Inc.
5001 Baum Boulevard, Pittsburgh, Pennsylvania 15213.
(9) Includes 3,254 shares of Common Stock issuable upon the exercise of
outstanding options. Mr. Godfrey's address is in care of SEEC, Inc., 5001
Baum Boulevard, Pittsburgh, Pennsylvania 15213.
(10) ERA's address is 4 Motilal Nehru Nagar, 1st Floor, Begumpet Road, Hyderabad
500 016 India.
(11) The address of Adam D. Young Qualified Annuity Trust is in care of Dana
Young, Trustee, 10 Riverside Drive, Marblehead, Massachusetts 01945.
(12) The address of Ravindra Koka Retained Annuity Trust is in care of Ravindra
Koka, Trustee, SEEC, Inc., 5001 Baum Boulevard, Pittsburgh, Pennsylvania
15213.
(13) Includes 22,601 shares of Common Stock issuable upon the exercise of
outstanding warrants. Stanley Young's address is in care of Young
Management Group, Inc., 24 New England Executive Park, Burlington,
Massachusetts 01803.
(14) Ms. Basu's address is c/o Hewlett Packard Company, International Software
Operation, 1266 Kifer Road, Sunnyvale, California 94086.
(15) Includes 1,883 shares issuable upon the exercise of outstanding warrants.
Mr. Ostrovsky's address is in care of Cable-Sat Systems, Inc., 2105
Hamilton Avenue, Suite 140, San Jose, California 95125.
(16) Includes 6,870 shares issuable upon exercise of outstanding options and
24,484 shares issuable upon exercise of outstanding warrants.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of SEEC consists of (i) 20,000,000 shares of
Common Stock, par value $.01 per share and (ii) 10,000,000 shares of Preferred
Stock, without par value (the "Preferred Stock"). The following description of
the capital stock of SEEC does not purport to be complete or to give full effect
to the provisions of statutory or common law and is subject in all respects to
the provisions of SEEC's Articles of Incorporation (the "Articles") as in effect
from time to time.
COMMON STOCK
As of November 1, 1996, SEEC had issued and outstanding 1,868,535 shares of
Common Stock. All outstanding shares of Common Stock are, and the shares offered
hereby will be, fully paid and nonassessable. The holders of Common Stock are
entitled to one vote for each share held of record on all matters voted upon by
shareholders and may not cumulate votes for the election of directors. Thus, the
owners of a majority of the shares of Common Stock outstanding may elect all of
the directors, if they choose to do so, and the owners of the balance of such
shares would not be able to elect any directors. Subject to preferences that may
be applicable to any outstanding shares of Preferred Stock, each share of
outstanding Common Stock is entitled to participate equally in any distribution
of net assets made to the shareholders upon liquidation, dissolution or winding
up of SEEC and is entitled to participate equally in dividends as and when
declared by SEEC's Board of Directors. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of Common Stock. All
shares of Common Stock have equal rights and preferences.
PREFERRED STOCK
SEEC's Board of Directors is authorized by the Articles to fix or alter the
rights, preferences, privileges and restrictions of any series of Preferred
Stock, including the dividend rights, original issue price, conversion rights,
voting rights, terms of redemption, liquidation preferences and sinking fund
terms thereof, and the number of shares constituting any such series and the
designation thereof, and to increase or decrease the number of shares of such
series subsequent to the issuance of shares of such series (but not below the
number of shares then outstanding). As the terms of the Preferred Stock can be
fixed by the Board of Directors without shareholder action, the Board may issue
Preferred Stock with terms calculated to defeat a proposed takeover of SEEC or
to make the removal of management more difficult. The Board of Directors,
without
45
<PAGE> 47
shareholder approval, could issue Preferred Stock with dividend, voting,
conversion and other rights which could adversely affect the rights of the
holders of Common Stock. SEEC's Board of Directors currently has no plans to
issue shares of Preferred Stock.
WARRANTS AND CONVERSION RIGHTS
Stanley A. Young, a director of SEEC, and Amar Foundation, a shareholder of
SEEC, hold warrants to purchase 22,601 and 28,629 shares of Common Stock,
respectively, at an exercise price of $.03 per share. The warrants were issued
in April 1993 in connection with loans to SEEC made by Mr. Young and Amar
Foundation in the amounts of $50,000 and $95,000, respectively, and in
connection with Mr. Young's purchase of a $25,000 10% Subordinated Note. The
warrants are currently exercisable, and expire on December 31, 1999.
Certain other purchasers of SEEC's 10% Subordinated Notes, all of which
were converted into shares of Common Stock in August 1996, hold warrants to
purchase an aggregate of 60,264 shares of Common Stock at an exercise price of
$.03 per share. The warrants were issued in April, September and October 1992 in
connection with the holders' purchases of SEEC's 10% Subordinated Notes, are
exercisable upon the effectiveness of the Offering, and expire on April 1, 1997
(30,132 shares) and September 28, 1997 (30,132 shares). Abraham Ostrovsky, who
will become a director of SEEC upon consummation of the Offering, is a holder of
warrants to purchase 1,883 shares of Common Stock which will expire on April 1,
1997. See "Certain Transactions."
SEEC will also issue the Representative's Warrant to the Representative
upon consummation of the Offering. See "Underwriting."
SEEC's loan agreement with ICICI provides that upon a default by SEEC under
such agreement, ICICI has the right to convert the unpaid principal and interest
of such loan into shares of Common Stock at fair value as determined by an
independent evaluator. In 1996, the Company was in default of certain payment
and other obligations under the ICICI Loan Agreement, but as of September 30,
1996 brought such payment obligations current and received a written waiver from
ICICI of all existing and prior defaults. See "Risk Factors--Prior Defaults" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources".
REGISTRATION RIGHTS
SEEC has granted registration rights to certain shareholders of SEEC. See
"Certain Transactions-- Registration Rights Agreement." SEEC also has granted
certain registration rights to the Representative in connection with the
issuance of the Representative's Warrant. See "Underwriting".
TRANSFER AGENT
The transfer agent for the Common Stock will be American Stock Transfer &
Trust Company.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS
SEEC's Articles will authorize the Board of Directors to issue, from time
to time, without any further action on the part of SEEC's shareholders, up to
10,000,000 shares of Preferred Stock in one or more series, with such
preferences, limitations and relative rights as are determined by the Board of
Directors at the time of issuance. The issuance of shares of Preferred Stock
could be used by SEEC to discourage or make more difficult a merger, tender
offer or similar transaction involving SEEC and may encourage any party seeking
to acquire control of SEEC to negotiate the transaction, in advance, with the
Board of Directors and to present any proposed transaction to all of the
shareholders. The Board of Directors believes that an arms'-length negotiation
of the terms of any takeover of control of SEEC is likely to result in more
favorable terms for all shareholders than the terms of a takeover that is
initiated without advance negotiations with the Board of Directors.
46
<PAGE> 48
SEEC has elected not to be governed by certain "anti-takeover" provisions
that had been added to the Pennsylvania Business Corporation Law (the "BCL"),
including provisions that (i) strip voting rights from "control shares," (ii)
require disgorgement of short-term profits upon disposition of stock by certain
controlling persons and (iii) require severance payments and protection of
collective bargaining agreements following certain control share acquisitions.
SEEC's Bylaws divide the Board of Directors into three classes, each class
to be as nearly equal in number of directors as possible. At each annual meeting
of shareholders, directors in each class will be elected for three-year terms to
succeed the directors of that class whose terms are expiring. Abraham Ostrovsky
and Stanley A. Young are Class I directors whose terms of office will expire in
1997. Radha R. Basu and John D. Godfrey are Class II directors whose terms will
expire in 1998. Ravindra Koka and Raj Reddy are Class III directors whose terms
will expire in 1999. This provision could, under certain circumstances, operate
to delay, defer or prevent a change in control of SEEC.
The VIASOFT Agreement provides that, if SEEC (or its principals) receives
an unsolicited offer to enter into a transaction or series of transactions
involving the sale of substantially all of its business or product line, whether
through the sale or exchange of capital stock, merger, consolidation, or sale or
other transfer of assets, or a transaction or series of transactions that would
result in a change in control of SEEC (any of the foregoing being a "significant
transaction"), VIASOFT will have an exclusive right for a period of seven days
to negotiate with SEEC with respect to accomplishing a mutually acceptable
significant transaction. During the exclusive period, the Company is obligated
to negotiate in good faith exclusively with VIASOFT and not negotiate with or
solicit any offers or discussions from any third party with respect to a
significant transaction.
LIMITATION OF DIRECTORS' LIABILITY
Section 1713 of the BCL provides that, if a bylaw adopted by the
shareholders of a Pennsylvania business corporation so provides, a director of
such corporation will not be personally liable for monetary damages for any
action taken unless the director has breached or failed to perform the duties of
his office under the BCL and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. Section 1713 provides that its
provisions do not apply to the responsibility or liability of a director
pursuant to any criminal statute or the liability of a director for the payment
of taxes pursuant to federal, state or local law. As permitted by the provisions
of the BCL, SEEC'S Bylaws limit the personal liability of directors of SEEC for
monetary damages for actions taken as a director, except to the extent that the
director has breached or failed to perform his or her duties to SEEC and the
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness. The Company does not believe that its Bylaws would affect any
liabilities of the Company's directors under the federal securities laws.
INDEMNIFICATION
As permitted by the BCL, SEEC's Bylaws require SEEC to indemnify all
directors and officers of SEEC. Under such provisions, any director or officer
who, in his or her capacity as such, is made or threatened to be made a party to
any suit or proceeding must be indemnified if such director or officer acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of SEEC. The Bylaws and the BCL further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Articles, any agreement, insurance policies, vote of
shareholders or disinterested directors or otherwise. SEEC has not purchased
directors' and officers' insurance.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering and assuming no exercise of outstanding
warrants and options, SEEC will have outstanding 2,868,535 shares of Common
Stock. Of such shares, the 1,000,000 shares sold in this Offering, and any of
the 150,000 shares which may be sold upon exercise of the Underwriters'
over-allotment option, will be freely tradable by persons other than
"affiliates" of SEEC, as that term is defined in Rule 144 under the Securities
Act. The remaining 1,868,535 shares of Common Stock are "restricted securities"
within the meaning of Rule 144 (the "Restricted Shares"). The Restricted Shares
may not be sold unless they are
47
<PAGE> 49
registered under the Securities Act or sold pursuant to an applicable exemption
from registration, including an exemption pursuant to Rule 144 under the
Securities Act. Holders of approximately 298,574 Restricted Shares have certain
registration rights pursuant to the Registration Rights Agreement. See "Certain
Transactions--Registration Rights Agreement."
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years, including persons who may be deemed to be "affiliates" of SEEC,
as that term is defined under Rule 144, may sell within any three-month period a
number of Restricted Shares that does not exceed the greater of one percent of
the then outstanding shares of the Common Stock (estimated to be 28,685 shares
after completion of this Offering, or 30,185 shares if the Underwriters'
over-allotment option is exercised in full) or the average weekly trading volume
of the Common Stock on the open market during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain manner-of-sale
limitations, notice requirements, and the availability of current public
information about SEEC. Pursuant to Rule 144(k), a person (or persons whose
shares are aggregated) who is deemed not to have been an "affiliate" of SEEC at
any time during the three months preceding a sale, and who has beneficially
owned Restricted Shares for at least three years, would be entitled to sell such
shares under Rule 144 without regard to the volume limitations, manner-of-sale
provisions or notice requirements. Restricted Shares properly sold in reliance
upon Rule 144 are thereafter freely tradable without restrictions or
registration under the Securities Act, unless thereafter held by an "affiliate"
of SEEC.
An employee, officer or director of or consultant to SEEC who purchased or
was awarded shares or options to purchase shares pursuant to a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701 under the Securities Act, which permits affiliates and non-affiliates
to sell their Rule 701 shares without having to comply with Rule 144's holding
period restrictions, in each case commencing 90 days after the effectiveness of
the Offering (the "Effective Date"). In addition, non-affiliates may sell Rule
701 shares without complying with the public information, volume and notice
provisions of Rule 144.
Beginning 270 days after the Effective Date, upon the expiration of the
lock-up agreements described below, or earlier in the discretion of the
Representative, approximately 1,356,116 Restricted Shares will become eligible
for sale in the public market in reliance upon Rule 144. In addition,
outstanding options and warrants to purchase approximately 18,471 and 111,494
shares of Common Stock, respectively, will be fully vested as of the Effective
Date, and all such options and warrants are subject to the 270-day lock-up
agreements described below.
All directors, officers and employees and substantially all shareholders,
who hold in the aggregate approximately shares of Common Stock,
options to purchase approximately shares of Common Stock, and warrants
to purchase approximately shares of Common Stock have agreed, pursuant
to agreements with the Representative, that they will not, without the prior
written consent of the Representative, sell or otherwise dispose of any shares
of Common Stock or options to acquire shares of Common Stock during the 270-day
period following the Effective Date.
Prior to this Offering there has been no market for the Common Stock, and
no prediction can be made as to the effect, if any, that sales of Restricted
Shares, or the availability of Restricted Shares for sale, by existing
shareholders in reliance upon Rule 144, pursuant to registration or otherwise
will have on the market price of Common Stock. The sale by SEEC or the
shareholders referred to above of a substantial number of shares of Common Stock
after this Offering could adversely affect the market price for the Common
Stock.
48
<PAGE> 50
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
(the "Underwriting Agreement"), each of the Underwriters has severally agreed to
purchase from SEEC, and SEEC has agreed to sell to the Underwriters, the number
of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ---------
<S> <C>
H.C. Wainwright & Co., Inc. .....................................................
---------
Total....................................................................... 1,000,000
========
</TABLE>
The Underwriting Agreement provides that the several Underwriters, subject
to the terms and conditions set forth therein, will purchase all of the shares
of Common Stock offered hereby if any of the shares are purchased. In the event
of a default by an Underwriter, the Underwriting Agreement provides that, under
certain circumstances, the purchase commitments of each nondefaulting
Underwriter may be increased or the Underwriting Agreement may be terminated.
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to the approval of certain legal matters by counsel and
various other conditions.
The Underwriters, for whom H.C. Wainwright & Co., Inc. is acting as the
representative (the "Representative"), have advised the Company that they
propose to offer the shares of Common Stock, other than some or all of the
Reserved Shares (as defined below), to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at that price less a concession not in excess of $ per share. The
Underwriters may allow, and the dealers may reallow, a discount not in excess of
$ per share on sales to other dealers. After the initial public offering,
the offering price, concession and reallowance may be changed by the
Underwriters.
At the request of SEEC, the Underwriters have reserved up to approximately
50,000 shares (the "Reserved Shares") of Common Stock for sale to certain
directors, officers, employees and friends of SEEC, and certain relatives of
such directors, officers, employees and friends of SEEC, who have expressed an
interest in purchasing shares of Common Stock in this Offering. The Reserved
Shares will be sold to such persons through brokerage accounts opened
specifically for such purpose through H.C. Wainwright & Co., Inc. The price for
such Reserved Shares will be the public offering price. The number of shares
available to the general public will be reduced to the extent such persons
purchase the Reserved Shares. Any Reserved Shares that are not so purchased by
such persons at the initial closing of this Offering will be sold by the
Underwriters to the general public on the same terms as the other shares of
Common Stock offered hereby.
SEEC has granted an option to the Underwriters, exercisable within 30 days
after the date of this Prospectus, to purchase up to 150,000 additional shares
of Common Stock at the initial public offering price less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriters may
exercise the option solely for the purpose of covering over-allotments, if any,
in connection with the sale of shares of Common Stock.
49
<PAGE> 51
SEEC has agreed to pay the Representative a non-accountable expense
allowance of three percent (3%) of the gross proceeds of the Offering, which
will include proceeds from the over-allotment option, if exercised. The
Representative's expenses in excess of the non-accountable expense allowance,
including its legal expenses, will be borne by the Representative.
In the Underwriting Agreement, SEEC has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
SEEC has agreed to sell to the Representative, for nominal consideration, a
warrant to purchase from SEEC up to 100,000 shares of Common Stock (115,000
shares if the Underwriters' overallotment option is exercised in full) at an
exercise price per share equal to 120% of the initial public offering price (the
"Representative's Warrant"). The Representative's Warrant is exercisable for a
period of four years beginning one year from the date of this Prospectus, and is
not transferable for a period of one year except to officers of the
Representative or to any successor to the Representative. SEEC has granted
certain registration rights to the holder of the Representative's Warrant. The
Representative's Warrant contains anti-dilution provisions providing for
appropriate adjustment upon the occurrence of certain events.
SEEC and its directors, executive officers, and certain other employees and
the holders of substantially all of the Common Stock and options and warrants to
purchase Common Stock outstanding prior to the offering have agreed that they
will not offer, contract, sell or otherwise dispose of directly or indirectly
any shares of Common Stock for a period of 270 days following the date of this
Prospectus, without the prior written consent of the Representative except, in
the case of SEEC, for the shares of Common Stock offered hereby and the issuance
of shares of Common Stock upon the exercise of stock options granted under the
Stock Option Plan and, in the case of the shareholders, for gifts of the Common
Stock provided the donee agrees in writing to be bound by the same restrictions.
Prior to this Offering, there has been no public market for the Common
Stock. Accordingly, the public offering price will be determined by negotiation
between SEEC and the Representative. Among the factors to be considered in
determining the public offering price will be the preliminary demand for the
Common Stock, prevailing market and economic conditions, SEEC's revenues and
earnings, estimates of the business potential and prospects of SEEC, the present
state of SEEC's business operations, an assessment of SEEC's management, and the
consideration of these factors in relation to the market valuation of comparable
companies in related businesses and the current condition of the markets in
which SEEC operates.
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a copy
of each agreement which is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. See "Additional Information."
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock offered
herein will be passed upon for SEEC by Cohen & Grigsby, P.C., Pittsburgh,
Pennsylvania and for the Underwriters by Morse, Barnes-Brown & Pendleton, P.C.,
Waltham, Massachusetts.
EXPERTS
The financial statements and schedule included in this Prospectus and in
the Registration Statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such reports given upon the authority of said firm
as experts in accounting and auditing.
50
<PAGE> 52
ADDITIONAL INFORMATION
SEEC has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
pursuant to this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement or the exhibits thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to SEEC and the Common
Stock offered hereby, reference is made to the Registration Statement, including
the exhibits thereto. Such information may be reviewed at, or obtained by mail
at prescribed rates from, the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, such information may
also be reviewed at the regional offices of the Commission at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven
World Trade Center, New York, New York 10007. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of such site is http://www.sec.gov. Statements made in this
Prospectus concerning the provisions of such documents are summaries of such
documents and each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
Prior to this Offering, SEEC has not been required to file reports under
the Exchange Act. However, following the completion of this Offering, SEEC will
be required to file reports and other information with the Commission pursuant
to the Exchange Act. Such reports and other information may be inspected at, and
copies thereof obtained from, the offices of the Commission as set forth in the
preceding paragraph.
SEEC intends to furnish its shareholders with annual reports containing
audited financial statements reported on by independent public accountants
following the end of each fiscal year, and quarterly reports containing
unaudited financial statements for the first three quarters of each fiscal year
following the end of each such fiscal quarter.
51
<PAGE> 53
SEEC, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Certified Public Accountants............................... F-2
Balance Sheets................................................................... F-3
Statements of Operations......................................................... F-4
Statements of Changes in Shareholders' Equity (Deficit).......................... F-5
Statements of Cash Flows......................................................... F-6
Notes to Financial Statements.................................................... F-7
</TABLE>
F-1
<PAGE> 54
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(The following is the form of opinion that BDO Seidman, LLP will be in a
position to issue upon completion of the recapitalization described in Note 1.)
To the Shareholders and
Board of Directors
SEEC, Inc.
Pittsburgh, Pennsylvania
We have audited the accompanying balance sheets of SEEC, Inc. as of March
31, 1995 and 1996, and the related statements of operations, changes in
shareholders' equity (deficit), and cash flows for each of the three years in
the period ended March 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SEEC, Inc. as of March 31,
1995 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended March 31, 1996, in conformity with generally
accepted accounting principles.
BDO Seidman, LLP
August 30, 1996, except for Notes 15
and 16(d), (e) and (f), as to which
the date is October 1, 1996, and the
recapitalization described in Note 1,
as to which the date is November , 1996
Boston, Massachusetts
F-2
<PAGE> 55
SEEC, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 SEPTEMBER
--------------------------- 30,
1995 1996 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 327,718 $ 110,841 $ 821,934
Accounts receivable:
Trade--less allowance for doubtful accounts of
$3,935 and $7,776 at March 31, 1995 and 1996,
respectively and $7,776 at September 30, 1996
(Notes 3 and 9).............................. 189,276 244,679 467,437
Affiliate--ERA (Notes 5 and 6)................. 16,734 992 --
Prepaid expenses (Note 2)......................... 5,862 5,515 147,512
----------- ----------- -----------
Total current assets......................... 539,590 362,027 1,436,883
EQUIPMENT, NET (NOTES 4 AND 9)...................... 26,009 27,693 37,742
INVESTMENT IN AFFILIATE (Note 5).................... 5,000 5,000 5,000
----------- ----------- -----------
$ 570,599 $ 394,720 $ 1,479,625
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable:
Trade.......................................... $ 46,938 $ 66,930 $ 273,645
Affiliate--ERA (Notes 5 and 6)................. -- -- 81,050
Current portion of notes payable to related
parties (Note 8)............................... 125,650 -- --
Accrued payroll, related taxes and withholdings... 34,800 45,660 53,570
Accrued royalties (Notes 5 and 6)................. 39,272 65,077 117,149
Accrued interest payable (Note 9)................. 13,075 20,250 8,000
Deferred maintenance revenue and current portion
of advance royalty (Note 6).................... 309,984 311,246 234,231
Customer advance.................................. 31,645 21,330 --
Current maturities of long-term debt (Note 9)..... 60,000 60,000 120,000
----------- ----------- -----------
Total current liabilities.................... 661,364 590,493 887,645
Due to officers/shareholders (Notes 10 and 11)...... 163,580 172,477 --
Notes payable to related parties, less current
portion (Notes 8 and 10).......................... 436,837 599,638 --
Long-term debt, less current maturities (Note 9).... 240,000 240,000 180,000
Advance royalty, less current portion (Note 6)...... 180,000 42,857 --
Accrued royalties (Note 6).......................... 17,452 29,040 33,314
----------- ----------- -----------
Total liabilities............................ 1,699,233 1,674,505 1,100,959
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (NOTES 2, 5, 6, 7, 10,
12, 13, 15 AND 16)
SHAREHOLDERS' EQUITY (DEFICIT)
(NOTES 2, 5, 7, 8, 9, 10, 11 AND 16):
Preferred stock--no par value; 10,000,000 shares
authorized; none outstanding
Common stock--$.01 par value; 20,000,000 shares
authorized; 1,358,376, 1,569,961 and 1,868,535
shares issued and outstanding at March 31, 1995
and 1996, and September 30, 1996,
respectively................................... 13,584 15,700 18,685
Additional paid-in capital........................ 38,787 38,692 1,568,682
Accumulated deficit............................... (1,181,005) (1,334,177) (1,208,701)
----------- ----------- -----------
Total shareholders' equity (deficit)......... (1,128,634) (1,279,785) 378,666
----------- ----------- -----------
$ 570,599 $ 394,720 $ 1,479,625
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 56
SEEC, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31 SIX MONTHS ENDED
-------------------------------------- SEPTEMBER 30
1994 1995 1996 ------------------------
---------- ---------- ---------- 1995 1996
---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE (Note 3):
Software license fees
(Notes 5 and 6)............ $ 480,933 $ 462,929 $ 505,555 $ 222,587 $ 492,040
Software maintenance fees..... 63,808 105,399 101,868 57,644 75,906
Professional services--product
related.................... 40,735 42,355 181,395 32,207 266,391
Professional services--other
(Note 5)................... 362,975 349,898 476,413 218,209 371,999
---------- ---------- ---------- ---------- ----------
Total revenues............. 948,451 960,581 1,265,231 530,647 1,206,336
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Cost of software license and
maintenance fees
(Notes 5 and 6)............ 108,081 126,652 149,184 67,531 117,451
Professional services--product
related.................... 9,853 13,952 58,542 13,398 135,427
Professional services--other
(Note 5)................... 254,826 242,921 439,545 182,379 302,708
General and administrative
(Note 12).................. 148,981 132,358 142,058 75,401 86,989
Sales and marketing........... 215,087 235,977 236,788 107,570 276,221
Research and development (Note
5)......................... 317,471 407,231 336,954 177,766 137,810
---------- ---------- ---------- ---------- ----------
Total operating expenses... 1,054,299 1,159,091 1,363,071 624,045 1,056,606
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS... (105,848) (198,510) (97,840) (93,398) 149,730
---------- ---------- ---------- ---------- ----------
OTHER EXPENSE, NET:
Interest expense
(Notes 6, 8, 9 and 11)..... (50,066) (62,866) (74,712) (37,969) (31,438)
Other income.................. 1,105 5,818 19,380 13,652 7,184
---------- ---------- ---------- ---------- ----------
Total other expense, net... (48,961) (57,048) (55,332) (24,317) (24,254)
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) (Note 13)..... $ (154,809) $ (255,558) $ (153,172) $ (117,715) $ 125,476
========= ========= ========= ========= =========
Net income (loss) per common
share......................... $ (.09) $ (.14) $ (.09) $ (.07) $ .06
========= ========= ========= ========= =========
Weighted average number of
common and common equivalent
shares outstanding............ 1,779,867 1,780,319 1,784,463 1,782,127 1,972,522
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 57
SEEC, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 31, 1994, 1995 AND 1996
AND THE SIX MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- ADDITIONAL SHAREHOLDERS'
NUMBER OF PAID-IN ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL DEFICIT (DEFICIT)
--------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance--April 1, 1993
(Note 1).................... 1,356,116 $13,561 $ 37,160 $ (770,638) $ (719,917)
Net loss for year............. -- -- -- (154,809) (154,809)
--------- ------- ---------- ----------- -----------
Balance--March 31, 1994....... 1,356,116 13,561 37,160 (925,447) (874,726)
Exercise of stock options..... 2,260 23 1,627 -- 1,650
Net loss for year............. -- -- -- (255,558) (255,558)
--------- ------- ---------- ----------- -----------
Balance--March 31, 1995....... 1,358,376 13,584 38,787 (1,181,005) (1,128,634)
Exercise of warrants (Note
10)......................... 60,906 609 1,412 -- 2,021
Acquisition of software rights
from affiliate (Note 5)..... 150,679 1,507 (1,507) -- --
Net loss for year............. -- -- -- (153,172) (153,172)
--------- ------- ---------- ----------- -----------
Balance--March 31, 1996....... 1,569,961 15,700 38,692 (1,334,177) (1,279,785)
Issuance of common stock for:
Conversion of notes and
other long-term
liabilities payable to
related parties (Notes 8
and 11).................. 157,809 1,578 783,957 -- 785,535
Cash (Note 16).............. 140,765 1,407 746,033 -- 747,440
Net income--six months ended
September 30, 1996
(Unaudited)................. -- -- -- 125,476 125,476
--------- ------- ---------- ----------- -----------
Balance--September 30, 1996
(Unaudited)................. 1,868,535 $18,685 $1,568,682 $(1,208,701) $ 378,666
========= ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 58
SEEC, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31 SIX MONTHS ENDED
------------------------------------- SEPTEMBER 30
1994 1995 1996 ----------------------
--------- --------- --------- 1995 1996
--------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................... $(154,809) $(255,558) $(153,172) $(117,715) $125,476
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating
activities:
Depreciation............................. 7,941 13,389 14,351 5,787 5,800
Provision for doubtful accounts.......... -- -- 6,836 4,000 --
Proceeds from advance royalty............ 160,000 620,000 120,000 120,000 --
Amortization of deferred revenue......... (85,714) (257,143) (257,143) (128,571) (128,571)
Accrued non-current interest............. 46,048 46,046 46,048 23,025 13,420
Accrued non-current royalty.............. 6,667 10,785 11,588 6,688 4,274
Changes in operating assets and
liabilities:
Accounts receivable................... (93,339) (26,262) (62,239) 62,311 (222,758)
Accounts receivable--affiliate........ -- (16,734) 15,742 16,734 992
Prepaid expenses...................... 15,991 (4,717) 347 2,098 (141,997)
Accounts payable...................... (11,345) (48,942) 19,992 (10,330) 206,715
Accounts payable--affiliate........... 43,923 (43,923) -- 24,083 81,050
Accrued payroll, related taxes and
withholdings........................ 30,812 (27,794) 10,860 1,294 7,910
Accrued royalties..................... 9,448 22,641 25,805 (71,898) 52,072
Accrued interest payable.............. -- 13,075 7,175 425 (12,250)
Deferred maintenance revenue.......... 29,721 (2,174) 1,262 (9,564) 8,699
Customer advance...................... 32,671 (43,355) (10,315) (4,530) (21,330)
--------- --------- --------- --------- --------
Net cash provided (used) by operating
activities................................. 38,015 (666) (202,863) (76,163) (20,498)
--------- --------- --------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment...................... (19,033) (18,564) (16,035) (1,781) (15,849)
Purchase of certificate of deposit......... -- -- -- (103,662) --
--------- --------- --------- --------- --------
Net cash used by investing activities........ (19,033) (18,564) (16,035) (105,443) (15,849)
--------- --------- --------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt............... -- 300,000 -- -- --
Proceeds from sale of common stock......... -- -- -- -- 747,440
Exercise of common stock warrants and
options.................................. -- 1,650 2,021 -- --
--------- --------- --------- --------- --------
Net cash provided by financing activities.... -- 301,650 2,021 -- 747,440
--------- --------- --------- --------- --------
Net increase (decrease) in cash and cash
equivalents................................ 18,982 282,420 (216,877) (181,606) 711,093
CASH AND CASH EQUIVALENTS:
Beginning of year.......................... 26,316 45,298 327,718 327,718 110,841
--------- --------- --------- --------- --------
End of year................................ $ 45,298 $ 327,718 $ 110,841 $ 146,112 $821,934
========= ========= ========= ========= ========
Supplemental cash flow information:
Cash paid during the period for interest..... $ -- $ -- $ 19,825 $ 13,075 $ 29,250
========= ========= ========= ========= ========
Purchase of software rights from affiliate
(Note 5)................................. $ -- $ -- $ 1,507 $ -- $ --
========= ========= ========= ========= ========
Conversion of debt to common stock (Notes 8
and 11).................................. $ -- $ -- $ -- $ -- $785,535
========= ========= ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 59
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 1--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business. SEEC, Inc. (the Company) provides a suite of software products
and related services to assist primarily Fortune 1000 companies and
similarly-sized business and governmental organizations in the maintenance and
redevelopment of existing legacy COBOL software applications and related
databases for large mainframe systems. The Company also provides solutions for
the system redevelopment required for year 2000 compliance and to support the
migration of existing COBOL applications from a mainframe to a client/server
environment.
The Company's PC-Windows-based products for COBOL application maintenance
and redevelopment are designed to be alternatives to existing mainframe-based
tools. Marketing efforts are conducted through the Company's direct sales force,
product distributors, and relationships with third-party service providers under
non-exclusive marketing licenses. The Company sells and supports its products
and services from its Pittsburgh, Pennsylvania headquarters.
The Company has a strategic software research and development alliance with
ERA Software Systems Private, Limited (ERA), a software consulting and
development group based in India. The Company and ERA are affiliated through
common ownership (see Notes 5 and 6).
Recapitalization. On November , 1996, the Board of Directors effected a
1-for-3.3183 reverse stock split in connection with a proposed public offering
of the Company's common stock. All shares, options, warrants and per share
amounts in the accompanying financial statements have been adjusted to reflect
the effects of this recapitalization.
Basis of Presentation. The accompanying balance sheet as of September 30,
1996, the related statements of operations, changes in capital deficit, and cash
flows for the six months ended September 30, 1996, and the statements of
operations and cash flows for the six months ended September 30, 1995, have not
been audited. However, in the opinion of management, they include all
adjustments necessary for a fair presentation of the financial position, results
of operations, and cash flows for the periods presented. The results of
operations for the six months ended September 30, 1996 are not necessarily
indicative of results to be realized for any other interim period or for the
full year.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents and Concentrations of Credit Risk. The statements of
cash flows classify changes in cash and cash equivalents (short-term,
highly-liquid investments readily convertible into cash with an original
maturity of three months or less) according to operating, investing or financing
activities. Financial instruments which potentially expose the Company to
concentrations of credit risk consist principally of cash, temporary cash
investments and accounts receivable.
The Company places its cash and temporary cash investments with a financial
institution which management considers to be of high quality; however, at times
such deposits may be in excess of the Federal Deposit Insurance Corporation
insurance limit.
Concentrations of credit risk with respect to accounts receivable result
from a significant portion of revenues being derived from a small number of
entities (see Notes 3 and 6); however, the Company's customer base is dispersed
across many different industries and geographic areas. The Company generally
extends credit to its customers without requiring collateral; however, it
closely monitors extensions of credit and has not experienced significant credit
losses.
F-7
<PAGE> 60
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 1--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition. Revenues are derived from the license of software
products, customer support and maintenance contracts, and COBOL maintenance and
redevelopment contracts. Revenue from product sales is recognized upon shipment.
Customer support and maintenance contract revenue is recognized ratably over the
term of the related agreement. The Company provides programming and
reengineering services under time and materials and fixed price contracts.
Revenues from time and materials contracts are recognized as the services are
provided. Revenues from fixed price contracts, which are all less than six
months in duration, are recognized on achievement of specified performance
milestones negotiated with customers. This method, which recognizes revenues on
substantially the same basis as the percentage-of-completion method, is used
because management considers milestones to be the best available measure of
progress on these contracts. Provision for estimated losses on uncompleted
contracts is made in the period in which such losses are determinable.
Equipment. Equipment is stated at cost. Maintenance and repairs which are
not considered to extend the useful life of assets are charged to operations as
incurred.
Depreciation of equipment is calculated using the declining balance method.
Estimated useful lives of assets are as follows: computer equipment-3 to 5
years; software and other equipment-5 years; and, furniture and fixtures-5 to 7
years.
Investment in Affiliate. The Company's investment in ERA, which represents
an ownership interest of less than 10%, is accounted for at cost. Management
does not believe that the common ownership interests of the Company and ERA are
sufficient to enable either of them to exert significant influence necessary to
require the Company's investment in ERA to be accounted for under the equity
method of accounting. Further, in management's opinion, the use of the equity
method of accounting would not have a significant effect on the Company's
financial position or results of operations.
Research and Development Costs. Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed" (FAS 86), establishes criteria for capitalization of
software development costs beginning upon the establishment of product
technological feasibility and concluding when the product is available for
general release to customers.
Management believes that in applying the above criteria capitalizable costs
must be carefully evaluated in conjunction with certain factors including, among
other things, costs reimbursed by the ICICI grant (see Notes 5 and 6),
anticipated future revenues, estimated economic product life, amortization
methodologies, and frequency of changes in software and hardware technologies.
After carefully evaluating these factors, management concluded that the amounts
which should have been capitalized pursuant to FAS 86, specifically costs
incurred after technological feasibility is established and prior to general
release of the software to customers, were immaterial and therefore no software
development costs have been capitalized to date.
Advertising Costs. The Company expenses advertising costs as incurred.
Stock-Based Compensation. The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FAS No. 123), which establishes financial accounting
and reporting standards for stock-based employee compensation plans. The Company
intends to adopt this statement during its year ending March 31, 1997. Other
than additional disclosures regarding stock options granted pursuant to the
Company's 1994 Stock Option Plan, this statement will not have an effect on the
Company's financial statements. The Company does not intend to adopt the expense
recognition provision of FAS No. 123.
Income Taxes. Deferred federal and state income taxes arise from temporary
differences and are accounted for using the asset and liability method to
recognize their tax consequences by applying enacted
F-8
<PAGE> 61
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 1--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities. The effect on deferred taxes of a change in tax rates is recognized
in the period that includes the enactment date (see Note 13).
Net Income (Loss) per Common Share. Net income (loss) per common and common
equivalent share, using the weighted average number of common and common
equivalent shares outstanding, was computed in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 83 (SAB 83) by applying the
treasury stock method. Pursuant to SAB 83, common and common equivalent shares
issued by the Company during the 12 months immediately preceding a proposed
public offering at prices substantially below the initial public offering price
together with common share equivalents which result from the grant of common
stock options having exercise prices substantially below the initial public
offering price during the same period have been included in the calculation of
the shares used in computing net income (loss) per share as if they were
outstanding for all periods prior to the initial public offering.
Common equivalent shares, consisting of warrants and stock options, issued
12 months prior to the Company's proposed initial filing date of its
registration statement (October 11, 1996) have not been included in the
computation of net loss per common share because their effect was antidilutive
for the years ended March 31, 1994 and 1995 and the six months ended September
30, 1995.
NOTE 2--LIQUIDITY AND CAPITAL RESOURCES
Since its inception the Company has been dependent upon external sources of
financing and has not generated sufficient revenue to finance continuing
operations. Management recognizes that continuation of the Company is dependent
upon its ability to generate sufficient revenues, and/or obtain additional
financing to support continuance of operations and satisfy obligations.
Management has taken positive actions to reduce debt and increase working
capital.
During July 1996 long-term liabilities to officers/shareholders totaling
$172,477 (see Note 11) and notes payable to related parties totaling $599,638
(see Note 8) were converted to common stock. Further, since July 1, 1996 and
through September 30, 1996, 140,765 shares of common stock have been sold
through private placements to raise additional cash of $747,440 (see Note 16).
The Company is also planning an initial public offering of its common stock
which is expected to close in December 1996. The Company intends to use the
proceeds of the offering to expand sales and marketing, hire new personnel,
increase capital expenditures and for working capital and other general
corporate purposes. Although the Company believes that the proceeds from its
proposed offering will be adequate to meet its working capital needs, there can
be no assurance that the Company will not continue to experience liquidity
problems because of adverse market conditions or other unfavorable events.
Through September 30, 1996, the Company has deferred certain costs
associated with the initial public offering totaling $132,865 which will be
charged against the proceeds of the planned offering. In the event the initial
public offering does not occur, these costs will be charged to operations.
NOTE 3--MAJOR CUSTOMERS
VIASOFT has been a significant customer of the Company as described in Note
6. During the years ended March 31, 1994, 1995 and 1996, a significant
percentage of the Company's revenues, was derived from a few other customers.
Sales to Complete Business Solutions, Inc. (CBSI) represented approximately 19%,
33% and 26% of revenues, respectively, for such periods. Additionally, sales to
WI State Materials Center represented 15% of revenues in 1994, and sales to ASD
International (ASD) represented 11% of revenues in
F-9
<PAGE> 62
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 3--MAJOR CUSTOMERS--CONTINUED
1996. Accounts receivable from such customers aggregated $86,741 and $81,492 at
March 31, 1995 and 1996, respectively.
During the six months ended September 30, 1995 and 1996, CBSI accounted for
22% and 21% of revenues, respectively. Also, during the six months ended
September 30, 1995, ASD accounted for 12% of revenues. Accounts receivable from
CBSI at September 30, 1996 totaled $101,164.
NOTE 4--EQUIPMENT
Equipment consists of the following:
<TABLE>
<CAPTION>
MARCH 31 SEPTEMBER 30
-------------------- ------------
1995 1996 1996
-------- -------- ------------
<S> <C> <C> <C>
Computer equipment............................ $ 43,708 $ 52,393 $ 66,805
Software and other equipment.................. 8,707 8,707 8,707
Furniture and fixtures........................ 6,113 10,427 11,864
-------- -------- --------
Total equipment............................... 58,528 71,527 87,376
Accumulated depreciation...................... (32,519) (43,834) (49,634)
-------- -------- --------
Equipment, net................................ $ 26,009 $ 27,693 $ 37,742
======== ======== ========
</TABLE>
NOTE 5--TRANSACTIONS WITH AFFILIATE
The Company and ERA developed certain COBOL analysis software products (the
Products) through their cooperative research and development efforts which were
funded in part through grants from the Industrial Credit and Investment
Corporation of India, Ltd. (ICICI), an investment bank that administers an
agreement between the governments of the United States of America and the
Republic of India. The ongoing process of development of the Products commenced
in 1990 and has been undertaken pursuant to the terms of various agreements
among the Company, ERA, and ICICI, which have been amended from time to time to
reflect their evolving relationships.
Until March 31, 1996, the Company had a 65% ownership interest in the
Products and paid a royalty to ICICI (see Note 6), a 10% royalty to ERA based on
revenues from sales or licensing of Products and a monthly research and
development fee of $5,000 to ERA.
Pursuant to a product purchase agreement (the Product Purchase Agreement)
dated March 31, 1996, the Company acquired ERA's 35% interest in the Products in
exchange for 150,679 shares of the Company's common stock. The transaction was
assigned a nominal value of $1,507 to reflect the predecessor basis of ERA in
the Products by applying the Company's accounting policy of expensing all
research and development costs.
Pursuant to the Product Purchase Agreement, the Company has agreed to pay
the following to:
- ERA--a research and development fee equal to 10% of gross Product
revenues (in no event will quarterly payments be less than $12,000)
through December 31, 1996, and thereafter on terms to be mutually
determined;
- ICICI on behalf of ERA--5% of gross Product revenues until such aggregate
payments (see Note 6) satisfy ERA's obligation to ICICI (the ERA
Obligation) after which such payments shall cease; and,
- ERA--a monthly maintenance fee of $5,000 for the first three years,
$6,000 for the next three years, and thereafter in amounts to be mutually
determined.
F-10
<PAGE> 63
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 5--TRANSACTIONS WITH AFFILIATE--CONTINUED
Upon a change in control in ERA, as defined in the Product Purchase
Agreement, the Company has the right to repurchase some or all of its common
stock owned by ERA. In the event of a change in control in the Company, as
defined, ERA has the right to request a renegotiation of any or all of the
research and development provisions of the Product Purchase Agreement. Further,
under certain circumstances, the Company has the right to purchase ERA's
research and development facilities at which time the Company will assume
responsibility for repayment of any unpaid ERA Obligation under the June 1, 1990
ICICI Agreement (see Note 6).
The Product Purchase Agreement will continue in effect until terminated by
either party and places certain restrictions on ERA's ability to design or
develop similar products for itself or any third party for a period of two years
subsequent to termination. The agreement also provides that all work performed
subsequent to March 31, 1996 by ERA will be done on a work for hire basis; any
products developed will be owned by the Company and will not result in any
ownership rights to ERA.
The Company also has an informal arrangement with ERA to administer the
billing and related collection function for a contract (to provide consulting
services to a corporation operating in the United States) for which the Company
retains 10% of the collected revenues.
Effective March 1, 1996, the Company formalized its marketing arrangements
with ERA by entering into a marketing agreement to distribute the Company's
products on a non-exclusive basis in India. The agreement, which can be
terminated by either party after eighteen months, provides for royalties to be
paid by ERA to the Company based on 40% of revenues (using the suggested
international list prices established by the Company) from customers in India
through September 1, 1996, and 50% thereafter. Royalties received under the
terms of the marketing agreement for the year ended March 31, 1996 and the six
months ended September 30, 1996, amounted to $11,500 and $38,920, respectively.
The Company incurred the following expenses in connection with its
activities with ERA during the periods presented below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED MARCH 31 SEPTEMBER 30
----------------------------- ------------------
1994 1995 1996 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Royalty expense...................... $48,093 $44,144 $42,538 $18,546 $28,835
======= ======= ======= ======= =======
Research and development fees........ $60,000 $60,000 $60,000 $30,000 $39,000
======= ======= ======= ======= =======
Fees applicable to professional
services provided by ERA
employees.......................... $25,250 $ 5,636 $72,429 $29,107 $45,872
======= ======= ======= ======= =======
</TABLE>
NOTE 6--ROYALTY AGREEMENTS
VIASOFT, Inc.--Effective December 1, 1993, the Company entered into a
five-year license agreement (the License Agreement) with VIASOFT, Inc. (the
Licensee) which generally grants to Licensee a worldwide license to use and
market certain of the Company's products on a private label basis. The License
Agreement provides, among other things, for royalties of up to 30% of any
license or maintenance fees related to licensed products and minimum advance
royalty payments totaling $900,000 during the 18-month exclusivity period which
expired on May 31, 1995.
The Company may terminate the License Agreement after December 1, 1996 or
1997, if the Licensee does not make annual minimum royalty payments of
$1,000,000 during the twelve-month period preceding the
F-11
<PAGE> 64
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 6--ROYALTY AGREEMENTS--CONTINUED
respective anniversary date. The termination will become effective six months
following the Company's written notice to the Licensee. The License Agreement
may be renewed for five successive one-year periods after the end of the
five-year initial term, if the Licensee continues to meet the $1,000,000 annual
minimum royalty target.
To date, the Company has not received any royalty payments beyond the
minimum advance royalty of $900,000, which is being amortized to income ratably
over the License Agreement's initial 42 month period. Software license fees as
presented in the accompanying statements of operations includes advance royalty
amortization of $85,714, $257,143 and $257,143 for the years ended March 31,
1994, 1995 and 1996, respectively, and $128,571 for each of the six months ended
September 30, 1995 and 1996.
Total revenues from VIASOFT including amortization of the advance royalty
represented 9%, 29% and 25% of the Company's total revenues for the years ended
March 31, 1994, 1995 and 1996, and 24% and 12% for the six months ended
September 30, 1995 and 1996, respectively.
The License Agreement also requires the Company to pay a royalty of 5% of
sales of its products which contain or use a COBOL parser, up to $1,000,000, but
in no event less than $100,000, over five-years. Any unpaid royalties will be
paid in twelve monthly installments following the conclusion of the license
term.
ICICI--Pursuant to the terms of the June 1, 1990 ICICI agreement, as
amended (the ICICI Agreement), the Company received a $255,000 grant to
partially fund research and development costs to develop the Products in
association with ERA. The grant program administered by ICICI was designed to
accelerate the pace and quality of technological innovation through the
promotion and financing of Indo-U.S. cooperative technology development ventures
(see Note 5). ERA received a grant of Indian Rs. 4,000,000 ($116,448 at March
31, 1996) under the ICICI Agreement for similar purposes.
The ICICI Agreement requires the Company and ERA to make royalty payments
based on Product revenues up to a maximum of $525,000 and Indian Rs. 8,000,000
($232,897 at March 31, 1996), respectively. Both the Company and ERA are jointly
and severally obligated for payment of the royalties. However, subsequent to
March 31, 1993, ICICI agreed to accept from the Company total royalties of 10%
of Product revenues and 5% of revenues from Product maintenance and Product
related services in satisfaction of future royalties due from the Company and
ERA. Total royalty expense under the ICICI Agreement for the years ended March
31, 1994, 1995 and 1996, amounted to $53,320, $51,532 and $57,602, and totaled
$24,642 and $57,524 for the six months ended September 30, 1995 and 1996,
respectively.
Effective February 1, 1996, ICICI agreed to defer payment of royalties for
one year, and the Company agreed to pay interest to ICICI on the amount of
unpaid royalties at the same rate of interest charged under the term loan
agreement described in Note 9. Interest expense was $3,500 for the six months
ended September 30, 1996.
At March 31 and September 30, 1996, the balance of the maximum royalty
obligation to be paid by the Company pursuant to the ICICI Agreement, after
deducting accrued royalties at such dates, was $419,006 and $380,076, and the
amount of the ERA Obligation (see Note 5) was Indian Rs. 5,321,433 ($154,918)
and Rs. 4,573,004 ($128,275), respectively.
As of March 31, 1996 the Company was in default of certain payment
obligations and covenants of the ICICI Agreement and term loan agreement
described in Note 9. As of September 30, 1996 the Company brought such payment
obligations current and received written waivers from ICICI of all existing and
prior defaults.
F-12
<PAGE> 65
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 7--STOCK OPTION PLAN
On September 12, 1994, the Company's shareholders approved the SEEC, Inc.
1994 Stock Option Plan (the Plan) under which a maximum of 150,679 common
shares, subject to anti-dilution adjustments, may be awarded during the Plan's
10-year term. The purpose of the Plan is to promote the interests of the Company
and its shareholders by providing key employees with additional incentives to
continue the success of the Company.
Under the Plan, options are awarded by a committee designated by the
Company's Board of Directors or, if no committee is designated, the full Board.
Incentive stock options and non-qualifying stock options may be granted to
purchase a specified number of shares of common stock at a price not less than
the fair market value on the date of grant and for a term not to exceed 10
years. Options become exercisable at such times and in such installments as
determined at the date of grant subject to continued employment and certain
other conditions including a limited ability to sell or otherwise transfer
shares issued pursuant to the Plan.
The following table summarizes the activity in stock options since the
Plan's inception:
<TABLE>
<CAPTION>
EXERCISE PRICE
SHARES PER SHARE
------ --------------
<S> <C> <C>
September 12, 1994--Inception................................ -- $ --
Granted.................................................... 20,701 .66 - .73
Exercised.................................................. (2,260) .73
Cancelled, expired or terminated........................... -- --
===========
------
Balance--March 31, 1995...................................... 18,441 $.66 - .73
===========
Granted.................................................... 14,550 $ .66
Exercised.................................................. -- --
Cancelled, expired or terminated........................... -- --
===========
------
Balance--March 31, 1996...................................... 32,991 $.66 - .73
===========
Granted.................................................... 3,010 $ 4.98
Exercised.................................................. -- --
Cancelled, expired or terminated........................... -- --
===========
------
Balance--September 30, 1996.................................. 36,001 $.66 - 4.98
====== ===========
</TABLE>
At March 31 and September 30, 1996, options totaling 14,194 and 18,471
shares, respectively, were exercisable at prices of $.66 to $.73 per share (see
Note 16).
F-13
<PAGE> 66
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 8--NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties consisted of the following:
<TABLE>
<CAPTION>
MARCH 31 SEPTEMBER 30
-------------------- ------------
1995 1996 1996
-------- -------- ------------
<S> <C> <C> <C>
Unsecured note payable to a director with
interest
at 7% due June 1996............................ $ 50,000 $ 50,000 $ --
Unsecured note payable to shareholder with
interest
at 7% due June 1996............................ 95,000 95,000 --
Unsecured advance from shareholder with imputed
interest at 7%................................. 75,000 75,000 --
10% subordinated notes due April 1997--Series
I.............................................. 100,000 100,000 --
10% subordinated notes due September 1997--Series
II (including $25,000 to a director)........... 125,000 125,000 --
Accrued interest................................. 117,487 154,638 --
-------- -------- -------
562,487 599,638 --
Less current maturities of principal and
interest....................................... 125,650 -- --
-------- -------- -------
$436,837 $599,638 $ --
======== ======== =======
</TABLE>
In connection with negotiating the terms of the notes and advances payable,
the Company issued warrants, on the basis of one warrant (pre-split) for each
dollar of the loan principal, to purchase 134,105 shares of common stock at $.03
per share (see Note 10).
The Series I and II notes are subordinate to all of the Company's
borrowings and are subject to prepayment upon the closing of any venture funding
of as least $1,000,000 or a public offering under the Securities Act of 1933.
Interest on the Series I and II notes is due quarterly; however, pursuant
to the note terms, all payments have been deferred until the Company has
positive cash flow, at which time scheduled quarterly payments of interest shall
commence. Interest previously deferred is payable at maturity.
Interest charged to expense on the notes payable to related parties for the
years ended March 31, 1994, 1995 and 1996 totaled $37,152, $37,150 and $37,152,
respectively, and $18,950 and $11,054 for the six months ended September 30,
1995 and 1996, respectively.
Effective July 1996, all of the outstanding principal and accrued interest
due to the related parties was converted into 122,636 shares of the Company's
common stock at a value of $4.98 per share. Accordingly, the entire balance of
notes and advance payable has been classified as long-term at March 31, 1996.
NOTE 9--LONG-TERM DEBT
The Company is a party to a term loan agreement with ICICI pursuant to
which ICICI made a loan of $300,000 to the Company. The loan bears interest at
the prime rate plus 2.5% (limited to a floor of 6% and ceiling of 9%) and
requires quarterly principal payments of $30,000 commencing December 1996. The
loan is secured by the Company's trade accounts receivable and equipment. Upon
any event of default, the Company may not declare dividends and ICICI has the
option to convert the then outstanding principal balance and accrued interest
into shares of the Company's common stock at a fair value to be determined by an
independent appraiser.
F-14
<PAGE> 67
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 9--LONG-TERM DEBT--CONTINUED
Principal payments were originally scheduled to commence December 15, 1995.
On July 23, 1996, the ICICI term loan agreement was amended to defer principal
payments until December 15, 1996.
At March 31, 1996, the aggregate maturities of notes payable to related
parties (see Note 8) and long-term debt for each of the next three fiscal years
are presented below:
<TABLE>
<CAPTION>
NOTES
PAYABLE TO
YEARS ENDING RELATED
MARCH 31 PARTIES TERM LOAN TOTAL
- ------------ ----------- --------- --------
<S> <C> <C> <C> <C>
1997............................................ $ -- $ 60,000 $ 60,000
1998............................................ 599,638 120,000 719,638
1999............................................ -- 120,000 120,000
--------- -------- --------
$ 599,638 $300,000 $899,638
========= ======== ========
</TABLE>
As of March 31, 1996, the Company was in default of certain payment
obligations and covenants of the ICICI term loan agreement and the ICICI
Agreement described in Note 6. As of September 30, 1996 the Company brought such
payment obligations current and received written waivers from ICICI of all
existing and prior defaults.
NOTE 10--COMMON STOCK WARRANTS
At March 31, 1994, 1995 and 1996, the Company had outstanding warrants to
purchase 172,400, 172,400 and 111,494 shares of the Company's common stock,
respectively, at $.03 per share (see Notes 8 and 11). Warrants for 60,906 shares
were exercised as of March 18, 1996. Warrants for 111,494 shares are exercisable
(51,230 shares are exercisable at March 31, 1996) and expire at various dates
from April 1997 through December 1999, or on the closing of a sale of the
Company's common shares in a public offering registered under the Securities Act
of 1933, whichever is first to occur. At March 31, 1994, 1995 and 1996 and
September 30, 1996, 172,400, 172,400, 111,494 and 111,494 shares of common
stock, respectively, were reserved for issuance upon the exercise of outstanding
warrants.
NOTE 11--DUE TO OFFICERS/SHAREHOLDERS
A portion of the annual salary of two officers and shareholders,
aggregating $127,106, was deferred. Interest at 7% has also been accrued on the
deferred salaries. The Company also issued warrants, on the basis of one warrant
(pre-split) for each dollar of deferred salary, to purchase 38,503 shares of
common stock at a value of $.03 per share (see Note 10). Interest of $8,896 was
charged to expense during each of the years ended March 31, 1994, 1995 and 1996,
and $4,449 and $2,595 for the six months ended September 30, 1995 and 1996,
respectively. Effective July 1996, the entire balance of principal and accrued
interest was converted into 35,173 shares of the Company's common stock at a
value of $4.98 per share.
NOTE 12--OPERATING LEASES
The Company's headquarters are occupied under an operating lease agreement
which expires July 31, 1997. The Company also rents two apartments in
Pittsburgh, Pennsylvania under terms of operating leases which have remaining
terms of twelve months or less. Management intends to renew or replace these
leases during the normal course of business. Total rent expense incurred for all
leases during the years ended March 31, 1994, 1995, and 1996 amounted to
$11,832, $20,350 and $23,710, and was $10,736 and $18,364 for the six months
ended September 30, 1995 and 1996, respectively.
F-15
<PAGE> 68
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 12--OPERATING LEASES--CONTINUED
Future minimum rental payments required under non-cancelable leases with
terms of one year or more, as of March 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
MARCH 31 AMOUNT
- ------------ -------
<S> <C> <C>
1997.................................................. $38,576
1998.................................................. 12,592
-------
$51,168
=======
</TABLE>
NOTE 13--INCOME TAXES
No provision for income taxes was recorded for the years ended March 31,
1994, 1995 and 1996, due to the Company's significant net operating loss
position. As presented below, the Company has calculated a deferred tax benefit;
however, a corresponding valuation allowance has been recorded to offset the
deferred benefit of net operating loss carryforwards and reversing temporary
differences since management could not determine that it is more likely than not
that the benefit can be realized in the foreseeable future.
The components of the net deferred tax asset are as follows:
<TABLE>
<CAPTION>
MARCH 31
---------------------- SEPTEMBER 30,
1995 1996 1996
-------- --------- -------------
<S> <C> <C> <C>
Net deferred tax asset resulting from using
the cash method of accounting for tax
reporting, attributable to:
Accounts payable........................ $ 18,757 $ 27,571 $ 144,804
Deferred maintenance revenue and advance
royalty............................... 202,167 146,103 96,644
Accrued interest payable................ 68,919 90,879 3,301
Accrued royalties....................... 23,404 38,833 62,081
Deferred compensation................... 52,444 52,444 --
Accounts receivable, net................ (85,000) (100,533) (192,864)
Other, net.............................. 61,195 56,309 (41,258)
-------- --------- ---------
341,886 311,606 72,708
Tax effect of federal and state net operating
loss carryforwards......................... 174,097 263,301 450,427
-------- --------- ---------
Net deferred tax asset....................... 515,983 574,907 523,135
Valuation allowance.......................... 515,983 574,907 523,135
-------- --------- ---------
Deferred tax asset, net...................... $ -- $ -- $ --
======== ========= =========
</TABLE>
F-16
<PAGE> 69
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 13--INCOME TAXES--CONTINUED
The Company has available at March 31, 1996, unused net operating loss
carryforwards that may be applied to reduce future taxable income and expire as
follows:
<TABLE>
<CAPTION>
NET OPERATING LOSS
EXPIRES DURING CARRYFORWARDS
YEAR ENDING ----------------------
MARCH 31 FEDERAL STATE
- -------------- -------- --------
<S> <C> <C> <C>
1998.............................................. $ -- $600,584
2006.............................................. 65,955 --
2007.............................................. 70,111 --
2008.............................................. 230,949 --
2010.............................................. 53,743 --
2011.............................................. 225,416 --
-------- --------
$646,174 $600,584
======== ========
</TABLE>
Changes in the Company's ownership, if considered substantial, may result
in an annual limitation on the amount of carryforwards that could be utilized.
The expected statutory tax benefit of the Company's financial accounting
losses for the years ended March 31, 1994, 1995, 1996 and the six months ended
September 30, 1995, have not been recorded due to the uncertainty of their
ultimate realization. During the six months ended September 30, 1996, an overall
decrease in the temporary differences comprising the net deferred tax asset
eliminated taxable income.
NOTE 14--FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Values of Financial Instruments", requires disclosure of the following
information about the fair value of certain financial instruments for which it
is practicable to estimate that fair value. The amounts disclosed represent
management's best estimates of fair value.
The carrying value of financial instruments (none of which are held or
issued for trading purposes) including cash and cash equivalents, accounts
receivable, accounts payable, and notes payable to related parties approximated
fair value as of March 31, 1995 and 1996, and at September 30, 1996, because of
the relatively short maturity of these instruments.
The Company has not estimated the fair value of the loan described in Note
9, or the amount due to officers/shareholders described in Note 11 (for which
quoted market prices are not available) because it has not yet obtained or
developed the valuation model necessary to make the estimate, and the cost of
obtaining an independent valuation appears excessive considering the materiality
of the instruments to the Company.
NOTE 15--COMMITMENTS AND CONTINGENCIES
The Company has entered into employment/severance (change in control)
agreements with three executive officers, effective October 1, 1996, and has
employment agreements with certain key employees which provide for minimum
annual salaries and automatic annual renewal at the end of the initial two year
term. The agreements generally contain, among other things, confidentiality
agreements, assignment to the Company of inventions made during employment (and
under certain circumstances for two years following termination of employment)
and non-competition agreements for the term of the agreements plus two years.
F-17
<PAGE> 70
SEEC, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(Information for September 30, 1995 and 1996 is Unaudited)
NOTE 15--COMMITMENTS AND CONTINGENCIES--CONTINUED
The executive employment/severance agreements provide for payments of up to
one year's compensation if there is a change of control in the Company, as
defined, and a termination of employment. The maximum contingent liability under
these agreements was approximately $228,000 at October 1, 1996.
NOTE 16--ADDITIONAL CAPITAL TRANSACTIONS
(a) On July 5, 1996 the Company's board of directors approved an increase
in the number of authorized shares of common stock to 20,000,000 shares.
(b) In July 1996 the Company sold, to an unrelated investor, 40,181 shares
of common stock at a purchase price of $4.98 per share, for an aggregate
purchase price of $200,000.
(c) Pursuant to a private placement stock purchase agreement dated August
15, 1996, the Company sold, to unrelated investors, 68,899 shares of common
stock at a value of $5.44 per share, for an aggregate purchase price of
$375,000.
(d) During September 1996, the Company sold 2,756 shares of common stock to
a director, and 28,929 shares to family members of a director at a value of
$5.44 per share, for an aggregate purchase price of $172,440.
(e) On September 30, 1996, the Board of Directors authorized the following:
- Preparation of a registration statement on Form S-1 with respect to the
Company's common stock for filing with the Securities and Exchange
Commission (SEC) under the Securities Act of 1933;
- The amendment of the Company's Articles of Incorporation, subject to
shareholder approval, to authorize the issuance of 10,000,000 shares of
preferred stock without par value, which are issuable in series, from time
to time by the Board of Directors; and,
- A reverse split of the Company's common stock, to be effective prior to
the time at which the registration statement is declared effective by the
SEC. See Note 1.
(f) On October 1, 1996, the Company granted a newly hired executive officer
an option to purchase 21,095 shares of common stock at an exercise price of
$5.44 per share.
F-18
<PAGE> 71
===============================================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THE PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 6
The Company.......................... 13
Use of Proceeds...................... 13
Dividend Policy...................... 13
Dilution............................. 14
Capitalization....................... 15
Selected Financial Data.............. 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 17
Business............................. 24
Management........................... 36
Certain Transactions................. 41
Principal Shareholders and Holdings
of Management...................... 44
Description of Capital Stock......... 45
Shares Eligible for Future Sale...... 47
Underwriting......................... 49
Legal Matters........................ 50
Experts.............................. 50
Additional Information............... 51
Index to Financial Statements........ F-1
</TABLE>
UNTIL (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
===============================================================================
===============================================================================
1,000,000 SHARES
LOGO
COMMON STOCK
------------------------
PROSPECTUS
------------------------
H.C. WAINWRIGHT & CO., INC.
, 1996
===============================================================================
<PAGE> 72
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses which will be incurred in
connection with the issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All fees and
expenses are estimated other than the Securities and Exchange Commission
registration fee, NASD filing fee and Nasdaq filing fee.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission registration fee....................... $ 4,362
NASD filing fee........................................................... 1,000
Blue Sky fees and expenses................................................ 10,000
Nasdaq filing fee......................................................... 10,000
Transfer agent fees....................................................... 10,000
Printing and engraving expenses........................................... 60,000
Legal fees and expenses................................................... 100,000
Accounting fees and expenses.............................................. 150,000
Nonaccountable expense allowance.......................................... 300,000
Miscellaneous expenses.................................................... 29,638
--------
Total................................................................... $675,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741 through 1750 of Subchapter D, Chapter 17, of the Pennsylvania
Business Corporation Law of 1988 (the "BCL") contain provisions for mandatory
and discretionary indemnification of a corporation's directors, officers and
other personnel, and related matters.
Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors and officers under certain prescribed circumstances
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with an action or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of his being a representative, director or
officer of the corporation or serving at the request of the corporation as a
representative of another corporation, partnership, joint venture, trust or
other enterprise, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. Under Section 1743, indemnification is mandatory to the
extent that the officer or director has been successful on the merits or
otherwise in defense of any action or proceeding if the appropriate standards of
conduct are met.
Section 1742 provides for indemnification in derivative actions except in
respect of any claim, issue or matter as to which the person has been adjudged
to be liable to the corporation unless and only to the extent that the proper
court determines upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for the expenses that the court deems proper.
Section 1744 provides that, unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation only as authorized
in the specific case upon a determination that the representative met the
applicable standard of conduct, and such determination will be made (i) by the
board of directors by a majority vote of a quorum of directors not parties to
the action or proceeding; (ii) if a quorum is not obtainable, or if obtainable
and a majority of disinterested directors so directs, by independent legal
counsel; or (iii) by the shareholders.
II-1
<PAGE> 73
Section 1745 provides that expenses incurred by an officer, director,
employee or agent in defending a civil or criminal action or proceeding may be
paid by the corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation.
Section 1746 provides generally that, except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter 17D of the
BCL shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding that office.
Section 1747 also grants to a corporation the power to purchase and
maintain insurance on behalf of any director or officer against any liability
incurred by him or her in his or her capacity as officer or director, whether or
not the corporation would have the power to indemnify him or her against the
liability under Subchapter 17D of the BCL.
Sections 1748 and 1749 extend the indemnification and advancement of
expenses provisions contained in Subchapter 17D of the BCL to successor
corporations in fundamental changes and to representatives serving as
fiduciaries of employee benefit plans.
Section 1750 provides that the indemnification and advancement of expenses
provided by, or granted pursuant to, Subchapter 17D of the BCL, shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs and personal representative of such person.
Reference is made to Article VII of the Company's Amended and Restated
Bylaws, which provide in general for the indemnification of the Company's
officers and directors to the fullest extent authorized by law.
Section 1713 of Subchapter B, Chapter 17, of the BCL permits a corporation
to provide in its bylaws that, subject to certain exceptions, a director shall
not be personally liable, as such, for monetary damages for any action taken,
unless the director has breached or failed to perform the duties of his office
under Subchapter B and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. Article 7 of the Company's
Amended and Restated Articles of Incorporation and Section 3.10 of the Company's
Amended and Restated Bylaws provide in general that to the fullest extent that
the laws of the Commonwealth of Pennsylvania, as amended, permit elimination or
limitation of the liability of directors, a director of the Company shall not be
personally liable for monetary damages for any action taken or for failure to
take any action as a director.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information as of October 1, 1996 regarding all
sales of unregistered securities of the Registrant during the past three years.
All such sales were deemed exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by reason of Section 4(2) or 3(b) of
the Securities Act. In connection with each of these transactions, the
securities were sold to a limited number of persons, such persons were provided
access to all relevant information regarding the Registrant and/or represented
to the Registrant that they were "accredited" investors, and such persons
represented to the Registrant that the securities were purchased for investment
purposes only and not with a view toward distribution. The share and per share
amounts set forth below have not been adjusted to reflect the reverse split of
the Registrant's Common Stock to be effected prior to consummation of the
Offering.
(a) In January 1995, the Registrant sold 2,260 shares of Common Stock for
$.73 per share to one individual who was an existing shareholder and employee of
the Company, pursuant to the exercise of an incentive stock option issued under
the Stock Option Plan.
II-2
<PAGE> 74
(b) In March 1996, the Registrant sold an aggregate of 60,906 shares of its
Common Stock upon exercise of outstanding warrants at a price of $.03 per share
to three individuals, each of whom was an existing shareholder of the Registrant
and a director and/or officer of the Registrant.
(c) In July 1996, the Registrant issued 20,097 shares of Common Stock to
its Chairman upon conversion of the principal and accrued interest on an
aggregate of $75,000 of loans made to the Registrant from August 1990 to
September 1992.
(d) In July 1996, the Registrant issued an aggregate of 137,712 shares of
its Common Stock for $4.98 per share to a total of 17 accredited investors, upon
the conversion of demand notes and 10% Subordinated Notes, previously issued by
the Company, and deferred salaries payable to two officers.
(e) In July 1996, the Registrant sold 40,181 shares of Common Stock to one
individual who is an accredited investor at a price of $4.98 per share.
(f) In August and September 1996, the Registrant sold 100,584 shares of
Common Stock to a total of 14 individuals, all of whom are accredited investors,
at a price of $5.44 per share.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------ ---------------------------------------------------------------------------------
<S> <C>
1.1 Revised Form of Underwriting Agreement
3.1 The Registrant's Articles of Incorporation*
3.2 The Registrant's Bylaws*
3.3 Form of the Registrant's Amended and Restated Articles of Incorporation*
3.4 Form of the Registrant's Amended and Restated Bylaws.*
4.1 Specimen Certificate for Common Stock of the Registrant**
4.2 Form of Representative's Warrant
5.1 Opinion of Cohen & Grigsby, P.C. (including the consent of such firm) regarding
the legality of the shares of Common Stock being registered**
10.1 SEEC, Inc. 1994 Stock Option Plan
10.2 Cooperation and Project Financing Agreement dated June 1, 1990, as supplemented
and amended, among the Industrial Credit and Investment Corporation of India,
Limited, ("ICICI"), Era Software Systems Private Limited ("ERA") and the
Registrant*
10.3 Loan Agreement dated June 20, 1994 between ICICI and the Registrant, as amended*
10.4 International Software Marketing and License Agreement dated November 29, 1993
between VIASOFT, Inc. and the Registrant, as amended
10.5 Product Purchase Agreement dated as of March 31, 1996 between the Registrant and
ERA
10.6 Marketing Agreement dated as of March 1, 1996 between the Registrant and ERA
10.7 Stock Purchase Agreement dated as of July 15, 1996 among the Registrant, Glen
Chatfield and certain former noteholders of the Registrant*
10.8 Stock Purchase Agreement dated as of August 15, 1996 among the Registrant and
certain purchasers of its Common Stock*
10.9 Registration Rights Agreement dated as of August 15, 1996 among the Registrant
and
certain of its shareholders*
10.10 Employment Agreement dated October 1, 1996 between the Registrant and Ravindra
Koka*
10.11 Employment Agreement dated October 1, 1996 between the Registrant and John D.
Godfrey*
</TABLE>
II-3
<PAGE> 75
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------ ---------------------------------------------------------------------------------
<S> <C>
10.12 Employment Agreement dated October 1, 1996 between the Registrant and Richard J.
Goldbach*
10.13 Agreement dated July 16, 1996 between the Registrant and Raj Reddy
10.14 Trust Agreement dated August 4, 1992 among the Registrant, Ravindra Koka and
Dr. K. Buddhiraju
11.1 Statement re computation of pro forma earnings per share
23.1 Consent of Cohen & Grigsby, P.C. (included in legal opinion filed as Exhibit 5.1)
23.2 Consent of independent certified public accountants
24.1 Power of Attorney*
</TABLE>
- ---------
* Previously filed
** To be filed by Amendment
(b) Schedules
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the BCL, the Articles of Incorporation and Bylaws, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling,
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pittsburgh, Commonwealth
of Pennsylvania, on November 20, 1996.
SEEC, INC.
By /s/ RAVINDRA KOKA
-----------------------
Ravindra Koka
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------- -----------------------------------
<S> <C> <C>
Chairman and Director
- -------------------------
Raj Reddy
President, Chief Executive Officer
- ------------------------- and Director (Principal Executive
Ravindra Koka Officer)
Chief Financial Officer (Principal By /s/ RAVINDRA KOKA
- ------------------------- Financial and Accounting Officer) -----------------------
Richard Goldbach Ravindra Koka
as Attorney-in-Fact
Vice President and Director November 20, 1996
- -------------------------
John D. Godfrey
Director
- -------------------------
Stanley A. Young
Director
- -------------------------
Radha Ramaswami Basu
</TABLE>
II-5
<PAGE> 77
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE II
The audit referred to in our report to SEEC, Inc., dated August 30, 1996,
except for Notes 15 and 16(d), (e) and (f), as to which the date is October 1,
1996, and the recapitalization described in Note 1, as to which the date is
November , 1996, which is contained in the Prospectus constituting part of
this Registration Statement included the audit of the schedule listed under Item
16(b) for each of the three years in the period ended March 31, 1996. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based upon our audit.
In our opinion, such schedule presents fairly, in all material respects,
the information set forth therein.
BDO Seidman, LLP
Boston, Massachusetts
August 30, 1996
<PAGE> 78
SEEC, INC.
VALUATION AND QUALIFYING ACCOUNTS--SCHEDULE II
YEARS ENDED MARCH 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- -------- --------
ADDITIONS DEDUCTIONS
BALANCE AT CHARGED TO CREDITED TO BALANCE
BEGINNING COSTS AND ACCOUNTS AT END
DESCRIPTION OF YEAR EXPENSES RECEIVABLE OF YEAR
- ----------- ---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
MARCH 31, 1994
Allowance deducted from related balance
sheet account--Accounts receivable......... $ 6,760 $ -- $ 998 $5,762
======== ======= ======= ======
MARCH 31, 1995
Allowance deducted from related balance
sheet account--Accounts receivable......... $ 5,762 $ -- $ 1,827 $3,935
======== ======= ======= ======
MARCH 31, 1996
Allowance deducted from related balance
sheet account--Accounts receivable......... $ 3,935 $6,836 $ 2,995 $7,776
======== ======= ======= ======
</TABLE>
<PAGE> 79
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------ ---------------------------------------------------------------------------------
<S> <C>
1.1 Revised Form of Underwriting Agreement
3.1 The Registrant's Articles of Incorporation*
3.2 The Registrant's Bylaws*
3.3 Form of the Registrant's Amended and Restated Articles of Incorporation*
3.4 Form of the Registrant's Amended and Restated Bylaws*
4.1 Specimen Certificate for Common Stock of the Registrant**
4.2 Form of Representative's Warrant
5.1 Opinion of Cohen & Grigsby, P.C. (including the consent of such firm) regarding
the legality of the shares of Common Stock being registered**
10.1 SEEC, Inc. 1994 Stock Option Plan
10.2 Cooperation and Project Financing Agreement dated June 1, 1990, as supplemented
and amended, among the Industrial Credit and Investment Corporation of India,
Limited, ("ICICI"), Era Software Systems Private Limited ("ERA") and the
Registrant*
10.3 Loan Agreement dated June 20, 1994 between ICICI and the Registrant, as amended*
10.4 International Software Marketing and License Agreement dated November 29, 1993
between VIASOFT, Inc. and the Registrant, as amended
10.5 Product Purchase Agreement dated as of March 31, 1996 between the Registrant and
ERA
10.6 Marketing Agreement dated as of March 1, 1996 between the Registrant and ERA
10.7 Stock Purchase Agreement dated as of July 15, 1996 among the Registrant, Glen
Chatfield and certain former noteholders of the Registrant*
10.8 Stock Purchase Agreement dated as of August 15, 1996 among the Registrant and
certain purchasers of its Common Stock*
10.9 Registration Rights Agreement dated as of August 15, 1996 among the Registrant
and
certain of its shareholders*
10.10 Employment Agreement dated October 1, 1996 between the Registrant and Ravindra
Koka*
10.11 Employment Agreement dated October 1, 1996 between the Registrant and John D.
Godfrey*
10.12 Employment Agreement dated October 1, 1996 between the Registrant and Richard J.
Goldbach*
10.13 Agreement dated July 16, 1996 between the Registrant and Raj Reddy
10.14 Trust Agreement dated August 4, 1992 among the Registrant, Ravindra Koka and
Dr. K. Buddhiraju
11.1 Statement re computation of pro forma earnings per share
23.1 Consent of Cohen & Grigsby, P.C. (included in legal opinion filed as Exhibit
5.1)**
23.2 Consent of independent certified public accountants
24.1 Power of Attorney*
</TABLE>
- ---------
* Previously filed
** To be filed by Amendment
<PAGE> 1
Exhibit 1.1
1,000,000 SHARES(1)
SEEC, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
_______________, 1996
H.C. Wainwright & Co., Inc.
One Boston Place
Boston, Massachusetts 02108
as Representative of the several
Underwriters named in SCHEDULE 1
attached hereto
Gentlemen:
1. INTRODUCTION. SEEC, Inc., a Pennsylvania corporation (the "Company"),
proposes to sell to the several underwriters named in SCHEDULE 1 attached
hereto (the "Underwriters"), for which H.C. Wainwright & Co., Inc. is acting as
representative (the "Representative"), an aggregate of 1,000,000 shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock"). The
1,000,000 shares of Common Stock to be sold by the Company are referred to as
the "Firm Shares." The respective amounts of the Firm Shares to be purchased by
the several Underwriters are set forth opposite their names in SCHEDULE 1
hereto.
The Company also proposes to issue and sell an aggregate of not more
than 150,000 additional shares of Common Stock if requested by the
Representative in accordance with Section 9 hereof. Such additional shares are
referred to as the "Additional Shares." The Firm Shares and the Additional
Shares are collectively referred to herein as the "Shares." The words "you" and
"your" refer to the Representative of the Underwriters.
The Company hereby confirms as follows its arrangements for the
purchase of the Shares by the Underwriters.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents, warrants and agrees with each of the
Underwriters that, except as disclosed in the Effective Prospectus and the
Final Prospectus (each as hereinafter defined):
- --------
1 Together with an option to purchase from the Company up to 150,000
additional shares to cover over allotments.
<PAGE> 2
(i) A registration statement on Form S-1 (File No. 333-14027)
under the Securities Act of 1933, as amended (the "Act"), with respect to the
Shares, including a preliminary form of prospectus, has been prepared by the
Company in conformity in all material respects with the requirements of the Act
and the Rules and Regulations (as hereinafter defined) of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission under the Act. Such registration statement, as amended and revised
at the time it becomes effective, or, if a post-effective amendment to such
registration statement has been or is filed, at the time such post-effective
amendment becomes effective, including financial statements and exhibits, is
hereinafter referred to as the "Registration Statement," and the prospectus
included as part of the Registration Statement on file with the Commission when
it became or shall become effective, or, if the procedure in Rule 430A of the
Rules and Regulations is followed, the prospectus that discloses all the
information that was omitted from the prospectus on the effective date of the
Registration Statement pursuant to such Rule and, in either case, together with
any changes contained in any prospectus filed with the Commission by the
Company under Rule 424(b) of the Rules and Regulations with your consent after
the effective date of the Registration Statement, is referred to herein as the
"Final Prospectus." If the procedure in Rule 430A is followed, the prospectus
included as part of the Registration Statement on the date when the
Registration Statement became effective is referred to herein as the "Effective
Prospectus." Any prospectus included in the Registration Statement and in any
amendments thereto prior to the effective date of the Registration Statement is
referred to herein as the "Pre-Effective Prospectus." For purposes hereof,
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934 (the
"Exchange Act"), as applicable. For purposes hereof, all references to the
Registration Statement, the Pre-Effective Prospectus, the Effective Prospectus
or the Final Prospectus, or any amendment or supplement to any of the
foregoing, shall be deemed to include the respective copies thereof filed with
the Commission pursuant to the Commission's Electronic Data Gathering, Analysis
and Retrieval System ("EDGAR").
(ii) The Commission has not issued any order preventing or
suspending the use of any Pre-Effective Prospectus and has not instituted or,
to the knowledge of the Company, threatened to institute any proceedings with
respect to such an order (a "Stop Order"); each Pre-Effective Prospectus, when
filed with the Commission, conformed in all material respects to the
requirements of the Act and the Rules and Regulations; when the Registration
Statement became or shall become effective and at all times subsequent thereto
up to and including the Closing Date and the Option Closing Date (each as
hereinafter defined), the Registration Statement, the Effective Prospectus, the
Final Prospectus and each amendment and each supplement thereto, if any, will
conform in all material respects to the requirements of the Act and the Rules
and Regulations; any request of the Commission for additional information (to
be included in the Registration Statement, the Effective Prospectus, the Final
Prospectus or otherwise) has been complied with; no part of the Registration
Statement, nor any amendment thereto, included or will include any untrue
statement of a material fact or omitted or will omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; and none of the Effective Prospectus, the Final Prospectus or any
Pre-Effective Prospectus (or any supplement thereto) as of their respective
dates, and, in the case of the Final Prospectus (or any supplement thereto) at
all times subsequent thereto up to and including the Closing Date and
2
<PAGE> 3
Option Closing Date, included or will include any untrue statement of a
material fact or omitted or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements in or
omissions from any Pre-Effective Prospectus, the Registration Statement, the
Effective Prospectus or the Final Prospectus, or any such amendment or
supplement, made in reliance upon, and in conformity with, information
furnished in writing to the Company by or on behalf of the Underwriters
expressly for use therein. As used in this Agreement, the term "knowledge"
means actual knowledge by any officer or director of the Company after
reasonable inquiry.
(iii) The Company (A) is a duly incorporated and validly
existing corporation in good standing under the laws of the Commonwealth of
Pennsylvania, with full power and authority (corporate and other), and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local and other governmental authorities and all courts and other tribunals
(collectively, the "Consents") to own or lease its properties and to conduct
its business as described in the Effective Prospectus and the Final Prospectus;
and (B) is duly qualified to do business as a foreign corporation in each
jurisdiction (x) in which the conduct of its business or (y) in which the
character of the property owned or leased by it requires such qualification,
except for those jurisdictions in which the failure so to qualify has not had
and will not have in the aggregate a material and adverse effect on the
Company. As used in this Agreement, the phrase "material and adverse effect on
the Company" or similar phrase means any material and adverse effect, directly
or indirectly, currently or prospectively, on the Company's financial
condition, results of operations, properties or prospects or business in
general.
(iv) The Company has no subsidiaries.
(v) The Company has a duly authorized and validly outstanding
capitalization as set forth in the Effective Prospectus and the Final
Prospectus and will have the adjusted capitalization set forth therein on the
Closing Date, based on the assumptions set forth therein; the capital stock of
the Company conforms to the descriptions thereof contained in the Effective
Prospectus and the Final Prospectus; the outstanding shares of capital stock
have been duly authorized and validly issued by the Company and are fully paid
and nonassessable, without any personal liability attaching to the ownership
thereof; the outstanding shares of capital stock have been issued in compliance
with all applicable federal and state securities laws; and the Company has duly
authorized the issuance and sale of the Shares to be issued and sold by the
Company in accordance with this Agreement. Except as created hereby or referred
to in the Registration Statement, the Effective Prospectus and the Final
Prospectus, there are no outstanding options, warrants, rights or other
arrangements (including without limitation preemptive rights) requiring the
Company at any time to issue any capital stock. The Shares are not and will not
be subject to any preemptive or other similar rights of any shareholder, which
have not been waived, have been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof will be validly issued, fully
paid and non-assessable and have been issued in compliance with all applicable
federal and state securities laws; and the holders thereof will not be subject
to any liability solely as such holders. Upon the issuance and delivery
pursuant to the terms hereof
3
<PAGE> 4
of the Shares, the Underwriters will acquire good and marketable title to such
Shares free and clear of any lien, encumbrance, equity, claim, security
interest, or other restriction whatsoever.
(vi) The financial statements and the related notes and
schedules thereto filed with and as part of the Registration Statement, the
Effective Prospectus and the Final Prospectus (collectively, the "Financial
Statements") fairly present the financial condition, results of operations,
stockholders' equity and cash flows of the Company at the respective dates of
such statements, notes and schedules and for the respective periods to which
they apply. The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, are correct and complete and are in accordance with the books
and records of the Company. Certain of the Financial Statements have been
audited by BDO Seidman, LLP, who are independent public accountants within the
meaning of the Act and the Rules and Regulations, as indicated in their reports
filed therewith. No other financial statements are required by Form S-1 or
otherwise to be included in the Registration Statement, the Effective
Prospectus or the Final Prospectus. The financial information and statistical
data set forth in the Effective Prospectus and the Final Prospectus under the
captions "Prospectus Summary -- Summary Financial Data," Capitalization,"
"Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" have been prepared on a basis
consistent with the Financial Statements.
(vii) The Company has filed all necessary federal and state
income and franchise tax returns and has paid all taxes shown as due
thereunder, and the Company has no knowledge of any tax deficiency which might
be assessed against the Company which, if so assessed, might have a material
and adverse effect on the Company.
(viii) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are, in the opinion of the Company's management, customary and adequate for the
businesses in which it is engaged, including, but not limited to, general
liability insurance and insurance covering real and personal property owned or
leased by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against by any company that is comparable
to the Company in terms of its financial condition, all of which insurance is
in full force and effect. The Company has no reason to believe that it will not
be able to renew existing insurance coverage with respect to the Company as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not now have,
individually or in the aggregate, a material and adverse effect on the Company.
(ix) Except as disclosed in the Effective Prospectus and the
Final Prospectus, there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation before or by any court,
regulatory body or administrative agency or any other governmental agency or
body, domestic or foreign, which (A) questions the validity of the capital
stock of the Company or this Agreement or of any action taken or to be taken by
the Company pursuant to or in connection with this Agreement, (B) is required
to be disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the
4
<PAGE> 5
Registration Statement, if any, are accurately summarized in all respects), or
(C) would have a material and adverse effect on the Company.
(x) The Company has full legal right, power and authority to
enter into this Agreement and to consummate the transactions provided for
herein; and this Agreement has been duly authorized by the Company's Board of
Directors and executed and delivered by the Company. This Agreement, assuming
it is a binding agreement of yours, constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws relating to creditors' rights
generally, and general equitable principles relating to the availability of
remedies, and as rights to indemnity or contribution may be limited by state or
federal securities laws and the public policy underlying such laws), and none
of the Company's execution or delivery of this Agreement, its performance
hereunder, or its consummation of the transactions contemplated herein,
conflicts or will conflict with, or results or will result, in any breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any
lien, charge, or encumbrance upon, any property or assets of the Company
pursuant to the terms of (A) the articles of organization or by-laws of the
Company, (B) any contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note agreement or other agreement or
instrument to which the Company is a party or by which it may be bound or to
which any of its properties is or may be subject, or any indebtedness, or (C)
any statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, having jurisdiction
over the Company or any of their activities or properties.
(xi) All executed agreements or copies of executed agreements
filed as exhibits to the Registration Statement to which the Company is a party
or by which it may be bound or to which any of its assets, properties or
business may be subject have been duly and validly authorized, executed and
delivered by the Company, constitute the legal, valid and binding agreements of
the Company, enforceable against it in accordance with their respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles relating to the
availability of remedies, and as rights to indemnity or contribution may be
limited by state or federal securities laws and the public policy underlying
such laws) and, to the knowledge of the Company, no default has occurred under
such agreements by the parties with whom the Company has entered into such
agreements. The descriptions in the Registration Statement of contracts and
other documents are accurate and fairly present the information required to be
shown with respect thereto by Form S-1, and there are no contracts or other
documents which are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies. Each transaction with ERA Software Systems
Private Limited ("ERA") is on terms comparable to those in an arm's length
transaction and has been evidenced by a formal agreement.
5
<PAGE> 6
(xii) Subsequent to the most recent respective dates as of
which information is given in the Effective Prospectus and the Final Prospectus
and except as expressly contemplated in the Effective Prospectus and the Final
Prospectus, the Company has not incurred, other than in the ordinary course of
its business, any material liabilities or obligations, direct or contingent,
paid or declared any dividends or other distributions on its capital stock or
entered into any material transactions not in the ordinary course of business,
and there has been no material change in capital stock or debt or any material
adverse change in the condition (financial or other), net worth or results of
operations of the Company. The Company is not in breach or violation of, or in
default under, any term or provision of (A) its articles of organization or
by-laws, (B) any contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note agreement or other agreement or
instrument to which the Company is a party or by which it is bound or to which
any of its property is subject, or any indebtedness, which breach, violation or
default would have a material and adverse effect on the Company, or (C) any
statute, judgment, decree, order, rule or regulation applicable to the Company
of any arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its activities or properties and the effect of which breach
or default would be material and adverse to the Company.
(xiii) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent which could reasonably
be expected to have a material and adverse effect on the Company.
(xiv) Since its inception, the Company has not incurred any
material liability arising under or as a result of the application of the
provisions of the Act or applicable state securities laws.
(xv) The Company does not maintain an "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")).
(xvi) The Company owns or possesses adequate rights to use,
license and sublicense all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information (together, "Proprietary Rights") currently employed by
it in connection with its business. The Company has all Proprietary Rights
necessary to carry out the Company's current, former and anticipated future
activities, including without limitation, rights to make, use, exclude others
from using, reproduce, modify, adapt, create derivative works based on,
translate, distribute (directly and indirectly), transmit, display and perform
publicly, license, rent, lease, assign, and sell the Proprietary Rights, and to
sublicense any or all such rights to third parties, including the right to
grant further sublicenses. The Company is not, nor as a result of the execution
and delivery of this Agreement, or performance of the Company's obligations
hereunder, will the Company be, in material violation of any license,
sublicense or agreement to which the Company is a party or otherwise bound. The
Company has not received any notice of infringement, misuse or misappropriation
of or conflict with asserted rights of any third party with respect to any of
the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or
6
<PAGE> 7
finding, would result in a material and adverse effect on the Company. There
is no pending or, to the knowledge of the Company, threatened or potential
claim, challenge or proceeding by the Company against any third party for
infringement, misuse or misappropriation or interference with any Proprietary
Right owned, licensed or controlled by the Company. The Company has not
disclosed any material confidential information developed or utilized by the
Company to any third party except on a confidential basis and pursuant to a
confidentiality agreement and with no intention to entitle such third party to
use such information other than for the purposes set forth in such
confidentiality agreement, nor, to the knowledge of the Company, has any third
party disclosed confidential information developed or utilized by the Company
to any person not an employee of the Company or of the third party. The Company
has nondisclosure and confidentiality agreements with respect to the
Proprietary Information with all employees of the Company.
(xvii) The Company is not in violation of any laws,
ordinances or governmental rules or regulations to which it or its property is
subject, which violation would have a material and adverse effect on the
Company and, without limiting the generality of the foregoing, the Company has
not violated any applicable safety or similar law applicable to the business of
the Company (or to its respective properties, whether owned or leased), or any
federal or state law relating to discrimination in the hiring, promotion, or
pay of employees, or any applicable federal or state wages and hours law, or
any provisions of ERISA or the rules and regulations promulgated thereunder,
which violation would have a material and adverse effect on the Company.
(xviii) No consent, approval, authorization or order of any
court, regulatory body, administrative agency or any other governmental agency
or body, domestic or foreign, is required for the performance by the Company of
this Agreement or the consummation by the Company of the transactions
contemplated hereby, except such as have been or may be obtained under the Act
or may be required under state securities or Blue Sky laws in connection with
the Underwriters' purchase and distribution of the Shares to be sold hereunder.
(xix) There are no holders of securities of the Company
having rights (exercisable currently or in the future) to the registration of
such securities under the Registration Statement who have not waived such
rights with respect to the Registration Statement and the transactions provided
for herein.
(xx) Neither the Company nor, to the knowledge of the
Company, any of its officers, directors or affiliates (within the meaning of
the Rules and Regulations) has taken or will take, directly or indirectly, any
action designed to stabilize or manipulate the price of any security of the
Company, or which might in the future reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of the Shares or otherwise.
(xxi) The Company has good and marketable title to all
properties and assets owned by it free and clear of all liens, encumbrances,
restrictions, equity, claims and defects, except such as are described in the
Registration Statement, the Effective Prospectus and the Final
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Prospectus or such as do not materially adversely affect the value of any of
such properties or assets taken as a whole and do not interfere with the use
made and proposed to be made of any of such properties or assets; all of the
material leases and subleases of the Company, and under which the Company holds
properties or assets as lessee or sublessee, constitute the binding obligations
of the Company free and clear of any lien, encumbrance, claim or defect, are in
full force and effect, and the Company is not in default in respect of any of
the material terms or provisions of any of such leases or subleases, and the
Company has not received notice of any material claim which has been asserted
by anyone adverse to the rights of the Company as lessee or sublessee under any
of such leases or subleases, or affecting or questioning the right of the
Company to the continued possession of the leased or subleased premises or
property under any such material lease or sublease, which would have a material
and adverse effect on the Company; and the Company owns or leases all such
premises and properties as are necessary to its operations as now conducted,
and as proposed to be conducted as set forth in the Registration Statement and
the Effective Prospectus and the Final Prospectus; and the properties and
business of the Company conform to the descriptions thereof contained in the
Registration Statement, the Effective Prospectus and the Final Prospectus.
(xxii) The Company holds all franchises, licenses,
governmental approvals, permits, certificates and other authorizations from
state, federal and other regulatory authorities necessary to the ownership,
leasing and operation of its properties or required for the present conduct of
its business, and such franchises, licenses, governmental approvals, permits,
certificates and other authorizations are in full force and effect and the
Company is in all material respects in compliance therewith except where the
failure so to obtain, maintain or comply with would not have a material and
adverse effect on the Company.
(xxiii) The Company maintains books, records and accounts
which in reasonable detail accurately and fairly reflect the transactions and
dispositions of its assets, and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are executed as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiv) The Company has filed a registration statement
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to register the Common Stock, has filed an application to
list the Securities on the National Association of Securities Dealers, Inc.
Automated Quotation Small-Cap Market (the "Nasdaq Small-Cap Market"), and has
received notification that the listing has been approved, subject to notice of
issuance of the Shares.
(xxv) Neither the Company nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated
with, or acting on behalf of, the Company has, directly or indirectly at any
time since the inception of the Company: used any Company
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<PAGE> 9
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns from Company funds; violated any provision of
the Foreign Corrupt Practices Act of 1977 (the "FCPA"), as amended; or made any
unlawful payment. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply in all material respects with the
Exchange Act and the FCPA.
(xxvi) The Company has obtained from each of its directors
and officers (as defined in the Rules and Regulations), and from substantially
all shareholders, who hold in the aggregate approximately ___________ shares of
Common Stock, options to purchase approximately __________ shares of Common
Stock and warrants to purchase approximately ____________ shares of Common
Stock, his, her or its enforceable written agreement, in form and substance
satisfactory to the Representative and its counsel, that for a period of 270
days from the date of the Final Prospectus he, she or it will not, without your
prior written consent, directly or indirectly, register, issue, offer, sell,
offer to sell, contract to sell, hypothecate, pledge or otherwise dispose of
any shares of Common Stock (or any security or other instrument which by its
terms is convertible into, exercisable for, or exchangeable for, shares of
Common Stock, including, without limitation, any shares of Common Stock
issuable under any employee or director stock options).
(xxvii) The Company is not, and does not intend to conduct
its business in a manner in which it would become, an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(xxviii) Except as described in the Final Prospectus, the
Company has not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement.
(xxix) The Company is in compliance with any and all
applicable federal, state and local environmental laws, rules, regulations,
treaties, statutes and codes promulgated by all governmental authorities
relating to the protection of human health and safety, the environment or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"). The
Company has received all permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct its business. The Company is in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, license or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a material and adverse effect on the
Company. No action, proceeding, revocation proceeding, writ, injunction or
claim is pending or threatened (nor, to the knowledge of the Company, is there
any basis therefor) relating to the Environmental Laws or to the Company's
activities involving Hazardous Material. "Hazardous Material" means any
material or substance that is prohibited or regulated by any Environmental Law,
or that has been designated or regulated by any governmental authority as
radioactive, toxic, hazardous or otherwise a danger to health, reproduction or
the environment. There have been no costs or
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<PAGE> 10
liabilities, to the knowledge of the Company, associated with the effect of or
compliance with the Environment Laws on the business, operations, properties or
assets of the Company that would, individually or in the aggregate, have a
material and adverse effect on the Company.
(xxx) To the knowledge of the Company, no officer, director
or stockholder of the Company other than Adam D. Young, David A. Smith, Thomas
L. Dwyer and Gerald R. Appel, has any affiliation or association with the
National Association of Securities Dealers, Inc. (the "NASD") or any member
thereof, except as described in the Prospectus.
(xxxi) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offer and sale of the Shares, other than any Pre-Effective Prospectus, the
Effective Prospectus or the Final Prospectus or other materials permitted by
the Act and the Rules and Regulations to be distributed.
(xxxii) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the Company's
business with Cuba or with any person or affiliate located in Cuba changes in
any material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the Department.
(b) Each Underwriter hereby represents and warrants to the Company as
follows:
(i) Such Underwriter is registered as a broker dealer with
the Commission and is registered with and holds all required authorizations
from any jurisdiction in which such Underwriter's activities in connection with
this Agreement require such registration or authorization.
(ii) There is not now pending or, to the knowledge of such
Underwriter, threatened against such Underwriter any action or proceeding of
which such Underwriter has been advised, either in any court of competent
jurisdiction, before the Commission or before any state securities commission,
concerning such Underwriter's activities as a broker or dealer, nor has such
Underwriter been named in any action or proceeding which may be expected to
have a material adverse effect upon such Underwriter's ability to act as
contemplated herein.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
sell to the several Underwriters, and each Underwriter, severally and not
jointly, agrees to purchase from the Company at $_____ per share (the "Purchase
Price"), the number of Shares set forth opposite the respective name of such
Underwriter on Schedule 1 hereto (and such number of Additional Shares as set
forth in
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Section 9 hereof), subject to such adjustments to eliminate any fractional
shares as the Representative in its sole discretion shall make.
Delivery of certificates for the Shares, and payment of the purchase
price for the Shares, shall be made at the offices of H.C. Wainwright & Co.,
Inc., One Boston Place, Boston, Massachusetts 02108, or such other location as
the Representative shall determine and advise the Company by at least two full
business days' notice in writing. Such delivery and payment shall be made at
10:00 a.m., Boston time, on the third business day following the Effective Date
(as defined in Section 11) unless postponed in accordance with the provisions
of Section 13, or at such other time as shall be agreed upon between you and
the Company. The time and date of such delivery and payment are herein called
the "Closing Date." Delivery of the certificates for the Shares shall be made
to the Representative for the respective accounts of the several Underwriters
against payment in Boston Clearing House Funds by the several Underwriters
through the Representative to the order of the Company for the Shares. The
certificates for the Shares to be so delivered will be in definitive, fully
registered form, will bear no restrictive legends and will be in such
denominations and registered in such names as the Representative shall request,
not less than two full business days prior to the Closing Date. The
certificates for the Shares will be made available to the Representative at
such office or such other place as the Representative may designate for
inspection, checking and packaging not later than 9:30 a.m., Boston time on the
business day prior to the Closing Date. The Company shall not be obligated to
sell any Firm Shares, unless all Firm Shares to be sold pursuant to this
Agreement are purchased hereunder.
4. PUBLIC OFFERING OF THE SHARES. As soon after the Registration Statement
becomes effective as the Representative deems advisable, it is understood that
the Underwriters propose to make a public offering (the "Offering") of the
Shares (other than to residents of or in any jurisdiction in which
qualification of the Shares is required and has not become effective) at $____
per share (the "Public Offering Price") and upon the other terms set forth in
the Effective Prospectus and the Final Prospectus relating to the Shares.
5. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with each of the Underwriters
that:
(i) The Company will use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and, if the procedure in Rule 430A of the Rules and
Regulations is followed, to comply with the provisions of and make all
requisite filings with the Commission pursuant to such Rule and to notify you
promptly of all such filings. The Company will not at any time, whether before
or after the effective date of the Registration Statement, file any amendment
to the Registration Statement or supplement to the Effective Prospectus or the
Final Prospectus before termination of the offering of the Shares by the
Underwriters of which the Representative shall not previously have been advised
and furnished with a copy, or to which the Representative shall have reasonably
objected or which is not in compliance with the Act or the Rules and
Regulations.
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(ii) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative (x) when the Registration
Statement, as amended, has become effective, if the provisions of Rule 430A
will be relied upon, when the Final Prospectus has been filed in accordance
with said Rule 430A and when any post-effective amendment to the Registration
Statement becomes effective, (y) of any request made by the Commission for
amending the Registration Statement, for supplementing any Pre-Effective
Prospectus, the Effective Prospectus or the Final Prospectus or for additional
information, or (z) of the issuance by the Commission of any Stop Order or the
institution or threat of any investigation or proceeding for that purpose, and
will use its best efforts to prevent the issuance of any such Stop Order and,
if issued, to obtain the lifting thereof as soon as possible.
(iii) The Company will cooperate with the Representative to
qualify the Shares for offer and sale under the state securities or Blue Sky
laws of such jurisdictions as the Representative may reasonably request and
will make such applications, file such documents and furnish such information
as may be required for such purpose; provided, however, that the Company shall
not be required to qualify as a foreign corporation or file a general or
unlimited consent to service of process in any such jurisdiction.
(iv) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act, any event occurs as a result of
which the Effective Prospectus, the Final Prospectus, or the Effective
Prospectus or the Final Prospectus as then amended or supplemented, would
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading, or if it becomes
necessary at any time to amend or supplement the Effective Prospectus or the
Final Prospectus to comply with the Act or the Rules and Regulations, the
Company promptly will so notify the Representative and prepare and file with
the Commission an amendment or supplement which will correct such statement or
omission or an amendment or supplement which will effect such compliance, each
such amendment or supplement to be reasonably satisfactory to Morse,
Barnes-Brown & Pendleton, P.C. (the "Underwriters' Counsel").
(v) As soon as practicable, but in any event not later than
45 days after the end of the 12 month period beginning on the day after the end
of the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company will make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representative, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the
Act, covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(vi) During a period of five years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants and prepared in accordance with generally accepted
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<PAGE> 13
accounting principles) and unaudited quarterly reports of earnings, and will
deliver to the Representative:
(A) concurrently with furnishing such quarterly reports to
its stockholders, a copy thereof in the form furnished to the Company's
stockholders;
(B) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity, and
cash flows of the Company for the fiscal year then ended, accompanied by a copy
of the report thereon of independent public accountants;
(C) concurrently with mailing, copies of all reports
(financial or other) mailed to stockholders;
(D) concurrently with mailing, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD or any
securities exchange;
(E) every press release and every material news item or
article of interest to the financial community in respect of the Company or its
affairs which was released or prepared by the Company; and
(F) any additional information of a public nature
concerning the Company or its business which the Representative may reasonably
request.
During such five-year period, if the Company has active subsidiaries,
the foregoing financial statements will be on a consolidated basis to the
extent that the accounts of the Company as its subsidiaries are consolidated,
and will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(vii) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same as the Transfer Agent) for its Common Stock.
(viii) The Company will furnish to the Representative or on
the Representative's order, without charge, at such place as the Representative
may designate, copies of each Pre-Effective Prospectus, the Registration
Statement and any pre-effective or post-effective amendments thereto (two of
which copies will be signed and will include all financial statements and
exhibits), the Effective Prospectus and the Final Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Representative may reasonably request. To the
extent applicable, the printed copies of the Registration Statement and each
amendment thereto (including all exhibits filed therewith), any Pre-Effective
Prospectus, Effective Prospectus or Final Prospectus (in each case, as amended
or supplemented) furnished to the Representative will be identical to the
electronic copies filed with the Commission pursuant to EDGAR except to the
extent permitted by Regulation S-T.
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(ix) The Company will not, directly or indirectly, without
the prior written consent of the Representative, offer, sell, grant any option
to purchase or otherwise dispose (or announce any offer, sale, grant of any
option to purchase or other disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 270 days after the date hereof, except pursuant to
this Agreement and except for (a) grants of stock options at exercise prices
equal to the fair market value of the Common Stock under the Stock Option Plan
described in the Effective Prospectus and the Final Prospectus or (b) issuances
pursuant to the exercise of stock options and warrants outstanding on the date
hereof and described in the Effective Prospectus and the Final Prospectus.
(x) Neither the Company nor any of its officers or directors,
nor affiliates of any of them (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(xi) As soon as the Company is advised or obtains knowledge
thereof, the Company will promptly advise the Representative of any change in
the information set forth in the certificate delivered by the Company pursuant
to Section 7(vii) below.
(xii) The Company will apply the net proceeds of the offering
substantially in the manner set forth under the caption "Use of Proceeds" in
the Effective Prospectus and the Final Prospectus.
(xiii) The Company will timely file all such reports, forms
or other documents as may be required, from time to time, under the Act, the
Exchange Act, or the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(xiv) The Company will cause the Shares to be duly included
for quotation on the NASDAQ Small-Cap Market prior to the Closing Date. The
Company will use its best efforts to ensure that the Shares remain included for
quotation on the NASDAQ Small-Cap Market following the Closing Date.
(xv) The Company will not, without the prior written consent
of the Representative, (i) grant to any holder of securities of the Company any
right to request registration of his securities under the Act or any related
rights unless such registration rights may be exercised only after nine months
following the effective date of the Registration Statement or (ii) file with
the Commission any Registration Statements covering any equity securities of
the Company within nine months following the effective date of the Registration
Statement, except that the Company, at any time, may file a Registration
Statement on Form S-8 to register options and shares of Common Stock issuable
under the plans described in the Effective Prospectus and the Final Prospectus.
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(xvi) The Company will not, without the prior written consent
of the Representative, grant to any person who is not subject to an agreement
described in Section 7(x) below any stock options or other rights to acquire
Common Stock which would be exercisable within six months following the
effective date of the Registration Statement.
(xvii) The Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(xviii) Prior to the Closing Date, the Company will not issue
any press release or other communication, directly or indirectly, or hold any
press conference with respect to the Company, the financial conditions, results
of operations, business, properties, assets or liabilities thereof, or this
offering, without the Representative's prior written consent, which consent
will not be unreasonably withheld.
(xix) The Company will file timely with the Commission
accurate reports on Form SR in accordance with Rule 463 of the Rules and
Regulations or any successor provision.
(xx) The Company will deliver to you, without charge, within
a reasonable period after the expiration of the period in which the
Underwriters may exercise the over-allotment option (but in no event later than
six months from the date of the Prospectus), such bound volumes of the
Registration Statement and all related materials as you may reasonably request.
(xxi) The Company will execute a letter addressed to the
transfer agent for the Company which instructs the transfer agent to note stop
transfer instructions with respect to all of the shares of Common Stock which
are subject to lock up agreements.
(xxii) The Company will do and perform all things reasonably
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Shares.
(xxiii) All transactions to be entered into by the Company
with ERA shall be at arm's length and shall be approved by an independent
committee of the Board of Directors of the Company.
6. FEES AND EXPENSES.
(a) Regardless of whether the transactions contemplated in this
Agreement are consummated, and regardless of whether for any reason this
Agreement is terminated, the Company will pay and hereby agrees to indemnify
each Underwriter against, all fees and expenses incident to the performance of
the obligations of the Company under this Agreement, including, but not limited
to, (i) the fees and expenses of accountants and counsel for the Company, (ii)
all costs and expenses incurred in connection with the preparation,
duplication, printing, filing, delivery, shipping and mailing of copies of the
Registration Statement and any pre-effective or post-effective amendments
thereto, each Pre-Effective Prospectus, the Effective Prospectus and the Final
Prospectus and any amendments or supplements thereto (including
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<PAGE> 16
postage costs related to the delivery by the Underwriters of any Pre-Effective
Prospectus, the Effective Prospectus or the Final Prospectus, or any amendment
or supplement thereto), this Agreement, the Agreement Among Underwriters, any
Selected Dealer Agreement, Underwriters' Questionnaire, and all other documents
in connection with the transactions contemplated herein, including the cost of
all copies thereof, (iii) fees and expenses relating to qualification of the
Shares under state securities or Blue Sky laws, including the cost of preparing
and mailing the preliminary and final "Blue Sky Memorandum" and disbursements
and reasonable fees of counsel in connection therewith, (iv) fees and expenses
relating to all filings and negotiations with the NASD, including disbursements
and reasonable fees of counsel in connection therewith, (v) the filing fees
payable to the Commission, the NASD and state securities authorities, (vi) all
expenses (including any applicable transfer taxes) incurred in connection with
the issuance and delivery to the Underwriters of the Shares to be sold in
accordance with the Agreement, (vii) any costs or fees incurred in connection
with the quotation of the Shares on the Nasdaq Small-Cap Market, and (viii) all
other costs and expenses incident to the performance of the Company's
obligations hereunder which are not specifically provided for in this Section.
(b) If the Firm Shares are purchased and sold on the Closing Date,
then the Company shall pay to the Representative an amount equal to 7% of the
aggregate Public Offering Price of all Firm Shares sold in the Offering, which
amount shall represent the underwriting discount. If any Additional Shares are
purchased and sold on the Option Closing Date, then the Company shall pay to
the Representative an additional amount equal to 7% of the aggregate Public
Offering Price of all Additional Shares sold in the Offering, which amount
shall represent an additional underwriting discount as aforesaid.
(c) If the Firm Shares are purchased and sold on the Closing Date,
then the Company shall pay to the Representative an amount equal to 3% of the
aggregate Public Offering Price of all Firm Shares sold in the Offering, which
amount shall represent a non-accountable allowance for the expenses incurred by
the Representative in connection with its duties and activities under this
Agreement. If any Additional Shares are purchased and sold on the Option
Closing Date, then the Company shall pay to the Representative an additional
amount equal to 3% of the aggregate Public Offering Price of all Additional
Shares sold in the Offering, which amount shall represent an additional
non-accountable allowance for the expenses incurred by the Representative as
aforesaid.
(d) The Company agrees that if the Firm Shares are purchased and sold
on the Closing Date then it will issue to the Representative individually, and
not in its capacity as Representative, a warrant to purchase up to ten percent
(10%) of the number of Shares of Common Stock offered by the Company at a price
per share equal to 120% of the Public Offering Price (the "Underwriter's
Warrant"). The Underwriter's Warrant shall not be exercisable for a period of
one year from the date of issuance thereof and shall be exercisable thereafter
for a period of four years. The Underwriter's Warrant shall be evidenced by a
certificate in the form and contain the terms and conditions as set forth in
the exhibits to the Registration Statement. The Underwriter's Warrant
certificate shall be delivered in such denominations and in such names as may
be requested by the Representative.
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(e) If the purchase of the Shares as herein contemplated is not
consummated because this Agreement is terminated pursuant to Sections 12(a) or
12(b) hereof or because of the failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of
the Underwriters, the Company shall reimburse the several Underwriters for
their documented out-of-pocket expenses, including counsel fees and
disbursements, up to a maximum of $100,000 in connection with any investigation
made by them, and any preparation made by them in respect of marketing of the
Shares or in contemplation of the performance by them of their obligations
hereunder. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
(f) In the event that the Company abandons the offering contemplated
by the Registration Statement because (i) the Company is acquired by merger,
purchase of assets or otherwise; or (ii) the Company reorganizes with another
entity; or (ii) the Company completes a financing (other than normal bank
debt), then the Company shall hire the Representative under the provisions of
Section 6(g). Any such fees payable under Section 6(g) shall be in addition to
the reimbursement of expenses described in paragraph (e) above.
(g) During the Exclusivity Period (as defined below), if the Company
determines to engage a financial advisor or investment bank to advise the
Company with respect to (i) the issuance and public sale of equity securities
of the Company, the Representative shall have the right, but not the
obligation, to act as a placement agent or managing underwriter, as the case
may be, or (ii) the sale or disposition of the Company or any of its assets or
the acquisition by the Company of any securities or assets of any other
business entity, the Representative shall have the right, but not the
obligation, to act as the Company's exclusive financial advisor. In connection
with any such engagements, the Company and the Representative shall enter into
agreements, appropriate under the circumstances, containing provisions for
compensation, indemnification, and other matters that are usual and customary
for other similar circumstances in which the Representative is engaged. The
"Exclusivity Period" refers to the two year period commencing from the date of
this agreement regardless of whether or not the offering is consummated,
PROVIDED, HOWEVER, that in the event that the Representative abandons the
offering for any reason, the Exclusivity Period shall terminate as of the date
of any such abandonment.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation of each
Underwriter to purchase and pay for the Shares to be purchased by such
Underwriter hereunder is subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date as if they had been made on and as of the Closing Date;
the accuracy on and as of the Closing Date of the statements of officers of the
Company made pursuant to the provisions hereof; the performance by the Company
on and as of the Closing Date of its covenants and agreements hereunder, and
the following additional conditions:
(i) The Registration Statement has become effective and any and all
filings required by Rule 424 and Rule 430A of the Rules and Regulations have
been made; no Stop Order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the knowledge of the Company or to the
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Representative's knowledge, have been threatened or are contemplated by the
Commission; and any request of the Commission for additional information to be
included in the Registration Statement or the Effective Prospectus or the Final
Prospectus or otherwise has been complied with or otherwise satisfied.
(ii) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state
a fact which, in the Representative's opinion, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading, or that the Effective Prospectus or the Final Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact which, in
the Representative's opinion, is material, or omits to state a fact which, in
the Representative's opinion, is material and is required to be stated therein
or is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(iii) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel such opinion or opinions with respect to
the issuance and sale of the Shares, the Registration Statement, the Effective
Prospectus and the Final Prospectus and other related matters as the
Representative reasonably may request and such counsel shall have received such
papers and information as they request to enable them to pass upon such
matters.
(iv) On the Closing Date and the Option Closing Date, as the case may
be, the Underwriters shall have received the opinion, dated at the Closing
Date, of Cohen & Grigsby, P.C., counsel to the Company to the effect set forth
below:
(A) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the Commonwealth
of Pennsylvania and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a material and adverse effect on the Company;
(B) The Company has corporate power and authority to own or
lease its properties and conduct its business as described in the Registration
Statement, the Effective Prospectus and the Final Prospectus, and the Company
has the power to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it;
(C) To the knowledge of such counsel, there are no holders of
securities of the Company, who, by reason of the filing of the Registration
Statement, have the right (and have not waived such right) to request the
Company to register under the Act, or to include in the Registration Statement,
securities held by them;
(D) To the knowledge of such counsel, no default exists, and
no event has occurred which, with notice or lapse of time or both, would
constitute a default by the Company in the due performance and observance of
any term, covenant or condition of any contract,
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<PAGE> 19
indenture, mortgage, deed of trust, voting trust agreement, stockholders
agreement, note agreement or other agreement or instrument to which the Company
is a party or by which the Company is bound or to which any of its property is
subject;
(E) The Company has an authorized capitalization as set forth
in the Effective Prospectus and the Final Prospectus; all of the issued shares
of capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities (provided that such counsel's opinion as to any agreements that
might confer any such rights shall be based upon such counsel's knowledge); the
Shares have been duly authorized by all necessary corporate action of the
Company and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be validly issued fully paid and
nonassessable; the Shares have been duly authorized for quotation on the Nasdaq
Small-Cap Market; and no holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to subscribe for
any of the Shares (provided that such counsel's opinion as to any agreements
that might confer any such rights shall be based upon such counsel's
knowledge);
(F) The statements set forth under the heading "Description
of Securities" in the Effective Prospectus and the Final Prospectus, insofar as
such statements purport to summarize certain provisions of the capital stock of
the Company, provide a fair summary of such provisions;
(G) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the Company; and this
Agreement, assuming it is a binding agreement of the Underwriters, constitutes
a legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, or other similar
laws relating to creditors' rights generally, and general equitable principles
relating to the availability of remedies, and as rights to indemnity or
contribution may be limited by state or federal securities laws and the public
policy underlying such laws);
(H) (i) To the knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company is a party or to
which the property of the Company is subject that are required to be described
in the Registration Statement, the Effective Prospectus or the Final Prospectus
and are not described therein, and no such proceedings have been threatened
against the Company or with respect to any of its properties; and (ii) no
contract or other document known to counsel is required to be described in the
Registration Statement, the Effective Prospectus or the Final Prospectus or to
be filed as an exhibit to the Registration Statement that is not described
therein or filed as required;
(I) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated do not
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<PAGE> 20
(A) require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained and
such as may be required under state securities or Blue Sky laws, or (B)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument, known to such counsel, to which
the Company is a party or by which the Company or any of its properties are
bound, or the charter documents or by-laws of the Company, or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and applicable
to the Company (assuming, for purposes of this paragraph, the due qualification
of the Shares for public offering by the Underwriters under state securities
laws, and compliance with all applicable federal and state securities laws);
(J) The Registration Statement is effective under the Act;
any required filing of the Final Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); and, to
such counsel's knowledge, no Stop Order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to the
knowledge of such counsel, are contemplated by the Commission; and
(K) The registration statement originally filed with respect
to the Shares and each amendment thereto and the Effective Prospectus and the
Final Prospectus (in each case, other than the financial statements and other
financial and statistical information contained therein, as to which such
counsel need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the Rules and Regulations;
(L) The Company is not now an "investment company" as defined
in Section 3(a) of the Investment Company Act; and
(M) All issuances and sales of currently issued and
outstanding securities by the Company were exempt from registration under the
Act and complied in all respects with the provisions of all applicable federal
and state securities laws.
In addition to the matters set forth above, the opinion shall also
include a statement to the effect that such counsel has participated in
conferences with representatives of the Company, counsel to the Underwriters,
representatives of the independent public accountants for the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and any Pre-Effective Prospectus and related matters were discussed,
and that no facts have come to such counsel's attention which would cause such
counsel to believe that the Registration Statement at the time it became
effective contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that, on the Closing Date, the Effective
Prospectus, the Final Prospectus and the Registration Statement contained any
untrue statement of material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express no
comment as to the information provided by the Underwriters, the
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<PAGE> 21
financial statements and schedules or other financial or statistical data
included therein). With respect to such statement, such counsel may state that
their belief is based on the procedures set forth therein, but is without
independent check and verification except as otherwise expressly stated.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement, Effective Prospectus and the Final Prospectus in this subparagraph
(iv) of Section 7 shall include any amendment or supplement thereto at the date
of such opinion.
(v) On or prior to the Closing Date, Underwriters' Counsel shall have
been furnished such documents, certificates and opinions as they may reasonably
require for the purposes of enabling them to review or pass upon the matters
referred to in paragraph (iii) of this Section 7, or in order to evidence the
accuracy, completeness or satisfaction of any of the representations or
warranties of the Company, or conditions herein contained.
(vi) At the time that this Agreement is executed by the Company, the
Underwriters shall have received from BDO Seidman, LLP a letter as of the date
of this Agreement in form and substance satisfactory to you (the "Original
Letter"), and on the Closing Date, the Underwriters shall have received from
BDO Seidman, LLP a letter dated the Closing Date stating that, as of a
specified date not earlier than five (5) days prior to the Closing Date,
nothing has come to the attention of BDO Seidman, LLP to suggest that the
statements made in the Original Letter are not true and correct.
(vii) On the Closing Date, the Underwriters shall have received a
certificate, dated the Closing Date, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect that
each of such persons has carefully examined the Registration Statement, the
Effective Prospectus and the Final Prospectus, and any amendments or
supplements thereto and this Agreement, and that:
(A) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date, and
the Company has complied with all agreements and covenants and satisfied all
conditions contained in this Agreement on its part to be performed or satisfied
at or prior to the Closing Date;
(B) No Stop Order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the each such person's knowledge,
are contemplated or threatened under the Act, and any and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations have been timely made;
(C) The Registration Statement, the Effective Prospectus and
the Final Prospectus and, if any, each amendment and each supplement thereto,
contain all statements and information required to be included therein, and
neither the Registration Statement nor any
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<PAGE> 22
amendment thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and none of the Effective Prospectus or the
Final Prospectus or any Pre-Effective Prospectus (or any amendment or
supplement thereto) included any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and
(D) Subsequent to the respective dates as of which
information is given in the Registration Statement, the Effective Prospectus
and the Final Prospectus, the Company has not incurred, up to and including the
Closing Date, other than in the ordinary course of its business or as
contemplated in the Effective Prospectus and the Final Prospectus, any material
liabilities or obligations, direct or contingent; the Company has not paid or
declared any dividends or other distributions on its capital stock; the Company
has not entered into any transactions not in the ordinary course of business or
as contemplated in the Effective Prospectus and the Final Prospectus, and there
has not been any change in the capital stock (other than change resulting from
the grant or exercise of options under stock option plans or agreements in
effect as of the date of this Agreement) or long-term debt or any increase in
the short-term borrowings (other than as disclosed in the Effective Prospectus
and the Final Prospectus or any increase in short-term borrowings in the
ordinary course of business) of the Company or any material adverse change in
the present or prospective business condition (financial or other), net worth
or results of operations of the Company; the Company has not sustained any
material loss or damage to its property or assets, whether or not insured;
there is no litigation which is pending or, to each such person's knowledge,
threatened against the Company which is required to be set forth in the
Effective Prospectus or Final Prospectus which has not been so set forth; and
there has occurred no event required to be set forth in an amended or
supplemented Effective Prospectus or Final Prospectus which has not been so set
forth.
References to the Registration Statement, the Effective Prospectus and
the Final Prospectus in this paragraph (vii) are to such documents as amended
and supplemented at the date of the certificate.
(viii) Subsequent to the respective dates as of which information is
given in the Registration Statement, the Effective Prospectus and the Final
Prospectus up to and including the Closing Date there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the business or properties of the Company which change or
development makes it impractical or inadvisable in the Representative's
judgment to proceed with the public offering or the delivery of the Shares as
contemplated by the Effective Prospectus and the Final Prospectus.
(ix) No order suspending the sale of the Shares prior to the Closing
Date in any jurisdiction designated by you pursuant to Section 5(iii) hereof
has been issued on or prior to the Closing Date and no proceedings for that
purpose have been instituted or, to your knowledge or that of the Company, have
been or are contemplated.
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(x) The Representative shall have received from each of the Company's
directors and officer and from substantially all shareholders, who hold in the
aggregate approximately __________ shares of Common Stock, options to purchase
approximately ___________ shares of Common Stock and warrants to purchase
approximately ___________ shares of Common Stock, an agreement to the effect
that such person will not, directly or indirectly, without the prior written
consent of the Representative, offer, sell, grant, any portion to purchase or
otherwise dispose (or announce any offer, sale, grant of an option to purchase
or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock
for a period of 270 days after the date of this Agreement.
(xi) The Company shall have furnished the Underwriters with such
further opinions, letters, certificates and documents as the Representative or
Underwriters' Counsel may reasonably request in order to effectuate the
provisions of this Agreement. All opinions, certificates, letters and documents
to be furnished by the Company will comply with the provisions hereof only if
they are reasonably satisfactory in all material respects to the Representative
and to the Underwriters' Counsel. The Company shall furnish the Underwriters
with conformed copies of such opinions, certificates, letters and documents in
such quantities as you reasonably request. The certificates delivered under
subsections (vii) and (xi) of this Section 7 shall constitute representations,
warranties and agreements of the Company, as to all matters set forth therein
as fully and effectively as if such matters had been set forth in Section 2 of
this Agreement.
(xii) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to the Underwriters' participation in such
offering.
(xiii) Prior to or on the Closing Date, the Company shall have
provided to the Representative copies of the agreements referred to in Section
2(a)(xvi).
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its officers, directors, partners, employees, agents and counsel,
and each person, if any, who controls such Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all
losses, claims, damages, expenses or liabilities whatsoever (which shall
include, for all purposes of this Section 8, but not limited to, attorneys'
fees and any and all expense whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever whether or not in connection with any litigation in which an
indemnified party is a party and whether or not involving a third party claim
and any and all amounts paid in settlement of any claim or litigation), joint
or several (and actions in respect thereof), to which such Underwriter or such
persons may become subject, under the Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, the Effective Prospectus or the Final Prospectus
or any Pre-Effective
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Prospectus, or any amendment or supplement thereto, or any Blue Sky application
or other document executed by the Company specifically for that purpose or
based upon written information furnished by the Company filed in any state or
other jurisdiction in order to qualify any or all of the Shares under the state
securities or Blue Sky laws thereof (any such application, document or
information being hereinafter called a "Blue Sky Application"), or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each such Underwriter or person for any
legal or other expenses incurred by such Underwriter or person in connection
with investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the Company will not be liable in any such case
to any such Underwriter, to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any of such
document in reliance upon and in conformity with written information furnished
to the Company by such Underwriter expressly for use therein, and PROVIDED,
FURTHER, that such indemnity with respect to any Pre-Effective Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased Shares which are the subject thereof if
such Underwriter failed to send or give a copy of the Effective Prospectus or
the Final Prospectus (or the Effective Prospectus or the Final Prospectus as
amended or supplemented) to such person at or prior to confirmation of the sale
of such Shares to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in
such Pre-Effective Prospectus was corrected in the Effective Prospectus or
Final Prospectus (or the Effective Prospectus or the Final Prospectus as
amended and supplemented); or (ii) any breach of any representation, warranty,
covenant or agreement of the Company contained in this Agreement. The indemnity
agreement in this subparagraph shall be in addition to any liability which the
Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act against any and all losses, claims, damages, expenses
or liabilities whatsoever (which shall include, for all purposes of this
Section 8, but not limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever whether or not in
connection with any litigation in which an indemnified party is a party and
whether or not involving a third party claim and any and all amounts paid in
settlement of any claim or litigation), joint or several (and actions in
respect thereof), to which the Company or any such director, officer, or
controlling person may become subject, under the Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Effective Prospectus or the
Final Prospectus or any Pre-Effective Prospectus, or an amendment or supplement
thereto or any Blue Sky Application, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to
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the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished by that Underwriter expressly for use therein; and will
reimburse all legal or other expenses reasonably incurred by the Company or any
such director, officer, or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; or (ii) any
breach of any representation, warranty, covenant or agreement of any
Underwriter contained in this Agreement; PROVIDED, however, that any obligation
of any Underwriter to provide indemnification under the provisions of this
Section 8(b) shall not be in excess of the underwriting discount and commission
applicable to the Shares purchased by such Underwriter hereunder. The Company
acknowledges that the statements with respect to the public offering of the
Shares set forth under the heading "Underwriting" and the stabilization legend
in the Prospectus have been furnished by the Underwriters expressly for use
therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Effective Prospectus and the
Final Prospectus. The indemnity agreement in this subparagraph (b) shall be in
addition to any liability which each of the Underwriters may have at common law
or otherwise.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 8, notify such indemnifying party or parties of the
commencement thereof; but the omission so to notify an indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8 or to the extent that the indemnifying
party was not adversely affected by such omission. In case any such action is
brought against an indemnified party and it notifies an indemnifying party or
parties of the commencement thereof, the indemnifying party or parties against
which a claim is to be made will be entitled to participate therein and, to the
extent that it or they may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and otherwise to participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from any indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party has employed such counsel in
connection with the assumption of such different or additional legal defenses
in accordance with the proviso to the immediately preceding sentence, (ii) the
indemnifying party has not employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, or (iii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. The indemnifying party, in defense of
any action assumed by it, shall not, without the consent of the indemnified
party, consent to entry of any judgment or enter into any
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settlement of such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such action. The indemnified party
shall not agree to settle any action or claim for which it intends to seek
indemnification hereunder without the prior written consent of the indemnifying
party.
(d) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under subparagraphs (a) or
(b) above in respect of any losses, claims, damages, expenses or liabilities
(or actions in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid as a result of such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by each
of the contributing parties, on the one hand, and the party to be indemnified
on the other hand, from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand, and the Underwriters on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Final Prospectus. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand, or by the Underwriters on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to above in
this subparagraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subparagraph (d), the Underwriters shall not be required to contribute any
amount in excess of the underwriting discount applicable to the Shares
purchased by the Underwriters hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who has signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the
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party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this subparagraph (d), or
to the extent that such party or parties were not adversely affected by such
omission. Anything in this Section 8(d) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 8(d) is
intended to supersede any right to contribution under the Act, the Exchange Act
or otherwise. The contribution agreement set forth above shall be in addition
to any liabilities which any indemnifying party may have at common law or
otherwise.
9. RIGHT TO INCREASE OFFERING. At any time and from time to time during a
period of 30 days from the effective date of the Final Prospectus, the
Representative, by no less than two business days' prior notice to the Company,
may designate a closing (which may be concurrent with, and part of, the closing
on the Closing Date with respect to the Firm Shares or may be a second closing
and which shall be referred to as the "Option Closing Date") at which the
Underwriters shall purchase from the Company in the manner described below, for
the sole purpose of covering over-allotments by the Underwriters during the
public offering, such number of Additional Shares as are specified in the
notice. The maximum number of Additional Shares to be sold by the Company is
150,000 shares of Common Stock. Except to the extent waived by the
Underwriters, all the provisions of this Agreement applicable with respect to
the transactions contemplated on the Closing Date shall apply to such later
closing (with such changes as are necessary) and the Additional Shares
purchased at such closing hereunder shall be deemed Shares for all purposes of
this Agreement.
If any Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company, at the Purchase
Price, the respective number of Additional Shares which bears the same
proportion to the number of Additional Shares to be sold by the Company as the
total number of Firm Shares set forth opposite the name of such Underwriter in
SCHEDULE 1 hereto bears to the total number of Firm Shares to be sold
hereunder, subject to such adjustments to eliminate any fractional shares as
the Representative in its sole discretion shall make.
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective representations,
warranties, agreements, covenants, indemnities and statements of, and on behalf
of, the Company and its officers, and the Underwriters, respectively, set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters, and
will survive delivery of and payment for the Shares. Any successors to the
Underwriters shall be entitled to the indemnity, reimbursement and contribution
agreements contained in this Agreement.
11. EFFECTIVE DATE. This Agreement shall become effective at the
later of (i) 9:30 a.m., Boston time, on the next full business day following
the date on which the Registration Statement becomes effective under the Act
or (ii) the execution of this Agreement.
27
<PAGE> 28
12. TERMINATION.
(a) This Agreement (except for the provisions of Sections 6 and 8
hereof) may be terminated by the Company at any time before this Agreement
becomes effective in accordance with Section 11 hereof, by notice to the
Representative.
(b) This Agreement (except for the provisions of Sections 6 and 8
hereof) may also be terminated by the Representative by notice to the Company
(i) in the event that the Company terminates this Agreement under Section 12(a)
hereof; (ii) in the event that the Company has failed to comply in any material
respect with any of the provisions of this Agreement on its part to be
performed at or prior to the Closing Date or the Option Closing Date, or if any
of the representations or warranties herein or therein are not accurate, or if
the covenants, agreements or conditions of, or applicable to, the Company
herein or therein contained have not been complied with in any material respect
or satisfied within the time specified; (iii) if prior to the Closing Date or
the Option Closing Date, the Company has sustained a loss by strike, fire,
flood, accident or other calamity of such a character as to interfere
materially with the conduct of the business and operations of the Company; (iv)
if prior to the Closing Date or the Option Closing Date, trading in securities
in the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock
Market is suspended or a general banking moratorium has been declared by
federal or state authorities; (v) if there has been a declaration of war by the
United States, or if the United States has become engaged in a major outbreak
of armed hostilities with a foreign government; or (vi) if there has been such
a material adverse change in general economic, political or financial
conditions or if there has been a material and adverse change to the Company
as, in the Representative's judgment, makes it impracticable or inadvisable to
make or consummate a public offering of the Shares on the terms and in the
manner contemplated in the Final Prospectus and in the Registration Statement.
(c) Termination of this Agreement shall be without liability of any
party to any other party other than as provided in Sections 6 and 8 hereof.
13. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters shall fail
or refuse (otherwise than pursuant to Section 7 or for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 12
hereof) to purchase and pay for the number of Shares agreed to be purchased by
such Underwriter or Underwriters upon tender to you of such Shares in
accordance with the terms hereof, and the number of such Shares shall not
exceed 10% of the Shares, then each of the non-defaulting Underwriters shall
purchase and pay for (in addition to the number of such Shares which it has
severally agreed to purchase hereunder) that proportion of the number of Shares
which the defaulting Underwriter or Underwriters shall have so failed or
refused to purchase which the number of Shares agreed to be purchased by such
non-defaulting Underwriter bears to the aggregate number of Shares so agreed to
be purchased by all such non-defaulting Underwriters. In such case, you shall
have the right to postpone each Closing Date specified in Sections 3 and 9
hereof to a date not exceeding seven full business days after the date
originally fixed as such Closing Date pursuant to said Sections 3 and 9 in
28
<PAGE> 29
order that any necessary changes in the Registration Statement, the Final
Prospectus or any other documents or arrangement may be made.
If one or more of the Underwriters shall fail or refuse (otherwise
than pursuant to Section 7 or for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 12 hereof) to
purchase and pay for the number of Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Shares in accordance
with the terms hereof and the number of such Shares shall exceed 10% of the
total Shares, then (unless within 48 hours after such default arrangements to
your satisfaction shall have been made for the purchase of the defaulted Shares
by an Underwriter or Underwriters) this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or on the part of the
Company or the Selling Shareholders except as otherwise provided in this
Agreement. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this paragraph. Nothing in this
Section 13, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
14. NOTICES. All communications hereunder shall be in writing and if sent to
the Representative shall be mailed or delivered or telecopied and confirmed to
H.C. Wainwright & Co., Inc., One Boston Place, Boston, Massachusetts 02108,
Attention: Corporate Finance Department, with a copy to Morse, Barnes-Brown &
Pendleton, P.C., 1601 Trapelo Road, Waltham, Massachusetts 02154, Attention:
Jeffrey P. Somers, Esq., or, if sent to the Company, shall be mailed or
delivered or telecopied and confirmed to the Company at 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213, Attention: President, with a copy to Cohen &
Grigsby, P.C., 2900 CNG Tower, 625 Liberty Avenue, Pittsburgh, Pennsylvania
15222, Attention: Daniel L. Wessels, Esq.
15. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the Company and each Underwriter and their respective successors, legal
representatives, heirs and assigns, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that the
representations, warranties, indemnities and contribution agreements of the
Company contained in this Agreement shall also be for the benefit of each
Underwriter's officers, directors, partners, employees, agents and counsel and
any person or persons who control any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, and except that the
Underwriters' indemnity and contribution agreements shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement, and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act. No purchaser of Shares from the Underwriters will be deemed a
successor because of such purchase.
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<PAGE> 30
16. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the conflict of law principles thereof.
17. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which together
shall be deemed to be one and the same instrument.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
section, paragraph or provision of this Agreement shall not effect the validity
or enforceability of any other section, paragraph or provision hereof. If any
section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as is necessary to make it valid and
enforceable.
If the foregoing correctly sets forth our understanding, please
indicate the Underwriters' acceptance thereof in the space provided below for
the purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
SEEC, Inc.
By: __________________________
Name:
Title:
The foregoing Underwriting
Agreement is confirmed and accepted as
of the date first above written:
H.C. Wainwright & Co., Inc.,
acting on its own behalf and as
the Representative of the several
Underwriters referred to in the
foregoing Agreement
By H.C. Wainwright & Co., Inc.
By: ------------------------
Name:
Title:
30
<PAGE> 31
SCHEDULE 1
UNDERWRITERS
Number of
Firm Shares
UNDERWRITER TO BE
PURCHASED
H.C. Wainwright & Co., Inc....................................
--------
Total 1,000,000
31
<PAGE> 1
Exhibit 4.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR
SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
(ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THIS WARRANT IS RESTRICTED AS PROVIDED HEREIN.
EXERCISABLE ON OR BEFORE 5:00 P.M., BOSTON TIME, _____________, 2001
Warrant to Purchase
_________ Shares
of Common Stock
WARRANT TO PURCHASE COMMON STOCK
SEEC, INC.
THIS WARRANT, dated as of ___________, 1996, is by and between SEEC,
Inc., a Pennsylvania corporation (the "Company"), and H.C. Wainwright & Co.,
Inc. (hereinafter referred to as the "Holder" or the "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative a warrant
(the "Warrant") to purchase up to _________ shares (the "Shares") of common
stock of the Company, $.01 par value per share (the "Common Shares");
WHEREAS, the Representative has agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement"), dated as of the date hereof, between
the Representative and the Company, to act as an underwriter and representative
of several other underwriters in connection with the Company's proposed initial
public offering (the "Public Offering") of 1,000,000 Common Shares (with an
over-allotment option of the Representative for the issuance and sale of an
additional 150,000 Common Shares) at an initial public offering price of $____
per Common Share; and
<PAGE> 2
WHEREAS, this Warrant is being issued by the Company to the
Representative, in consideration for, and as part of the Representative's
compensation in connection with, the Representative acting as an underwriter
and representative pursuant to the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of ONE HUNDRED DOLLARS ($100.00), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. GRANT. The Holder is hereby granted the right to purchase, subject
to the provisions of this Warrant, at any time on or after ______________, 1997
until 5:00 P.M., Boston time, on ___________, 2001 (the "Warrant Exercise
Term"), up to __________ Shares at an initial exercise price (subject to
adjustment as provided in Article 7 hereof) of $____ per Share (the "Initial
Exercise Price").
2. EXERCISE OF WARRANTS. This Warrant is exercisable by payment of the
Exercise Price (as hereinafter defined) in the form of (i) cash or a check
payable to the order of the Company in an amount equal to the Exercise Price,
or any combination of cash or check, (ii) Common Shares of the Company owned by
the Holder (including such Shares issued pursuant to the exercise of this
Warrant) having a fair market value equal in amount to the Exercise Price (as
hereinafter defined), or (iii) any combination of (i) and (ii). The fair market
value of the Common Shares which may be delivered upon exercise of this Warrant
shall be the mean between the high and low sales prices, if any, as reported in
the National Association of Securities Dealers, Inc. Automated Quotation
Small-Cap Market System for the business day immediately preceding the date of
exercise. If the fair market value cannot be determined under the preceding
sentence, it shall be determined in good faith by the Board of Directors of the
Company. Upon surrender of this Warrant and Form of Election to Purchase
attached hereto duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares purchased, at the Company's principal
offices in Pittsburgh, Pennsylvania (presently located at 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213), the Holder shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase right
represented by this Warrant is exercisable at the option of the Holder hereof,
in whole or in part (but not as to fractional shares of the Common Shares). In
the case of the purchase of less than all the Shares purchasable under this
Warrant, the Company shall cancel this Warrant upon the surrender thereof and
shall execute and deliver a new Warrant of like tenor for the balance of the
Shares purchasable thereunder. Upon receipt by the Company of this Warrant at
the office or agency of the Company, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the Common Shares issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such Common Shares shall
not then be actually delivered to the Holder.
2
<PAGE> 3
3. ISSUANCE OF CERTIFICATES.
Upon the exercise of this Warrant, the issuance of certificates for
the Shares shall be made forthwith (and in any event within three business days
thereafter), provided that if payment of the Exercise Price (as hereinafter
defined) is made by personal check, the issuance of certificates shall be made
no later than one day after such check clears, without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance hereof, and such certificates shall (subject to the provisions
of Section 4 hereof) be issued in the name of, or in such names as may be
directed by, the Holder hereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
This Warrant and the certificates representing the Shares shall be
executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors or
President or Vice President of the Company under its corporate seal reproduced
thereon, attested to by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the Company. This Warrant shall be
dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
Upon exercise of this Warrant, in part or in whole, certificates
representing the Shares shall bear a legend substantially similar to the
following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such Act
relating to the disposition of securities), or (iii) upon the delivery
by the holder to the Company of an opinion of counsel, reasonably
satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available."
4. RESTRICTION ON TRANSFER OF WARRANT.The Holder of this Warrant, by
its acceptance hereof, covenants and agrees that this Warrant is being acquired
as an investment and not with a view to the distribution thereof, and that this
Warrant may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for a period of one (1) year from the date
hereof, except to officers or partners of the Representative or to any member
of the selling group participating in the distribution to the public of the
Common Shares and/or their respective officers or partners.
3
<PAGE> 4
5. EXERCISE PRICE.
5.1 INITIAL AND ADJUSTED EXERCISE PRICE. The Initial Exercise Price of
the Shares shall be $___ per Share. The adjusted exercise price (the "Adjusted
Exercise Price") shall be the price which shall result from time to time from
any and all adjustments of the Initial Exercise Price in accordance with the
provisions of Article 7 hereof.
5.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
Initial Exercise Price or the Adjusted Exercise Price, depending upon the
context.
6. REGISTRATION RIGHTS.
6.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. This Warrant and
the Shares have not been registered for purposes of public distribution under
the Securities Act of 1933, as amended (the "Act").
6.2 PIGGYBACK REGISTRATION. If, at any time during Warrant Exercise
Term, the Company proposes to register any of its securities under the Act
(other than in connection with a merger, acquisition or pursuant to Form S-8,
Form 4 or successor forms), it will give written notice by registered mail, at
least thirty (30) business days prior to the filing of each such registration
statement, to the Holder or Holders of this Warrant and/or the Shares of its
intention to do so. If the Holder or Holders of this Warrant and/or Shares
notify the Company within twenty (20) business days after receipt of any such
notice of its or their desire to include any such securities in such proposed
registration statement, the Company shall afford the Holder or Holders of this
Warrant and/or Shares the opportunity to have any such securities registered
under such registration statement at the Company's sole cost and expense and at
no cost or expense to the Holder or Holders.
Notwithstanding the provisions of this Section 6.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 6.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
6.3 DEMAND REGISTRATION.
(a) At any time during the Warrant Exercise Term, the Holder
or Holders of the Warrant and/or the Shares representing a majority of such
securities (assuming this Warrant is exercised for all of the Shares) shall
have the right (which right is in addition to the registration rights under
Section 6.2 hereof), exercisable by written notice to the Company, to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Holder or Holders, in order to comply with the provisions of the
4
<PAGE> 5
Act, so as to permit a public offering and sale by such Holder or
Holders and by the Holder or Holders of the Warrant and/or the Shares.
(b) The Company covenants and agrees to give written notice
of any registration request under this Section 6.3 by any Holder to all other
registered Holders of this Warrant and the Shares within ten (10) days from the
date of the receipt of any such registration request. After receiving notice
from the Company as provided in this Section 6.3(b), any Holder or Holders of
the Warrant and/or Shares may request the Company to include their respective
Warrants and/or Shares in the registration statement to be filed pursuant to
Section 6.3(a) hereof by notifying the Company of their decision to include
such securities within ten (10) days of their receipt of the Company notice.
6.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 6.3
hereof, the Company shall prepare and file with the Commission a registration
statement within twenty (20) business days of receipt of any demand therefor,
shall use its best efforts to have any registration statements declared
effective at the earliest possible time, and shall furnish each Holder such
number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs, fees and expenses in
connection with all registration statements filed pursuant to Sections 6.2 and
6.3(a) hereof including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant or the Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as are requested by the Holder or Holders.
(d) The Company shall indemnify any Holder of the Warrant or
the Shares to be sold pursuant to any registration statement and each person,
if any, who controls such Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act,
the Exchange Act or otherwise, arising from such registration statement to the
same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Representatives contained in Section 8 of
the Underwriting Agreement and to provide for just and equitable contribution
as set forth in Section 8 of the Underwriting Agreement.
(e) Any Holder of this Warrant or the Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly,
5
<PAGE> 6
indemnify, the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished in writing by or on behalf of such Holder, or their successors or
assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 8 of the
Underwriting Agreement pursuant to which the Representatives have agreed to
indemnify the Company and to provide for just and equitable contribution as set
forth in Section 8 of the Underwriting Agreement.
(f) Nothing contained in this Warrant shall be construed as
requiring any Holder to exercise this Warrant prior to the initial filing of
any registration statement or the effectiveness thereof.
7. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
7.1 RECLASSIFICATION, CONSOLIDATION, MERGER, ETC. In case of any
reclassification or change of the outstanding Common Shares (other than a
change in par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in the case of any consolidation of
the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving
corporation and which does not result in any reclassification or change of the
outstanding Common Shares, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holder shall thereafter have the right to receive
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder or Holders were the owner of the Common Shares
underlying this Warrant immediately prior to any such events at a price equal
to the product of (x) the number of shares issuable upon exercise of this
Warrant and (y) the Exercise Price in effect immediately prior to the record
date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holder or Holders had exercised this Warrant.
7.2 DIVIDENDS AND OTHER DISTRIBUTIONS WITH RESPECT TO OUTSTANDING
SECURITIES. In the event that the Company shall at any time prior to the
exercise of this Warrant declare a dividend (other than a dividend consisting
solely of Common Shares or a cash dividend or distribution payable out of
current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than Common Shares), whether issued by the Company or by another person or
entity, or any other thing of value, the Holder or Holders of the unexercised
Warrant shall thereafter be entitled, in addition to the Common Shares or other
securities receivable upon the exercise thereof, to receive, upon the exercise
of such Warrant, the same monies, property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of
6
<PAGE> 7
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Section 7.2.
7.3 NO ADJUSTMENT FOR SMALL AMOUNTS. Anything in this Section 7 to the
contrary notwithstanding, the Company shall not be required to give effect to
any adjustment in the Exercise Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required a change of
the Exercise Price by at least one cent, but when the cumulative net effect of
more than one adjustment so determined shall be to change the actual Exercise
Price by at least one cent, such change in the Exercise Price shall thereupon
be given effect.
7.4 SUBSCRIPTION RIGHTS FOR COMMON SHARES OR OTHER SECURITIES. In the
case the Company or an affiliate of the Company shall at any time after the
date hereof and prior to the exercise of all the Warrants issue any rights to
subscribe for Common Shares or any other securities of the Company or of such
affiliate to all the shareholders of the Company, the Holders of the
unexercised Warrants shall be entitled, in addition to the Common Shares or
other securities receivable upon the exercise of the Warrants, to receive such
rights at the time such rights are distributed to the other shareholders of the
Company.
8. EXCHANGE AND REPLACEMENT OF WARRANT.
This Warrant is exchangeable without expense, upon the surrender
hereof by the registered Holder at the principal executive office of the
Company, for a new Warrant of like tenor and date representing in the aggregate
the right to purchase the same number of Shares in such denominations as shall
be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor, in lieu thereof.
9. ELIMINATION OF FRACTIONAL INTERESTS.
The Company shall not be required to issue certificates representing
fractions of Common Shares and shall not be required to issue scrip or pay cash
in lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Common Shares.
10. RESERVATION AND LISTING OF SECURITIES.
The Company shall at all times reserve and keep available out of its
authorized Common Shares, solely for the purpose of issuance upon the exercise
of this Warrant, such number of
7
<PAGE> 8
Common Shares as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of this Warrant and payment of the
Exercise Price therefor, all Common Shares issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any shareholder. As long as this Warrant shall be
outstanding, the Company shall use its best efforts to cause all Common Shares
issuable upon the exercise of this Warrant to be listed on or quoted by Nasdaq
or listed on such national securities exchanges as requested by the
Representative.
11. NOTICES TO WARRANT HOLDER. Nothing contained in this Agreement
shall be construed as conferring upon the Holder the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having
any rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of this Warrant and its exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its
Common Shares for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common
Shares any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation,
winding up or sale. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be. Failure to give such notice or
any defect therein shall not affect the validity of any action taken in
connection with the declaration or payment of any such dividend or
distribution, or the issuance of any convertible or exchangeable securities or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
12. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
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<PAGE> 9
(a) If to the registered Holder of this Warrant, to the
address of such Holder as shown on the books of the Company; or (b) if to the
Company, to the address set forth in Section 2 of this Warrant or to such other
address as the Company may designate by notice to the Holder.
13. SUPPLEMENTS AND AMENDMENTS.
The Company and the Representative may from time to time supplement or
amend this Warrant in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Representative may deem
necessary or desirable.
14. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. TERMINATION.
This Warrant shall terminate at the close of business on ___________,
2001. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date this Warrant has been exercised and all the Shares issuable upon
exercise of this Warrant have been resold to the public; provided, however,
that the provisions of Section 6.4 shall survive such termination until the
close of business on ________________, 2006.
16. GOVERNING LAW.
This Warrant shall be deemed to be a contract made under the laws of
the Commonwealth of Massachusetts and for all purposes shall be construed in
accordance with the laws of said Commonwealth.
17. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to give to any person or
corporation other than the Company and the Representative any legal or
equitable right, remedy or claim under this Warrant; and this Warrant shall be
for the sole and exclusive benefit of the Company and the Representative.
9
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal as of the date first written above.
SEEC, INC.
[SEAL]
By:
_____________________________
Name:
Title:
ATTEST:
- --------------------------
10
<PAGE> 11
EXHIBIT A
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase ________ Shares and herewith tenders
in payment for such Shares cash or a certified or official bank check payable
to the order of _________________ in the amount of $___________, all in
accordance with the terms hereof. The undersigned requests that a certificate
for such Shares be registered in the name of _________________, whose address
is _____________________________________, and that such Certificate be
delivered to _____________________, whose address is
__________________________________________.
Dated: Signature: ______________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
---------------------------------------
(Insert Social Security or Other Identifying
Number of Holder)
<PAGE> 12
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant.)
FOR VALUE RECEIVED _________________________________________ hereby
sells, assigns and transfers unto
- ------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ____________________, Attorney, to
transfer the within Warrant on the books of the within-named Company, with full
power of substitution.
Dated: Signature: ______________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
---------------------------------------
(Insert Social Security or Other Identifying
Number of Holder)
<PAGE> 1
Exhibit 10.1
SEEC, INC.
1994 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article 1 General Description Page
Section 1.1 Purpose 1
Section 1.2 Definitions 1
Section 1.3 Plan Administration 2
Section 1.4 Common Stock Subject to the Plan 3
Section 1.5 Participation in the Plan 3
Article 2 Stock Options
Section 2.1 Option Documentation 4
Section 2.2 Exercise Price 4
Section 2.3 Option Period 4
Section 2.4 Exercisability 4
Section 2.5 Nonassignability 5
Section 2.6 Payment of Purchase Price and
Delivery of Shares 5
Section 2.7 Limitation on Fair Market Value of
Shares of Common stock Received
Upon exercise of Incentive Stock Options 5
Section 2.8 Withholding and Other Taxes 6
Article 3 Employment Conditions
Section 3.1 Termination of Employment 7
Section 3.2 Disability and Death 7
Section 3.3 Retirement 7
Section 3.4 Termination for Cause 8
Section 3.5 Noncompetition 8
Article 4 Securities Law Considerations
Section 4.1 Option Exercise 9
Section 4.2 Issuance of Shares 9
Section 4.3 Restrictive Transfer Legend 10
Article 5 Changes in Capitalization or Control
Section 5.1 Changes in Capitalization of Company 11
Section 5.2 Changes in Control 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Article 6 Share Repurchases and Transfers
Section 6.1 Rights to Repurchase and Rights of
First Refusal 12
Section 6.2 Company Options to Repurchase 12
Section 6.3 Right of First Refusal 12
Article 7 Miscellaneous
Section 7.1 Governing Law 14
Section 7.2 Effective Date 14
Section 7.3 Employment Rights 14
Section 7.4 Termination or Amendment of the
Plan 14
</TABLE>
<PAGE> 4
ARTICLE 1 GENERAL
SECTION 1.1 PURPOSE
The purpose of the SEEC, Inc. 1994 Stock Option Plan (the "Plan") is to
promote the interest of SEEC, Inc. and its shareholders by (i) attracting and
retaining employees of outstanding ability, (ii) motivating employees to put
forth maximum effort to achieve long term corporate objectives and (iii)
enabling employees to participate in the long-term growth and financial success
of the Company.
SECTION 1.2 DEFINITIONS
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "AWARD" shall mean any Stock Option award granted under the
Plan by the Committee to a Participant, subject to such terms,
conditions, restrictions, and/or limitations, if any, as the Committee
may establish.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "COMMITTEE" shall mean the committee designated by the Board to
administer the Plan and if no Committee has been designated, this will
mean the Board.
(d) "COMMON STOCK" shall mean the Commons Stock of the Company
having a par value of $.01 per share.
(e) "COMPANY" shall mean SEEC, Inc.
(f) "DISABILITY" shall mean total and permanent disability within
the meaning of Section 22(e)(3) of the Internal Revenue Code.
-1-
<PAGE> 5
(g) "FAIR MARKET VALUE" of a share of Common Stock shall be the
amount that is established by the Board as the fair market value of the
Company, in their best judgment, divided by the shares of Common Stock.
(h) "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, including any successor law thereto.
(i) "PARTICIPANT" shall mean any individual to whom a Stock Option
grant has been made that remains outstanding under the Plan.
(j) "SECURITIES ACTS" shall mean collectively the Securities Act of
1933 or any applicable state securities laws.
(k) "SIGNIFICANT SHAREHOLDER" shall mean a shareholder of the
Company that owns more than ten percent of the total combined voting
power of all classes of stock of the Company.
(l) "STOCK OPTION" shall mean a right granted to a Participant
under an executed Stock Option agreement to purchase at a specified
date and at a specified price, a specified number of shares of Common
Stock. Stock Options may be Incentive Stock Options, which are
intended to be such within the meaning of Section 422 of the Internal
Revenue Code, or Non qualified Stock Options, which do not meet such
definition.
SECTION 1.3 PLAN ADMINISTRATION
The Plan shall be administered by the Committee. The Committee is
authorized to (i) interpret the Plans; (ii) select employees to receive Awards;
(iii) designate such Awards as Incentive Stock Options or Nonqualified Stock
Options; (iv) to prescribe, amend and rescind rules and regulations to further
the purposes of the Plan, and (v) to make all other determinations necessary
for the administration of the Plan. All such actions by the Committee shall be
final and binding.
-2-
<PAGE> 6
SECTION 1.4 COMMON STOCK SUBJECT TO THE PLAN
The total number of shares of Common Stock that may be distributed
under the Plan shall be _____________ subject to adjustment as provided in
Section 5.1 hereof. To the extent that Options granted under the Plan shall
expire or terminate without being exercised, Common Stock covered thereby shall
remain available for issuance under this Plan.
SECTION 1.5 PARTICIPATION IN THE PLAN
The Committee shall determine and designate from time to time those
employees of the Company who shall be awarded Stock Options under the Plan.
Employees of the Company, who in the opinion of the Committee are responsible
for the continued growth, development and financial success of the Company,
shall be eligible to participate in the Plan. Stock Options granted to the same
or different employees or at the same or different times, need not contain
similar provisions.
-3-
<PAGE> 7
ARTICLE 2 STOCK OPTIONS
SECTION 2.1 OPTION DOCUMENTATION
Each Award shall be evidenced by a written option agreement executed by
the Participant and the Committee in such form as the Committee shall approve
from time to time. The option agreement shall designate the Stock Option as an
Incentive Stock Option or Nonqualified Stock Option, as determined by the
Committee as well as other terms and conditions not inconsistent with the
following provisions.
SECTION 2.2 EXERCISE PRICE
The Committee shall establish the per share exercise price for a Stock
Option at the time the Stock Option is granted. In the case of Incentive Stock
Options, the per share exercise price at the date of grant shall not be less
than the Fair Market Value. If the Participant is a Significant Shareholder and
an Incentive Stock Option is awarded to such Participant, the Exercise Price
will be set at not less than 110% of the Fair Market Value on the date of
grant.
SECTION 2.3 OPTION PERIOD
For each Stock Option granted, the Committee shall specify the period
during which the Stock Option may be exercised. Under no circumstances will an
option period extend beyond 10 years from the date of grant. If the Participant
is a Significant Shareholder and an Incentive Stock Option is awarded to such
Participant, the Option Period will not extend beyond five years from the date
of grant.
-4-
<PAGE> 8
SECTION 2.4 EXERCISABILITY
Stock Options shall become exercisable at such times and in such
installments as the Committee shall provide at the date of grant subject to
employment conditions specified in Article 3. The Committee may, however, in
its sole discretion accelerate the time at which a Stock Option may be
exercised. A Stock Option may be exercised at any time from the time first set
by the Committee until the close of business on the expiration of the Stock
Options.
SECTION 2.5 NONASSIGNABILITY
Stock Options shall not be transferable other than by will or by the
laws of descent and distributions. During a Participant's lifetime, Stock
Options are exercisable only by such Participant.
SECTION 2.6 PAYMENT OF PURCHASE PRICE UPON EXERCISE AND DELIVERY
OF SHARES
Full payment for Common Stock purchased upon the exercise of the Stock
Option shall be made at the time the Option is exercised in whole or in part.
Payment of the purchase price shall be made in cash or in such other form as
the Committee may approve and as provided for in the Stock Options agreement.
The Committee may, at its discretion, permit payment by the delivery of Common
Stock that has been held by the Participant for at least six months prior to
the exercise of such Stock Option, valued at the Fair Market Value at the date
the option is exercised. No shares of Commons Stock shall be issued to the
Participant until such payment has been made, and a Participant shall have none
of the rights of a shareholder with respect to options held except to the
extent such options have been exercised.
-5-
<PAGE> 9
SECTION 2.7 LIMITATION ON FAIR MARKET VALUE OF SHARES OF COMMON
STOCK RECEIVED UPON EXERCISE OF INCENTIVE STOCK
OPTIONS
The aggregate Fair Market Value (determined at the time an Incentive
Stock Option is granted) of the shares of Common Stock with respect to which an
Incentive Stock Option is exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000 or such other limit as may
be established from time to time under the Internal Revenue Code. To the extent
that any Award, or part of an Award, is designated as an Incentive Stock Option
and exceeds the foregoing limit, such Stock Option or portion thereof, will be
treated as a Nonqualified Stock Option.
SECTION 2.7 WITHHOLDING AND OTHER TAXES
The Company shall have the right, before any Common Stock certificates
are issued and delivered, to require the Participant to deposit with the
Company any Federal, state or local taxes, including transfer taxes, required
by law to be withheld.
-6-
<PAGE> 10
ARTICLE 3 EMPLOYMENT CONDITIONS
SECTION 3.1 TERMINATION OF EMPLOYMENT
If a Participant ceases to be an employee of the Company, the
Participant will have 30 days from the last day of employment to exercise any
vested options as of such last day of employment except as noted in Sections
3.2 through 3.5. If the Participant does not elect to exercise the Stock Option
within this period, the Stock Option will be forfeited and will become
unexercisable.
SECTION 3.2 DISABILITY AND DEATH
If a Participant ceases to be an employee of the Company by reason of
Disability and/or death, prior to the expiration of the Stock Option all such
Stock Options shall vest. Such Stock Option, including all previously unvested
portions, may be exercised to the full extent not already exercised, by the
Participant, Participant's guardians, estate or beneficiaries for a period of
twelve (12) months from the date of the Participant's Disability and/or death,
unless such period is extended by the Committee.
SECTION 3.3 RETIREMENT
If the Participant ceases to be an employee of the Company by reason of
retirement under the Company's normal retirement policy, prior to the exercise
or expiration of the Stock Option, such Stock Options, excluding all unvested
portions, may be exercised to the full extent not already exercised, by the
Participant for a period of up to (i) three (3) months in the case of an
Incentive Stock Option or (ii) twelve (12) months in the case of a Nonqualified
Stock Option from the date of the Participant's retirement, unless such period
is extended by the Committee.
-7-
<PAGE> 11
SECTION 3.4 TERMINATION FOR CAUSE
If the Participant ceases to be an employee of the Company because
Participant has been terminated for cause, all remaining vested and unvested
portions of such Stock Options are automatically forfeited and will become
unexercisable. Termination for cause shall mean a termination by the Company or
a voluntary resignations by the Participant as a result of, or in connection
with:
(i) any act or commission by the Participant which constitutes
a felony or misdemeanor, or involves dishonesty or serious
disloyalty;
(ii) any act or omission which is an intentional violation of
the policies and procedures of the Company;
(iii) any act or omission which constitutes failure by the
Participant to perform diligently and competently Participant's
duties; or
(iv) any willful or grossly negligent act or omissions which
has a material adverse effect on the Company's reputation,
business affairs or goodwill.
SECTION 3.5 NONCOMPETITION
If the Committee determines that a Participant currently acts, or will
act, as an employee, consultant or agent of a competitor of the Company, all of
Participant's unexercised Stock Options will automatically be forfeited and
will become unexercisable. Determination as to whether the Participant is
acting or will become an employee, consultant or agent of a competitor remains
in the sole discretion of the Committee.
-8-
<PAGE> 12
ARTICLE 4 SECURITIES LAW CONSIDERATIONS
SECTION 4.1 OPTION EXERCISE
The Stock Option may only be exercised by written request directed to
and received by the secretary of the Company at the principal office of the
Company. Unless the Common Stock subject to the Stock Option has been
registered under the applicable Securities Acts) each Participant must
represent and warrant at the time of exercise that:
(i) the Participant is purchasing the Common Stock for Participant's
own account and for investment purposes and not with a view to, or sale in
connection with, the distribution thereof, nor with any present intention of
selling any of the shares of Common Stock acquired hereunder; and
(ii) through Participant's relationship with the Company that
Participant has had access to, or possessions of, or has the opportunity to
obtain, all information material to Participant's decision to exercise the
Stock Option and purchase the Commons Stock; and
(iii) the Participant has been notified that the Common Stock received
upon exercise of the Stock Option has not been registered under the Securities
Acts.
SECTION 4.2 ISSUANCE OF SHARES
Notwithstanding any provision of the Plan or the terms of any stock
option agreement issued under the Plan, the Company shall not be required to
issue Common Stock prior to the registration of the Commons Stock subject to
the Plan under any Securities Acts if such registration shall become necessary
or before compliance by the Company and Participant with any applicable
provisions of any Securities Acts necessary to perfect an exemption from such
registration. Participants may not require the Company to undertake, at any
time, the registration of Common Stock under the Securities Acts.
-9-
<PAGE> 13
SECTION 4.3 RESTRICTIVE TRANSFER LEGEND
Common Stock issued to Participants upon the exercise of a Stock Option
shall contain a restrictive transfer legend referring to the Stock Option
agreement and, unless registered under applicable Securities Acts, the
restrictions on transfer imposed by these Securities Acts.
-10-
<PAGE> 14
ARTICLE 5 CHANGES IN CAPITALIZATION OR CONTROL
SECTION 5.1 CHANGES IN CAPITALIZATION OF COMPANY
In the event of any subdivision or combination of the outstanding
shares of Common Stock, stock dividend, recapitalization, reclassification of
shares, or other corporate transactions which would result in substantial
dilution or enlargements of the rights or economic benefits inuring to
Participants hereunder, the Committee shall make such equitable adjustments, as
it may deem appropriate, in the Plan and the outstanding Stock Options,
including and without limitation, any adjustment to the total number of shares
of Common Stock which may thereafter be available under the Plan.
SECTION 5.2 CHANGES IN CONTROL
Upon a change in control all unvested Stock Options shall become
immediately exercisable. For purposes of this Plan, a Change of Control shall
mean the:
(i) sale or disposition of substantially all of the Company's
assets to another person or entity; or
(ii) reorganization, merger or consolidation of the Company into or
with another person or entity of the Company by which reorganization, merger or
consolidation the shareholders of the Company receive less than 50% of the
outstanding voting shares of the new or continuing entity.
-11-
<PAGE> 15
ARTICLE 6 SHARE REPURCHASES AND TRANSFERS
SECTION 6.1 RIGHTS TO REPURCHASE AND RIGHTS OF FIRST REFUSAL
The Company retains an options, but not an obligation, to repurchase
shares and retains a right of first refusal until the closing of an initial
public offering registered with the Securities and Exchange Commissions. At
this time, these rights expire.
SECTION 6.2 COMPANY OPTION TO REPURCHASE
If a stockholder or subsequent transferee, who received his shares
through the exercise of a Stock Option, ceases to be in the employ of the
Company, the Company has the right for a period of 60 days to repurchase all or
a portions of such shares. This repurchase of shares shall be at the Fair
Market Value in existence at the time of termination except if (i) such
cessation of employment resulted from Termination for Cause as defined Sections
3.4 or (ii) the employee is deemed to be in competition with the Company as
defined in Sections 3.5. In those cases, the Company may repurchase the shares
at the same price as the option exercise price paid by that stockholder.
If the Company exercises its options to repurchase shares, the Company
may elect to make a full cash payment or may elect to make payments over a
three year period. If the Company elects to make payments over a three year
period, this obligation shall be evidenced by a note payable and shall bear
interest monthly at the prime rate as defined and reported in the Wall Street
Journal at the date the Company makes its election.
-12-
<PAGE> 16
ARTICLE 7 MISCELLANEOUS
SECTION 7.1 GOVERNING LAW
The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of the Commonwealth of Pennsylvania
applicable to contracts entered into and performed entirely in such State.
SECTION 7.2 EFFECTIVE DATE
The Plan shall become effective on the date on which it is adopted by
the Board, subject to the approval by the shareholders of the Company within
one year of adoption of this Plan.
SECTION 7.3 EMPLOYMENT RIGHTS
Neither the Plan nor any action taken hereunder shall be construed as
giving any employee of the Company the right to become a Participant, and a
grant of an Award under the Plan shall not be construed as giving any
Participant any right to be retained in the employ of the Company.
SECTION 7.4 TERMINATION OR AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time, in its
sole and absolute discretion; provided that no such action shall deprive any
person, without such persons's consent, of any rights previously awarded
pursuant to the Plan. To the extent that any amendment to the Plan is of a
nature that requires shareholder approval in order to continue to issue
Incentive Stock Options under the Plans, such amendment shall require
shareholder approval before it becomes effective. The Plan shall terminate on
the tenth anniversary of the effective date unless it is earlier terminated by
the Board. Termination of the Plan shall not affect Stock Options previously
granted under the Plan.
-14-
<PAGE> 1
Exhibit 10.4
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
SEEC, INC.
- and -
VIASOFT, INC.
<PAGE> 2
FINAL
THIS INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT is made as of this
29th day of November, 1993 by and between
SEEC, INC., a corporation organized and existing under the laws of
Pennsylvania (hereinafter referred to as "SEEC"), having its principal
office at 5001 Baum Boulevard, Pittsburgh, Pennsylvania 15213.
- and -
VIASOFT, INC., a corporation organized and existing under the laws of
Delaware (hereinafter referred to as "VIASOFT"), having its principal
office at 3033 North 44th Street, Phoenix, Arizona 85018.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed as follows:
1. Definitions.
(a) "Add-ons" includes any products that SEEC, ERA Software Systems
("ERA") or any third party authorized by SEEC or ERA may develop
that may be sold or licensed in conjunction with Cobol Analyst and
which will require access to the SEEC Application Dictionary and do
not include COBOL Analyst. Add-ons do include ADW Export. Add-ons
will be used in conjunction with COBOL Analyst for performing COBOL
application maintenance. As used in this Agreement, "Add-ons" do
not include products that access the SEEC Application Dictionary
and will be sold to the COBOL Analyst customer base but whose end
use is not COBOL application maintenance. Such products are not
included within the scope of this Agreement.
(b) "Affiliate" shall mean any person or entity controlling, controlled
by or under common control with a person or entity.
(c) "Best Efforts" shall mean SEEC is to use its best efforts, in the
required context, without being required to utilize more than such
resources as have been allocated by SEEC (and any other development
sites of SEEC, including without limitation, ERA) to the Licensed
Programs.
(d) "Change in Control" with respect to a party means the happening of
any of the following: any transaction or series of transactions
(whether by stock sale or exchange, merger, sale of substantially
all of its assets, or otherwise) after the effectiveness of which
such party's current shareholders together own less than fifty-one
percent (51%) of the outstanding beneficial
<PAGE> 3
interests and voting power of such party or the resultant entity,
provided that an initial public offering shall not be deemed to be
a "Change in Control" within the meaning of this Agreement.
(e) "Commencement Date" means December 1, 1993.
(f) "End User" shall mean any user who has the right to use any
Licensed Program for its own internal business use and not for any
other use, including, without limitation, remarketing, resale,
relicensing or other redistribution, either alone or as a component
of any other product.
(g) "End User Sublicense Agreement" shall mean an agreement described
in Section 3(a) hereof.
(h) "Final Beta Tests" means beta tests performed by VIASOFT using the
final beta version for a Licensed Program created by or for SEEC
(i) "Intellectual Property Rights" shall mean and include all
copyrights, trademarks, trade names, trade secrets, industrial
rights, and other proprietary rights therefor which a party may
own, or have the right to use or sublicense with respect to its
proprietary products or its business, even though they may not fall
within the common law definition of trade secrets.
(j) "Licensed Programs" shall mean the proprietary computer programs
identified in Exhibit A, as it may be amended from time to time;
and any and all new versions, new features, enhancements,
translations, Add-ons, Upgrades, and modifications developed by or
for SEEC with respect to such Licensed Programs, including without
limitation the Private Label Products. Licensed Programs also
include, without limitation: (i) diskettes encoded with SEEC's
proprietary computer programs in executable form; (ii) all related
user documentation in all available languages; (iii) any authorized
copies of such items; and (iv) any hardware or software security
devices or security codes. Licensed Programs do not include New
Product Derivatives, or products that do not address the COBOL
maintenance market. Source code is not included within the term
Licensed Programs.
(k) "Maintenance Agreement" shall mean the agreement entered into
between VIASOFT and any End User whereby VIASOFT agrees to provide
Maintenance and Support Services to such End User.
(l) "Maintenance and Support Services" shall mean services provided
pursuant to Exhibit B attached hereto.
2
<PAGE> 4
(m) "New Product Derivatives" shall mean products that consist of the
Application Capture tool, the Application Dictionary and some of
the analysis features of the Application Analyst tool. A New
Product Derivative will not be similar to COBOL Analyst in
functionality or look and feel, and the end use for any New Product
Derivative will not be COBOL application maintenance. New Product
Derivatives are not included within the scope of this Agreement.
Private label versions of the Licensed Programs are derivatives
which are included within the scope of this Agreement.
(n) "Object Code" shall mean the compiled or assembled machine language
representation of a sequence of computer instructions.
(o) "Private Label Products" means those Licensed Programs which are
modified by SEEC pursuant to Sections 5 (c), 5(d) and 8 for
distribution by VIASOFT
(p) "Sale" or "Sell" means the licensing of a unit of the Licensed
Programs. It does not mean the transfer of any ownership rights in
the copyrighted technology in any unit of the Licensed Programs.
(q) A "Seat" means one personal computer, located at one physical site.
(r) "SEEC Bankruptcy" means (i) SEEC has ceased doing business, or (ii)
SEEC has filed a petition seeking relief under the bankruptcy laws,
or (iii) SEEC has had filed against it a petition for involuntary
bankruptcy and has not obtained dismissal of such petition within
sixty (60) days after the filing thereof, or (iv) Section 365 of
the U.S. Bankruptcy Code (or any successor or replacement statute)
has become applicable to SEEC or its assets or business, or (v) a
general receiver or trustee is appointed for SEEC or its business
or assets for the benefit of its creditors, or SEEC makes a general
assignment, composition or other arrangement for the benefit of
creditors.
(s) "SEEC Customer" is any business, person or entity listed on Exhibit
D (and any successor or assign thereof whose name and address have
been provided to VIASOFT) provided such Exhibit D is signed by both
parties.
(t) "Site License" means an End User License Agreement to use any
Licensed Program(s) by an unlimited number of users who are
physically located at a single specified site.
3
<PAGE> 5
(u) "Sub-Distributor" shall mean any subsidiary or branch of VIASOFT,
whether wholly or partially owned, or any other organization or
individual authorized by VIASOFT to sublicense the Licensed
Programs to End Users according to the terms of this Agreement.
(v) "Upgrades" means new releases of the Licensed Programs that contain
maintenance, enhancements or new features which SEEC develops and
releases from time to time, and which include improvements and
enhancements of current functionality. For purposes of this
Agreement, "Upgrades" do not include products that do not address
the COBOL maintenance market.
(w) "VIASOFT Bankruptcy" means (i) VIASOFT has ceased doing business,
or (ii) VIASOFT has filed a petition seeking relief under the
bankruptcy laws, or (iii) VIASOFT has had filed against it a
petition for involuntary bankruptcy and has not obtained dismissal
of such petition within sixty (60) days after the filing thereof,
or (iv) Sections 365 of the U.S. Bankruptcy Code (or any successor
or replacement statute) has become applicable to VIASOFT or its
assets or business, or (v) a general receiver or trustee is
appointed for VIASOFT or its business or assets for the benefit of
its creditors, or VIASOFT makes a general assignment, composition
or other arrangement for the benefit of creditors.
(x) "VIASOFT Customer" is any business, person or entity listed on
Exhibit D (and any successor or assign thereof whose name and
address have been provided to SEEC) provided such Exhibit D is
signed by both parties.
2. Appointment.
(a) SEEC hereby grants to VIASOFT and VIASOFT accepts from SEEC a
worldwide license to, directly or through Sub- Distributors: (i)
market or have marketed sublicenses to End Users for use of the
Licensed Programs; (ii) use, without charge or royalty, the
Licensed Programs to demonstrate and teach the same to prospective
End Users; (iii) use, without charge or royalty, the Licensed
Programs to perform Final Beta Tests of Licensed Programs and all
of VIASOFT's required installation, Maintenance and Support
Services obligations under this Agreement; and (iv) reproduce,
without charge or royalty, copies of the evaluation versions of the
Licensed Programs in Object Code form to market, install,
demonstrate, teach, maintain or support the Licensed Programs as
permitted under this Agreement.
4
<PAGE> 6
(b) Subject to Section 2(c) of this Agreement, the rights and licenses
granted to VIASOFT pursuant to Section 2 (a) (the "Rights") shall
be exclusive or nonexclusive as hereinafter set forth:
1. Subject to Sections 2(b)3, 2(b)4, and 2(b)5 of this Agreement,
the Rights shall be exclusive during the eighteen (18) month
period commencing on the Commencement Date (the "Exclusivity
Period"). For so long as exclusivity remains in effect in the
Exclusivity Period, VIASOFT shall make Advances, as set forth in
Section 4 (c).
2. The parties may, from time to time, by mutual agreement, extend
the Exclusivity Period, in which event the term Exclusivity
Period as used in this Agreement shall be deemed to include all
such extensions, and all rights and obligations of the parties
that apply to the Exclusivity Period shall also apply to all
such extensions:
3. Notwithstanding exclusivity of the Rights during the Exclusivity
Period,
(i) SEEC shall have the reserved right to market, sell,
license and transfer Licensed Programs directly through its
own efforts to any potential End Users, other than VIASOFT
Customers, for use in the United States, Canada, Germany,
Spain, Benelux or India provided that SEEC gives VIASOFT at
least six (6) months prior written notice of SEEC's
intention to sell directly in Germany, Spain or Benelux,
and
(ii) the Rights shall be nonexclusive in the territories
identified on Exhibit C (the "Nonexclusive Territories) for
so long as SEEC's agreements with the existing distributors
listed on Exhibit C (the "SEEC Distributors"), and any
contractually required renewals of the same, remains in
effect, provided however that SEEC shall not otherwise
market, sell, license or transfer Licensed Programs
directly or to or through any third party (except only to
the SEEC Distributors for remarketing in the Nonexclusive
Territories) during the Exclusivity Period.
4. If, during the Exclusivity Period, VIASOFT otherwise has the
right to terminate this Agreement under Section 16 due to a
Material Default defined
5
<PAGE> 7
as such in Exhibit B, then VIASOFT shall have the right (in
addition to its rights under Section 16) to convert the Rights
from exclusive to non-exclusive and, upon such conversions by
written notice to SEEC, any obligation to pay future Advances
shall terminate effective as of VIASOFT's election.
5. If, during the Exclusivity Period, SEEC otherwise has the right
to terminate this Agreement under Section 16, SEEC shall have
the right (in addition to its rights under Sections 16) to
convert the Rights from exclusive to nonexclusive by written
notice to VIASOFT, upon the receipt of which any obligation of
VIASOFT to pay future Advances shall terminate.
(c) 1. During the Exclusivity Period, VIASOFT agrees not to promote or
distribute, directly, indirectly or through Sub-Distributors,
any products that compete directly on any stand-alone PC/LAN
platform with Licensed Programs that SEEC has delivered to
VIASOFT for distribution (collectively, "Competing Products").
2. After the Exclusivity Period, and while this Agreement is in
effect,
(A) If VIASOFT builds a Competing Product, VIASOFT will, at
least six (6) months before it begins to promote or distribute,
directly, indirectly or through Sub-Distributors, such Competing
Product, inform SEEC in writing in sufficient detail to enable
SEEC to evaluate VIASOFT's intentions, in which event, SEEC will
have the absolute right, at its sole discretion, to terminate
this Agreement, by written notice of termination, within twelve
(12) months following VIASOFT's written notice of intent to
promote or distribute a Competing Product, with such termination
to be effective not earlier than six (6) months after such
notice of termination by SEEC.
(B) If VIASOFT directly or indirectly acquires the right to
distribute a Competing Product (other than by building such a
Product), at least thirty (30) days before VIASOFT begins to
distribute such Competing Product, VIASOFT will inform SEEC in
writing in sufficient detail to enable SEEC to evaluate
VIASOFT's intentions, in which event, SEEC will have the
absolute right, in its sole discretion, to terminate this
Agreement, by written
6
<PAGE> 8
notice of termination, within twelve (12) months following
VIASOFT's written notice described herein, with such termination
to be effective not earlier than ninety (90) days after such
notice of termination by SEEC.
(C) Within thirty (30) days of each anniversary of the
Commencement Date after the twelve month periods described in
(A) and (B) above, if VIASOFT is then promoting or distributing
a Competing Product directly or indirectly, SEEC may terminate
this Agreement by delivering written notice of termination to
VIASOFT by such anniversary date, and any such termination
notice so given shall be effective no earlier than six (6)
months after such anniversary date.
3. For purposes of this Section 2 (c), in the event of (i) a Change
in Control of VIASOFT and the resultant entity, directly or
indirectly, promotes or distributes a Competing Product at any
time after such Change in Control, or (ii) VIASOFT acquires a
company that promotes or distributes, directly or indirectly, a
Competing Product after such acquisition, then VIASOFT shall be
deemed to be promoting or distributing a Competing Product. With
respect to a transaction described in the preceding sentence (a
"Competing Product Company Acquisition"), VIASOFT agrees to
provide SEEC written notice in reasonable detail when VIASOFT
becomes aware that a Competing Product Company Acquisition is
about to occur (i.e., when VIASOFT or its shareholders sign a
preliminary agreement pursuant to which a closing for a
Competing Product Company Acquisition is contemplated) and to
keep SEEC informed with respect to whether the same occurs.
(d) SEEC represents and warrants that it has not and will not authorize
the SEEC Sub-Distributors to distribute any Licensed Programs
outside of their respective Nonexclusive Territories, either
directly or through third parties.
(e) Notwithstanding any other provision of this Agreement, during the
Exclusivity Period, SEEC shall not solicit, market, sell, license
or transfer Licensed Programs directly, or to or through any third
party, to VIASOFT Customers without VIASOFT's prior written consent
in its sole discretion.
7
<PAGE> 9
(f) The rights and licenses granted to VIASOFT pursuant to this
Agreement are for distribution of the Licensed Programs on a
"private label" basis only; VIASOFT shall not have the right to use
any trademark, service mark or trade name of SEEC without its prior
written consent except for use of names in the context of providing
copyright notices on the Licensed Programs or SEEC Materials or
VIASOFT Materials. VIASOFT shall have the right to select its
private labels for the Licensed Programs, with SEEC's consent,
which will not be unreasonably withheld or delayed, and for such
purpose, SEEC shall be deemed to have approved any submitted
private label if VIASOFT has not received a written objection
thereto within twenty (20) days after SEEC's receipt of a written
request for approval of such private label.
(g) The relationship between SEEC and VIASOFT shall be that of
independent contractor; no joint venture, principal- agent,
employer-employee, partnership, or similar arrangement shall exist
between them, and neither party has, nor will represent it has, any
power or right to, and shall not attempt to, expressly or by
implication, incur any liability on behalf of the other or in any
way pledge the other's credit or accept any order or make any
contract binding upon the other or otherwise bind the other in any
way or hold itself out as an agent or employee of the other.
(h) 1. During the twelve (12) month period following the purchase
within a twelve (12) month period by a VIASOFT customer Site of
at least $10,000 of Licensed Programs (a "Protected Customer"),
SEEC shall not, without VIASOFT's prior written consent in its
sole discretion, solicit, market, sell, license or transfer
Licensed Programs directly to such Protected Customer, provided
that (1) VIASOFT gives SEEC appropriate documentation which
identifies such Protected Customers, and (ii) SEEC will have the
right to verify such information by audit of VIASOFT
Notwithstanding the foregoing, no VIASOFT customer site may
become a Protected Customer if any of the following occur: (1) a
Change in Control of VIASOFT has occurred, (2) VIASOFT is
promoting or distributing a Competing Product, (3) VIASOFT is in
material default under this Agreement and has not cured such
default within the applicable cure period, (4) a VIASOFT
Bankruptcy has occurred, (5) VIASOFT has not met the performance
requirements set forth in Section 16(g) as of the relevant
measuring date, or (6)
8
<PAGE> 10
such customer site has previously been designated as a Protected
Customer under this Section 2 (h).
2. Section 2(e) above is wholly independent from this Section 2
(h). In addition, this Section 2 (h) shall not apply to any
SEEC Customer.
3. End User Sublicense Agreement.
(a) Subject to Sections 5(a) and 10(d), VIASOFT or its Sub-
Distributor, as applicable, shall enter into an End User Sublicense
Agreement with each End User prior to delivery of any Licensed
Programs to such End User, or alternatively shall deliver the
Licensed Program(s) to the End User with a "shrink wrap" End User
sublicense agreement in substantially the form attached hereto as
Exhibit E (or such other form as VIASOFT elects to use, with SEEC's
consent which shall not be unreasonably withheld or delayed).
(b) VIASOFT shall be free to establish and alter the prices and pricing
arrangements to its End Users and Sub-Distributors as it determines
in its sole discretion.
4. VIASOFT Royalties and Taxes.
(a) VIASOFT shall pay to SEEC royalties ("VIASOFT Royalties") for
Licensed Programs and New COBOL Maintenance Products sublicensed to
End Users or sold to Sub-Distributors as follows:
The amount of the VIASOFT Royalties shall equal the sum of License
Royalties and Maintenance Royalties, as defined in (i) and (ii)
below:
(i) "License Royalties" shall be the License Fee Rate (as
defined below) multiplied times VIASOFT's actual,
contractually agreed sublicense price to the End User or
Sub-Distributor as applicable, for any Licensed Program, but
not less than the amounts set forth in (iii) below. The
"License Fee Rate" shall equal thirty percent (30%) until
VIASOFT Royalties of $2,000,000 have accrued, and thereafter
shall be twenty-five percent (25%), or the minimum royalty
set forth in Section 4 (a) (iii) below, if higher.
For purposes of determining the License Fee Rates for "New
COBOL Maintenance Products", as defined in the following
sentence, such License Fee Rates shall be the rates
determined as Set forth above, provided that
9
<PAGE> 11
for purposes of such determination, VIASOFT Royalties shall
be assumed to include only such Royalties as relate solely
to sale and maintenance of that New COBOL Maintenance
Product. A "New COBOL Maintenance Product" means a new
product within the Cobol Analyst Product Line that
addresses the Cobol Maintenance market, and Add-ons, (i)
which has significantly different functionality than the
Licensed Programs, not a porting of Licensed Programs to
new platforms, and that represents new revenue opportunity,
and (ii) which exceeds a total of 10 man years in design,
development and testing by SEEC (or its
subcontractor/developers), including without limiting the
generality of the foregoing, time invested by SEEC (or its
subcontractor/ developers) in beta testing.
(ii) "Maintenance Royalties" shall be thirty percent (30%)
of the applicable maintenance fees which VIASOFT invoices
under Maintenance Agreements.
(iii) Notwithstanding (i) above, the minimum amount of
License Royalties for Licensed Programs shall depend on the
current US Domestic Published List Price and the current
License Fee Rate in effect for that month. For purposes of
this Section 4, "Sub-Distributor" shall mean only those
Sub-Distributors in which VIASOFT has no ownership interest
or management control. The minimum royalty amount will be
computed as shown in the following table:
(1) Royalty Minimums for bundled COBOL
Analyst:
COBOL Analyst (Without ADW Export) Sales or Sublicense by
VIASOFT
<TABLE>
<CAPTION>
U.S. Domestic Published List Price Minimum Royalty
<S> <C>
$2,500 or more $400
$2,000 - $2,499 $350
$1,500 - $1,999 $300
</TABLE>
COBOL Analyst (Without ADW Export) sales by VIASOFT
Sub-Distributors
<TABLE>
<CAPTION>
U.S. Domestic Published List Price* Minimum Royalty
<S> <C>
$2,500 or more $225
$2,000 - $2,499 $200
$1,500 - $1,999 $175
</TABLE>
10
<PAGE> 12
(2) Royalty minimums for the server version of the\
product will be calculated as follows (above table
multiplied by 2):
COBOL Analyst Server Version Sales or Sublicense by VIASOFT
<TABLE>
<CAPTION>
U.S. Domestic Published List Price* Minimum Royalty
<S> <C>
$5,000 or more $800
$4,000 - $4,999 $700
$3,000 - $3,999 $600
</TABLE>
COBOL Analyst Server Version Sales by VIASOFT
Sub-Distributors
<TABLE>
<CAPTION>
U.S. Domestic Published List Price* Minimum Royalty
<S> <C>
$5,000 or more $450
$4,000 - $4,999 $400
$3,000 - $3,999 $350
</TABLE>
(3) Minimum Royalties for Bundled COBOL Analyst with
ADW Export (REW/ADW) will be calculated as follows
(table in 1 multiplied by 3):
COBOL Analyst (With ADW/Export) Sales by VIASOFT
<TABLE>
<CAPTION>
U.S. Domestic Published List Price* Minimum Royalty
<S> <C>
$7,500 or more $1200
$6,000 - $7,499 $1050
$4,500 - $5,999 $900
</TABLE>
COBOL Analyst (With ADW/Export) Sales by VIASOFT
Sub-Distributors
<TABLE>
<CAPTION>
U.S. Domestic Published List Price Minimum Royalty
<S> <C>
$7,500 or more $675
$8,000 - $7,499 $600
$4,500 - $5,999 $525
</TABLE>
* The List Price is the US Domestic Bundled List Price then
in effect for the described product.
(4) If the actual sale is not of the bundled product
but the base product plus options, then the
minimum royalty for that sale will be calculated
as follows:
Total U.S. Published
List Price of the base
and/or applicable Add-ons Minimum Royalty
and options purchased for the Bundled
--------------------------- X Product (as
Bundled U.S. Published determined above)
List Price for that product
11
<PAGE> 13
(5) A Site License will require the actual royalties
as computed in Section 4(a)(i), or minimum
royalties to be paid for 90 Seats of the product,
whichever is higher.
Notwithstanding the foregoing, computation of VIASOFT Royalties
shall be based on the actual:
o sublicense price charged by VIASOFT to End
Users or
o the price charged by VIASOFT to its Sub-
Distributors
before computation and application of any taxes, duties, charges or
withholdings of any nature imposed by any government authority that
increase or decrease the total monies to be received by VIASOFT as
a result of the sale, whether or not such amount is received or
paid by VIASOFT, a government authority, end-user or
sub-distributor.
VIASOFT shall be entitled to deduct from VIASOFT Royalties
otherwise playable any amounts for which VIASOFT issues a refund or
credit in exchange for the return to VIASOFT of any copies of
Licensed Programs (or of copies of VIASOFT's software containing
any Licensed Programs).
(b) 1. VIASOFT shall pay all License Royalties to SEEC within sixty
(60) days of the end of the month in which VIASOFT invoices the
End Users or Sub- Distributors for transactions to which VIASOFT
Royalties apply. VIASOFT shall pay all Maintenance Royalties
within ninety (90) days of the end of the month in which VIASOFT
invoices the End User or Sub-Distributor. With all royalty
payments, VIASOFT shall provide SEEC with a written report
detailing all invoice numbers by categories and geographic
regions, and such other information as may reasonably be needed
to ascertain how the amount of the royalty payment was
calculated.
2. SEEC shall perform such calculations as it deems appropriate to
confirm the accuracy of the amount of VIASOFT's payment and
shall advise VIASOFT within thirty (30) days after receipt of
such payment and the related written report described above of
any discrepancies in such amounts based upon the information
VIASOFT provided to SEEC. In the event SEEC identifies any
discrepancies, the parties shall promptly confer and determine
the
12
<PAGE> 14
proper amount payable by mutual agreement, and VIASOFT or SEEC,
as applicable, shall remit to the other the amount of any
underpayment or overpayment, as applicable, within five (5) days
of such mutual determination. Section 9(d) of this Agreement
shall not apply to any shortfall due to calculation errors that
should have been discovered pursuant to the review procedure set
forth in this Section 4(b)2.
(c) For the Exclusivity Period, VIASOFT shall pay to SEEC minimum
VIASOFT Royalties (each an "Advance") as follows: For each of the
first nine (9) months during such Period, each Advance shall equal
$40,000, and for each additional month during such Period, the
amount of each Advance shall be $60,000. No Advances shall be
required for any month after which VIASOFT or SEEC exercises its
right under Sections 2(b)4 or 2(b)5 to relinquish or convert
exclusivity. The initial Advance shall be made on the Commencement
Date and each payment thereafter shall be made on or before the
monthly anniversary thereafter of the Commencement Date for so long
as such Advances are due. Each payment shall constitute an advance
of future VIASOFT Royalties to the extent that such payments do not
include VIASOFT Royalties already earned and payable pursuant to
Section 4(a) above. Earned VIASOFT Royalties shall be credited
against the Advances until the amount of the Advances has been
fully earned by SEEC, at which time payments pursuant to the first
sentence of Section 4(b) shall commence. Unearned Advances shall be
nonrefundable except as follows:
1. If this Agreement is terminated by VIASOFT due to a "Material
Default" by SEEC as defined under Exhibit B, SEEC shall repay to
VIASOFT an amount equal to one half of the unearned Advances in
twelve (12) equal monthly payments commencing thirty (30) days
after the termination is effective.
2. If this Agreement is terminated by VIASOFT due to any other
material default by SEEC under this Agreement, SEEC shall repay
to VIASOFT an amount equal to all of the unearned Advances in
twelve (12) equal monthly payments commencing thirty (30) days
after the termination is effective.
(d) SEEC warrants to VIASOFT that the rates and terms under this
Agreement concerning the licensing or remarketing of the Licensed
Programs do not exceed those offered by SEEC to any other
distributor or licensee. SEEC agrees that
13
<PAGE> 15
if, while. this Agreement is in effect, SEEC enters into an
agreement with any other distributor or licensee for distribution
rights with respect to Licensed Programs, SEEC shall, within
fifteen (15) days of entering into such agreement provide to
VIASOFT a copy of the written agreement, or a complete and accurate
written summary of all terms of such agreement if such agreement is
oral, or a written summary prepared by a mutually acceptable third
party, provided that a senior SEEC officer certifies in writing to
VIASOFT that such written summary is complete and accurate. VIASOFT
shall then have the right to determine whether the terms and
conditions of such agreement are more favorable than under this
Agreement and, at its election, all reasonably applicable terms and
conditions shall apply to this Agreement effective as of the date
of VIASOFT's election. At SEEC's written request, any copy or
summary of an agreement provided to VIASOFT by SEEC pursuant to
this Section shall be deemed to be Confidential Information of SEEC
subject to Section 14 hereof.
(e) Royalties that are not paid within ten (10) days of the due date
will carry interest at the rate of 1% per month.
5. Product Rollout; Market Introduction.
(a) Upon execution of this Agreement, SEEC will provide to VIASOFT a
reasonable number of copies of (i) SEEC's current collateral and
documentation for the Licensed Programs, including without
limitation hard copy and machine readable text, original artwork
(mechanicals), sales and customer training materials, and PC Demo's
(collectively, the "SEEC Materials"), and (ii) the Licensed
Programs in the then current version. SEEC will thereafter provide
to VIASOFT a reasonable number of copies of any new or additional
SEEC Materials developed by or for SEEC as soon as the same become
available. SEEC hereby grants to VIASOFT, and VIASOFT hereby
accepts, a license to use and distribute the SEEC Materials,
including the right to modify, amend and make derivative works of
the SEEC Materials, without charge or royalty, during the term of
and for the purposes of this Agreement. If VIASOFT modifies or
amends the SEEC Materials to the extent that the revised materials
constitute "derivative works" pursuant to Section 101 of the
federal Copyright Act (17 U.S.C. Section 101), VIASOFT has the
right to register its copyright in the derivative work and label
the new materials with a proper copyright notice with VIASOFT as
the owner. Should VIASOFT materials substantially copy any SEEC
materials, VIASOFT shall affix proper copyright notice denoting
SEEC's
14
<PAGE> 16
ownership and copyright in addition to any VIASOFT copyright
notice. Upon delivery of SEEC Materials to VIASOFT, SEEC shall
inform VIASOFT of the proper copyright notice to be used in
connection with any materials to which SEEC's copyright is to be
affixed.
(b) Promptly upon receipt of the SEEC Materials, VIASOFT shall develop,
at its cost, product documentation, sales and other collateral
materials for use in using and promoting the Licensed Programs (the
"VIASOFT Materials"). The VIASOFT Materials shall include such
items as VIASOFT deems necessary or helpful in the sales effort,
and may include, without limitation, collateral pieces,
documentation, training courses, direct mail, press releases, and
materials in support of activity at trade shows, seminars, and
special promotions. Should VIASOFT materials substantially copy any
SEEC materials, VIASOFT shall affix proper copyright notice
denoting SEEC's ownership and copyright in addition to any VIASOFT
copyright notice.
(c) SEEC will update and deliver to VIASOFT the Licensed Programs
within fifteen (15) days following the Commencement Date to reflect
VIASOFT' 5 private labelling, in form and substance as reasonably
requested by VIASOFT These private labelling activities will
include inserting the name of the product, modifying specified
terminology and modifying the presentation of certain screens. Any
of SEEC's work done in connection with Private Label Products shall
not be deemed to be "works for hire" but will be considered as part
of SEEC's license to VIASOFT.
(d) Subject to Section 8, VIASOFT will runs the relevant portions of
the Licensed Programs through VIASOFT's proprietary COBOL Parser
Validation Suite of COBOL programs (the "COBOL Parser Validation
Suite"), which contains ten years of accumulated VIASOFT know-how,
within fifteen (15) days after receipt of the Licensed Programs and
provide SEEC with a comprehensive, prioritized list of product bugs
within fifteen (15) days after the later of such testing or the
Commencement Date. VIASOFT agrees to provide technical consultation
to SEEC to help in the resolution of such bugs, as mutually agreed.
SEEC agrees to use Best Efforts to fix all product bugs that are
reasonably identified by VIASOFT as being necessary to make the
Licensed Programs marketable to VIASOFT's customers, such fixes to
be made pursuant to a schedule that is mutually determined by the
parties.
(e) (i) Within fifteen (15) days after the Commencement Date, SEEC
shall deliver to VIASOFT such number as VIASOFT reasonably requests
of diskettes containing the
15
<PAGE> 17
evaluation versions of the Licensed Programs updated as required by
Sections 11.6 of Exhibit B, and (ii) thereafter shall similarly
deliver replacement diskettes containing the evaluation versions of
the Licensed Programs as set forth in Section 11.6 of Exhibit B.
VIASOFT may make an unlimited number of distribution copies of the
evaluation versions of the Licensed Programs from these diskettes.
Evaluation versions of the Licensed Programs are copies, the
usability of which is limited by time or size limitations
(presently such versions have an upper limit of 100,000 lines of
COBOL source code).
(f) In addition, (i) within fifteen (15) days after the Commencement
Date, SEEC shall deliver to VIASOFT such number as VIASOFT
reasonably requests of diskettes containing the Licensed Programs
updated as required by Section 11.6 of Exhibit B and, (ii)
thereafter, shall similarly deliver replacement diskettes
containing the Licensed Programs which have been modified, updated
or enhanced pursuant to Exhibit B. VIASOFT shall have the right to
make, and distribute pursuant to Section 2, distribution copies of
the Licensed Programs from these diskettes in the event that SEEC
does not provide VIASOFT with a reasonable number of diskettes
pursuant to Section 5 (g) below within thirty (30) days from
VIASOFT's request therefor.
(g) SEEC shall deliver to VIASOFT such number of defect- and virus-free
diskettes containing Licensed Programs, as labelled and upgraded
pursuant to this Section 5, as VIASOFT reasonably requests from
time to time in order to maintain an adequate inventory of Licensed
Programs. An adequate inventory shall initially be 200 copies of
each Licensed Program, and thereafter SEEC shall replenish such
inventory in quantities of at least fifty (50) units per delivery
to restore VIASOFT's inventory to the higher of 200 copies or the
sum of VIASOFT's monthly sales levels of such Licensed Programs for
each of the immediately preceding three (3) months. SEEC shall use
such virus detection programs to test the diskettes to be delivered
as are reasonably acceptable to VIASOFT SEEC shall provide VIASOFT
at the time of each delivery of diskettes pursuant to this Section
with the written certifications of an officer of SEEC, in form and
substance satisfactory to VIASOFT, to the effect that all diskettes
in such delivery for any Licensed Program are defect-free,
identical (except for serial numbers) and virus-free.
(h) SEEC shall pay all costs of shipping and applicable taxes, duties
and other charges relating to bulk
16
<PAGE> 18
shipments of materials ordered by and delivered to VIASOFT under
this Agreement. All materials sent to VIASOFT shall be sent to its
notice address as specified in or pursuant to Section 18 hereof.
VIASOFT will provide SEEC with appropriate sales/use tax exemption
certificates for goods purchased for resale.
(i) VIASOFT shall be responsible for publication and delivery of
Private Label Product documentation and SEEC-furnished diskettes to
Sub-Distributors and End Users.
(j) With such assistance from SEEC as is mutually agreed, VIASOFT will
establish a special telesales function for domestic sales.
(k) Attached hereto as Exhibit G is VIASOFT's initial marketing plan
for commencing distribution of the Licensed Programs, which SEEC
has approved. Such plan represents VIASOFT's good faith present
intentions, and does not constitute a contractually binding
obligation or any guarantee of performance.
(l) At no cost to VIASOFT, SEEC shall provide to VIASOFT during the
first three (3) months of the term of this Agreement the following
assistance, as requested by VIASOFT: (i) five (5) person-days of
on-site support by SEEC's best telesales person, (ii) five (5)
person-days of support by SEEC's best direct sales person, such
support to be provided on-site, in Phoenix, Arizona, or by
telephone, as requested by VIASOFT, (iii) ten (10) person-days of
on-site assistance by SEEC's best customer support person, and (iv)
ten (10) person-days of on-site assistance by SEEC's best
technician. Within six (6) months thereafter, at VIASOFT's request,
SEEC shall provide to VIASOFT, by telephonic conference or at
SEEC's location (at VIASOFT's election), an additional five (5)
person-days of support by the persons described in each of (i)
through (iv) above. Assistance provided pursuant to this Section
5(1) need not be contiguous in time, and the particular scheduling
in each instance shall be subject to mutual agreement of the
parties.
(m) Intentionally deleted.
(n) SEEC shall have the right, at its expense, to build into the
Licensed Programs such security devices as SEEC and VIASOFT
mutually agree upon.
(o) SEEC may at its option from time to time during the term of this
Agreement and subject to the availability of SEEC personnel, render
to VIASOFT such other reasonable commercial and technical
assistance in connection with
17
<PAGE> 19
VIASOFT's support and marketing of the Licensed Programs, including
sending SEEC personnel to assist VIASOFT with the marketing of the
Licensed Programs, at such charges and other terms as are mutually
agreed to by the parties.
(p) Except as expressly provided otherwise in this Agreement, neither
party shall have any responsibility for the travel, lodging, meal
and other expenses incurred by the other party or its employees in
connection with this Agreement.
6. Intentionally deleted.
7. Changes, Developments and Quality Control.
(a) SEEC reserves the right to change the Licensed Programs or any of
its related technical or marketing materials at any time. SEEC
agrees to keep VIASOFT informed of and to issue to VIASOFT as part
of the Licensed Programs all corrections, modifications,
enhancements, Add-ons and Upgrades to the Licensed Programs as
provided in Exhibit B attached hereto.
(b) Exhibit F attached hereto sets forth the parties' intentions with
respect to further development, testing procedures and quality
control procedures concerning the Licensed Programs and certain
limited obligations of SEEC set forth therein.
8. VIASOFT COBOL Parser Validation Suite Services.
(a) In additions to providing the COBOL Parser Validation Suite
services described in Section 5(d) above, VIASOFT may run each new
release of Licensed Programs during the term of this Agreement
through a sample of the COBOL Parser Validation Suite in order to
validate the product release. At SEEC's request, VIASOFT will
provide to SEEC a list of bugs generated from any such run. In
exchange for VIASOFT's COBOL Parser Validation Suite services
described in Section 5 (d), SEEC agrees to pay to VIASOFT a royalty
(the "SEEC Royalty") in the amount of five percent (5%) of all
amounts received by SEEC or any Affiliate of SEEC from any direct
or third party sales (other than by VIASOFT or its
Sub-Distributors) of any SEEC products or services that contain or
use any COBOL parsers for COBOL language as accepted by the IBM
OS/VS COBOL compiler for COBOL 68 and COBOL 74 language levels; for
COBOL language as accepted by IBM VS COBOL II compilers Release 1.0
through Release 4.0; and for COBOL language as accepted by IBM
COBOL/370 compilers, during the five (5) year period commencing on
the earlier to occur of (i) the first sale of COBOL Analyst Release
2.1
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containing elements as described in Phase IIA of Exhibit B attached
hereto or (ii) six months from the Commencement Date, up to a
maximum aggregate payment of One Million Dollars ($1,000,000),
provided, however, that in no event shall the SEEC Royalty be less
than $75 per product. At the end of such five (5) year term, if
SEEC has not paid to VIASOFT at least $100,000 in SEEC Royalties,
SEEC shall play to VIASOFT, in twelve (12) equal monthly payments
commencing immediately after such term the difference between
$100,000 and the amount of SEEC Royalties paid to VIASOFT prior to
the end of the five year term. Unless SEEC fails to pay the SEEC
Royalties, SEEC shall have the right to unlimited use of the
aforesaid disclosed know-how subject to Section 13 obligations not
to disclose such know-how to third parties. This right survives
termination of this Agreement. This provision shall not be
construed to prohibit or interfere with SEEC's right to develop,
copyright and market any product line that is or is not related to
the Licensed Programs, under any circumstances. VIASOFT shall have
no interest in any such related or unrelated products.
(b) SEEC shall pay the SEEC Royalty within sixty (60) days after the
end of the month in which invoices for transactions to which the
SEEC Royalty applies are sent. With all royalty payments, SEEC
shall provide VIASOFT with a written report detailing all invoice
numbers by categories and geographic regions, and such other
information as may reasonably be needed to ascertain how the amount
of the royalty payment was arrived at. Royalties that are not paid
within ten (10) days of the due date will carry interest at the
rate of 1% per month. SEEC's obligation to pay the SEEC Royalties
shall remain in full force and effect notwithstanding any
termination of this Agreement. SEEC may prepay its payment
obligations at any time under this Sections 8 without premium,
penalty or discount. VIASOFT, in its discretion, may offset against
VIASOFT Royalties the amount of any SEEC Royalties when such SEEC
Royalties become due and payable but remain unpaid, and VIASOFT
shall be deemed to have paid VIASOFT Royalties in the amount of
such offset.
(c) Notwithstanding any provision to the contrary in this Agreement,
SEEC shall retain the right during this Agreement and after its
termination to continue and update SEEC's COBOL parser validation
suite, and any such SEEC test suite shall be and remain the
exclusive property of SEEC, whether or not such SEEC suite utilizes
VIASOFT know-how and/or COBOL Parser Validation Suite Services
described in Section 5(d).
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<PAGE> 21
9. Record Keeping; Audit Rights and Procedures.
(a) Each party hereby agrees that it shall keep full, true and accurate
records and books of account containing all particulars which may
be necessary for the purpose of showing the amounts payable to the
other party pursuant to this Agreement, and shall keep such records
and the supporting data for seven (7) years following the end of
the calendar year to which they pertain.
(b) From time to time during the term of this Agreement and thereafter
with respect to any payments due after termination or expiration of
this Agreement (but not more than once in any twelve month period),
an independent public accountant retained by a party may, upon
giving the other party reasonable notice, inspect and copy such
records and books of account for the sole purpose of verifying the
accuracy and completeness of payments required to be made under
this Agreement, provided such right to copy shall not include
customer names or addresses.
(c) Subject to the following sentence, the party for whom the record
inspection is conducted shall bear its own costs and expenses of
such inspection and copying.
(d) In the event it is determined that a party has underpaid amounts
due hereunder, such party shall promptly bring such payments
current and, in the further event that such payment shortfall
represents an underpayment of ten percent (10%) or more of the
amount due for the period in question, then such party shall
promptly reimburse the other party for one-half its reasonable
costs and expenses incurred in connection with determining and
resolving such shortfall.
(e) A party (or its independent accountants) shall have the right to
review and verify the calculations and other determinations of the
reviewing party's accountants.
10. Additional Undertakings by VIASOFT
VIASOFT undertakes and agrees with SEEC that it will at all times
during the continuance in force of this Agreement, and where applicable
following termination hereof, observe and perform the terms and
conditions set out in this Agreement and in particular:
(a) will at all times, if reasonably requested, join with SEEC, and
otherwise fully cooperate with SEEC, at the expense of SEEC, in any
proceedings necessary for the protection of SEEC's Intellectual
Property Rights in the
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<PAGE> 22
Licensed Programs and will give notice to SEEC forthwith of any
circumstances coming to the knowledge of VIASOFT which it believes
might reasonably indicate an infringement of such rights.
(b) acknowledges that all Licensed Programs and all documents,
information and material related to such Licensed Programs and
Maintenance (hereafter, such Licensed Programs, and related
documents, information and materials shall be referred to
collectively as "Technical Data") are subject to United States
export controls pursuant to the Export Administration Regulations,
15 C.F.R. Parts 768-799. At all times VIASOFT shall comply with all
requirements of the Export Administration Regulations and all
licenses and authorizations issued thereunder with respect to all
such Technical Data;
(c) during the term of this Agreement, or during the twelve (12) month
period following termination or expiration of this Agreement, will
not, without SEEC's prior consent, directly or indirectly, employ
or solicit the employment of any person who, to VIASOFT's knowledge
at that time is, or was during the prior twelve (12) months, an
employee of SEEC or ERA.
(d) will, at its expense, take the same measures to protect SEEC's
copyright interests in the Licensed Programs outside of the United
States as VIASOFT takes with respect to VIASOFT's copyright
interests in its products that are distributed outside of the
United States, and in connections therewith VIASOFT will promptly
notify SEEC of any filing, registration, recording or other action
that VIASOFT takes with respect to its products in order to protect
its own copyright interests, and VIASOFT will assist SEEC to do so
as mutually agreed upon. Without limiting the foregoing, (i) the
copyright interests in the Licensed Programs shall receive the same
contractual protections as are provided to the copyright interests
in VIASOFT products under any applicable VIASOFT agreements with
Sub-Distributors; (ii) VIASOFT will not remove any copyright legend
affixed by SEEC to any Licensed Materials; (iii) VIASOFT will
require its Sub- Distributors not to remove any copyright legend so
affixed by SEEC; and (iv) VIASOFT will affix SEEC's copyright
legends as required by Section 5(a) of this Agreement.
(e) VIASOFT represents that to its knowledge this Agreement is
presently in compliance with all applicable laws, including without
limitation all antitrust, distribution, licensing and marketing
laws and regulations of the United States and each country in which
VIASOFT or its
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<PAGE> 23
Sub-distributors will market the Licensed Programs. For so long as
VIASOFT has any rights to distribute Licensed Programs under this
Agreement, VIASOFT will comply, and will require its
Sub-Distributors who are distributing Licensed Programs to comply,
with all applicable laws, including without limitation all
antitrust, distribution, licensing and marketing laws and
regulations of the United States and each country in which VIASOFT
or its Sub-Distributor distributes Licensed Programs.
(f) Subject to the provisions of Section 21 (d), VIASOFT will indemnity
and hold SEEC harmless from any and all damages, claims, demands,
losses, costs, suits, judgments, penalties, expenses, and
liabilities of any kind whatsoever, that may occur, or for which
SEEC may become liable, including without limitation, reasonable
attorney's fees and the costs and expenses of litigation, that are
caused by (i) any action by VIASOFT or any Sub- distributor which
exceeds the License granted to VIASOFT in this Agreement, or which
is in breach of any of the provisions of Sections 2(c) (but not for
a breach described in the last sentence of Section 16 (c)), 10 (a),
10(c), 10(d), 14(a), 14(e)l, 14(e)3, 14(e)4, 14(i) and 14(k)
through (o) of this Agreement; (ii) any use of the Escrow Contents
by VIASOFT or any person who obtains the same from VIASOFT, which
use is not specifically authorized under the terms of this
Agreement; (iii) failure to comply with the provisions of Sections
10 (b), 10(e) and 10(g) of this Agreement; (iv) failure to comply
with the provisions of Section 10(h) and all its subparts; and (v)
any Sub-distributor acquiring rights (whether by operations of law
or otherwise) which rights are greater than the rights accorded to
VIASOFT under this Agreement.
(g) represents and warrants that VIASOFT's performance under this
Agreement does not and will not, with or without notice or the
passage of time, conflict with VIASOFT's corporate charter or
bylaws, any agreement with any person or entity, or any applicable
laws, rules, regulations, orders, judgments, or decrees of any
government or agency thereunder.
(h) VIASOFT shall not grant to any Sub-distributor any rights to market
Licensed Programs that are greater than VIASOFT's rights to market
Licensed Programs under this Agreement. VIASOFT shall provide in
its agreements with each its Sub-distributors who desires to market
Licensed Programs that such Sub-distributor's rights to market
Licensed Programs exist only for so long as VIASOFT has such rights
and shall automatically terminate when VIASOFT's marketing rights
terminate (except for the
22
<PAGE> 24
right to market existing inventory as specified in this Agreement)
without any liability on the part of SEEC for such termination.
11. Additional Undertakings by SEEC.
SEEC undertakes and agrees with VIASOFT that it will at all times
during the continuance in force of this Agreement, and where applicable
following termination hereof, observe and perform the terms and
conditions set out in this Agreement and in particular:
(a) (i) will provide Maintenance and Support Services such that SEEC
does not cause a "Material Default" as defined in Sections 12, 13
and 14 of Exhibit B, and (ii) will provide final beta test versions
to permit VIASOFT to run Final Beta Tests, as provided in Section 5
of Exhibit F and Section 11.1 of Exhibit B;
(b) will give to VIASOFT prompt notice, and one copy for VIASOFT
internal use only, of any Licensed Program enhancement, Add-ons,
Upgrade, modification, variation, suspension or elimination, bug
reports, and temporary program fixes, including without limitation
any new releases of any Licensed Program, in accordance with
Section 7 above and Exhibits B and F;
(c) will promptly make available to VIASOFT as it becomes available to
SEEC such information relating to the sale and marketing of the
Licensed Programs as SEEC considers in its sole discretion to be
important to VIASOFT's performance under this Agreement;
(d) represents and warrants that (i) SEEC and ERA own all Intellectual
Property Rights to the Licensed Programs free and clear of any
claims, liens or encumbrances, and that SEEC has obtained all
necessary authorizations from ERA to permit SEEC to execute,
deliver and perform this Agreement; (ii) the Licensed Programs and
SEEC Materials do not infringe any Intellectual Property Right of
any third party; (iii) the Licensed Programs are not intentionally
constructed to damage, interfere with, or otherwise adversely
affect, without the consent of the user of the Licensed Programs,
computer programming code, data files, or hardware; (iv) SEEC's
performance under this Agreement does not and will not, with or
without notice or the passage of time, conflict with SEEC's
corporate charter or bylaws, any agreement with any persons or
entity, or any applicable laws, rules, or regulations of the United
States, orders, judgments or decrees of any government or agency
thereunder; and (v)
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<PAGE> 25
that the certificate of ERA attached hereto as Exhibit H is
accurate, complete and not misleading;
(e) SEEC shall make reasonable efforts to maintain during the term of
this Agreement such resources as are necessary to meet its
obligations under Exhibit B.
(f) during the term of this Agreement, or during the twelve (12) month
period following termination or expiration of this Agreement, will
not without VIASOFT's prior consent directly or indirectly employ
or solicit the employment of any person who, to SEEC's knowledge,
at that time is, or was during the prior twelve (12) months, an
employee of VIASOFT.
(g) during the term of this Agreement, or during the twelve (12) month
period following termination or expiration of this Agreement, will
not without VIASOFT's prior consent directly or indirectly use or
attempt to use, directly or indirectly, as a distributor, sales
representative or agent, any person or entity who, to SEEC's
knowledge, at that time is, or was during the prior twelve (12)
months, a distributor of VIASOFT.
12. Product Warranty.
(a) SEEC warrants that the Licensed Programs delivered to or for
VIASOFT will operate substantially in accordance with the
accompanying SEEC documentation for the Private Label Products, and
will be free from problems or errors which would materially affect
the performance of any Licensed Program in accordance with SEEC's
product documentation therefor. In case of breach of this limited
warranty or any other duty (other than under Section 5(g)) that
relates to the quality of a diskette, VIASOFT's remedies will be,
at VIASOFT's option: (i) correction of the diskette, or (ii)
replacement of the diskette. SEEC does not warrant that the
functions contained in the software will meet the requirements of
the end-user, or that the operation of the software will be
uninterrupted or error free. EXCEPT AS PROVIDED IN THIS AGREEMENT,
THE PRODUCTS WILL BE PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND,
EITHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICUlAR
PURPOSE, AND THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF
THE PRODUCTS IS WITH THE USER WHO WILL BE LIABLE FOR THE ENTIRE
COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.
(b) THERE ARE NO EXPRESS OR IMPLIED WARRANTIES BY SEEC TO VIASOFT, TO
VIASOFT'S SUB-DISTRIBUTORS, OR TO VIASOFT'S END USERS, OTHER THAN
THE WARRANTIES SPECIFIED IN THIS
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<PAGE> 26
AGREEMENT. SEEC GIVES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING
ITS MAINTENANCE, SUPPORT OR DEVELOPMENT SERVICES OTHER THAN SUCH
OBLIGATIONS AS ARE SET FORTH IN EXHIBIT B, IF ANY.
(c) UNDER NO CIRCUMSTANCES WILL SEEC OR ITS AFFILIATES BE LIABLE FOR
ANY CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES ARISING OUT OF ANY
BREACH OF WARRANTY UNDER THIS SECTION 12.
(d) In making proposals to End Users, VIASOFT will use commercially
reasonable efforts to inform the End User of all technical and
other requirements necessary for the proper functioning of the
Licensed Programs.
13. Confidentiality.
(a) The parties agree to keep confidential all technical and commercial
information which either party may designate to the other in
writing as confidential ("Confidential Information"), unless any
such information is published without restriction and in the public
domain. This obligation to keep information confidential shall
include proprietary information even though it may not fall within
the common law (or statutory) definitions of trade secrets, so long
as the party providing the information designates it as
confidential, and such information or data is not in the public
domain. Without limiting the foregoing, the parties agree that the
following constitute "Confidential Information" of the party owning
or providing the same, as applicable: (i) Escrow Contents; (ii) any
list of recommendations or fixes provided by VIASOFT in connection
with COBOL Parser Validation Suite services; (iii) VIASOFT Customer
identities; (iv) VIASOFT's Protected Customers (provided that this
Section 13 shall not preclude SEEC from exercising marketing rights
with respect to Protected Customers as permitted under Section 2
(h)); and (v) SEEC Customer identities. The parties agree that they
will not use Confidential Information of the other party for any
purpose other than as allowed under this Agreement, and that they
will not reproduce or disclose such Confidential Information to any
other person or firm, except as allowed in this Agreement or on the
following terms:
1. Either party may disclose Confidential Information, except
source code, to third parties to whom disclosure is made for the
purpose of this Agreement and who have agreed in writing to keep
such Confidential Information confidential;
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<PAGE> 27
2. Either party may disclose the Confidential Information to those
of its employees who have a need to know the Confidential
Information for the purpose of their job; and
3. Each party will label each copy of Confidential Information as
confidential and proprietary in accordance with such party's
standard procedures; and
4. Each party agrees to use the same degree of care as such party
uses to prevent the disclosure of its own Confidential
Information, but in no event shall such degree of care be less
than reasonable and appropriate for the protection of
proprietary information and trade secrets, together with any
additional safeguards required for confidentiality as set forth
in this Agreement; and
5. The parties agree that any release of Confidential Information
to employees shall be only to their employees who have a need to
know the Confidential Information for the purpose of their jobs.
In addition, VIASOFT agrees not to release any Confidential
Information received by it pursuant to Exhibit F to any other
VIASOFT employees who are members of a development team working
on any product competitive with any Licensed Program to which
such Confidential Information relates.
6. Neither party shall be required to keep confidential any
Confidential Information which is:
a. within, or later falls within, the public domain without
breach of this Agreement by the other party; or
b. rightfully known to such party prior to any disclosure by
the other party; or
c. rightfully available or becomes rightfully available to one
of the parties from a source other than the other party or
other than from the escrow custodian for the source/object
codes for the Licensed Programs under the provisions of
Section 15 of this Agreement, provided however, that the
party to which the Confidential Information is or becomes
rightfully available trust reasonably expect that such
source has an unrestricted right to disclose the same to
such party.
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<PAGE> 28
7. Upon any termination of this Agreement, or within thirty (30)
days after a written request from one party to the other for the
return of the requesting party's Confidential Information, the
other party shall either (i) return to the requesting party, or
(ii) certify in writing to the requesting party the destructions
of all Confidential Information except Confidential Information
which is necessary to carry out the provisions of this Agreement
which survive any such termination.
8. Notwithstanding any other provision of this Agreement to the
contrary, the parties hereby agree that the terms and conditions
of this Agreement (as distinct from the fact of this Agreement)
are Confidential Information of each of them, and that such
terms and conditions shall not be disclosed except to the
following persons provided the recipients take such Confidential
Information subject to the same use and disclosure restrictions
as apply to the parties hereunder: a party's officers,
directors, shareholders, employees, attorneys, auditors,
financial advisors, lenders, bona fide potential investors of a
significant amount of capital in such party, and bona fide
potential purchasers of such party, all on a "need to know"
basis. SEEC agrees not to disclose such terms and conditions to
Compuware unless Compuware is negotiating in good faith to
purchase more than fifty percent (50%) of SEEC's stock or
business. The parties agree to issue a joint press release
announcing this Agreement, which press release shall be mutually
acceptable.
9. SEEC agrees not to disclose to any third party any deficiency in
a Private Label Product that does not exist in the non-Private
Label Product version of the Licensed Program (i) if VIASOFT
requests, within thirty (30) days of being apprised of such
deficiency by SEEC, that SEEC cure such deficiency, or (ii) if
SEEC has not informed VIASOFT of such deficiency.
14. Intellectual Property Rights; Indemnities.
(a) Any ownership rights, marketing rights, title or other rights to
products now or in the future belonging to SEEC shall remain vested
in SEEC. Any ownership rights, marketing rights, title or other
rights to products now or in the future belonging to VIASOFT shall
remain vested in VIASOFT, except as provided in Sections 14(b)
below. Each party shall own exclusive rights to the trademarks
27
<PAGE> 29
and service marks it creates. Neither party shall have the right to
use trademarks or service marks of 'the other party without the
other party's express written consent except for use of names in
the context of providing copyright notices on the Licensed Programs
or SEEC materials or VIASOFT materials. Neither party will do
anything to infringe or knowingly jeopardize the copyright
interests or Confidential Information of the other party.
(b) SEEC shall own the copyrights in the Private Label Products and
shall affix the following copyright notice to the Private Label
Products and where indicated below:
(c) [year of first publication] SEEC, Inc.
Such copyright notice will be displayed in the transient, "Loading"
screen that will be displayed while the product is being brought up
and in the HELP/About screen. Each such screens shall bear the
title of the applicable product name, as chosen by VIASOFT,
followed by the VIASOFT/Product Logo and descriptive text in the
center of the screen. The bottom of each screen will contain
VIASOFT trademarks and the SEEC copyright as described above.
VIASOFT will provide SEEC with DLL(s) or resource files with
dialogs and product icons for the above-described screens to be
included in the product diskettes. Copyright ownership and
legending duties with respect to the SEEC Materials and the VIASOFT
Materials are further set forth in Sections 5(a), 5(b) and 10(d)
above.
(c) SEEC covenants and agrees not to manufacture or distribute Private
Label Products except for or on behalf of VIASOFT, at VIASOFT's
request. SEEC may, however, use the additional programming created
pursuant to its obligations under Sections 5(d) and e in products
other than Private Label Products.
(d) SEEC covenants and agrees that, as owner of the Private Label
Products, it will not (i) transfer or license the Private Label
Products to third parties without the prior written consent of
VIASOFT, except as expressly permitted in this Agreement, or (ii)
have any right to compensation or accounting other than as
expressly provided in this Agreement. This Section 14(d) does not
increase or decrease SEEC's rights with respect to a Change in
Control of SEEC. Nothing in this Section 14(d) will be deemed to
restrict SEEC's rights to transfer or license Licensed Programs
(other than Private Label Products) except as specified to the
contrary in this Agreement.
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(e) 1. VIASOFT and SEEC agree to notify each other of any conduct by
any third persons which, in their reasonable opinions,
constitutes infringement or other unauthorized use of the
Licensed Programs, and each shall make available to the other
any information with respect to such possible infringement or
other unauthorized use which they may possess.
2. SEEC shall have the first right to enforce the Licensed Programs
against infringements by third parties. SEEC shall have sole
discretion with respect to settlement and the conduct of any
ensuing litigation. VIASOFT will cooperate in any reasonable
request of SEEC including, without limitation, producing
documents regarding Licensed Programs and making officers and
key employees available for testimony, whether at deposition or
in court. All damages or awards received by SEEC in connection
with its efforts to enforce the Licensed Programs shall be
distributed as provided in Section 14(e)4.
3. VIASOFT may, at its option and sole cost, enforce the Licensed
Programs against infringements by third parties if SEEC does not
do so within a reasonable period (not to exceed sixty (60) days)
after receipt of a written request from VIASOFT that SEEC
proceed under Section 14(e) (2). If VIASOFT elects to enforce
the Licensed Programs against any such infringement, it shall
have sole discretion with respect to settlement and the conduct
of any ensuing litigation, provided that VIASOFT shall not have
the right to enter into a settlement agreement without SEEC's
prior written consent to the extent that such settlement
agreement would impair or jeopardize SEEC's copyright interests
at issue or which would permit future use of a product which
infringes SEEC's copyright interests. SEEC will cooperate in any
reasonable request of VIASOFT including, without limitation,
producing documents regarding the Licensed Programs and making
officers and key employees available for testimony, whether at
deposition or in court. All damages or awards received by
VIASOFT in connection with its efforts to enforce the Licensed
Programs shall be distributed as provided in Section 14(e)4. In
the event VIASOFT proceeds under this Section 14(e)3, SEEC will
cooperate at VIASOFT's costs in a manner sufficient to give
VIASOFT standing to enforce such copyright against the claimed
infringement.
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4. Any damages or awards received by SEEC or VIASOFT pursuant to
this Section 14(e) shall be applied first to the reasonable
costs and expenses incurred by the parties in connection with
such litigation, and any amounts remaining after such
application (the "Remaining Award") shall be disbursed to the
parties as follows:
a. The entire Remaining Award shall first be divided into two
portions, one the "VIASOFT Portion" and the other the "SEEC
Portion", such that the ratio of the VIASOFT Portion to the
SEEC Portion shall equal the ratio of VIASOFT's "Market
Share" to SEEC's "Market Share" at the time of the damage
award.
b. For purposes of the preceding sentence, the term "Market
Share" of a party means (i) that party's gross revenues
received in the prior twelve (12) months with respect to
sale or use of Licensed Programs in the actual geographic
market in which the infringement that gave rise to the
damage award occurred as determined by the court in the
infringement proceeding (not including revenues received by
such party from the other party pursuant to this Agreement
and not including revenues from any geographic region with
respect to which such party did not have distribution
rights pursuant to this Agreement), (ii) divided by the sum
of the parties' Market Shares determined pursuant to the
foregoing clause (i).
c. The VIASOFT Portion shall be deemed to constitute VIASOFT
License revenues for purposes of Section 4(a) above; SEEC
shall be entitled to receive from the VIASOFT Portion an
amount determined by multiplying the VIASOFT Portion by the
applicable License Fee Rate under Section 4(a); and VIASOFT
shall be entitled to receive the balance of the VIASOFT
Portion.
d. The SEEC Portion shall be deemed to constitute SEEC
revenues to which the SEEC Royalty applies pursuant to
Section 8 above; VIASOFT shall be entitled to receive from
the SEEC Portion an amount determined by multiplying the
SEEC Portion by the five percent (5%) SEEC Royalty rate
subject to the aggregate $1,000,000 limitation set forth in
Section 8;
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and SEEC shall be entitled to receive the balance of the
SEEC Portion.
(f) SEEC shall indemnify, defend, save and keep harmless VIASOFT and
VIASOFT's Sub-Distributors and End Users for, from and against any
and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind whatsoever,
incurred by them in connection with:
1. Any claim, demand or proceeding made or brought against VIASOFT
or any of VIASOFT's Sub- Distributors or End Users by any person
not a party to this Agreement to the extent such claim, demand
or proceeding is based on an allegation that the provision or
use of any Licensed Program or SEEC Materials infringes any U.S.
patent, U.S. copyright or U.S. trademark, or involves
misappropriation of any trade secret anywhere in the world, or a
violation of Sections 11(d) (i), 11(d) (ii), or 11(d) (iii), and
2. Notwithstanding Section 14(f)1, SEEC shall have no liability or
duty hereunder to defend, indemnify or keep harmless VIASOFT or
its Sub-Distributors or End Users to the extent that it is
determined that the actual or claimed infringement or
misappropriation arises from the use of a Licensed Program
(including without limitation a Private Label Product) in a form
other than supplied by SEEC and such actual or claimed
infringement or misappropriation would not have arisen if the
Licensed Program had been used in the form supplied by SEEC.
Such other forms of a Licensed Program include, without
limitation, modifications to the software or documentation and
use of the software in combination with a program or device not
supplied by SEEC. In the event any actual or claimed
infringement or misappropriation arises from such other forms or
use by VIASOFT, VIASOFT shall defend, indemnify and keep
harmless SEEC to the same extent and under the same terms and
provisions as SEEC is obligated to defend, indemnify and keep
harmless License as provided in Section 14(f)1.
(g) Should any Licensed Program or SEEC Material become the subject of
a claim of infringement of a patent, copyright or trademark, or
misappropriation of a trade secret, SEEC may procure for VIASOFT
and VIASOFT's End Users, at no additional cost to VIASOFT, the
right to continue to use, market and license the Licensed Program
as provided
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herein, or SEEC shall use its Best Efforts to modify or replace the
Licensed Program in order to make it non-infringing or
non-violating, provided such modification or replacement is not
infringing and nonviolating and does not materially adversely
affect VIASOFT's right and license with respect to, or VIASOFT's
End User's use of the Licensed Program.
(h) Subject to the provisions of Section 21(d) of this Agreement, SEEC
shall defend, save and keep harmless from, and indemnify VIASOFT
and VIASOFT's Sub- Distributors and End Users against any and all
claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind whatsoever, arising
directly or indirectly out of any breach of Sections 2(d), 2(e),
2(h), 5(a), 5(c), 5(e) (ii), 5(f) (ii), 5(g), 11(a), 11(d) (iv),
11(d) (v), 11(f), 11(g), 14(a), 14(c), 14(d), 14(e)1, 14(e)3,
14(e)4, 14(i), or 15, provided that VIASOFT shall give SEEC written
notice within thirty (30) days after receipt of any third party
claim with respect to the foregoing.
(i) Each party shall indemnify, defend, save and keep harmless the
other party for, from and against any and all claims, demands,
losses, costs, damages, suits, judgments, penalties, expenses and
liabilities of any kind whatsoever, arising directly or indirectly
out of any breach of the confidentiality obligations set forth in
Section 13, provided that such party shall give the other party
written notice within thirty (30) days after receipt of any third
party claim with respect to any of the foregoing. The parties agree
that actual damages may not be a sufficient or readily
ascertainable remedy for any breach of the confidentiality
obligations set forth in Section 13. Each party's liability under
this Section 14(i) whether in tort, contract or otherwise, for any
damages arising out of breach of Section 13 of this Agreement shall
not exceed Five Hundred Thousand Dollars (U.S. $500,000), except
that each party's liability shall not be limited as to the amount
or type of damages for any intentional or grossly negligent breach
of the obligations set forth in Section 13 and except that
VIASOFT's liability shall not be so limited for wrongful disclosure
or use of source code which is Confidential Information.
(j) The foregoing states the entire liability of SEEC for infringement
of copyright or trademark or misappropriation of any trade secret.
(k) This Agreement does not include any right to manufacture, copy, or
modify the Licensed Programs, or authorize any
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third party to do so, except as may specifically be permitted in
this Agreement.
(l) This Agreement does not include, or transfer to VIASOFT, any rights
other than the rights specifically enumerated in this Agreement.
This Agreement shall not be deemed to create any implied rights.
(m) This Agreement does not transfer any ownership rights in the
Licensed Programs, and/or their source codes and object codes.
(n) This Agreement does not transfer any ownership rights in any
copyrights and/or trademarks and/or patents covering the Licensed
Programs.
(o) SEEC retains all rights of ownership in and to the Licensed
Programs, its source and object code, copyrights, trademarks,
and/or patents, including modifications that VIASOFT may make to
the Escrow Contents pursuant to Section 15(e).
15. Escrow.
(a) SEEC shall establish and maintain on a continuing basis, at its
expense, a source code escrow with Data Securities Inc., or any
substitute therefor that is mutually acceptable to the parties,
(the "Custodian") in which the following are held: the latest
version, and all prior versions that are currently being supported,
of the Licensed Programs' source code and internal documentation
and program logic manuals; all other necessary tools and facilities
SEEC uses to regenerate the Object code from source code; all other
materials relating to any security devices built into the Licensed
Programs necessary to understand, modify and use such devices; and
all physical embodiments of the foregoing (the "Escrow Contents").
SEEC shall supply to VIASOFT within thirty (30) days of the
Commencement Date a written confirmation from the Custodian that
the foregoing has been accomplished as to the current versions of
the Licensed Programs, on terms and conditions set forth in this
Section 15 and other terms and conditions mutually acceptable to
the parties, and (ii) within ten (10) days after any Escrow
Contents are changed or supplemented, a written confirmation from
the Custodian identifying in reasonable detail such changes and
supplementations. The Custodian shall not discard, destroy or
release any items from the escrow without first giving VIASOFT at
least thirty (30) days prior written notice and an opportunity to
object to such proposed action, and will not discard, destroy or
release such item if VIASOFT does object. SEEC shall also
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<PAGE> 35
provide to VIASOFT from time to time at VIASOFT's request (but no
more often than quarterly), a written certification by a SEEC
officer to the effect that the Escrow Contents include the most
current versions of all programs, documents and other materials
required to be held in the escrow. SEEC shall provide the Escrow
Custodian with the name and address of the person to whom any
Notices required under this Section shall be sent.
(b) Entitlement to Escrow Contents. VIASOFT shall not be entitled to
the Escrow Contents unless all of the following events shall have
occurred: (1) VIASOFT is not in material default with respect to
its royalty payments; and (2) SEEC is in "Material Default" as
defined under Exhibit B; and (3) a SEEC Bankruptcy has occurred;
and (4) VIASOFT has complied with any applicable requirements of
the United States Bankruptcy Code pertaining to access to the
Escrow Contents, if SEEC is then under the jurisdiction of the
United States Bankruptcy Court.
(c) Release of the Escrow Contents to VIASOFT. The Escrow Contents
shall be released to VIASOFT by the Escrow Custodian under the
terms of this Agreement only upon the happening of any one or more
of the following events:
1. If the Escrow Custodian receives a copy, certified by the
American Arbitration Association as true and correct, of a
decision of an Arbitration Board which states that (i) SEEC has
been given notice and an opportunity to be heard; and (ii)
orders the release of the Escrow Contents to VIASOFT, the Escrow
Custodian shall release the Escrow Contents to VIASOFT
forthwith.
2. If the Escrow Custodian receives a written request from VIASOFT
for release of the Escrow Contents ("VIASOFT Request"), the
Escrow Custodian shall release the Escrow Contents to VIASOFT
only after all of the following conditions have been satisfied
in every respect:
(i) The VIASOFT Request shall specify in reasonable detail all
of the facts which VIASOFT alleges entitles it to release of the
Escrow Contents under the pre-requisites set forth in Section
15(b) above.
(ii) The Escrow Custodian shall thereupon send SEEC by Express
Mail, return receipt required, a written notice of the VIASOFT
Request, which notice shall include a copy of the VIASOFT
Request ("Escrow Custodian's Notice" hereinafter).
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<PAGE> 36
(iii) If within thirty-one (31) days of SEEC's receipt of the
Escrow Custodian's Notice, SEEC provides the Escrow Custodian
with a copy of a document, certified by the American Arbitration
Association, or by a state of federal court, which shows that
SEEC has initiated an action contesting VIASOFT's right to the
Escrow Contents, the Escrow Custodian shall not release the
Escrow Contents in response to the VIASOFT Request. If after
thirty one (31) days no such certified document has been
received by the Escrow Custodian, it shall release the Escrow
Contents to VIASOFT forthwith.
3. If the Custodian receives a certified copy of an order of a
court of competent jurisdiction ordering such release, the
Escrow Custodian shall release the Escrow Contents to VIASOFT
forthwith.
4. If the Custodian receives a written request from the
debtor-in-possession (or trustee) of SEEC, if applicable,
directing such release, the Escrow Custodian shall release the
Escrow Contents to VIASOFT forthwith.
(d) Burden. In any action brought by SEEC to contest VIASOFT's
entitlement to the Escrow Contents, VIASOFT shall bear the burden
of proving by a preponderance of the evidence that it is entitled
to the Escrow Contents under the pre-requisites set forth in
Section 15 (b) above of this Agreement. If VIASOFT meets its
aforesaid burden of proof, SEEC may successfully avoid release of
the Escrow Contents only upon proving, by a preponderance of the
evidence that it has the ability and means of fulfilling its
maintenance and support obligations under Exhibit B of this
Agreement, and will do so.
(e) Use of Escrow Contents and Indemnity. Subject to the provisions of
Section 15(b) of this Agreement, VIASOFT shall have the right to
use the Escrow Contents only for the purposes specified in this
Section 15(e) and all its subparts. Upon release of the Escrow
Contents to VIASOFT, the Escrow Contents shall be maintained and
used by VIASOFT on ONE (1) designated LAN Server and access to the
Escrow Contents and the designated LAN Server will be restricted to
individuals selected by VIASOFT responsible for maintenance and
support with effective security measures in place for the purpose
of preventing unauthorized access, and maintaining a record of all
access. The identification of the LAN Server and its physical
location, and the nature and extent of the aforesaid security
measure will be certified by VIASOFT to SEEC within one business
day of receipt of the Escrow
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Contents by VIASOFT. VIASOFT shall maintain all records of all
access to the Escrow Contents and all such records will be
available for inspection on a confidential basis by an independent,
third party auditor at any time and from time to time during normal
business hours. Such auditor shall not disclose the names revealed
to it in such records. Any use of the Escrow Contents which does
not strictly conform in every respect to the provisions of this
Section 15(e) and all its subparts, or any unauthorized disclosure
of the same, shall be deemed an infringement of SEEC's copyright
interest and an unauthorized use of SEEC's Confidential
Information, in material breach of VIASOFT's obligations under this
Agreement, and VIASOFT shall indemnify and save SEEC harmless from
any and all damages, costs, and expenses, including, without
limiting the generality of the foregoing, reasonable attorney's
fees and the costs and expenses of litigation, resulting from the
said infringement and/or unauthorized use.
(i) Use of Escrow Contents Prior to Termination of Agreement. Prior
to termination of this Agreement, VIASOFT shall have the right to
use the Escrow Contents only for the purpose of fulfilling
VIASOFT's and SEEC's pre-termination Exhibit B obligations to
VIASOFT and VIASOFT customers who have Maintenance Agreements with
VIASOFT and for no other purposes. While using the Escrow Contents
as specified herein, VIASOFT shall continue to pay all License
Royalties due under the terms of this Agreement, and its obligation
to pay Maintenance Royalties shall continue but shall be reduced to
ten percent (10%) from thirty percent (30%). VIASOFT shall not be
required to pay any other charge for use of the Escrow Contents.
(ii) Use of Escrow Contents After Termination of Agreement. After
termination of this Agreement, VIASOFT shall have the right to use
the Escrow Contents only for the purpose of fulfilling VIASOFT's
and SEEC's Exhibit B obligations to VIASOFT and VIASOFT customers
who have Maintenance Agreements with VIASOFT, up to a maximum
period of three (3) years from the date of termination of this
Agreement, and for no other purpose. VIASOFT shall provide SEEC's
auditors, on a confidential basis, with a list of all its then
existing customers, and SEEC's auditors shall have the right to
ascertain that the customers on the list have maintenance
agreements with VIASOFT of the type covered by Exhibit B of this
Agreement. While using the Escrow Contents as specified in this
Subsection 15(e) (ii), VIASOFT shall continue to pay all License
Royalties due to SEEC for such sales of the Licensed Programs as
are permitted under the post-
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<PAGE> 38
termination terms of this Agreement. However, VIASOFT shall pay to
SEEC Maintenance Royalties of ten percent (10%), rather than thirty
percent (30%), but shall not be required to pay any other charge
for use of the Escrow Contents.
(f) The parties expressly intend that this Section 15 shall constitute
a "supplementary agreement" within the meaning of 11 U.S.C. Section
365(n), that VIASOFT shall be entitled to the full application of
11 U.S.C. Section 365(n), in respect to its rights under this
Agreement, particularly its rights under this Section 15, and that
in the exercise of such rights, VIASOFT shall have the further
rights, upon nonperformance by SEEC of its maintenance and support
obligations under Exhibit B of this Agreement, to perform or have
performed such obligations to the extent reasonably necessary to
permit VIASOFT to fully exercise the limited right and license set
forth in Section 15(e).
(g) If VIASOFT has received the Escrow Contents pursuant to this
Section 15, and SEEC demonstrates (no earlier than six (6) months
after VIASOFT receives such Escrow Contents) to VIASOFT's
reasonable satisfaction that SEEC is ready, willing and able to
resume providing Maintenance and Support Services as required by
Exhibit B, including assurances that SEEC will not again default
under Exhibit B, SEEC may resume providing such Maintenance and
Support Services on the terms existing prior to SEEC's Material
Default under Exhibit B, subject to VIASOFT and SEEC reaching
mutual agreement with respect to VIASOFT's access to the Escrow
Contents in the event that SEEC again defaults under Exhibit B,
subject to Section 16 (f). Any disputes under this Section 15 (g),
including with respect to whether VIASOFT's determination in the
second clause of this Section 15 (g) is reasonable and including
what would constitute a reasonable mutual agreement as contemplated
by the last clause of the first sentence in this Section 15 (g),
shall be resolved by binding arbitration pursuant to Section 20(g)
of this Agreement.
(h) If VIASOFT takes possession of the Escrow Contents under this
Section 15, (i) it shall hold such Escrow Contents pursuant to this
Section 15 and in trust for the benefit of SEEC, (ii) it shall
continue in effect the escrow described in Section 15(a) but for
SEEC's benefit and shall have the same obligations under Section
15(a) for SEEC's benefit as SEEC has for VIASOFT's benefit
(including providing copies of major and minor releases of Licensed
Programs by VIASOFT, and related materials described in Section
15(a)), and (iii) during regular
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business hours when VIASOFT is open for business, VIASOFT shall
permit SEEC to review major and minor releases of the Licensed
Programs by VIASOFT, which SEEC, in its discretion may use and
license, but under no circumstances will VIASOFT be liable to SEEC
or its customers with respect to such releases or any other changes
by VIASOFT to the Escrow Contents; VIASOFT makes no warranties of
any kind or nature with respect thereto, and without limiting the
foregoing, does not warrant that the same are defect-free or
virus-free.
(i) At such time as VIASOFT's right to possess the Escrow Contents
pursuant to this Section 15 terminates, VIASOFT shall (i) terminate
its usage of the Escrow Contents immediately, (ii) return the
Escrow Contents, as modified by VIASOFT, to SEEC promptly, and
(iii) certify to SEEC that VIASOFT no longer has possession of or
access to the Escrow Contents.
(j) Release of the Escrow Contents to VIASOFT does not give any rights
in the same to VIASOFT except as expressly set forth in this
Section 15. Because the Escrow Contents are trade secrets of SEEC,
VIASOFT's rights to the Escrow Contents shall not under any
circumstances, voluntarily or involuntarily, be assigned unless the
assignee posts a performance bond in the amount of one and one-half
times the fair market value of the Escrow Contents. The granting of
rights to VIASOFT under this Section 15 without necessity for
posting such a bond are personal to VIASOFT and represent an
extension of credit to VIASOFT.
(k) SEEC's Right to Terminate Escrow. In addition to the provisions of
Section 15(i) above, SEEC shall have the right to terminate the
Escrow and receive the Escrow Contents from the Escrow Agent when
this Agreement has been terminated and all of the post-termination
periods specified in Section 16 (f) of this Agreement have come to
an end, in which event, the Escrow Agent shall release the Escrow
Contents to SEEC upon the happening of any one or more of the
following events:
1. If the Escrow Custodian receives a written request from SEEC for
release of the Escrow Contents ("SEEC Request"), the Escrow
Custodian shall release the Escrow Contents to SEEC only after
all of the following conditions have been satisfied in every
respect:
(i) The SEEC Request shall specify in detail all of the facts
which SEEC alleges entitles it to release of the Escrow Contents
under the prerequisites set forth in Section 15(k) above.
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(ii) The Escrow Custodian shall thereupon send VIASOFT by
Express Mail, return receipt required, a written notice of the
SEEC Request, which notice shall include a copy of the SEEC
Request ("Escrow Custodian's Notice of SEEC Request"
hereinafter).
(iii) If within thirty-one (31) days of VIASOFT's receipt of the
Escrow Custodian's Notice of SEEC Request, VIASOFT provides the
Escrow Custodian with a copy of a document, certified by the
American Arbitration Association, or by a state or federal
court, which shows that VIASOFT has initiated an action
contesting SEEC's right to the Escrow Contents, the Escrow
Custodian shall not release the Escrow Contents in response to
the SEEC Request. If after thirty-one (31) days no such
certified document has been received by the Escrow Custodian, it
shall release the Escrow Contents to SEEC forthwith.
2. If the Escrow Custodian receives a copy, certified by the
American Arbitration Association as true and correct, of a
decision of an Arbitration Board which states that (i) VIASOFT
has been given notice and an opportunity to be heard; and (ii)
orders the release of the Escrow Contents to SEEC, the Escrow
Custodian shall release the Escrow Contents to SEEC forthwith.
16. Term and Termination.
(a) 1. This Agreement shall take effect as of the Commencement Date and
shall remain in effect for a period of five years (the "Initial
Term") unless earlier terminated pursuant to this Agreement. So
long as VIASOFT is not in material default of this Agreement as
defined below, the Initial Term shall be extended automatically
for an additional period of five (5) successive one (1) year
terms (each a "Subsequent Term") if VIASOFT has paid to SEEC or,
because of the 60 or 90 day billing cycle, as applicable,
VIASOFT has accrued but not yet paid, at least One Million
Dollars ($1,000,000) in VIASOFT Royalties (or payments to make
up a shortfall therein) during the twelve (12) months preceding
the end of the Initial Term or at least One Million Dollars
($1,000,000) in VIASOFT Royalties (or payments to make up a
shortfall therein) during the twelve (12) months preceding the
end of any Subsequent Term, as applicable. For purposes of
determining compliance with the
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preceding sentence, accruals and payments shall not be double
counted.
2. If the Agreement has not renewed pursuant to Section 16(a)1
(whether by royalty payments/accruals or shortfall payments) as
of the end of the Initial Term or a Subsequent Term, then the
Initial Term or Subsequent Term, as applicable, shall continue
only for thirty (30) days after the end of such Term and shall
terminate effective at the end of such thirty (30) day period,
unless VIASOFT pays the necessary royalty or shortfall payments,
or SEEC elects in its sole discretion to renew the Agreement,
during such thirty (30) day period, in which case, the Agreement
shall renew.
3. Unless renewed, or upon termination of this Agreement in
accordance with its terms, VIASOFT's right to market and promote
the Licensed Programs shall terminate absolutely, except to the
extent specified in this Agreement, without any liability by
SEEC to VIASOFT, or its Sub-distributors, for the said
termination. VIASOFT shall ensure that its agreements with its
Sub-distributors so provide. Except as provided herein, there
will be no automatic right to renewal of this Agreement by
either party. Unless VIASOFT satisfies the pre- requisites for
renewal set forth above, failure to renew by SEEC for any
reason, or for no reason, shall not be deemed a breach of this
Agreement or an actionable wrong.
4. Any payments made by VIASOFT in order to make up a shortfall in
VIASOFT Royalties for purposes of Section 16(a) or 16(g) shall
be deemed earned, and not advance royalties. They shall not be
refundable under any circumstances, nor shall VIASOFT be
entitled to any credit against them for future sales.
(b) Definition of Material Default. For purposes of this Agreement,
"material default" means (1) a default under the terms of this
Agreement which remains uncured for a period of more than thirty
(30) days after receipt of a notice in writing from the party
specifying such default, or (2) breach of a provision of this
Agreement which is not de minimis, and which cannot be cured, or
(3) repeated tardy payments of VIASOFT Royalties or SEEC Royalties,
as applicable. For purposes of this Agreement, "repeated tardy
payments" means (i) two (2) or more occurrences within a six (6)
month period in which Advances are more than twenty (20) days late,
with
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interest, or (ii) three (3) or more occurrences within a six (6)
month period in which undisputed royalties are more than twenty
(20) days late, with interest, provided that SEEC Royalties shall
not be deemed tardy to the extent that VIASOFT is able to offset
SEEC Royalties that are due against VIASOFT Royalties that are due.
(c) Termination for Material Default. Notwithstanding any provisions in
this Agreement to the contrary, this Agreement may be terminated at
any time by either party giving written notice to the other party
if such other party shall be in material default under this
Agreement. Such termination shall be effective thirty (30) days
after the defaulting party's receipt of notice of termination,
unless this Agreement expressly provides a longer or shorter period
before which the termination becomes effective. If such material
default consists of a violation by VIASOFT of Section 2(c)1 that
occurred because of Section 2(c)3, then SEEC's sole remedies for
such material default shall be termination of this Agreement or
conversion of exclusivity to nonexclusivity under Section 2(b)5.
(d) Termination by VIASOFT. This Agreement may be terminated by VIASOFT
if a Change in Control of SEEC occurs. SEEC agrees to provide
VIASOFT written notice in reasonable detail when SEEC becomes aware
that a Change in Control of it is about to occur (i.e., when SEEC
or its shareholders sign a preliminary agreement pursuant to which
a closing for a Change in Control is contemplated) and to keep
VIASOFT informed with respect to whether the same occurs. If it
desires to terminate this Agreement pursuant to this Section 16(d),
VIASOFT shall exercise its right to terminate the Agreement by
delivering written notice to SEEC (or the resultant entity, as
applicable) within thirty (30) days after VIASOFT's receipt of
written notice in reasonable detail that a Change in Control of
SEEC has occurred, and in such event, this Agreement shall
terminate thirty (30) days after such notice of termination.
(e) Termination by SEEC. Whether or not VIASOFT is in material default,
SEEC may terminate this Agreement, within the time periods
specified,
(i) Pursuant to and as set forth in Section 2(c)2;
(ii) Upon thirty (30) days prior written notice, if VIASOFT assigns
this Agreement to a third party without SEEC's prior written
approval in violation of Section 20(h) or Section 15. If the
aforesaid assignment is involuntary, and if the assignee does
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not have credit and technical capabilities that are
satisfactory to SEEC, SEEC shall have the absolute right to
unilaterally amend this Agreement to (i) require payment terms
which do not involve the extension of credit, and (ii)
establish quality control criteria for the promotion, sale and
maintenance of the Licensed Programs, as a condition precedent
to the continuation of this Agreement. Failure of the assignee
to comply with such credit and quality control terms after
notice of deficiencies and a thirty (30) day opportunity to
cure, shall be deemed a material default and shall entitle
SEEC to terminate this Agreement upon compliance with the
provisions of Section 16(b) and (c) above.
(f) Rights and Obligations Upon Termination. Upon termination of this
Agreement the parties shall have the following rights and
obligations:
(1) Confidential Information shall be dealt with as described in
Section 13(a)7.
(2) SEEC shall provide to VIASOFT within thirty (30) days after
termination, that number of copies of Licensed Programs (in the
mix requested by VIASOFT) such that the number of copies
multiplied by the applicable minimum domestic License Royalty
under Section 4(a) (using the highest published domestic list
price for each product in the mix for the prior twelve (12)
months) is equal to the amount of unrecoverable unearned
Advances, if any. VIASOFT and its Sub-distributors may continue
to sublicense to end-users such existing inventories of
Licensed Programs as they receive pursuant to the preceding
sentence or as they may have in their possession at the time
notice of termination is received or sent by VIASOFT, for
VIASOFT License Royalties as set forth in Section 4 of this
Agreement.
(3) VIASOFT may, at its sole option, continue to provide Level 1
support and maintenance services as set forth in Exhibit B, to
end-users who have purchased Licensed Programs prior to
termination or pursuant to Section 16(f) (2) above pertaining
to sale of existing inventory, or pursuant to Section 16(f) (4)
below, for a period not to exceed three (3) years from the date
of termination. If VIASOFT elects to provide such service,
support and maintenance to such customers, SEEC shall have the
obligation to continue to provide Maintenance and Support
Services set forth in Exhibit B of this
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Agreement to such VIASOFT customers for a maintenance royalty
of thirty percent (30%) of VIASOFT's invoiced maintenance
revenue, payable in accordance with the terms of Section 4 of
this Agreement.
(4) Upon termination by SEEC of this Agreement other than under the
provisions of Sections 16(c) or 16 (e) above, VIASOFT may, for
a period of two (2) years from date of termination, continue to
sell Add-ons to end-users who are existing customers of VIASOFT
at the time of termination, and to VIASOFT customers to whom
inventory is sold under the provisions of Section 16(f) (2)
above, for a royalty of forty percent (40%) of VIASOFT's
invoiced revenues therefor, or the minimum royalty specified in
Section 4 of this Agreement, whichever is higher, which
royalties shall be paid in accordance with the provisions of
Section 4 of this Agreement. If SEEC requests, VIASOFT shall
provide reasonable proof to SEEC that each such customer
qualifies for the purchase of such Add-ons under this
provision. SEEC shall not sell Licensed Programs to Protected
Customers under Section 2(h) for the remainder of the twelve
(12) month period of protection applicable thereto, provided
that there can be no new protection available after the
termination date.
(5) End-user sublicense agreements granted under the terms of this
Agreement and prior to any termination thereof, or in
accordance with Section 16(f) (2) (pertaining to sale of
inventory) and Section 16(f)(4) (pertaining to Add-ons), shall
continue in full force and effect notwithstanding any
termination of this Agreement.
(6) If, during the term of this Agreement or the three (3) year
period described in Section 16 (f) (3), VIASOFT publicly states
or notifies VIASOFT's customers of VIASOFT's intentions to
abandon support for the Licensed Programs, VIASOFT will, at
SEEC's option, assign to SEEC the Maintenance Agreements for
the Licensed Programs, provided that SEEC
(i) provides Maintenance Support Services pursuant to Exhibit
B, including Level 1 support, for the remainder of the
Maintenance Agreements and any renewals of the same, and
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(ii) pays VIASOFT twenty percent (20%) of all future
maintenance revenue for the Licensed Programs that SEEC
invoices to such customers during the three (3) year
period following such assignment. Such payments shall be
paid to VIASOFT within ninety (90) days following the end
of the month in which SEEC invoices such customers, and
otherwise as is provided in Section 8 (b) (concerning SEEC
Royalties).
With respect to each Maintenance Agreement assigned to SEEC
pursuant to this Section 16(f) (6), if such assignment occurs
prior to the end of a term for which the relevant End User has
paid (or is obligated to pay) to VIASOFT a "Support Fee" under
such Maintenance Agreement, then the amounts payable to VIASOFT
and SEEC with respect to such Support Fee under this Agreement
for the portion of such term before and after such assignment
will be pro rated as follows (with the Support Fee being
divided evenly over each month) - For each month before the
Maintenance Agreement is assigned including the month of
assignment, SEEC shall be entitled to the applicable
Maintenance Royalty. For each month following assignment of the
agreement, SEEC shall be entitled to eighty percent (80%) of
the Support Fee. The net amount owing to SEEC as the result of
assignment will be recovered by SEEC offsetting such amount
against payments SEEC owes to VIASOFT pursuant to Section 16(f)
(6) (ii).
(g) After the Exclusivity Period, SEEC shall have the right and
option, in its sole discretion, to terminate this Agreement as
set forth below, if VIASOFT has not paid to SEEC, or because of
the 60 or 90 day billing cycle, as applicable, VIASOFT has
accrued but not yet paid, VIASOFT Royalties of at least One
Million Dollars ($1,000,000) for each twelve month period
ending on the third and fourth anniversary dates of the
Commencement Date, unless VIASOFT cures any shortfall in such
amount of VIASOFT Royalties by paying to SEEC an amount equal
to the amount of the shortfall within thirty (30) days
following written notice from SEEC that it intends to terminate
the Agreement pursuant to this Section 16 (g). If VIASOFT has
not cured such shortfall as provided in the previous sentence,
termination pursuant to this Section 16(g) shall become
effective six months after receipt by VIASOFT of SEEC's written
notice of termination. For purposes of determining compliance
with the first sentence of this Section 16 (g), accruals and
payments shall not be double counted.
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(h) (1) All remedies, indemnities and causes of action for damages
resulting from any breach of this Agreement shall survive
termination of this Agreement and shall continue in full force
and effect until expiration of applicable periods of limitation
and the completion of any timely litigation, unless a longer
period is specified herein.
(2) Without limiting the generality of the foregoing, the following
Sections of this Agreement shall survive any termination of
this Agreement and continue in full force and effect until
expiration of the period of limitations where applicable and
the completion of any timely litigation.
(i) Section 1, Section 4 for the payment of VIASOFT
Royalties, Section 8 for the payment of SEEC Royalties,
10(b), 10(h), 11(d), 12, 14(j), and
(ii) Sections 10(a) and 14(e) for the periods of time after
termination described in Section 16 (f).
(3) The following Sections of this Agreement shall survive
termination of this Agreement and shall continue in full force
and effect for the periods specified herein, provided, however,
when a harm complained of is known or should have been known,
the applicable statute of limitations will commence to run.
Nothing in this Section will be deemed to have extended the
term of the applicable statute of limitations.
(i) Sections 2(a) (but not to perform Final Beta Tests of
Licensed Programs), 3(a), 3(b), 4, 7(a) (but excluding
enhancements and Exhibit F), 11(a) (i), 11(b) (but
excluding enhancements and Exhibit F), 11(e), 14(b), to
the extent necessary to effectuate the provisions of
Section 16 (f);
(ii) Section 8(a) indefinitely so far as it pertains to
SEEC's right to use the disclosed know-how;
(iii) Section 8 (c), indefinitely;
(iv) Sections 10(c), 11(f), 11(g), for twelve months
following termination, or such additional period as an
arbitration panel may determine if this provision has
been
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breached prior to the aforesaid twelve month period and
the non-compete period is extended by the period of the
aforesaid breach.
(v) Sections 10(d) and 10(e) for the period of time during
which VIASOFT continues to sell or support the Private
Label Products after termination of this Agreement in
accordance with the provisions of Section 16 (f).
(vi) Sections 10(f), 14(i), 15(e) for so long as SEEC may
suffer any of the enumerated types of damage or
liability for which the indemnity is given.
(vii) Section 13, for all trade secrets, forever; for all
registered copyrighted materials, for the life of the
copyright and all renewals thereof; for all other
materials, until such time as the materials are lawfully
published and lawfully come into the public domain.
(viii) Section 14(a) so far as it pertains to copyright
interests, trade secrets, trademarks and service marks,
forever.
(ix) Section 14(c) and (d) forever.
(x) Sections 14(f), 14(h), 14(i) for so long as VIASOFT may
suffer any of the enumerated types of damage or
liability for which the indemnity is given.
(xi) Sections 14(k) through (o) indefinitely.
(xii) Section 15 for so long as SEEC has any support and
maintenance obligations under Section 16(f).
(xiii) Sections 16(f) (2) and 16(f) (4) for a period of two (2)
years from date of termination.
(xiv) Section 16(f) (3) for a period of three years from date
of termination.
(xv) Section 16(f) (6) for a period of three years from date
of termination.
(xvi) Sections 9, 10(g), 18 (Notices), Section 19 (Law and
Jurisdiction) and Section 20
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(General), Section 21 (Remedies), for as long as any
other provision of this Agreement survives termination
and for the duration of any timely litigation.
17. Right of First Offer. At any time or times during the term of this
Agreement that SEEC or its principals desire to enter into a
transaction or series of transactions the result of which would be the
sale of all or substantially all of its business or of the product line
(including all copyright interests) that includes Licensed Programs,
whether the same would be accomplished by the sale or exchange of
capital stock, merger, consolidation, or Bale or other transfer of
assets (including long term or perpetual exclusive licensing), or a
transaction or series of transactions that would result in a Change in
Control of SEEC (any of the foregoing transactions being a "Significant
Transaction"), provided that a Significant Transaction shall not
include venture capital investments, SEEC shall provide written notice
of such desires to VIASOFT prior to approaching any third parties.
VIASOFT shall then have the first opportunity to negotiate with SEEC
and/or its principals with respect to accomplishing a mutually
acceptable Significant Transaction. If VIASOFT so elects, it will make
a written offer with respect to a Significant Transaction SEEC has
solicited from VIASOFT. SEEC agrees, for the thirty (30) day period
following its written notice to VIASOFT described above, to negotiate
in good faith exclusively with VIASOFT (the "Exclusive Negotiating
Period") and not negotiate with, or solicit any offers or discussions
from any third party with respect to a significant transaction.
VIASOFT's entitlement to an Exclusive Negotiation Period and to make a
Right of First Offer shall be on a one-time basis only (except with
respect to unsolicited offers). After expiration of the Exclusive
Negotiation Period, SEEC shall be free to negotiate and/or accept any
other offer which SEEC, in its sole discretion, deems to be better than
the VIASOFT offer, if any. Notwithstanding the foregoing, such thirty
(30) day period shall be reduced to a seven (7) day period each time,
if any, that SEEC receives an unsolicited offer. With respect to
unsolicited offers, if SEEC elects in its sole discretion to continue
to negotiate with the offeror after the Exclusive Negotiation Period
the VIASOFT Right of First Offer will not apply to offers and
counteroffers made in the course of such continued negotiations by SEEC
and/or the initiating offeror. If SEEC thereafter abandons such
negotiations, then commencing six (6) months after such abandonment
provided negotiations were not resumed in such six (6) month period,
the VIASOFT Right of First Offer will again apply to offers by the same
offeror.
This Section 17 shall be binding upon SEEC and the following
principals: Ravi Koka, Raj Reddy, Adam Young and John
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Godfrey, and as a condition of executing this Agreement, SEEC shall
provide VIASOFT with a letter from each such principal in the form
attached hereto as Exhibit I agreeing to be bound by this Section 17.
18. Notices and Requests.
Unless otherwise specifically provided, all notices required or
permitted by this Agreement shall be in writing and may be delivered
personally, by overnight delivery service, or may be sent by facsimile
with a confirming copy sent by registered or certified mail, postage
prepaid and return receipt requested, addressed as follows:
For SEEC: SEEC, Inc.
5001 Baum Blvd.
Pittsburgh, Pennsylvania 15213
United States of America
Attn: Ravi Koka
Telefax: (412) 682-4958
For VIASOFT: VIASOFT, Inc.
3033 North 44th Street
Phoenix, AZ 85018
United States of America
Attn: Nanda M. Nandkishore
Telefax: (602) 840-4068
The parties may change their address from time to time by giving
written notice to the other party. Any notice shall be deemed to have
been received as follows: (i) personal delivery and overnight delivery
upon receipt; and (ii) facsimile the day sent. Nothing contained herein
shall justify or excuse failure to give oral notice for the purpose of
informing the other party thereof when prompt notification is
appropriate, but such oral notice shall not satisfy the requirement of
written notice. If either party knows that the other party's last known
address is different from the above, the notice shall be sent to the
above address and the last known address.
19. Governing Law and Jurisdiction.
The validity, construction and performance of this Agreement and legal
relations between the parties to this Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of
Pennsylvania, excluding that body of law applicable to conflicts of
law.
20. General. Except to the extent inconsistent with the express language of
the foregoing provisions of this Agreement, the
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<PAGE> 50
following provisions shall govern the interpretation, application,
construction and enforcement of this Agreement.
(a) Additional Acts and Documents. Each party hereto agrees to do all
such things and take all such actions, and to make, execute and
deliver such other documents and instruments, as shall be
reasonably requested to carry out the provisions, intent and
purpose of this Agreement.
(b) Attorney Fees. Except as provided in Section 21, in the event suit
is brought (or arbitration instituted) or an attorney is retained
by any party to this Agreement to enforce the terms of this
Agreement or to collect any moneys due hereunder, or to collect
money damages for breach hereof, each party shall bear its own
costs and expenses incurred in connection therewith regardless of
who prevails in such proceeding.
(c) Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute
one and the same instrument, and each of said counterparts shall be
deemed an original hereof.
(d) Waiver. No action or failure to act by either party shall
constitute a waiver of any right or duty accorded to any of them
under this Agreement, nor shall any such action or failure to act
constitute an approval of, or acquiescence in, any breach
hereunder, whether a subsequent breach of the same kind, or a
different breach, or the continuance of any existing breach, unless
the parties specifically agree to the contrary.
(e) Integration and Amendment. The terms and conditions contained
herein constitute the full understanding of the parties, a complete
allocation of the risks between them, and a complete and exclusive
statement of the terms and conditions of their agreement, and all
agreements entered into prior hereto with respect to the subject
matter hereof are revoked and superseded by this Agreement, and no
representations, warranties, inducements or oral agreements have
been made or relied on by any of the parties except as expressly
set forth herein or in other contemporaneous written agreements. No
conditions, representations or understandings not contained herein,
and purporting to modify, waive, vary, explain or supplement the
terms or conditions of this contract shall be binding unless
hereafter made in writing and signed by a duly authorized
representative of the party to be bound.
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(f) Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not
be deemed to limit or alter any provisions hereof and shall not be
deemed relevant in construing this Agreement.
(g) Arbitration. In the event any dispute or controversy arising out of
or related to this Agreement cannot be settled by the parties, such
controversy or dispute shall be submitted to common law arbitration
in Columbus, Ohio, (or in such other location as is expressly
agreed in this Agreement) pursuant to the then existing rules and
regulations of the American Arbitration Association governing
commercial transactions (the "AAA Rules") and for this purpose each
party hereby expressly consents to such arbitration in such place.
In the event the parties cannot mutually agree upon an arbitrator
to settle their dispute or controversy, each party shall then
select one arbitrator and the two so selected shall select a third
arbitrator. If either party fails to select an arbitrator within
fifteen (15) days after written demand from the other party to do
so, then the arbitrator selected by the demanding party shall be
the sole arbitrator whose decision shall be binding and enforceable
as set forth below. If the two arbitrators selected fail to select
a third arbitrator within fifteen (15) days after the last of such
selected arbitrators is appointed, then at the election of either
party hereto, such other arbitrator shall be selected pursuant to
the AAA Rules. The decision of the majority of said arbitrators, or
of a sole arbitrator if a single arbitrator is hearing the dispute
as provided herein, shall be binding upon the parties hereto for
all purposes, and judgment to enforce any such binding decision may
be entered in the courts of general jurisdiction in Maricopa
County, Arizona or Allegheny County, Pennsylvania (and for this
purpose each party hereby expressly and irrevocably consents to the
jurisdiction of said courts). At the request of either party,
arbitration proceedings shall be conducted in the utmost secrecy
upon good cause shown. In such case, all documents, testimony and
records shall be received, heard and maintained by the arbitrators
in secrecy, available for inspection only by either party and by
their respective attorneys and experts who shall agree, in advance
and in writing, to receive all such information in secrecy.
Notwithstanding the foregoing, any party shall have the right to
seek injunctive relief (whether temporary, preliminary or
permanent) for a threatened breach of this Agreement without regard
to this Section. This Agreement shall not be construed as a
consent to arbitrate any dispute with any person who is not a party
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<PAGE> 52
to this Agreement. Except for proceedings brought under Section 21
(b) or 21 (c), each party shall bear the cost of its own
arbitrator, shall bear one-half of the costs of the third
arbitrator, and shall bear all of its own witnesses and travel. An
expedited arbitration schedule shall be utilized upon good cause
shown. The costs of the AAA shall be paid by the nonprevailing
party.
(h) Limitation on Assignments. This Agreement is personal to each of
the parties hereto, and therefore the parties desire to provide for
certain rights and restrictions with respect to assignability of
this Agreement. Accordingly, the parties agree that during the
Exclusivity Period, neither party may assign or delegate any of its
rights or obligations hereunder without first obtaining the written
consent of the other, which will not be unreasonably withheld or
delayed. At any other time during the term of the Agreement, either
party shall be free to assign or delegate its rights or obligations
hereunder; provided, the party desiring to make such assignment or
delegation shall first provide written notice to the other party in
reasonable detail of such desire and the potential
assignee/delegatee and its business and provided further that such
other party shall have the right, in its sole discretion, to
terminate this Agreement upon twenty (20) days written notice from
the date it receives the above-described written notice from the
party desiring to enter the assignment/delegation transaction.
Nothing in this Section 20(h) shall preclude a party from
delegating any of its obligations under this Agreement so long as
such party remains primarily liable to the other party for
performance of such obligations. This Section 20(h) does not apply
to an assignment in connection with a Change in Control of a party,
which assignment may be made without the consent of the other
party.
21. Remedies.
(a) Nonexclusive Remedies. The remedies set forth in this Agreement
shall not be deemed to be mutually exclusive, and a party may, from
time to time, and at any time, utilize any remedies available
hereunder in accordance with the terms of this Agreement,
individually, or cumulatively, at its discretion, together with any
other remedies available at law or equity, to the extent not
specifically limited by the terms of this Agreement; provided,
however, in no event shall a party be entitled to collect a double
recovery.
(b) Liabilities. Each party shall be entitled to recover, without
limitation, (i) all statutory damages, costs,
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fees and expenses to which it may be entitled, and (ii) all
statutory and common law damages, costs, fees and expenses to which
it may be entitled for infringement of copyright or trademark
interests, and (iii) all recoveries allowed under, or for breach
of, Sections 10(f), 14(f), 14(h), 14(i) or 15 of this Agreement,
relating to indemnities.
(c) Unpaid Royalties. In any proceeding brought to recover unpaid
royalties, the prevailing party shall be entitled to recover the
royalties to which it is found to be entitled, interest thereon as
specified in this Agreement, and reasonable litigation costs,
expenses and fees, including without limiting the generality of the
foregoing, reasonable attorneys' fees.
(d) Limitation of Liability. Neither party shall be liable for any
consequential, incidental, indirect or special damages, excepting
the liabilities described in Section 21 (b) above, provided that
recovery by VIASOFT for breach of Sections 5(a), 5(c), 5(e) (ii),
5(f) (ii), or 11(a) shall be so limited unless VIASOFT demonstrates
that such breach was in bad faith or without best efforts, and
provided that recovery by SEEC for breach of Section 2 (c) shall be
so limited unless SEEC demonstrates that such breach was in bad
faith.
(e) Injunctions. Nothing contained in this Agreement shall be deemed to
deprive any party of the right to enforce an Arbitration Award, or
obtain injunctive relief to which it would be entitled under any
provision of law or equity.
(f) SEEC's Liability on Product Warranties. SEEC's liability to
VIASOFT, VIASOFT's Sub-distributors and end-users for breach of the
warranty in Section 12 shall be limited to SEEC's obligations to
repair or replace, as set forth in Section 12 and its subparts, of
this Agreement.
IN WITNESS whereof the parties hereto have caused two (2) original
copies of this Agreement to be signed for the same effect and purpose.
VIASOFT, INC. SEEC, INC.
By: /s/ MICHAEL A. WOLF By: /s/ RAVI KOKA
------------------------- -------------------------
Michael A. Wolf Ravi Koka
Executive Vice President President and CEO
Date: 11/29/93 Date: 11/29/93
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EXHIBITS
A. Licensed Programs
B. Maintenance and Support Services
C. SEEC's Existing Sub-Distributors
D. VIASOFT Customer List
E. Shrink Wrap License
F. Development Agreement
G. Initial Marketing Plan
H. ERA Certificate
I. Section 17 Certificate of Principals
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EXHIBIT A
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
--------------------------------------------
LIST OF LICENSED PROGRAMS
The "Licensed Programs" shall include:
1. The COBOL Analyst product line, which includes all products that
address the COBOL maintenance market. This will include code analysis,
documentation, editing, impact analysis, code slicing, restructuring
and testing. The rule of thumb to be applied in deciding whether a
product or an add-on fits in this category will be the end use. The
end use for this product line is defined as COBOL application
maintenance and the end user is any COBOL programmer whose
responsibility is to maintain COBOL programs. The list of products
currently available (under their present names) and new products within
this product line that will be developed in the next eighteen months is
specified below:
A. COBOL Analyst consists of configure, capture, Application
Dictionary, and the Analyst tool:
a. COBOL ANALYST/ALL (includes the COBOL ANALYST/VSAM,
COBOL ANALYST/IMS, and COBOL ANALYST/CICS)
b. COBOL ANALYST/VSAM
c. COBOL ANALYST/IMS
d. COBOL ANALYST/CICS
e. Any code and data re-engineering products that address
the COBOL Maintenance Market that do not constitute
Derivative Products, as defined in Section 1 of the
Agreement.
B. Add-ons
a. CODE WALK THRU
b. SYNONYM PROCESSOR
c. DB2 ANALYSER
d. IDMS ANALYSER (proposed)
e. JCL support
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f. All local area network versions of any Licensed
Program
g. Windows NT (or any other platform migration)
h. Any other Add-ons to any Licensed Programs
i. ADW Export
C. COBOL dialog options:
a. COBOL II and COBOL II Releases
b. OS/VS COBOL
c. DOS/VSE COBOL
d. MICROFOCUS COBOL
e. REALIA COBOL
D. Bundled COBOL Analyst:
Items A(a, b, c or d) sold along with existing Item B
Add-ons
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EXHIBIT B
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
--------------------------------------------
MAINTENANCE AND SUPPORT SERVICES
The following outlines the end-user maintenance and support objectives and
agreements of the parties. The time limits, responses, and other obligations
are estimates based on information available to date and will be reviewed
annually by the parties. Except with respect to "Material Defaults" as defined
below, SEEC will not be deemed in breach of any obligation described herein,
regardless of whether the obligation is fulfilled or unfulfilled, so long as
SEEC acts in good faith and in a commercially reasonable manner to meet the
maintenance and support objectives of the parties. Capitalized terms used
herein shall have the meanings expressly assigned thereto, if any, in the
Agreement, unless the context requires otherwise.
Both SEEC and VIASOFT will provide ongoing customer support of all releases of
the private-labelled products. VIASOFT will provide all Level 1 support; SEEC
will resolve any problems which reach Level 2, and beyond, with response levels
as defined below. Notwithstanding any other provision of this Exhibit, ADW
Export will be supported by SEEC to the extent it deems appropriate, in its
discretion, and by VIASOFT to the extent it deems appropriate, in its
discretion.
During the term of the Agreement, by written notice to the other party, either
party may initiate a joint review by the parties of Exhibit B support
requirements (Sections 10 and 12), and the same will be revised, if at all, as
is mutually agreeable. In the event the parties cannot reach mutual agreement,
the negotiations shall be submitted to binding arbitration pursuant to Section
20 (g) of the Agreement for a reasonable resolution by the arbitrators. SEEC's
obligations pursuant to this Exhibit are subject to Section 16(f).
1 VIASOFT LEVEL 1 CUSTOMER SUPPORT
VIASOFT, as Level 1 support, will receive all initial questions and
problem reports from its customers and distributors. Where possible,
VIASOFT will respond with answers and/or resolutions to problems. If
VIASOFT is unable to resolve the question or problem, VIASOFT Customer
Support will use its best efforts to define the problem in sufficient
detail for SEEC to identify and correct the source of the problem.
Assistance from SEEC may be needed in the course of this detailed
definition process. VIASOFT will communicate problem resolution to the
customer or distributor. By mutual
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agreement of VIASOFT any SEEC for specific problems, SEEC may
participate in three-way conferences among VIASOFT, SEEC, and the
customer or distributor. Also, by mutual agreement of VIASOFT and SEEC
for specific problems, SEEC may assume the role of primary
communications with the customer or distributor.
2 SEEC LEVEL 2 CUSTOMER SUPPORT
SEEC, as Level 2 support, will receive questions and problem reports
from VIASOFT, and will respond with resolutions to problems within the
expected problem resolution times for the severity of the problem being
reported. The problem severity definitions, and the problem resolution
time commitments are listed below. The resolution time commitments from
SEEC are measured from the time a problem is first reported to SEEC by
VIASOFT. If SEEC is unable to reproduce the problem with the
information provided by VIASOFT, then the time commitments will be
measured from the time the problem becomes reproducible, as long as
SEEC informs VIASOFT within the response time commitments that the
problem is not reproducible.
3 RESPONSE TO SUPPORT CALLS
SEEC will respond to calls for assistance from VIASOFT Level 1 support
within three (3) regular business hours.
4 ON-SITE SUPPORT
In the event that a problem cannot be resolved within committed
resolution time goals, and the viability of the account, as a user or
as a satisfied customer, is seriously at jeopardy, and the VIASOFT
Development Manager for the product feels that an on-site technical
visit will expedite the resolution of the problem(s), SEEC agrees to
send a technician to the customer site to correct the problem(s) at
SEEC's expense, provided that if SEEC reasonably objects to the need
for such site visit, VIASOFT will bear the travel, meals, and lodging
expense. The on-site visits will be limited to North America (U.S. and
Canada). These visits will be limited to three (3) days or less, unless
mutually agreed by SEEC and VIASOFT.
5 SUPPORT HOURS
5.1 Regular business hours for SEEC are 8:30 am until 6:00 pm (both
Eastern Time), Monday through Friday. SEEC will provide the
name and phone number of a SEEC person to be contacted in case
of an emergency, whether inside or outside of regular business
hours.
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5.2 Critical customer situations periodically arise which require
support beyond regular business hours. VIASOFT works to
accommodate its customers by arranging to have people on call
during off-hours in such critical situations. VIASOFT asks the
customer to request and justify the request in advance, and
makes arrangements on a one-time-only basis for that particular
situation. SEEC agrees to use its commercially reasonable
efforts to accommodate VIASOFT and its customers or
distributors in the same manner.
6 SUPPORT EXTENTS
6.1 SEEC will provide full support for the current major release
and previous major release as upgraded by minor releases for
each software product.
6.2 SEEC will not remove product functionality from one product
release to another without prior review and agreement by
VIASOFT.
6.3 In the event a Severity 1 or 2 problem is reported in a release
and is fixed in a current release, VIASOFT Customer Support
will make reasonable efforts to convince the customer to
upgrade to the current release. In situations where the
customer still refuses to upgrade to the current release, SEEC
Customer Support will treat that as a Severity 1 or 2 problem.
In this case, the time when VIASOFT informs SEEC that such
customer is unwilling to upgrade, will be considered to be the
start time for SEEC to meet its response and resolution
objectives.
7 PROCEDURES
To enable a smooth operation of support to the customer, SEEC agrees it
will:
7.1 Designate an individual as Customer Support Interface for
support coordination, problem escalation, and status reporting.
VIASOFT will designate a like individual from its staff.
7.2 Staff the Customer Support function adequately enough to meet
response and resolution goals as the number of customers
increases over time.
7.3 Provide VIASOFT Customer Support with a machine-readable,
machine-searchable list of commonly asked questions and their
responses, and a list of known problems and their resolutions.
These lists will be updated on a monthly basis by SEEC and
provided to VIASOFT. The lists will be provided through
electronic file transfer or via
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diskette, and will be compatible with WordPerfect R5.x or with
the OS/2 Enhanced Editor.
7.4 SEEC and VIASOFT will use the remote feature of the "cc:Mail"
software package as a means of quickly and electronically
transferring programs, files, and other information back and
forth between the companies, especially as related to the
timely resolution of problems. Other electronic communication
vehicles may be pursued as mutually agreed by both SEEC and
VIASOFT.
7.5 When VIASOFT reports a problem to SEEC, the problem report will
include a VIASOFT problem number (STAR number) which has been
assigned at VIASOFT for tracking and resolution purposes. SEEC
will refer to this VIASOFT STAR number in all correspondences
relating to the problem.
7.6 In order to maintain the confidentiality of SEEC product code,
VIASOFT does not require a copy of the source code for SEEC
products. SEEC will provide all necessary information to
VIASOFT to enable VIASOFT to provide Level 1 support for the
SEEC products. This information will include debug
documentation, test scripts and test cases to help expedite the
problem identification and reproduction process at VIASOFT.
SEEC will provide VIASOFT with updated versions of these items
as upgrades to the SEEC products are made available.
8 INTENTIONALLY DELETED.
9 PROBLEM SEVERITY CODES
The table below defines the different problem severity codes used by
VIASOFT in communicating problems to SEEC. Different response and
resolution goals are tied to these severity assignments. SEEC
recognizes that circumstances may arise where VIASOFT may request a
more expedited resolution time than what is indicated by the
description below for the severity of the problem reported. This is
most likely to happen when the problem occurs in a TRIAL situation, or
in a key account where delayed resolution of the problem might be a
serious impediment to customer satisfaction and future customer
business. In those cases, SEEC agrees to use commercially reasonable
efforts to accommodate the VIASOFT business requests.
SEEC and VIASOFT will jointly keep a list of sample problems
categorized under the different seventies to be used as a model by the
Support personnel of both companies.
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Severity Description
1 Critical product problem - A problem will be considered to be
severity 1 under the following situations:
(a) Use of the product causes unacceptable side effects on
the customer's environment (for supported environments
per product specification) such as:
o Crashes customer's LAN
o Crashes operating system
o Crashes non SEEC application
o Corrupts disk
o Corrupts non-product files
(b) Product will not run in customer environment
(c) Use of the product repeatedly, i.e. sporadically or
consistently, corrupts the Application Dictionary at
one site, or at multiple sites in aggregate
2 High impact product problem - Use of the product results in
erroneous product behavior and is currently being experienced
by more than one site or more than one user; or the customer
indicates that the problem is currently causing a day-to-day
slip in a project. Excluded from this severity are product
design limitations known to VIASOFT prior to the customer
experiencing the problem.
3 Product error - The customer is able to use the software
product, but with restrictions on limited functions which are
not critical to overall operation.
4 Low priority product problem - The customer is able to use the
product subject only to minor inconveniences which are not
critical to the customer's operation and for which simple
circumventions are available. Usage deficiencies which are
nuisances in product operation or documentation. Also
classified at this level are documentation errors and training
class/material errors.
5 Enhancement request - The item reported by the customer is a
request for product functionality which is outside the design
intent or current capabilities of the software product.
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10 PROBLEM RESOLUTION COMMITMENTS
The commitment of effort and problem resolution goals are described
below by problem severity and relate only to customer-level problems.
The resolution time goals are measured from the time that the problem
is first reported to SEEC by VIASOFT. These resolution commitments are
consistent with commitments currently made by VIASOFT to its customers.
"Emergency Release" is a new version of the product that has limited
fixes on it and that has not gone through a thorough QA process.
"Maintenance Release" is a new version of the product that has all the
fixes since the most recent major release, minor release, or a
maintenance release and that has gone through a thorough QA process.
Severity Resolution Commitment
1 All required resources are applied to the problem for diagnosis
and resolution ASAP.
Commitments:
Circumvention/work-around that is acceptable to the customer
within 1 working day or an Emergency Release within 5 working
days.
Maintenance Release within 30 days
2 Addressed as high priority by Customer Support. Development
staff need to be involved as required for consultation or to
escalate in case of slower progress than goal.
Commitments:
Circumvention/work-around that is acceptable to the customer
within 5 working days or an Emergency Release within 10 working
days.
Maintenance Release within 30 days.
3 Circumvention, work-around or correction on a discretionary
basis, as time permits. No commitment for a short term solution
to the problem is made.
Commitments:
Resolved via circumvention/work-around on a time-available
basis.
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A resolution is provided within 30 working days that indicates
the current or future planned action to remedy the situation.
Source-fixed in the next major or minor release of the product.
4 Circumvention, work-around or correction on a discretionary
basis, as time permits. No commitment for a short term solution
to the problem is made.
Commitments:
A resolution within 60 working days that provides a solution or
indicates the current or future planned activity to remedy the
situation.
5 The item will be considered for implementation in a future
general product release. Any action is discretionary. No
commitment is made.
Commitments:
The problem is maintained in the queue for future enhancement.
A severity 1 or 2 problem is deemed to be resolved when the problem no
longer exists or its severity level is reclassified to 3, 4, or 5 by
mutual agreement of SEEC and VIASOFT.
11 PRODUCT PLANS AND COMMITMENTS FOR NEW RELEASES
Except as expressly set forth in the Agreement, all software production
shall be the sole responsibility of SEEC, and SEEC shall manage all
aspects of acquiring and directing technical resources necessary to
sustain software production.
SEEC agrees to make commercially reasonable efforts to release at least
two new releases (major or minor release) of each Licensed Program each
calendar year.
11.1 Delivery of Product Diskettes
VIASOFT is interested in conducting its own QA Testing for the
minor and major releases as per this exhibit and SEEC agrees to
provide VIASOFT with the QA Version or the early Beta version
of the private labelled product or any upgrades to allow
VIASOFT to do so. VIASOFT will provide SEEC with a list of
product problems that are discovered during this testing,
categorized as follows:
(a) product regression (problems that did not exist in the
previous release).
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(b) problems that are not fixed correctly in situations
where a previously reported problem was fixed in that
release.
(c) problems with any new features that were implemented
in this release.
SEEC agrees to fix all category (a) and (b) problems before the
end of the Final Beta Testing Period. SEEC will use its
discretion to fix the problems in category (c).
VIASOFT intends to conduct its own Final Beta Testing program
with the Final Beta Testing limited to a maximum of six active
VIASOFT Beta Test Sites for each new release of a product; SEEC
agrees to provide VIASOFT with the Final Beta versions of the
Private Labelled Products for each new release of a product to
allow VIASOFT to do so. SEEC will make reasonable efforts to
resolve all Severity 1 and 2 problems and category (a) and (b)
problems discovered by the VIASOFT and SEEC Beta Sites, before
the end of the Final Beta Testing period.
SEEC agrees to provide the Final Beta version of the private
labelled product at the same time as the Final Beta version of
the non-private labelled product is made available by SEEC to
its customers for QA, Final Beta, or General Availability
unless VIASOFT requests otherwise.
11.2 Coordination Process
SEEC will keep VIASOFT apprised of any changes to the release
content or the delivery dates of the product upgrades on a
frequent basis (not less than once a month).
11.3 Site Visits
With SEEC's prior knowledge and at mutually agreeable time
frames, VIASOFT representatives will visit SEEC With SEEC's
prior knowledge and at a mutually agreeable time and in the
presence of Ravi Koka or another designated SEEC
representative, VIASOFT will have the right to visit ERA once
within 12 months of the signing of the agreement. With SEEC's
approval, VIASOFT may visit SEEC and SEEC's other development
sites at a mutually agreeable time.
11.4 Product Enhancement Plan and Release Projections
VIASOFT wishes to assist SEEC in determining and solidifying
product development plans. An agreed upon product enhancement
plan with commencement and delivery dates is shown below. Such
plan and dates are subject to periodic amendment, by
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<PAGE> 65
mutual agreement of the parties, as market conditions and
requirements evolve. Periodically, VIASOFT will provide SEEC
with enhancement suggestions and a list of high priority
problems that need to be included in the upcoming releases of
the product. SEEC agrees to consider such suggestions and
requests in good faith and to make such product changes as are
required by this Agreement or as are otherwise mutually
agreeable.
For each release of each Licensed Program, SEEC will provide to
VIASOFT non-private labelled versions of the product
documentation (and versions showing all changes, i.e.,
"black-lined", where applicable) at the start of QA phase, Beta
Phase, and at General Availability. If the product
documentation is not ready at these phases, then it will be
delivered as soon as it is available, but no later than the
time it is shipped to any SEEC customer.
11.5 Development Plans and Delivery Dates
VIASOFT has reviewed the SEEC 2.0 beta release and identified
several enhancement options. In general, these enhancements
fall into three categories:
o Conformance to ESW conventions (as negotiated),
o Functionality, and
o Usability.
The Development Plan and Schedule set forth below addresses the
three categories.
11.6 PHASE I ENHANCEMENTS QA RELEASE DATE: 15 DAYS FROM THE
COMMENCEMENT DATE
Phase I involves modifying the cosmetics and conventions of
SEEC products to match those of VIASOFT's Existing Systems
Workbench (ESW). SEEC agrees to make and release the following
enhancements (and those additional enhancements the parties
agree upon) :
o Modify all pertinent components to reflect VIASOFT
<product_name> rather than SEEC or COBOL Analyst, or
ADW Export. These include, but are not limited to:
a) Installation text used in SETUP.EXE (including
SETUP.LST) and suggested values for installation
directories
b) Online Help
c) README file text, if any
d) Invoke the new VIASOFT provided "About" dialog
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<PAGE> 66
o Invoke the new "Loading" VIASOFT dialog while a
primary product component (Configure, Capture,
Analyst, Export) is loading. This screen will include
VIASOFT Logo, Product Logo, loading information,
VIASOFT Trademarks, and SEEC Copyright.
o Remove copyright information from the logon screen.
o Modify the following terms to reflect VIASOFT terms:
<TABLE>
<S> <C> <C>
"Structure Chart" - Change to "Structure View"
"Logic Display" - Change to "Tree View"
"Variables" - Change to "Data Items"
"Indirect" - Change to "Alias"
"Data Dictionary" - Change to "Repository" when
the abbreviation is used.
Change corresponding directory
names also.
"Halstead" - Length
"McCabe" - Cyclomatic
"McClure" - Control Variable
"Add Item" - "Add Impact Item" or "Add
Impact"
</TABLE>
o Make minor changes to the terminology in COBOL Subsets
to map to VIASOFT's naming convention.
o Review and ensure that the product is packaged as one
product without options if VIASOFT decides to always
sell it as a bundled product, otherwise the product
should be packaged as one product with options rather
than as separate products.
11.7 PHASE II A QA START DATE: APR. 1, 1994
BETA START DATE: MAY 1, 1994
COMMITMENTS:
SEEC commits to make and release the following
enhancements, subject to mutually agreeable changes:
VERSION 2.1
o Fix category 1 bugs as reported by VIASOFT as
a result of running the VIASOFT COBOL parser
validation test suite
o Review and respond to usability issues (report
forthcoming).
65
<PAGE> 67
o Review dialogs for consistency in using the
"Ok" versus "Close" pushbuttons as the action
to exit the dialog.
11.8 PHASE II B QA START DATE: JUNE 30, 1994
BETA START DATE: JULY 31, 1994
OTHER FEATURES:
Although, SEEC does not commit to the implementation
of the following features, SEEC will make reasonable
efforts to incorporate as many of these features or
mutually agreeable alternate features as possible
limited to a maximum of 4 man-months of product
development effort.
o Develop interface with VIASOFT's product that
downloads all components necessary for the
COBOL Analyst Capture facility.
o Synergy items to enable COBOL Analyst to
integrate better with VIASOFT's ESW/2
(Cooperative Existing Systems Workbench for
OS/2). Details to be mutually agreed upon.
12 DEFINITION OF "MATERIAL DEFAULT" FOR SUPPORT SERVICES
Each of the following shall constitute the basis for a "Material
Default" for purposes of Section 16(c) of the Agreement, subject to
Section 13 below:
The problems described below will not include any problems internally
discovered by VIASOFT only.
1 When the total of technically unique Severity 1 and Severity 2
problems reported by VIASOFT (other than problems discovered by
VIASOFT only) in the most recent 120 calendar days is less than
or equal to 60:
o More than 15 have exceeded their goal by 10 working
days.
2 When the total of technically unique Severity 1 and Severity 2
problems reported by VIASOFT (other than problems discovered by
VIASOFT only) in the most recent 120 calendar days is greater
than 60 occurrences of any one of the following situations:
o Less than 80% of the Severity 1 problems are resolved
in 5 working days, however, if the number of Severity
1 problems is less than 20, then more than 4 have not
been resolved in 5 working days.
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<PAGE> 68
o Less than 90% of the Severity 1 problems are resolved
in 10 working days, however, if the number of Severity
1 problems is less than 20, then more than 2 have not
been resolved in 10 working days.
o Less than 70% of the Severity 2 problems are resolved
in 10 working days.
o Less than 80% of the Severity 2 problems are resolved
in 15 working days.
o Less than 90% of the Severity 2 problems are resolved
in 20 working days.
3 When the total of technically unique Severity 3 problems
reported by VIASOFT (other than problems discovered by VIASOFT
only) in the most recent 120 calendar days is greater than 60:
o Less than 80% of the Severity 3 problems are resolved
in 30 working days.
4 *** INTENTIONALLY DELETED ***
5 For any week when the total number of calls from VIASOFT Level
1 support to SEEC is less than 10:
o if more than 5 calls have not been responded to within
3 business hours.
6 For any week when the total number of calls from VIASOFT Level
1 support to SEEC exceeds 10:
o if less than 80% of the calls have been responded to
within 3 business hours.
7 If SEEC fails to perform as required under sections 6.1, 6.2,
7.2, 7.6, 11.1 or 11.4 (second paragraph), of this Exhibit.
8 If SEEC fails to make at least one major release and one minor
release of each License Program each VIASOFT fiscal year during
the term of this Agreement. A "major" release is at least 40
man-months of effort, and a "minor" release is at least 15
man-months of effort.
9 If Phase I is delayed by more than 15 days, or Phase II A is
delayed by more than 60 days, unless otherwise mutually agreed.
13 DECLARATION OF MATERIAL DEFAULT
Whenever a situation has arisen as described in Section 12, subsections
1 through 8, VIASOFT management will notify SEEC Senior Management of
the situation and arrange a meeting (by tele-conference or in person)
between VIASOFT management and
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<PAGE> 69
SEEC Senior Management to review the situation. This meeting must be
held within 2 business days of the original notification, unless
VIASOFT agrees to a later time. The management teams will review the
situation and SEEC will have an opportunity to propose a workable plan
of action to remedy it within 30 days. It the plan is not agreeable to
VIASOFT, or if during the 30 day plan implementation period VIASOFT has
reason to believe that the plan is not being fully implemented, or if
the problem is not resolved in 30 days, then VIASOFT will so notify
SEEC in writing, and, if the conditions in Section 14 apply, SEEC will
have a final cure period as set forth in Section 14. Otherwise, VIASOFT
shall have the right to immediately declare a "Material Default."
14 FINAL CURE PERIOD
If a Change in Control of SEEC has not occurred, SEEC Bankruptcy has
not occurred, and the "50% Support Level" (defined below) is being met,
then instead of declaring "Material Default", the following will apply:
For the six months following the event described in 13 above, for each
month that the default has not been cured, the VIASOFT Maintenance
Royalties will be reduced by an amount equal to one-sixth of the
"Average Monthly Maintenance Royalty".
From the seventh month following the event described in 13 above, for a
period of six months thereafter, for each month that the default has
not been cured, the VIASOFT Maintenance Royalties will be reduced by an
amount equal to one-third of the "Average Monthly Maintenance Royalty".
If at any time during the 12 months described above, SEEC's support
does not satisfy the "50% Support Level", or if at the end of the 12
months the default remains uncured, then VIASOFT will have the right to
immediately declare a "Material Default".
"50% Support Level" is defined as the criteria set forth in Section 12
above but using the time period for each criteria that is twice the
amount of time specified in that subsection.
"Average Monthly Maintenance Royalty" will be the average monthly
Maintenance Royalty for the 12 months preceding the month in which the
computation is being made. If this Agreement has been in existence for
less than 12 months, then the average will be computed for the entire
duration this Agreement has been in effect.
The provisions of this Section 14 are not intended to constitute
penalties. Rather, they provide a reasonable basis
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<PAGE> 70
for an extended cure period for SEEC with reasonable estimates of
damages to VIASOFT during such period.
If during the final cure period described in this Section 15 (the
"Final Cure Period") the level of support provided by SEEC drops below
the "50% support level" or after the Final Cure Period the support
default constituting the "Material Default" has not been cured,
VIASOFT, will have the right, at its option, to bring VIASOFT
management and VIASOFT technical personnel to SEEC's facilities to
manage the level 2 support with the assistance of SEEC support
personnel, or to take the SEEC support personnel and all required
source code (and related tools, documentation and other required
materials) for Licensed Programs to VIASOFT's facilities and manage the
level 2 support from there. In either case, VIASOFT will pay all the
reasonably incurred travel, meals and lodging costs of the SEEC
personnel and will pay SEEC reduced Maintenance Royalties of ten
percent (10%) rather than thirty percent (30%). The SEEC personnel
working at VIASOFT's facilities pursuant to this Section will remain
SEEC employees for all purposes (including without limitation salary,
payroll taxes, benefits, etc.) and will be responsible for all product
manufacturing. VIASOFT will reimburse SEEC for its actual and
reasonable direct costs incurred with respect to such employees
(salary, payroll taxes, benefits, etc.) for such period of time as
VIASOFT is managing support hereunder. All Licensed Programs so
manufactured shall remain SEEC's responsibility and will be delivered
to VIASOFT as if this Section 15 had not been invoked (including
without limitation for purposes of Sections 5 (g), 12 and 14 (h)), and
the SEEC personnel will also make product modifications available to
SEEC to allow SEEC to provide support to SEEC customers. The parties,
by mutual agreement, will determine the number of SEEC support
personnel to be used by VIASOFT, the duration of such use, and what
procedures will be maintained with respect to the source code to ensure
the protection of SEEC's interests therein, and failing mutual
agreement, either party may submit the dispute to binding arbitration
under Section 20(g) for a reasonable resolution by the arbitrator.
69
<PAGE> 71
EXHIBIT C
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
--------------------------------------------
SEEC'S EXISTING SUB-DISTRIBUTORS
<TABLE>
<CAPTION>
Sub-Distributor Product Territory
--------------- ------- ---------
<S> <C> <C> <C>
1. Case Consult Gmbh COBOL Analyst and Germany, Austria,
Add-ons Switzerland, Benelux
2. Case Consult, Belgium COBOL Analyst and Benelux
Add-ons
3. SIC Emertech COBOL Analyst and Spain
Add-ons
</TABLE>
70
<PAGE> 72
EXHIBIT D
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
--------------------------------------------
VIASOFT & SEEC CUSTOMER LISTS
This exhibit will contain the list of "VIASOFT CUSTOMERS" and "SEEC CUSTOMERS".
The "VIASOFT CUSTOMERS" list will contain all current VIASOFT customers
(Customer name and Sites) who are currently on maintenance and who are not in
the list of "SEEC CUSTOMERS". The list of "SEEC CUSTOMERS" will contain the
list of all current SEEC customers (Customer name and Sites) who are currently
on maintenance that are also VIASOFT customers. These lists will only contain
customers that are in U.S. or Canada.
Once the agreement is signed, the lists of "VIASOFT CUSTOMERS" and "SEEC
CUSTOMERS" can not be amended to add new customers unless mutually agreed upon
by the two parties.
VIASOFT CUSTOMERS: See Attached.
SEEC CUSTOMERS See Attached.
Approved:
VIASOFT, INC. SEEC, INC.
By /s/ MICHAEL A. WOLF By /s/ RAVI KOKA
----------------------------- -----------------------------
Its Executive Vice President Its President & CEO
---------------------------- ----------------------------
Date: 11/29/93 Date: 11/29/93
71
<PAGE> 73
================================================================================
Exhibit D-2
Company Name City State Country
- --------------------------------------------------------------------------------
ADC-Minnesota Mining & Manufact St. Paul MN
ADC Telecommunications Bloomington MN
ADC Telecommunications Minneapolis MN
ADC Telecommunications Minnetonka MN
AdminaStar, Inc Indianapolis IN
Advantis Chicago IL
Advantis Hoffman Estates IL
Advantis Itasca IL
Advantis Riverwood IL
Advantis Schaumburg IL
Aetna Life Insurance Co. Hartford CT
Aetna Life Insurance Co. Middletown CT
Agway, Inc. Dewitt NY
Aid Association for Lutherans Appleton WI
Airborne Express Seattle WA
Alamo Rent A Car, Inc. Ft. Lauderdale FL
Alberta Gov't Dept of Public Works Edmonton AB CANADA
Albertsons, Inc. Boise ID
Alcatel Network Systems Raleigh NC
Allied Signal - Corporate Data Ctr. Phoenix AZ
Allied Signal - Corporate Data Ctr. Tempe AZ
Allnet Communication Services Bingham Farms MI
Allstate - Northbrook Mundelion IL
Allstate - Northbrook Northbrook IL
Allstate - Northbrook S. Barrington IL
American Airlines DFW Airport TX
American Airlines Tulsa OK
American Assoc. of Retired Persons Lakewood CA
American Cyanamid Company Wayne NJ
American Express Phoenix AZ
American General Houston TX
American International Group East Orange NJ
American International Group Livingston NJ
American National Can Company Chicago IL
American National Property Casualty Springfield MO
American President Lines Alameda CA
American President Lines Oakland CA
American President Lines Rancho Cordova CA
Ameritech Services Inc. - Chicago Chicago IL
Ameritech Services Inc. - Chicago Hoffman Estates IL
Ameritech Services Inc. - Michigan Southfield MI
Ameritech Services Inc. - WI Waukesha WI
Amsouth Bank N.A. Birmingham AL
Andersen Consulting Dallas TX
Andersen Consulting Houston TX
Andersen Consulting Irving TX
Andersen Consulting Ottawa ON CANADA
Angelica Corporation St. Louis MO
??????, Inc. Houston TX
Arizona Dept Of Economic Security Phoenix AZ
Arizona State University Tempe AZ
Army Air Force Exchange Service Dallas TX
AT&T - Colorado Aurora CO
AT&T - Colorado Newark NJ
<PAGE> 74
================================================================================
Exhibit D-3
Company Name City State Country
- --------------------------------------------------------------------------------
AT&T - IMS Dallas TX
AT&T - IMS Greensboro NC
AT&T - IMS Orlando FL
AT&T - Kansas City Kansan City MO
AT&T - Merrimack Valley Works North Andover MA
AT&T Easy Link Services Parsippany NJ
AT&T Easy Link Services Piscataway NJ
AT&T Paradyne Largo FL
Atlas Van Lines Evansville IN
Avery Dennison Company Framingham MA
Bank of New York New York NY
Bank of New York - NJ Teaneck NJ
Bank of Nova Scotia Scarborough ON CANADA
Bankers Trust Services Jersey City NJ
Bankers Trust Services New York NY
Barnett Technologies Jacksonville FL
Bell Atlantic Beltsville MD
Bell Atlantic Silver Spring MD
Bell Helicopter Textron, Inc. Fort Worth TX
Bell of Pennsylvania Philadelphia PA
Beneficial Data Processing Peapack NJ
Blue Cross Blue Shield Of CT North Haven CT
Blue Cross Blue Shield Of KS City Kansas City MO
Blue Cross Blue Shield Of MO St. Louis MO
Blue Cross Blue Shield Of NC Durham NC
Blue Cross Blue Shield Of NE Omaha NE
Blue Cross Blue Shield Of OR Portland OR
Blue Cross Blue Shield Of TX Richardson TX
Blue Cross Blue Shield Of UT Salt Lake City UT
Boatmen's Bancshares, Inc. Albuquerque NM
Boatmen's Bancshares, Inc. St. Louis MO
Boeing Computer Services - KS Wichita KS
Boeing Computer Services - PA Eddystone PA
Boeing Computer Services - PA Seattle WA
Boeing Computer Services - WA Renton WA
Boeing Computer Services - WA Seattle WA
Boeing Computer Services - WA Tukwila WA
Boise Cascade Office Products Itasca IL
Boston Edison Company Boston MA
Briston Myers - Squibb Plainsboro NJ
British Columbia Telephone Burnaby BC CANADA
Burlington Industries Burlington NC
Burlington Industries Greensboro NC
Burlington Northern Railroad Ft. Worth TX
Burlington Northern Railroad St. Paul MN
Cable & Wireless Communications Vienna VA
CAE Link Corporation Binghamton NY
Cajun Electric Power Corporation Baton Rouge LA
California Franchise Tax Board Sacramento CA
Campbell Soup Company Camden NJ
Canada Life Assurance Company Toronto ON CANADA
Canada Post Corporation Ottawa ON CANADA
Canadian Imperial Bank of Commerce Toronto ON CANADA
Canadian Pacific Toronto ON CANADA
<PAGE> 75
================================================================================
Exhibit D-4
Company Name City State Country
- --------------------------------------------------------------------------------
Capital Group, Inc., The Brea CA
Capitol Holding Corporation Louisville KY
Caterpillar Inc. East Peoria IL
Central Freight Waco TX
Central Illinois Public Service Springfield IL
Central Life Assurance Company Des Moines IA
Central Telephone Company Chicago IL
Central Telephone Company Lincoln NE
Central Trust Bank Jefferson City MO
Cessna Aircraft Company Wichita KS
Charter Medical Macon GA
Chem-Network New York NY
Chem-Network Somerset NJ
Chemical Bank - New York New York NY
Cincinnati Financial Fairfield OH
Citibank Long Island City NY
Citibank New York NY
Citibank Weehawkin NJ
City of LA Los Angeles CA
CNA Insurance Chicago IL
Coleman Company Wichita KS
Colonial Life & Accident Insuranc Columbia SC
Columbia Healthcare Corp Louisville KY
COM/Energy Service Company Cambridge MA
COM/Energy Service Company Wareham MA
Communications Data Services Des Moines IA
Community Mutual Insurance Cincinnati OH
Community Mutual Insurance Worthington OH
Computer Power Inc. Jacksonville FL
Computrol Chesterfield MO
Conoco Ponca City OK
Consolidated Natural Gas Clarksburg WV
Consolidated Natural Gas Independence OH
Consolidated Natural Gas Pittsburgh PA
Consumers Gas Company Ltd. Scarborough ON CANADA
Consumers Gas Company Ltd. Willowdale ON CANADA
Consumers Power Company Jackson MI
Continuum Company, Inc., The Austin TX
Cotter & Company Chicago IL
County of Fairfax Fairfax VA
County of Riverside Riverside CA
County of San Diego San Diego CA
Crowley Maritime Corporation Oakland CA
Crowley Maritime Corporation San Francisco CA
Curtin Matheson Scientific Houston TX
Dallas Morning News Dallas TX
Dayton Light & Power Company Dayton OH
Defense Lodgistics Agency Alexandria VA
Delta Airlines, Inc. Atlanta GA
Depository Trust Company New York NY
Detroit Edison Detroit MI
Dial Corporation Irving TX
Dial Corporation Phoenix AZ
Dial Corporation Scottsdale AZ
<PAGE> 76
================================================================================
Exhibit D-5
Company Name City State Country
- --------------------------------------------------------------------------------
Dilliards Department Store Little Rock AR
DITSO Denver CO
Defense Lodgistics Agency Mechanicsburg PA
DST Systems Inc. Kansas City MO
E-Systems Inc. Garland TX
EG&G Mound Applied Technology Miamisburg OH
Electronic Data Systems Corporation Hazelwood MO
Electronic Data Systems Corporation Maryland Heights MO
Employers Insurance Of Texas Dallas TX
Esprit San Francisco CA
Estee Lauder, Inc. Melville NY
Executive Life Insurance Company Los Angeles CA
Exxon Company USA Houston TX
Fannie Mae Washington DC
Farm Bureau Insurance Company West Des Moines IA
Farm Credit Banks Of Spokane Spokane WA
Farmers Insurance Company Los Angeles CA
Federal Data Corporation Mechanicsburg PA
FHP Costa Mesa CA
Fidelity Investments-Dallas Devel. Irving TX
Fidelity Management & Research Boston MA
Fidelity Management & Research Irving TX
First American Data Services, Inc. Reston VA
First Data Corporation/TSSG Boston MA
First Health Services Corporation Glen Allen VA
First Interstate Bank Of Arizona Los Angeles CA
First Interstate Bank Of Arizona Tempe AZ
First Interstate Bank of Oregon Portland OR
First Nationwide Bank Daly City CA
First Nationwide Bank Folsom CA
First Nationwide Bank Sacramento CA
First Nationwide Bank San Francisco CA
Firstar Information Services Corp. Milwaukee WI
FISERV Fresno CA
FISERV Philadelphia PA
FISERV Pittsburgh PA
Florida Power Corporation St. Petersburg FL
FMC Corp. Dallas TX
FoxMeyer Drug Company Carrollton TX
FoxMeyer Drug Company Dallas TX
Freedon Group - AGIS Des Moines IA
Freedon Group - AGIS Urbandale IA
GE Aerospace Cincinnati OH
GE Aerospace King Of Prussia PA
GE Aerospace Mason OH
GE Aerospace Philadelphia PA
GE Medical Systems Group Louisville KY
GE Medical Systems Group Milwaukee WI
GE Medical Systems Group New Berlin WI
General American Life Insurance Co. St. Louis MO
General Casualty Companies Sun Prairie WI
General Dynamics Ft. Worth TX
General Mills, Inc. Minneapolis MN
Geneva Steel Orem UT
<PAGE> 77
================================================================================
Exhibit D-6
Company Name City State Country
- --------------------------------------------------------------------------------
Geneva Steel Provo UT
Georgia Pacific Brunswick GA
Georgia-Pacific Corp. - Wisconsin Port Edwards WI
Gov't du Quebec/Ministere du Rev. Quebec CANADA
Gov't du Quebec/Ministere du Rev. Sainte-Foy PQ CANADA
Grand Metropolitan Food Sector Minneapolis MN
Great Atlantic & Pacific Tea Co. Montvale NJ
Great Lakes Higher Education Corp. Madison WI
Great West Life Assurance Company Winnepeg MB CANADA
Group Health Inc. New York NY
GTE Data Services Temple Terrace FL
Gulf States Toyota Houston TX
Halliburton Arlington TX
Halliburton Carrollton TX
Hallmark Cards Kansas City MO
Hawaii Medical Service Association Honolulu HI
Health Charge Corporation Skokie IL
Hill Airforce Base Hill AFB UT
Holden Group Los Angeles CA
Holden Group Santa Monica CA
Home Savings of America Irwindale CA
Household Credit Services Salinas CA
Household International, Inc. Northbrook IL
Houston Light & Power Houston TX
HQ SCCC/WPSP (HQSAC)(GSA29) Offut AFB NE
HQ SCCC/WPSP (HQSAC)(GSA29) Offutt AFB NE
Hudson's Bay Company Toronto ON CANADA
Hughes Aircraft Company El Segundo CA
Hughes Aircraft Company Fullerton CA
Humana Incorporated Louisville KY
Huntington Memorial Hospital Pasadena CA
Illinois Power Company Decatur IL
IMS America Ltd. Plymouth Meeting PA
Independent Order of Foresters Don Mills ON CANADA
Information Systems of America Atlanta GA
Integral Systems, Inc. Walnut Creek CA
Integrated Systems Technology Corp. Medford MA
Internal Revenue Service Martinsburg WV
Internal Revenue Service Washington DC
International Paper Memphis TN
ITT Consumer Financial Corporation Minneapolis MN
Jack Eckerd Corporation Clearwater FL
Jack Eckerd Corporation Largo FL
Jeppesen Sanderson Inc. Englewood CA
J. Case Racine WI
John Alden Life Insurance Miami FL
John H. Harland Company Decatur IL
John Hancock Mutual Life Insurance Boston MA
John Hancock Mutual Life Insurance Marlboro MA
Johnson & Johnson Milltown NJ
Johnson & Johnson New Brunswick NJ
Johnson & Johnson North Brunswick NJ
Johnson & Johnson Raritan NJ
Kaiser Permanente - CA Walnut Creek CA
<PAGE> 78
================================================================================
Exhibit D-7
Company Name City State Country
- --------------------------------------------------------------------------------
Kaiser Permanente - Or Lake Oswego OR
Kemper Financial Group Chicago IL
Kirchman Corporation Altamonte Springs FL
Kirchman Corporation Orlando FL
Kraft General Foods, Inc. Rye Brook NY
Kraft General Foods, Inc. White Plains NY
Kraft Incorporated Glenview IL
Kraft Incorporated Northfield IL
La-Z-Boy Chair Company Monroe MI
Lincoln National Corporation Fort Wayne IN
Lockheed Aeronautical Systems Marietta GA
Lockheed Information Technology Co. Denver CO
London Life Insurance London ON CANADA
Loral Defense Systems Akron OH
Lutheran Brotherhood Insurance Minneapolis MN
M&I Data Services, Inc. Milwaukee WI
Manufacturers Life Financial Toronto ON CANADA
Marine Midland Bank Buffalo NY
Marine Midland Bank Syracuse NY
Maritime Telegraph & Telephone Halifax NS CANADA
Marshalls Andover MA
Martin Marietta Information Systems Orlando FL
Martin Marietta/Dept Of Energy Oak Ridge TN
Matson Navigation Company Boulder CO
Matson Navigation Company San Francisco CA
Maxus Corporate Company Dallas TX
Maxus Corporate Company Irving TX
MBNA Information Services Addison TX
MBNA Information Services Addison TX
McDonnell Douglas Helicopter Mesa AZ
McKesson Corporation Rancho Cordova CA
McKesson Corporation San Francisco CA
McLane Data Systems Temple TX
Memphis Light, Gas & Water Memphis TN
Merrill Lynch Staten Island NY
Merrill Lynch - NY, NY Somerset NJ
Methodist Hospital Houston TX
Metro Atlanta Rapid Transit (MARTA) Atlanta GA
Metropolitan Life Ins. - NY Greenville SC
Metropolitan Life Ins. - NY New York NY
Metropolitan Life Ins. - NY Wichita KS
Metropolitan Life Ins. - Ottawa Ottawa ON CANADA
Michigan Mutual (Amerisure) Southfield MI
Milliken & Company Spartanberg SC
Montreal Trust Montreal PQ CANADA
Montreal Trust Nuns Island, Verdun PQ CANADA
Mutual of America Boca Raton FL
Mutual of Omaha Omaha NE
Nabisco Brands Incorporated Wilkes Barre PA
NAII Des Plaines IL
NASSCO San Diego CA
Nation's Bank Charlotte NC
Nation's Bank Dallas TX
National Bank Of Detroit Belleview MI
<PAGE> 79
================================================================================
Exhibit D-8
Company Name City State Country
- --------------------------------------------------------------------------------
National Bank Of Detroit Detroit MI
National Council Compensation Ins. Boca Raton FL
National Defense Headquarters Ottawa ON CANADA
National Defense Headquarters Ottawa ON CANADA
National Exhange Carrier Assoc. Whippany NY
Navistar International Corp. Brookfield WI
Navistar International Corp. Knoxville TN
Navistar International Corp. Oakbrook Terrace IL
NBC Data Center Fort Meyers FL
NBC Data Center New York NY
Nevada Power Company Las Vegas NV
Nevada Power Company Philadelphia PA
New England Business Service Groton MA
New Hampton, Inc. Hampton VA
New Jersey Bell Madison NJ
Newfoundland Telephone Company St. John's NF CANADA
Nissan Motor Corporation Carson CA
Nissan Motor Corporation Gardena CA
Nissan Motor Manufacturing Corp. Smyrna TN
Nissan North America, Inc Denver CO
Nissan North America, Inc Englewood CO
North Carolina Farm Bureau Raleigh NC
Northern Virginia Community College Annadale VA
Northwest Natural Gas Boulder CO
Northwest Natural Gas Portland OR
Northwestern National Casualty Co. Brookfield WI
NSRI Seattle WA
Ohio Edison Akron OH
Ontario Hydro Toronto ON CANADA
Oregon Dept. of Transportation Salem OR
Oryx Energy Corporation Dallas TX
Pacific Bell Millbrae CA
Pacific Bell San Ramon CA
Pacific Gas & Electric - Avila Bch Avila Beach CA
Pacific Gas & Electric - Fairfield Fairfield CA
Pacific Gas & Electric - San Fran. San Francisco CA
PaineWebber Inc. Weehawken NJ
Pennsylvania Blue Shield Camp Hill PA
Pennzoil Company Houston TX
Peoples Gas, Light and Coke Company Chicago IL
Petro Canada Calgary AB CANADA
Pharmaceutical Card Systems, Inc. Scottsdale AZ
Phillips Petroleum Company Bartlesville OK
Pier 1 Imports Fort Worth TX
Pier 1 Imports Ft. Worth TX
Policy Management Systems Corp Blythewood SC
Policy Management Systems Corp Columbia SC
Principal Financial Group Des Moines IA
Provident Mutual Life Insurance Co. Philadelphia PA
Prudential Re-Insurance Company Chicago IL
Prudential Re-Insurance Company Roseland NJ
Prudential Securities New York NY
Public Service Company Of NC Gastonia NC
Public Service Company Of NM Albuquerque NM
<PAGE> 80
================================================================================
Exhibit D-9
Company Name City State Country
- --------------------------------------------------------------------------------
Purdue University West Lafayette IN
Putnam Fiduciary Trust Quincy MA
Ranger Insurance Houston TX
Reliance Insurance Company Philadelphia PA
Reliance Insurance Company Voorhees NJ
Republic Financial Dallas TX
Republic Information & Comm. Svcs. New York NY
Revenue Canada Taxation Ottawa ON CANADA
Riggs National Bank Washington DC
Rockwell International Richardson TX
Rockwell International Tulsa OK
Rockwell Intl./Info. Systems Center Anaheim CA
Royal Canadian Mounted Police Ottawa ON CANADA
Royal Insurance Company of Canada Toronto ON CANADA
Sacramento Municipal Utility Dist. Sacramento CA
San Diego Gas & Electric San Diego CA
Sandia National Laboratories Albuquerque NM
Sanwa Bank California Monterey Park CA
Sara Lee Hosiery Atlanta GA
Sara Lee Hosiery Winston-Salem NC
Sara Lee Knit Products Winston-Salem NC
School Board Of Orange County Orlando FL
Scott and White Clinic Hospital Temple TX
Seafirst Bank Glendale CA
Seafirst Bank Seattle WA
Sears Canada, Inc. North York ON CANADA
Sears Canada, Inc. Toronto ON CANADA
Security Beneficial Group Topeka KS
Shared Services Center Harrisburg PA
Shared Services Center Wilkes-Barre PA
Shelter Mutual Insurance Company Columbia MO
Smith Barney Shearson New York NY
Snohomish County PUD Everett WA
Solar Turbine San Diego CA
Solicitor General Ottawa ON CANADA
Southern California Gas Los Angeles CA
Southern California Gas Monterrey Park CA
Southern California Gas Van Nuys CA
Southern New England Telephone Meriden CT
Southern New England Telephone New Haven CT
Southern New England Telephone North Haven CT
Southwestern Bell Mobile Systems Dallas TX
Southwestern Bell Mobile Systems Farmer Branch TX
Southwestern Bell Telephone St. Louis MO
Southwestern Bell Telephone Co. Kansas City MO
Southwestern Public Service Company Amarillo TX
Spartan Stores, Inc. Grand Rapids MI
Spiegel Inc. Westmont IL
Sprint Corp. Apopka FL
Sprint Corp. Overland Park KS
SSA Health & Human Svcs. (GSA 28) Baltimore MD
St. Luke's Hospital Kansas City MO
St. Vincent Hospital Portland OR
Star Tribune Newspaper Minneapolis MN
<PAGE> 81
================================================================================
Exhibit D-10
Company Name City State Country
- --------------------------------------------------------------------------------
State Farm Mutual Auto Insurance Co. Bloomington IL
State Of California Sacramento CA
State Of Connecticut Hartford CT
State Of Maryland Annapolis MD
State Of Maryland Baltimore MD
State Of Tennessee Nashville TN
State Of Utah Salt Lake City UT
State Of Wisconsin Madison WI
Sun Companies Philadelphia PA
Sun Companies Tulsa OK
Sun Life Assurance Co. Of Canada Toronto ON CANADA
Sun Life Assurance Co. Of Canada Willowdale ON CANADA
Suntrust Service Corporation Atlanta GA
Swedish Hospital Medical Center Seattle WA
Systematics Little Rock AR
Systematics - OH Twinsburg OH
Systemhouse Baltimore MD
Systemhouse Houston TX
T. Eaton Company LTD Mississaugua ON CANADA
T. Eaton Company LTD Toronto ON CANADA
Tampa Electric Company Tampa FL
Tandy Information Services Ft. Worth TX
Target Department Stores Minneapolis MN
TDS Computer Services, Inc. Madison WI
??? Healthcare Systems San Jose CA
Texas Commerce Bank Houston TX
Thrifty Corp. Los Angeles CA
??? Companies, Inc., The Framington MA
Toronto Dominion Bank Toronto ON CANADA
Toronto Hydro Toronto ON CANADA
????? Infirmary New Orleans LA
TRW Information Services Division Allen TX
TRW Information Services Division Orange CA
TWA - Trans World Airlines Kansas City MO
Union Gas Limited Chatham ON CANADA
Union Pacific Railroad - Omaha Omaha NE
Union Pacific Resources Fort Worth TX
Union Pacific Technologies Clayton MO
Union Pacific Technologies St. Louis MO
Universal Underwriters Insurance Overland Park KS
University Of California San Francisco CA
University Of Colorado Boulder CO
University Of Minnesota Minneapolis MN
University of Western Ontario London ON CANADA
University of Wyoming Laramie WY
UNUM Life Insurance Company Portland ME
US West Advanced Technology Englewood CO
US West New Vector Group Inc. Bellevue WA
USDA Nat'l Finance Center (GSA20) New Orleans LA
USDA Nat'l Finance Center (GSA20) Washingotn DC
Vanderbilt University Medical Cntr. Nashville TN
Vanguard Wayne PA
Veterans Administration Austin TX
Veterans Administration (GSA#2) Hines IL
<PAGE> 82
================================================================================
Exhibit D-11
Company Name City State Country
- --------------------------------------------------------------------------------
Virginia Community College System Richmond VA
Vons Company, Inc. Arcadia CA
Vons Company, Inc. El Monte CA
Vons Company, Inc. Los Angeles CA
W.W. Grainger Niles OH
Wachovia Columbia SC (Protected
after
Dec. 31,
1993 unless
they become
a SEEC
Customer)
Walden Book Company Stamford CT
Warnaco, Inc. Bridgeport CT
Warner Lambert Company Morris Plains NJ
Wells Fargo Bank El Monte CA
Wells Fargo Bank San Francisco CA
Western Southern Life Insurance Cincinnnati OH
Whirlpool Financial Corporation Benton Harbor MI
Workers Compensation Board Edmonton AB CANADA
Workers Compensation Board Toronto ON CANADA
World Book Inc. Cicero IL
World Book Inc. Elk Grove Village IL
Worldspan Atlanta GA
Zenith Electronics Chicago IL
Zions Data Services Salt Lake City UT
Zurich Canada Toronto On CANADA
===============================================================================
<PAGE> 83
================================================================================
Exhibit D-12
Company Name City State Country
- --------------------------------------------------------------------------------
?? Morgan Services Inc. New York NY
?? Morgan Services Inc. Newark NJ
MBNA Information Services Dallas TX
Mellon Bank Pittsburgh PA
Merrill Lynch - NY, NY New York NY
Owens & Minor, Inc. Richmond VA
Rockwell Intl./Info. Systems Center Seal Beach CA
Shearson Lehman Brothers New York NY
Sony of Canada Willowdale ON CANADA
Sprint Corp. Kansas City MO
Travelers Corp. Hartford CT
United Services Auto Association San Antonio TX
Wachovia Columbia SC (only if
they pur-
chase COBOL
Analyst by
Dec. 31,
1993)
================================================================================
<PAGE> 84
EXHIBIT E
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
---------------------------------
SHRINK WRAP LICENSE
READ CAREFULLY BEFORE OPENING ENVELOPE
OPENING THIS PACKAGE INDICATES YOUR ACCEPTANCE OF THE FOLLOWING TERMS AND
CONDITIONS. IF YOU DO NOT AGREE WITH THESE TERMS AND CONDITIONS, YOU SHOULD
PROMPTLY RETURN THIS PACKAGE UNOPENED WITH THE OTHER COMPONENTS OF THIS PRODUCT.
This is a license agreement and not an agreement for sale. VIASOFT owns, or
has licensed from the owner, copyrights in the Software. You obtain no rights
other than the license granted to you by this Agreement. Title to the enclosed
copy of the Software, and any copy made from it, is retained by VIASOFT.
LICENSE
- -------
YOU MAY:
1) Use the Software on only one machine at a time;
2) Make a copy of the Software, if not copy projected, for backup purposes only
in support of your Authorized use;
3) Transfer the Software and this VIASOFT Software License Agreement to another
party if the other party agrees to accept the terms and conditions of this
Agreement. If you transfer the Software, you must at the same time either
transfer all copies to the same party, or destroy any copies not
transferred. Such transfer of possession terminates your license from
VIASOFT.
YOU AGREE NOT TO:
1) Use copy, modify, or transfer copies of the Software except as expressly
provided for this Agreement;
2) Reverse assemble or reverse compile the Software; and/or
3) Sublicense, rent, lease, or assign the Software or any copy thereof.
LIMITED WARRANTY
- ----------------
THIS SOFTWARE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER
EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE
QUALITY AND PERFORMANCE OF THE SOFTWARE IS WITH THE USER. SHOULD THE SOFTWARE
BE DEFECTIVE, YOU (AND NOT VIASOFT) ASSUME THE ENTIRE COST OF ALL NECESSARY
SERVICING, REPAIR, OR CORRECTION.
VIASOFT does not warrant the functions contained in the Software will meet
your requirements or that operation of the Software will be uninterrupted or
error free.
However, VIASOFT warrants the diskette(s) on which the Software is furnished to
be free from defects in material and workmanship under normal use for a period
of thirty (30) days from the date of delivery to the original user.
LIMITATIONS OF REMEDIES
- -----------------------
VIASOFT's and its Licensor's entire liability and your exclusive remedy
shall be:
1) Replacement of any diskette not meeting VIASOFT's "Limited Warranty" and
which is returned to VIASOFT, or
2) If VIASOFT is unable to deliver a replacement diskette that is free of
defects in materials or workmanship as warranted, you may terminate your
license.
IN NO EVENT WILL VIASOFT OR LICENSOR BE LIABLE TO YOU FOR ANY DAMAGES,
INCLUDING ANY LOST PROFITS, LOST SAVINGS OR ANY INCIDENTAL OR OTHER
CONSEQUENTIAL DAMAGES, EVEN IF VIASOFT OR LICENSOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER PARTY.
GENERAL
- -------
You may terminate your license at any time by destroying all your copies of the
Program.
VIASOFT may terminate your license if you fail to comply with the terms and
conditions of this Agreement. upon such termination, you agree to destroy all
your copies of the Software.
Any attempt to sublicense, rent, lease or assign, or except as expressly
provided herein, to transfer any copy of the Software is void.
You agree that you are responsible for payment of any taxes, including personal
property taxes, resulting from this Agreement.
This Agreement is governed by the laws of the State of Arizona.
Should you have any questions concerning the Agreement, write to:
VIASOFT, INC., 3033 North 44th Street, Suite 101, Phoenix, Arizona 85018.
YOU ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT, UNDERSTAND IT AND AGREE TO
BE BOUND BY ITS TERMS AND CONDITIONS. YOU FURTHER AGREE THAT IT IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, WHICH SUPERSEDES ANY PRIOR
AGREEMENT, ORAL OR WRITTEN, AND ANY OTHER COMMUNICATIONS BETWEEN US RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT.
CONFIDENTIAL 72
<PAGE> 85
EXHIBIT F
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
-------------------------
PROPOSED DEVELOPMENT PLANS
This Exhibit describes SEEC's current development plan with expected delivery
dates. SEEC may, at its sole discretion, change these plans as commercially
reasonable. Except as expressly set forth in Section 5 of this exhibit, SEEC
will not be deemed in breach of any obligation described herein, regardless of
whether the obligation is fulfilled or unfulfilled, as long as SEEC keeps
VIASOFT reasonably informed of its then current development plans, as long as
VIASOFT is not promoting a competing product. This does not require disclosure
of Confidential Information by SEEC.
1 TECHNICAL RESOURCES AND CERTAIN COMMITMENTS
Except as expressly set forth in the Agreement, all software production
shall be the sole responsibility of SEEC, and SEEC shall manage all
aspects of acquiring and directing technical resources necessary to
sustain software production.
VIASOFT desires to conduct its own Final Beta Testing program for the
new products in the COBOL Analyst Product Line, with the Final Beta
Testing limited to a maximum of six active VIASOFT Beta Sites for each
release of these products; SEEC agrees to provide Final Beta versions
of the private labelled versions of these products to allow VIASOFT to
do so. SEEC will make reasonable efforts to resolve all Severity 1 and
2 problems discovered by the VIASOFT and SEEC Beta Sites, before the
end of the Final Beta Testing period.
SEEC agrees to provide the private labelled version products at the
same time as the non-private labelled version of the products are made
available to customers of SEEC in Final Beta or General Availability
("GA") versions, unless VIASOFT requests otherwise.
2 DEVELOPMENT COORDINATION
SEEC will ensure that VIASOFT is kept abreast of product deliverables.
At the start of each new release, SEEC will provide to VIASOFT a
schedule identifying the release content and major milestones for that
release.
73
<PAGE> 86
3 PRODUCT DEVELOPMENT PLAN AND RELEASE PROJECTIONS
3.1 Periodically, VIASOFT will provide SEEC with enhancement suggestions
and a list of high priority problems that need to be included in the
upcoming new products. SEEC agrees to consider such suggestions and
requests in good faith.
3.2 For each new product in the COBOL Analyst Product Line, SEEC wilt
provide to VIASOFT non-private labelled versions of the product
documentation (and versions showing all changes, i.e., "black-lined",
where applicable) at the start of Final Beta Phase, and at General
Availability. If the product documentation is not ready at these
phases, then it will be delivered as soon as it is available, but no
later than the time it is shipped to any SEEC customer.
4.1 DEVELOPMENT PLANS AND DELIVERY DATES
4.1.2 PHASE II A FINAL BETA START DATE: MAR. 1, 1994
PLANNED FEATURES:
SEEC's current intentions are to make and release the following
enhancements:
o Develop SEEC Version 2.1 enhancements currently planned.
- Editing via annotations
- Facility to recapture a program that is already loaded
into the Application Dictionary with an option to Save
annotations, synonyms, and renames
- Enhanced system wide search
- Enhanced system wide cross reference and impact
analysis features
- Enhanced annotation facility (support for annotation
types and ability to query based on annotation type,
author, business rule.
o Implement a Microfocus Workbench Interface as determined by SEEC
4.1.2 PHASE II B FINAL BETA START DATE: MAY 31, 1994
PLANNED FEATURES:
SEEC's current intentions are to make and release the following
enhancements:
o Develop the LAN Server version of the COBOL Analyst product.
o Enhance the error reporting, and error recovery capabilities of
the Licensed Programs to improve the supportability of the
Licensed Programs. In particular, improve Application Capture
to recover from an error to continue to parse the rest of the
program without producing
74
<PAGE> 87
spurious error messages, thereby parsing the entire program in
a single run.
o Provide facilities for working with large numbers of
Applications, including: Reports (programs/objects within
applications by type); Find Application (in Capture or
Analyst).
o Fix all severity 2 bugs reported by VIASOFT as a result of
running the VIASOFT COBOL parser Validation Test Suite.
4.1.3 PHASE III FINAL BETA START DATE: DEC.31, 1994
PLANNED FEATURES:
SEEC's current intentions are to make and release the following
enhancements:
o 32 bit Windows NT version of the products.
o Support IDMS syntax 2nd COBOL II Release 3 subprograms in the
Application Capture and present same in COBOL Analyst.
o Resolution of all Severity 3 bugs reported by VIASOFT as a
result of running the VIASOFT COBOL parser Validation Test
Suite.
o JCL (compile, application) for basic file/program
relationships.
o (If not already implemented in Phase II B) develop interface
with VIASOFT's product that downloads all components necessary
for the COBOL Analyst Capture facility.
o (If not already implemented in Phase II B) Synergy items to
enable COBOL Analyst to integrate better with VIASOFT's ESW/2
(Co-operative Existing Systems Workbench for OS/2). Details to
be mutually agreed upon.
OTHER FEATURES:
SEEC's current intentions are to consider these additional features on
a time permitting basis:
o Enhance the debugging capabilities of the product as required.
o Enhance re-capture scenario, including:
- A "delete existing member" option, to support
recapturing stale members.
- Re-application of existing program knowledge (COBOL
type, synonyms, renames, annotations, etc.).
75
<PAGE> 88
- Re-capture of any (or all) those application members
that are stale. Reference the Application Definition
(above) to recapture each in the proper manner.
Produce complete recapture report.
o Develop additional metrics: "Knots" and "Essential Complexity".
o Define, display and store the Application Definition for
reference to all components (programs, files definitions, table
definitions, segment definitions, maps, etc.).
o Enhance Analyst to improve Synonym gathering heuristics.
Usability related:
o Allow reports to be run to a window; then optionally saved to
file.
o Enhance documentation to incorporate task-based scenarios.
o Provide context sensitive Help for all dialogs.
4.1.4 PHASE IV FINAL BETA START DATE: JUNE 30, 1995
OTHER FEATURES:
SEEC's current intentions are to consider the following features on a
time permitting basis:
o Enhance products to capture and present the following: -
COBOL PERFORM ranges
- CICS FCT (and possibly PPT) tables; also a mechanism
to capture equivalent information from the CICS System
Definition (CSD) file
- VSAM IDCAMs and associate with definition extracted
from COBOL
- IMS stage 1
- IMS DFSMDA Macro (determine Dds for IMS databases)
o Enhance Analyst as follows:
- Add object selection lists for files, data items,
paragraph labels, PERFORM ranges, and subprograms
- Provide an "exceptions" report facility to identify
program anomalies, e.g. dead data, dead code,
recursion (PERFORM range), live exits (paragraph via
PERFORM range), data item modified but not used, data
item used before initialized.
- Provide statistics for the program, files, PERFORM
ranges and other objects.
76
<PAGE> 89
o Further automate identification of synonym base elements and
generation of candidate selection lists; provide "object type"
filters for candidate selection lists.
o Enable COBOL Analyst to synergize or integrate better with
VIASOFT's mainframe Existing Systems Workbench (ESW). Details
to be mutually agreeable.
o Resolve all Severity 4 COBOL parser anomalies as reported by
VIASOFT from running the COBOL Parser Validation Suite.
4.1.5 PHASE V FINAL BETA START DATE: DEC.31, 1995
OTHER FEATURES:
SEEC's current intentions are to consider the following features on a
time permitting basis:
o Application Programming Interface (API) to the data dictionary.
o Expand Application analysis to capture/construct complete data
flow linkages between programs.
o Expand gathering of Application "glue" including:
- Capture JOB and CALL data to map data flows between
batch programs
- Establish semantic linkages between data objects
across programs via calls and file aliasing
- Establish global cross-references to file/record,
segment, table, map and other object usage
- Enhance application level impact analysis
o Expand Data Re-engineering (to be mutually determined).
5 DEFINITION OF "MATERIAL DEFAULT" FOR DEVELOPMENT SERVICES
The following are the conditions under which SEEC shall be in "Material
Default" of the Agreement for purposes of Section 16(c) of the
Agreement as it relates to Sections 1, 2, 3 and 4 of Exhibit F (meaning
that SEEC has 30 days to cure the default or VIASOFT can exercise its
remedies, including termination of the agreement at the end of the 30
days):
5.1 If SEEC does not provide (i) the Final Beta versions of the private
labelled products to VIASOFT to allow VIASOFT to conduct its own Final
Beta Testing
77
<PAGE> 90
program or, (ii) the General Availability ("GA") versions, as provided
in Section 1 above.
5.2 If SEEC violates Section 3.2 above.
78
<PAGE> 91
EXHIBIT G
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
-------------------------
INITIAL MARKETING PLAN
The following outlines the projected Initial Market Plan. It is based on
information available to date and represents the requirements for fulfilling
marketing and sales requirements. It is provided in general terms and is
subject to modification based on timing, market conditions or other unknown
influences.
CUSTOMER DOCUMENTATION and TRAINING MATERIALS
To conform to VIASOFT packaging standards short and long term, the
customer documentation and training courseware will undergo two major
changes. The first will be to repackage/standardize the existing
documentation as is. This includes VIASOFT standard covers, binding and
page sizing at 7.5 in. by 9 in. The second change will entail expansion
and rewrite reflecting VIASOFT's years of professional documentation
and training experience in the COBOL maintenance market. One additional
requirement is existing ESW workshop materials include training modules
covering the new technology.
SALES COLLATERAL and PACKAGING
The product packaging/private labelling will begin immediately after
the signing of the agreement. Sales collateral will be developed to
support the selling process and trade shows. The anticipated materials
are listed below in the new Product Package, Product Trial Kit and
Student Training Kit below:
Product Package
- Documentation Set and Reference Cards (Bound 7.5 x 9)
- Diskettes (up to 4) and Labels
- Box/Sleeve/Filler
Student Training Kit
- Student Training Guide
- Student Quick Start Guide
- Student Certificate
79
<PAGE> 92
Product Trial Kit
- Literature Folder
- Whitepaper
- Backgrounder
- Brochure
- User Success Stories
- Product Description
- Diskettes (up to 4) and Labels
- Trial Agreement
SALES STAFFING
No increase in staffing for the Direct Sales, Client Services
Consultants, Education Specialists and Systems Engineers is anticipated
for this new technology. A new Telesales department will be created
with the following expected staffing levels subject to market
conditions and success of this new channel:
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5
<S> <C> <C> <C> <C> <C>
TeleSales 1 1 1 1 1
Manager
TelesaIes Reps 2 3 4 5 6
</TABLE>
Note: During the first year, the Telesales Manager will also carry a sales
quota.
INTERNAL TRAINING
Training of the Direct Sales Force, Client Services Consultants and
Education Specialists, Systems Engineers and the Telesales sales staff
will be jointly developed and conducted by SEEC and VIASOFT. It is
estimated to take approximately 4-6 weeks to design and deliver the
training program. There will be three different training programs
required: 1) A Direct Sales force training program. 2) A Telesales
training program. 3) A technical training program for Consultants,
Systems Engineers and Education Specialists.
PROMOTION
To supplement selling efforts, a constant direct mail campaign
consisting of 1 500 pieces every month will be launched. The intent of
the campaign is to expose the entire prospect base to the benefits of
the new technology every 90 days. Although advertising is not planned
currently, VIASOFT will evaluate the viability of advertising to
supplement the sales effort.
INITIAL MARKETPLACE LAUNCH
Approximately 90 days after execution of this agreement, an initial
marketplace launch focused on existing VIASOFT customers will commence.
The direct sales force will target larger accounts with a large
workstation population while the telesales organization attacks
smaller, less workstation populated accounts.
80
<PAGE> 93
Account selection and deployment of the sales channels will be jointly
planned and executed by management from both organizations.
Simultaneously, the direct mail campaign will be launched focusing on
new prospects as describe above.
PUBLIC RELATIONS
The new technology will be automatically included with the planned
industry analyst awareness program scheduled to begin in early 1994
time frame. Press announcements will be made within 30 days after
repackaging of the product Is completed and the sales channels are
market ready.
USER SUCCESS STORIES
Currently, VIASOFT has a program in place to cultivate and develop User
Success Stories. To include the new product into this program, several
'seed' copies will be provided to selected VIASOFT customers (8-10) at
no charge. In return, after 90 days, the customer will work with the
VIASOFT staff to develop initial User Success Stories. Once these
initial success stories are completed, additional User Success Stories
will be developed as part of the natural course of VIASOFT's existing
success story program.
TRADE SHOWS
Immediate steps will be taken to include the new product into the
existing trade show program. Additionally, VIASOFT will investigate and
take advantage of, when possible and feasible, other trade shows not
currently attended by VIASOFT.
PRELIMINARY SALES PROJECTIONS
Set forth below are VIASOFT's preliminary projections for the
COBOL/Analyst products to be sold under this Agreement. Such
projections are good faith projections and are not contractually
binding obligations or any guaranteed performance. The contract year
will be of 12 month duration starting 90 days from the commencement of
the agreement.
<TABLE>
<CAPTION>
Contract Year Unit Sales
<S> <C>
1st year 2,000
2nd year 3,000
3rd year 4,000
</TABLE>
81
<PAGE> 94
EXHIBIT H
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
[LOGO]
ERA CERTIFICATE
Era Software Systems Private Limited (ERA) a company created under Indian
Companies Act, 1956, hereby certifies to VIASOFT, Inc., a Delaware Corporation,
in order to induce VIASOFT, Inc. to enter into that certain International
Software Marketing and License Agreement with SEEC, Inc. (the "Agreement") (the
capitalized terms used in this Certificate have the same meanings as are
assigned thereto in the agreement unless the context requires otherwise) as
follows:
1. SEEC, Inc. and ERA own all intellectual Property Rights to the Licensed
Programs free and clear of any claims, liens or encumbrances, and SEEC, Inc.
has obtained all necessary authorizations from ERA to permit SEEC to
execute, deliver and perform the Agreement and no further authorizations or
consents from ERA are required in that respect. Without limiting the
foregoing, SEEC advises that the Licensed Programs were developed with
financing from ICICI. However, SEEC and ERA have been advised by ICICI, and
by legal counsel in India that the financing agreement does not give ICICI a
lien against the Licensed Programs, ICICI is aware of SEEC's intent to give
VIASOFT a license to the Licensed Programs and it has no objections to the
same. See letters attached.
2. During the term of the agreement, or during the twelve (12) month period
following termination or expiration of this Agreement, ERA will not without
VIASOFT's prior consent employ or solicit the employment of any person who,
to ERA's knowledge at that time is, or was during the prior twelve (12)
months, an employee of VIASOFT.
3. During the term of the Agreement, or during the twelve (12) month period
following termination or expiration of this Agreement, ERA will not without
VIASOFT's prior consent use or attempt to use, directly or indirectly, as a
distributor, sales representative or agent, any person or entity who, to
ERA's knowledge at that time is, or was during the prior twelve (12) months,
a distributor of VIASOFT.
CONFIDENTIAL 82 AAL20217.WP5 11/19/93
<PAGE> 95
[LOGO]
4. ERA agrees that this Certificate shall be binding upon its successors and
assigns, and any transferee of its ownership interests in SEEC.
Dated November 23, 1993.
/s/ ASHOK K. AGARWAL
--------------------
By Ashok K. Agarwal
-----------------
its DIRECTOR.
----------------
"ERA"
CONFIDENTIAL 83 AAL20217.WP5 11/29/93
<PAGE> 96
[LETTERHEAD]
PACT/33932 September 29, 1993
Mr. Ravi Koka
President
Seec, Inc.
5001 Baum Blvd.
Pittsburgh
Pennsylvania 15213
USA
Dear Mr. Koka:
Referring to your fax of September 27, 1993 regarding the PACT project,
we have to inform you that we do not have any objection to your entering into
marketing alliance with Viasoft. We have to further inform you that PACT does
not have a lien on the products/technology developed by you under the project,
which is subject to the overall terms and conditions specified in the
Cooperation and Project Financing Agreement dated June 20, 1990 signed by you
and Era Software with us.
With best regards,
Yours sincerely,
/s/ P. D. SHEDDE
--------------------
P. D. Shedde
Assistant General Manager
CONFIDENTIAL 84 ALL20217.WP5 11/29/93
<PAGE> 97
TO: RAVI
FM: KISHORE DATE: 27.10.93
FOR YOUR COMMENTS PLEASE.
Legal Practitioner
S. PRABHAKAR High Court Of Andhra Pradesh
Advocate India
Regn No. 452/61986
- --------------------------------------------------------------------------
Date: 24/09/93
M/s. Era Software Systems Pvt. Ltd.,
Regd. Office at 4, Modini Nehru Nagar,
1st Floor, Begumpet Road,
Hydershad - 500016.A.P.
Sirs,
Ref: Opinion as to whether I.C.I.C.I., has Lien against the Software
Developed under the C.P.F.A. Agreement - regarding.
I am a Lawyer authorized to practice in the High Court of Andhra Pradesh, India
with effect from 20th June 1986.
As desired by you I have studied the Cooperation and Project Financing
Agreement entered into by The Industrial Credit and Investment Corporation of
India Ltd., M/s Era Software Systems Pvt. Ltd. Hyderabad, India, and Seec
Incorporated, Pittsburgh, Pennsylvania, U.S.A.
I examined the Agreement to see whether I.C.I.C.I. has lien against the
Software Developed under the C.P.F.A. Agreement.
There is no clause indicating that I.C.I.C.I. has any lien against the Software
Developed under the C.P.F.A. Agreement. The Industrial Credit and Investment
Corporation of India Ltd. is merely entitled to receive payments as enumerated
in clauses C1 to C7 of the above referred agreement and nothing further.
I have also examined Clause L3 of the said Agreement, it reads as follows:
"In the event that potentially useful products or processes are developed as
the result of work financed by ICICI hereunder, but neither participant elects
to commercialize or license such products or processes, then ICICI reserves to
itself the right to commercialize such products/processes through any other
agency at their discretion. If so required by ICICI, the Proposer will execute
a Disclaimer/Release Assignment in favour of ICICI or any other Agency as ICICI
may direct."
The above clause is applicable only to potentially useful products developed as
a result of work financed by ICICI, which neither participant elects to
commercialize or license. The above clause cannot be construed as a general
lien against all the Software Developed under the C.P.F.A. Agreement.
I am therefore of the firm opinion that ICICI has no general lien against the
Software Developed under the C.P.F.A. Agreement and that it is merely entitled
to receive payments as enumerated in clauses C1 to C7 of the above referred
agreement.
S. PRABHAKAR
ADVOCATE
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6-1-320, WALKER TOWN, SECUNDERABAD-500 025, INDIA 866683
CONFIDENTIAL 85 ALL20217.WP5 11/29/93
<PAGE> 98
EXHIBIT I
TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSE AGREEMENT
-------------------------
CERTIFICATE OF PRINCIPALS
VIASOFT, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
U.S.A.
Gentlemen:
Each of the undersigned own, in the aggregate, more than fifty percent
(50%) of the outstanding legal and beneficial ownership interests (including
voting rights) in SEEC, Inc., a Pennsylvania corporation ("SEEC"), and each of
the undersigned hereby certifies to VIASOFT, Inc., that the undersigned, on
behalf of himself or itself and his or its successors and assigns, agrees to be
bound by Section 17 of that certain International Software Marketing and
License Agreement between you and SEEC (the "Agreement"). Section 17 provides
as follows:
At any time or times during the term of this Agreement that SEEC or its
principals desire to enter into a transaction or series of transactions
the result of which would be the sale of all or substantially all of
its business or of the product line (including all copyright interests)
that includes Licensed Programs, whether the same would be accomplished
by the sale or exchange of capital stock, merger, consolidation, or
sale Dr other transfer of assets (including long term or perpetual
exclusive licensing), or a transaction or series of transactions that
would result in a Change in Control of SEEC (any of the foregoing
transactions being a "Significant Transaction"), provided that a
Significant Transaction shall not include venture capital investments,
SEEC shall provide written notice of such desires to VIASOFT prior to
approaching any third parties. VIASOFT shall then have the first
Opportunity to negotiate with SEEC and/or its principals with respect
to accomplishing a mutually acceptable Significant Transaction. If
VIASOFT so elects, it will make a written offer with respect to a
Significant Transaction SEEC has solicited from VIASOFT. SEEC agrees,
for the thirty (30) day period following its written notice to VIASOFT
described above, to negotiate in good faith
86
<PAGE> 99
exclusively with VIASOFT (the "Exclusive Negotiating Period") and not
negotiate with, or solicit any offers or discussions from any third
party with respect to a significant transaction. VIASOFT's entitlement
to an Exclusive Negotiation Period and to make a Right of First Offer
shall be on a one-time basis only (except with respect to unsolicited
offers). After expiration of the Exclusive Negotiation Period, SEEC
shall be free to negotiate and/or accept any other offer which SEEC, in
its sole discretion, deems to be better than the VIASOFT offer, if any.
Notwithstanding the foregoing, such thirty (30) day period shall be
reduced to a seven (7) day period each time, if any, that SEEC receives
an unsolicited offer. With respect to unsolicited offers, if SEEC
elects in its sole discretion to continue to negotiate with the offeror
after the Exclusive Negotiation Period the VIASOFT Right of First Offer
will not apply to offers and counteroffers made in the course of such
continued negotiations by SEEC and/or the initiating offeror. If SEEC
thereafter abandons such negotiations, then commencing six (6) months
after such abandonment provided negotiations were not resumed in such
six (6) month period, the VIASOFT Right of First Offer will again apply
to offers by the same offeror.
This Section 17 shall be binding upon SEEC and the following
principals: Ravi Koka, Raj Reddy, Adam Young and John Godfrey, and as a
condition of executing this Agreement, SEEC shall provide VIASOFT with a letter
from each such principal in the form attached hereto as Exhibit I agreeing to
be bound by this Section 17.
87
<PAGE> 100
The undersigned agrees to cause any transferee of the undersigned's
ownership interests In SEEC to agree to be bound pursuant to this letter.
Date: 12/3/ , 1993.
----------
/s/ RAVI KOKA /s/ RAJ REDDY
-------------------- ----------------------
Signature Signature
Ravi Koka Raj Reddy
-------------------- ----------------------
Print Name Print Name
/s/ JOHN D. GODFREY
-------------------- ----------------------
Signature Signature
John D. Godfrey
-------------------- ----------------------
Print Name Print Name
88
<PAGE> 101
ADDENDUM No. 1
to
INTERNATIONAL SOFTWARE MARKETING & LICENSE AGREEMENT
By and Between
SEEC, INC. - AND - VIASOFT, INC.
Dated 29 November, 1993
This Addendum to the International Software Marketing & License
Agreement (the "Addendum") is made as of this 7th day of November, 1995 by and
between SEEC, Inc., ("SEEC") a corporation organized and existing under the
laws of Pennsylvania and VIASOFT, Inc., a Delaware corporation ("VIASOFT").
This Addendum modifies and amends the International Software Marketing &
License Agreement between SEEC and VIASOFT dated 29 November, 1993 (the
"License Agreement"). Capitalized terms used herein shall have the same
meanings defined in the International Software Marketing & License Agreement.
WHEREAS, SEEC has developed a product that may be sold or licensed in
conjunction with COBOL Analyst and which will require access to the SEEC
Application Dictionary, and,
WHEREAS, SEEC has named the product "Inventory/Analysis" and has configured the
software to be an add-on to COBOL Analyst, and
WHEREAS, SEEC and VIASOFT desire that the product be included for purposes of
this existing License Agreement,
NOW, THEREFORE, the parties agree that:
(1) As defined in Section 1. Definitions., for the purposes of the Agreement,
and the respective applicable provisions contained therein, Inventory/Analysis
will be considered an "Add-on", "Licensed Program" and a "Private label
Product".
(2) Exhibit A is hereby modified to include Inventory/Analysis as an "Add-on"
product.
(3) The rights and license granted to VIASOFT pursuant to 2(a) (the "Rights")
shall be non-exclusive for Inventory/Analysis. No additional Advances shall be
due SEEC from VIASOFT. Earned VIASOFT Royalties for Inventory/Analysis shall be
credited against all Advances previously paid until the amount of the Advances
has been fully earned by SEEC
(4) The initial Exclusivity Period (Section 2. Appointment, Subsection (b)(1))
has expired. As a result, Section 2., Subsections (b)(1) - (5); and subsection
(c)(1) are no longer applicable.
<PAGE> 102
(5) The following shall be added to Section 4. VIASOFT Royalties and Taxes,
Subsection (a) (iii):
"(6) MINIMUM ROYALTIES FOR AN UNLIMITED USE, SINGLE-SERVER
SUBLICENSE OF INVENTORY/ANALYSIS WILL BE CALCULATED AS FOLLOWS:
INVENTORY /ANALYSIS SALES BY VIASOFT
U.S. DOMESTIC PUBLISHED LIST PRICE* MINIMUM ROYALTY
$7,500 $1,200
SINGLE-SERVER SUBLICENSE OF INVENTORY/ANALYSIS BY VIASOFT'S
SUB-DISTRIBUTORS:
U.S. DOMESTIC PUBLISHED LIST PRICE* MINIMUM ROYALTY
$7,500 $675
* PRICES MAY BE DISCOUNTED, BUT MINIMUM ROYALTY SHALL NOT."
(6) VIASOFT will provide to SEEC the error detection services vis a vis the
COBOL Parser Validation Suite Services described in Section 5. Product Rollout:
Market Introduction, Subsection (d); furthermore, Inventory/Analysis does use a
COBOL parser pursuant to Section 8. VIASOFT COBOL Parser Validation Suite
Services. Subsection (a); therefore the five percent (5%) SEEC Royalty
mentioned in said Section applies.
(7) Delete Section 5. Product Rollout; Market Introduction, Subsection (j),
in its entirety.
Addendum Effective Nov 7, 1995
SEEC, Inc. VIASOFT, Inc.
By: /s/ RAVINDRA KOKA By: /s/ AL BOOR
------------------- -------------------
Its: President & CEO Its: CEO
------------------ ------------------
<PAGE> 103
AMENDMENT TO
INTERNATIONAL SOFTWARE MARKETING AND LICENSING AGREEMENT
This Amendment amends and modifies, as set forth herein but not
otherwise, that certain International Software Marketing and License Agreement
dated as of November 29, 1993, by and between SEEC, Inc. ("SEEC"), and VIASOFT,
Inc. ("VIASOFT"), as amended (the "Agreement"). Capitalized terms used herein
shall have the same meanings herein as are expressly assigned to such terms in
the Agreement, unless the context requires otherwise.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, SEEC and VIASOFT hereby agree as follows:
1. Section 1(f), defining "End User", is hereby amended to read
in its entirety as follows:
"End User" shall mean any user who has the right to use any Licensed
Program for its own internal business use, or with respect to
consultants, for their own use in providing consulting services to
their customers, and not for any other use, including, without
limitation, remarketing, resale, relicensing or other redistribution,
either alone or as a component of any other product.
2. The amendment set forth in paragraph 1 above is the only
amendment of the Agreement set forth herein.
This Amendment is effective as of Nov. 7, 1994.
SEEC, INC. VIASOFT, INC.
By /s/ RAVINDRA KOKA By /s/ AL BOOR
--------------------- -------------------------
Its President Its Cheif Financial Officer
-------------------- ------------------------
<PAGE> 1
Exhibit 10.5
PRODUCT PURCHASE AGREEMENT.
MADE this 31st day of March 1996, by and between: SEEC, INC. a Pennsylvania
corporation having offices in Pittsburgh, PA,
("SEEC" hereinafter);
AND
ERA SOFTWARE SYSTEMS PRIVATE LIMITED, a corporation existing under the laws of
the Republic of India ("ERA" hereinafter):
WITNESSETH:
WHEREAS, the parties wish to enter into this Agreement for the purposes of
developing and maintaining a suite of software tools;
NOW THEREFORE:
For and in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto do covenant and agree
as follows:
ARTICLE I DEFINITIONS.
Section 1 As used in this Agreement, and in the dealings between the parties,
the following terms shall be deemed to have the following meanings:
"Add-ons" are any products that SEEC, ERA, or any third party authorized
by SEEC or ERA may develop that may be sold in conjunction with
the PRODUCTS which are the subject of this Agreement.
"Agreement" means this Agreement, its Exhibits, and all lawful amendments
thereto.
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<PAGE> 2
<TABLE>
<S> <C>
"Change of
Control" with respect to a party means the happening of any of the
following: any transaction or series of transactions (including
without limiting the generality of the foregoing, stock sale or
exchange, merger, sale of substantially all of its assets, operation
of law, appointment of a receiver, custodian or trustee for benefit
of creditors, appointment of a receiver or trustee whether under
the laws of the United States or any state therein, or whether
under the laws of the Republic of India, or otherwise) after the
effectiveness of which such party's current shareholders lose
control of such party, or together own less than fifty-one (51%)
percent of the outstanding beneficial interests and voting power
of such party or the resultant entity, provided that an initial
public offering shall not be deemed to be a "Change of Control"
within the meaning of this Agreement.
"Corrected
versions" means products which SEEC or ERA has updated by fixing bugs
in the PRODUCTS.
"Design and
Development" means any design and development or research and development
work done with respect to the PRODUCTS.
"ERA'S
Employees" means all employees of ERA who are working on the design,
development and maintenance of the PRODUCTS at the time SEEC's
right to purchase ERA'S R & D Facilities arises.
"ERA'S R & D
Facilities" means those personnel, equipment, and information which ERA
utilizes for the design and development and maintenance of the
PRODUCTS.
"New versions" mean new versions of the PRODUCTS that SEEC or ERA or any
third party authorized by SEEC or ERA, may develop from time
to time, which include improvements and enhancements of current
functionality. Versions or updates that fix bugs are not
included within the definition of "new versions" for purposes of
this Agreement.
"R & D work" means any design and development or research and development
work done with respect to the PRODUCTS.
</TABLE>
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<PAGE> 3
ARTICLE II PRODUCTS.
Section 1 Products. The products which are the subject of this Agreement are
the existing products described in Exhibit A of this Agreement ("EXISTING
PRODUCTS"), and all future products described in Exhibit A of this Agreement
which are developed by ERA and/or SEEC under the provisions of this Agreement,
("FUTURE PRODUCTS"). As used in this Agreement, the term "PRODUCTS" shaH
collectively be deemed to include EXISTING PRODUCTS, FUTURE PRODUCTS, all work
in progress, all Confidential Data relating to EXISTING and FUTURE PRODUCTS,
and all derivatices, corrected versions and add-ons, together with their
respective use Manuals.
ARTICLE III OWNERSHIP OF PRODUCTS.
Section 1 Joint Ownership. Until SEEC purchases ERA's ownership interest in the
PRODUCTS as specified in Article V, Section 1 of this Agreement, the parties
acknowledge that all PRODUCTS which are the subject of this Agreement are owned
jointly by ERA and SEEC The percentage of ownership to be allocated between
SEEC and ERA for each component included within the term PRODUCTS will be based
on the following formula:
(a) Five (5%) per cent of the ownership to the party who is the
source of the idea;
(b) Thirty-five (35%) of the ownership to the party designing and
developing the PRODUCTS;
(c) Sixty (60%) per cent of the ownership to the party doing the
beta testing, marketing and sales of the PRODUCTS.
For all EXISTING PRODUCTS, the parties agree that SEEC has performed tasks (a)
and (c) above of this Section 1, and ERA has performed task (b) above.
Therefore, all
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<PAGE> 4
EXISTING PRODUCTS are owned sixty five (65%) per cent by SEEC and thirty five
(35%) per cent by ERA.
Section 2 Deliberately omitted.
Section 3 If and after SEEC purchases the PRODUCTS, they, together with all
design and development and maintenance work in progress and all information and
Confidential Data relating to the PRODUCTS shall be the property of SEEC,
regardless of the fact that any one or more of the above may continue to be in
the possession of ERA. ERA shall cooperate with SEEC and take all reasonable
and necessary actions, at SEEC'S expense, to ensure that no third party
acquires any rights to any part of the PRODUCTS remaining in ERA'S possession
because of any failure to give such persons actual or constructive notice of
SEEC'S ownership in accordance with the provisions of any applicable Commercial
Code. This provision shall not be construed to allow or require ERA to register
the PRODUCTS under any copyright or intellectual property laws on behalf of
SEEC without SEEC'S prior written consent.
ARTICLE IV SOURCE CODE
Section 1 Access to Source Code. So long as the PRODUCTS are jointly owned by
SEEC and ERA, both parties will have right of access to the source code for
purposes of maintenance of PRODUCTS and for development of FUTURE PRODUCTS in
accordance with the terms of this Agreement. Use of the source code for any
other purpose shall be by mutual agreement.
Section 2 Sale and Licenses to Third Parties. So long as the PRODUCTS are
jointly owned by SEEC and ERA, neither party shall have the right to license
use of the source code to any third party, or transfer any ownership interest
in the PRODUCTS to any third party without the consent of the other party.
Section 3 After Purchase of PRODUCTS by SEEC After SEEC purchases the PRODUCTS,
the source code shall be the sole property of SEEC and SEEC may
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<PAGE> 5
demand its return at any time, and from time to time, in which event ERA shall
immediately return the source code and certify, to SEEC'S satisfaction, that
ERA has not retained any copies of the same, provided however, SEEC will not
demand the return of the source code if SEEC requires ERA to perform
maintenance which requires use of the source code.
ARTICLE V SEEC'S PURCHASE OF OWNERSHIP OF PRODUCTS.
Section 1 At or about the time this Agreement is signed by the parties, SEEC
shall purchase all of ERA'S right, title and interests in and to the PRODUCTS
and ERA shall transfer to SEEC all of its right, title and interest in the
PRODUCTS, free and clear of all liens and encumbrances.
Section 2 Consideration. In full payment for the said transfer of ERA'S said
ownership interest in the PRODUCTS, SEEC shall transfer to ERA Five Hundred
Thousand (500,000) shares of common stock in SEEC, (which shares are
hereinafter called "ERA'S SEEC SHARES"), under the terms and conditions set
forth in a Shareholder Agreement between the parties and the other shareholders
of SEEC of even date herewith ("SHAREHOLDERS' AGREEMENT").
Section 3 Restrictive Endorsement: ERA'S SEEC SHARES shall be endorsed on
their face with the following restrictive covenant:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND/OR ENCUMBRANCE AS SET FORTH IN A SHAREHOLDERS'
AGREEMENT DATED _______________1994. WHICH AGREEMENT IS ON FILE WITH
THE BOOKS AND RECORDS OF THE CORPORATION, AND SUCH SHARES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED HYPOTHECATED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF THAT
AGREEMENT."
Section 4 FUTURE PRODUCTS After Purchase. After SEEC purchases the PRODUCTS,
any and all development and design work done by ERA for FUTURE PRODUCTS will be
deemed to be done on the basis of work for hire, and such work shall not result
in any ownership rights in ERA to any such FUTURE PRODUCTS.
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<PAGE> 6
After SEEC has purchased the PRODUCTS, if any applicable laws give ERA any
ownership interest in FUTURE PRODUCTS for development and design work done by
ERA for such FUTURE PRODUCTS, ERA agrees that it will, at any time, and from
time to time, without payment of any additional consideration, sign all
documents and do all actions necessary to transfer and assign its said
ownership interest in FUTURE PRODUCTS to SEEC The parties expressly understand
and agree that the transfer to ERA of Five Hundred Thousand (500,000) shares of
SEEC'S common stock with the aforesaid restrictive covenants is full and
adequate consideration for ERA'S existing and future ownership rights in all
EXISTING PRODUCTS and FUTURE PRODUCTS.
ARTICLE VI PRODUCT DEVELOPMENT AND MAINTENANCE.
Section 1 Design and Development. Except where this Agreement provides to the
contrary, while this Agreement is in effect, ERA will have the right, but not
the exclusive right, to do design and development work for the PRODUCTS. Such
design and development work shall be deemed to include the responsibilities
specified in Exhibit C of this Agreement.
Section 2 PRODUCTS and Development Schedule. The PRODUCTS to be developed,
their start and finish dates, and milestones for development are specified in
Exhibit C of this Agreement. ERA will communicate with SEEC on a weekly basis
as to the status of the development schedule. The parties may by amendments to
Exhibit C define additional ideas for development of PRODUCTS and their
respective development schedules at any time, and from time to time. The terms
and conditions of this Agreement will apply to all such amendments to Exhibit C
unless the parties specifically provide to the contrary in writing.
Section 3 Infrastructure and Personnel. ERA agrees to maintain in India the
necessary infrastructure and personnel to support the design and development
work described in this Agreement. The actual number of personnel needed will be
agreed to annually, with an option by either party to review such agreements
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<PAGE> 7
quarterly. In 1994 ERA will maintain fifteen (15) R & D personnel, and the
number of PCs and servers set forth in Exhibit D of this Agreement.
Section 4 Project Manager. ERA will appoint and employ in India a project
manager who will be responsible for all software development under this
Agreement.
Section 5 Development Support at SEEC ERA agrees to depute or transfer to SEEC
the necessary manpower for PRODUCT support at SEEC The costs of such personnel
transfers, shall be paid for by SEEC, and the compensation and fringe benefits
of such persons, shall be paid for by SEEC ERA will ensure that each of the
persons so deputed or transferred will have adequate knowledge of the PRODUCTS.
For each such person deputed or transferred to SEEC, ERA agrees to arrange
suitable training of up to six (6) months at ERA based on a mutually agreed to
curriculum, prior to deputing or transferring the person to SEEC The costs of
such training, and the compensation of the person during training shall be paid
for by ERA.
Section 6 PRODUCTS Maintenance Support. ERA will maintain a team of personnel
in India for PRODUCTS maintenance. The primary responsibility of such personnel
will be to fix bugs found in the PRODUCTS in accordance with the schedules for
different levels of severity, as specified in Exhibit E of this Agreement. The
starting number of such personnel and the performance criteria to be met by ERA
is specified in Exhibit F. The team size may be adjusted quarterly or as
mutually agreed to, in accordance with the criteria set forth in Exhibit F.
Section 7 Transfer of Personnel. ERA will permit SEEC, at SEEC'S option, to
take from ERA, and employ on a temporary or permanent basis, critical personnel
on an as needed basis, up to a maximum of five (5) persons within a two (2)
year period. The costs of transfer and the compensation of such personnel shall
be paid for by SEEC.
Section 8 Software Releases. ERA will make releases in accordance with
reasonable guidelines laid down by SEEC The quality assurance procedure to be
followed will be as specified by SEEC and agreed to by ERA.
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<PAGE> 8
Section 9 After SEEC purchases the PRODUCTS, ERA will not have the right to
design and develop PRODUCTS except with SEEC'S prior written consent, and on
such terms and conditions as the parties agree to.
ARTICLE VII Deliberately Omitted.
ARTICLE VIII NON-COMPETE COVENANT.
Section 1 ERA agrees that it will not, directly or indirectly develop for
itself or for any third party, a product or line of products similar to the
PRODUCTS covered by this Agreement and any products that address the COBOL
maintenance and redevelopment market and data base re-engineering and reverse
engineering products, except in accordance with the terms of this Agreement. So
long as SEEC continues in business, this non-compete covenant will remain in
full force and effect while this Agreement is in effect, and for a period of
two (2) years after termination of this Agreement. This non-compete covenant
shall not be applicable to any period of time after SEEC ceases to do business.
Section 2 Except as specifically allowed by this Agreement, SEEC agrees that it
will not, without the prior written consent of ERA, offer employment to any
employee of ERA who is engaged in development, design and maintenance work
covered under this Agreement. So long as ERA continues in business, this
non-compete covenant will remain in full force and effect while this Agreement
is in effect, and for a period of two (2) years after termination of this
Agreement. This non-compete covenant will not be applicable to any period of
time after ERA ceases to do business. This non-compete covenant will not be
applicable to any situation in which SEEC has the right to purchase the R & D
facilities of ERA in accordance with the terms of this Agreement, or take over
employees of ERA under the provisions of this Agreement pertaining to PRODUCT
development, support, marketing or maintenance.
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<PAGE> 9
Section 3 ERA agrees that it will not, without the prior written consent of
SEEC, offer employment to any employee of SEEC who is engaged in work involving
the PRODUCTS covered under this Agreement. So long as SEEC continues in
business, this non-compete covenant will remain in full force and effect while
this Agreement is in effect, and for a period of two (2) years after
termination of this Agreement. This non-compete covenant will not be applicable
to any period of time after SEEC ceases to do business.
ARTICLE IX ROYALTIES, MAINTENANCE FEES, AND R & D FEES.
Section 1 For purposes of this Article the term "SEEC'S gross receipts" shall
be deemed to mean the sum of (a) the gross amounts received by SEEC from
end-users and (b) the gross amount received by SEEC from distributors and
sub-distributors. The term "SEEC'S gross receipts" shall not be deemed to mean
the full amount received by a Distributor or sub-distributor for the
sub-licensing of a product or program, if SEEC does not receive that full
amount.
Section 2 Deliberately omitted.
Section 3. Deliberately omitted.
Section 4 Deliberately omitted.
Section 5 R & D Fees to ERA. After SEEC purchases the PRODUCTS under the terms
of this Agreement, SEEC'S obligations to pay ERA Royalties for the PRODUCTS
will cease. Instead of such royalties, SEEC will pay ERA an R & D fee in the
sum of the following:
(a) Ten (10%) per cent of SEEC'S gross receipts from the PRODUCTS
developed by ERA before date of purchase, which ten (10%) per
cent shall be paid up through the end of 1996, and thereafter
on mutually
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<PAGE> 10
agreed to terms; payments under this subparagraph shall be paid
by SEEC directly to ERA; and
(b) Five (5%) per cent of SEEC'S gross receipts from PRODUCTS and
services derived from COBOL redevelopment, and all data base
re-engineering and reverse engineering products and services,
which amounts shall be paid by SEEC directly to ICICI in behalf
of ERA, until such payments aggregate Rs. 75.8 lakhs, after
which there shall be no further obligation to pay this five
(5%) per cent.
Section 6 In the event that the R & D fees specified in Section 5 above of this
Article are less than TWELVE THOUSAND (US$12,000.00) DOLLARS per quarter
("Minimum R & D Fee"), SEEC will, within sixty (60) days pay ERA such
additional amounts as may be necessary to bring the total R & D payment under
Section 4 above up to the amount of the Minimum R & D Fee.
Section 7 Maintenance Fees to ERA. In the first three years of this Agreement,
SEEC agrees to pay ERA a maintenance fee in accordance with Exhibit G of this
Agreement, at a flat rate of FIVE THOUSAND (U.S.$5,000.00) DOLLARS per month.
In each of the next three years, so long as this Agreement continues to be in
effect, the aforesaid amount shall be SIX THOUSAND (US $6,000.00) DOLLARS per
month. For all subsequent years, so long as this Agreement continues in effect,
the maintenance fee shall be increased by an amount to be mutually agreed to by
the parties, taking into consideration any and all factors that are relevant
and reasonable, including without limiting the generality of the foregoing, the
cost of providing the service, and a fifteen (15%) per cent profit for ERA;
provided however, if the parties cannot arrive at mutual agreement as to the
increase, the matter shall be resolved by binding arbitration in accordance
with the provisions of Article XIII, Section 2 of this Agreement if the parties
agree to binding arbitration. If they do not agree to binding arbitration, then
SEEC shall have the right to purchase ERA'S R & D Facilities as set forth in
Article XV Sections 2 and 3 of this Agreement.
Section 8 Deliberately omitted.
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<PAGE> 11
Section 9 Payment Terms. All royalty, maintenance fee and R & D fee payments
due under the terms of this Agreement, shall be paid within sixty (60) days of
date of invoice.
Section 10 Deliberately omitted.
Section 11 Deliberately omitted.
Section 12 Failure to Pay R & D Fees After Purchase of PRODUCTS by SEEC After
the PRODUCTS are purchased by SEEC, if SEEC fails, without justification, to
cure tardy payments of R & D fees due to ERA in accordance with the provisions
of this Agreement, regardless of whether or not interest is paid or owing on
such tardy payments, ERA may, at its option, cease to provide further R & D
Services until such time as the R & D fees are once again current. This option
may be exercised at any time and from time to time, either alone or together
with other remedies, so long as an uncured and unjustified failure to pay
royalties then exists. The exercise of this option shall not affect or impair
ERA'S right to terminate this Agreement for such an Event of Default, but shall
exist in addition to the right to terminate.
Section 13 Failure to Pay Maintenance Fees. If SEEC fails, without
justification, to cure tardy payments of maintenance fees due to ERA in
accordance with the provisions of this Agreement, regardless of whether or not
interest is paid or owing on such tardy payments, ERA may, at its option, cease
to provide further maintenance services until such time as the maintenance fees
are once again current. This option may be exercised at any time and from time,
either alone or together with other remedies, to time, so long as an uncured
and unjustified failure to pay maintenance fees then exists, and the exercise
of this option shall not affect or impair ERA'S right to terminate the
Agreement for such an Event of Default, but shall exist in addition to the
right to terminate. For an uncured failure to pay maintenance fees, and after
written notice to SEEC of its intent to do the following, ERA may offer
maintenance services for the PRODUCTS to SEEC'S distributors and customers.
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<PAGE> 12
ARTICLE X AGENCY/JOINT VENTURE.
Section 1 This Agreement is to delineate the rights and obligations of the
parties pertaining to jointly owned intellectual property rights, while such
property rights are jointly owned, and the rights and obligations of the
parties after the joint ownership ceases to exist. It is not the intention of
the parties to create a joint-venture, or a partnership and this Agreement
shall not be deemed to create the same. Neither party will have the authority
to bind the other to any contractual or other commitments whatsoever, without
the prior written consent of the party to be bound.
Section 2 Neither party shall be deemed an Agent for the other. Neither party
shall act in behalf of the other in any respect whatsoever, except to the
extent specified in this Agreement, without the prior written consent of the
other.
ARTICLE XI CONFIDENTIALITY.
Section 1 All intellectual property, technical information or commercial
information disclosed by either party to the other, whether orally, in writing,
on disks or diskettes, on magnetic recordings, or by any method of fax,
computer or telephonic transfer, which is marked or designated Confidential,
and all copies of the same, shall be deemed to be confidential information
("Confidential Data"). Except as provided to the contrary below, each party
agrees to keep confidential all Confidential Data of the other party. This
obligation to keep Confidential Data confidential shall be binding on the
parties even though some or all of the Confidential Data may not fall within
the common law definition of trade secrets.
Section 2 In discharging its obligation to keep the Confidential Data of the
other party confidential, each party may disclose Confidential Data to such of
its officers and employees who have a legitimate need to know all or part of
such Confidential Data to perform their respective duties and obligations. All
such persons will be directed and required to maintain any disclosed
Confidential Data in strict confidence at all
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<PAGE> 13
times, and each party shall take all reasonable precautions (including entering
into appropriate agreements, and establishing appropriate procedures and
disciplines), to ensure the confidentiality of the other's Confidential Data. A
party shall not disclose any Confidential Data of the other party to any
director, officer, or employee whose interests may be competitive or in
conflict with the owner of the Confidential Data, without the prior written
consent of the said owner.
Section 3 No Confidential Data shall be copied or reproduced without the
express prior written consent of the party owning the Confidential Data. All
Confidential Data shall be returned to the party owning or having a right to
possession of the Confidential Data immediately upon request.
Section 4 Neither party shall be liable for the disclosure of any Confidential
Data if such Confidential Data is:
a. In the public domain at the time of disclosure or is made
available to the general public without a breach of this
Agreement by any party or its officers, directors,
shareholders, employees or agents;
b. Used or disclosed with prior written approval of the owning
party;
c. Disclosed pursuant to the order of any Court of competent
jurisdiction;
d. Disclosed without restriction from an outside source with whom
the non-owning party has no relationship;
e. Used or disclosed after a period of five (5) years from the
date of the original disclosure for technical Confidential
Data, and ten (10) years from the date of the original
disclosure for financial or commercial Confidential Data;
f. Established by competent proof as being lawfully known to or in
the possession of the other party at the time of disclosure;
g. Independently developed by the other party without recourse to
or utilization of any portion of the Confidential Data which is
disclosed; or
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<PAGE> 14
h. Ascertainable from a visual inspection of any Systems, machine
or devise which is being offered for sale, lease or rental or
is otherwise made available to the public in the ordinary
course of each party's business, or is ascertainable from
information released by either party to the public in
connection with the sale of its products.
Section 5 Protection of Source Code. ERA agrees to institute the procedures and
provisions of Exhibit H attached hereto, to ensure the confidentiality of the
source code of the PRODUCTS. The source code shall be deemed Confidential Data,
and all of the provisions of this Article and of this Agreement pertaining to
Confidential Data shall be deemed to apply to the source code.
Section 6 Work in Progress and R & D and Maintenance Facilities. All design and
development work in progress, R & D work in progress and maintenance work
(hereinafter collectively referred to as "WORK") performed by ERA under the
terms of this Agreement shall be deemed Confidential Data, and all of the
provisions of this Article and of this Agreement pertaining to Confidential
Data shall be deemed to apply to the WORK. While the PRODUCTS are jointly
owned, all WORK shall be deemed to be the Confidential Data of both parties and
their percentage of ownership shall be determined according to the formula
specified in Article III Section 1 of this Agreement. After SEEC has purchased
the PRODUCTS, all WORK shall be deemed the Confidential Data of SEEC only.
Section 7 ERA agrees to take such security precautions as SEEC may reasonably
require to ensure the confidentiality of its R & D and maintenance facilities
for the PRODUCTS both while the PRODUCTS are jointly owned, and after the
PRODUCTS have been purchased by SEEC.
ARTICLE XII PROTECTION OF INTELLECTUAL PROPERTY RIGHTS.
Section 1 Neither party will do anything which would impair the intellectual
property rights of the other party in the PRODUCTS.
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<PAGE> 15
Section 2 If any party becomes aware of any conduct or lawsuit involving the
intellectual property rights of the other in the PRODUCTS, it shall forthwith
inform the other of such conduct or lawsuit.
Section 3 Deliberately omitted.
ARTICLE XIII INDEMNITIES.
Section 1 Indemnities from SEEC to ERA. SEEC will, at any and all times, and
from time to time, indemnify and hold ERA harmless from any and all damages,
claims, demands, losses, costs, suits, judgments, penalties, expenses, and
liabilities of any kind whatsoever, that may occur, or for which ERA may become
liable, (including without limiting the generality of the foregoing, reasonable
attorneys' fees and the costs and expenses of litigation), that are caused by
any one or more or the following:
(a) Any breach by SEEC of the non-compete covenants contained in
this Agreement;
(b) Failure by SEEC to pay royalties, maintenance fees, or R & D
fees, as specified in this Agreement;
(c) Any impairment by SEEC of ERA'S intellectual property
interests.
(d) Any breach by SEEC of the confidentiality provisions of this
Agreement.
Section 2 Indemnities from ERA to SEEC ERA will, at any and all times, and from
time to time, indemnify and hold SEEC harmless from any and all damages,
claims, demands, losses, costs, suits, judgments, penalties, expenses, and
liabilities of any kind whatsoever, that may occur, or for which SEEC may
become liable,
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<PAGE> 16
(including without limiting the generality of the foregoing, reasonable
attorneys' fees and the Costs and expenses of litigation), that are caused by
any one or more or the following:
(a) Any breach by ERA of the non-compete covenants contained in
this Agreement;
(b) Deliberately omitted.
(c) Any impairment by ERA of SEEC'S intellectual property
interests;
(d) Any breach by ERA of the confidentiality provisions of this
Agreement, including without limiting the generality of the
foregoing, its obligation to keep all design and development,
R & D and maintenance work confidential, and its obligation to
take adequate measures to assure the security of its R & D and
maintenance facilities;
(e) Any breach by ERA of the provisions specified in Exhibit H for
the protection of the source code of the PRODUCTS.
Section 3 To the extent that applicable laws and regulations permit, any
amounts payable under the indemnity provisions of this Agreement shall be
payable in the currency of the country in which the party entitled to the
indemnity has its principal place of business. Any amounts not so payable shall
be paid in the currency of the country in which the payor has its principal
place of business.
ARTICLE XIV TERM AND TERMINATION.
Section 1 Term. This Agreement shall be effective as of the date first above
written, and shall continue in full force and effect until it is terminated in
accordance with its provisions.
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<PAGE> 17
Section 2 Termination Without Cause. Either party may terminate this Agreement
for any reason, or for no reason, upon giving the other party twelve (12)
months written notice of intent to terminate, in which event the Agreement
shall terminate twelve (12) months after delivery of the said notice.
Section 3 Event of Default. An Event of Default shall be any breach of this
Agreement which remains uncured without justification after notice and an
opportunity to cure as set forth in Section 4 below of this Article, provided
however, no opportunity to cure need be given in any one or more of the
following situations, each of which will be deemed an Event of Default without
notice and an opportunity to cure:
(a) For any breach of the Confidentiality provisions of this
Agreement;
(b) For any breach which impairs intellectual property interests;
(c) For any material breach which cannot be cured;
(d) For any breach which is of such a nature that giving the
breaching party an opportunity to cure would cause the serious
harm to the other party, or would be a futile act.
(e) For any breach which Exhibit H identifies as an Event of
Default without necessity for giving an opportunity to cure.
Section 4 Notice and Opportunity to Cure. Except as specified in Section 3
above of this Article, in the event that a party believes that the other party
is in breach of this Agreement, it shall give the breaching party written
notice identifying the breach. If the breaching party fails without
justification to cure the breach within sixty (60) days of receipt of the
written notice, the breaching party will have committed an Event of Default.
If, after such opportunity to cure has been given, this Agreement is not
terminated, no further opportunities to cure need be given prior to
termination, so long as the breach remains uncured without justification.
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<PAGE> 18
Section 5 Termination for Default. Either party may terminate this Agreement at
any time upon written notice of termination, if the other party has committed
an Event of Default. Without limiting the generality of the foregoing, the
parties agree that: (1) an uncured failure by ERA to meet its design and
development, R & D, and maintenance obligations as set for in this Agreements
shall be deemed an Event of Default; and (2) an uncured failure of SEEC to meet
payment of its royalty, R & D fees or maintenance fees obligations as set forth
in this Agreement shall be deemed an Event of Default.
Section 6 Change of Control. In the event of a Change of Control in one party,
the other party may terminate this Agreement upon ninety (90) days written
notice either before the Change of Control becomes effective, or at any time
within six (6) months after the Change of Control becomes effective. This
provision shall not be deemed to impair ERA'S right to request a renegotiation
of the design and development and R & D provisions of this Agreement in the
event of a Change of Control, as set forth in Article XVII, Section 4.
Section 7 Termination for Other Reasons. If this Agreement calls for mutual
agreement of the parties in some particular, and the parties are unable to
reach agreement as to what is mutually acceptable, and if the matter is
referred for resolution to binding arbitration under the terms of this
Agreement, and the arbitrators render a decision which either party finds
unacceptable, the dissatisfied party may terminate this Agreement upon one
hundred and eighty (180) days written notice to the other party.
Section 8 Rights and Obligations Upon Termination. Upon termination of this
Agreement:
(a) Within thirty (30) days of termination, each party will return
all Confidential Data of the other party to it (including
without limiting the generality of the foregoing, all WORK as
defined in Article XI, Section 6 of this Agreement), and shall
certify to the other that all Confidential Data has been
returned or if in a form that it cannot be returned, shall
further certify that it has been erased.
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<PAGE> 19
(B) Within sixty (60) days of termination, each party will remit to
the other all sums due from it to the other under the terms of
this Agreement.
Section 9 Provisions Which Survive Termination. The following provisions of
this Agreement shall survive termination of the Agreement.
(a) Article V, Section 3 pertaining to restrictive endorsement of
ERA'S SEEC SHARES, for so long as ERA owns the said shares,
unless the shareholders agree to a lesser period of time.
(b) Article VIII, Sections 1, 2 and 3 pertaining to Non Compete
covenants, for two years after termination.
(c) Article XI, Section 1 pertaining to confidential data, so long
as the confidential data is not in the public domain.
(d) Article XII, Section 1 pertaining to impairment of intellectual
property rights, in perpetuity.
(e) Article XII, Sections 1(a), 1(c) and 1(d) pertaining to
indemnities, for the period of the applicable statute of
limitations.
(f) Article XII, Sections 2(a), 2(c) 2(d) and 2(e) pertaining to
indemnities, for the period of the applicable statute of
limitations.
(g) Article XV, Section 1(a), 1(b) and 1(c) pertaining to the
purchase of ERA'S R & D Facilities.
(h) Article XVII, Sections 1 and 3 pertaining to SEEC'S right to
repurchase ERA shares.
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<PAGE> 20
ARTICLE XV PURCHASE OF R & D FACILITIES BY SEEC
Section 1 SEEC or its designee shall have the option of purchasing ERA'S R & D
Facilities upon written notice to ERA on the terms and conditions set forth
herein in any one or more of the following events (for purposes of this Article
only, the term "SEEC" shall be deemed to include any designee of SEEC):
(a) Termination of this Agreement without cause, as specified in
Article XIV, Section 2 of this Agreement, or termination of
this Agreement by ERA as a result of a Change of Control in
SEEC; written notice of its intent to purchase ERA'S R & D
Facilities will be given by SEEC within one (1) year of SEEC
giving or receiving notice of termination;
(b) (i) An uncured failure by ERA to meet any one or more of its
obligations for design and development, R & D, or maintenance,
as set forth in Exhibits C, D, E and F of this Agreement, in
which event SEEC will give ERA written notice of its intent to
purchase.
(c) Termination of this Agreement by SEEC for a Change of Control
in ERA; written notice of its intent to purchase ERA'S R & D
Facilities will be given by SEEC within six (6) months of SEEC
giving notice of termination;
(d) Deliberately omitted.
(e) In the event ERA decides to make an initial public offering of
its shares; written notice of its intent to purchase will be
given by SEEC within six (6) months of SEEC receiving notice
from ERA that proceedings to make an initial public offering
have commenced.
(f) Failure by the parties to arrive at a mutually agreeable
maintenance fee as set forth in Article IX Section 7 of this
Agreement.
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<PAGE> 21
Section 2 Time of Purchase. If SEEC exercises its option to purchase some or
all of ERA'S R & D Facilities, it shall accomplish the purchase within six (6)
months of giving ERA written notice of its intent to purchase unless ERA agrees
to a later time.
Section 3 Terms of Purchase. In purchasing ERA'S R & D facility SEEC shall have
the right, at its sole discretion, to purchase some or all of ERA'S equipment
and Confidential Data used for or relating to the PRODUCTS without taking ERA'S
Employees, or SEEC may take all of ERA'S Employees and all, some or none of
ERA'S said equipment or Confidential Data, all on the terms and conditions set
forth herein.
(a) In purchasing ERA'S R & D facility SEEC shall have the right,
at its sole discretion, and without limiting the generality of
the foregoing, to employ all of ERA'S Employees on such terms
and conditions as SEEC and each such ERA Employee may agree to.
SEEC may not opt to take some ERA Employees without taking all
such employees who wish to go with SEEC However, the decision
of one or more ERA Employees not to go with SEEC will not
preclude SEEC from taking over those ERA Employees who wish to
go with SEEC.
(b) In purchasing ERA'S R & D facility SEEC shall also have the
right, at its sole discretion, and without limiting the
generality of the foregoing, to employ some or all of ERA'S
other employees who have worked on the PRODUCTS within three
(3) months of the date on which SEEC'S right to purchase ERA'S
R & D Facilities arises, and who wish to go with SEEC, on such
terms and conditions as SEEC and each such employee may agree
to.
(c) If SEEC has the right, and opts, to take over any ERA employees
as specified in subparagraphs (a) and (b) above of this Section
at any time within the first three years of the date of this
Agreement, SEEC shall pay ERA Five Thousand (US $5,000.00)
Dollars for each such ERA employee who agrees to go with SEEC
This payment shall be for purposes of compensating ERA for the
time and effort expended to give the said employees training
and experience, and shall not be deemed any part of the
compensation which SEEC may agree to pay any such employee.
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<PAGE> 22
After the first three years of this Agreement, the amount which
SEEC shall pay to ERA for each such employee shall be Six
Thousand (US $6,000) Dollars.
(d) If SEEC exercises its option to purchase ERA'S R & D
facilities, ERA will not offer any ERA employee described in
subparagraphs (a) and (b) above of this Section, any inducement
to remain with ERA.
(e) In purchasing ERA'S R & D facility SEEC shall have the right,
at its sole discretion, and without limiting the generality of
the foregoing, to purchase some or all equipment, and other
tangible or intangible personal property which belongs to ERA
and which is in any way related to the PRODUCTS, on such terms
and conditions as the parties may agree to.
(f) If, at the time SEEC exercises its option to purchase ERA'S R &
D Facilities, ERA'S loan to ICICI has not been paid in full,
SEEC will be responsible for obtaining whatever permission from
ICICI may be necessary, if any, to enable SEEC to purchase
ERA'S R & D Facilities, and will assume responsibility for
paying off ERA'S obligation to ICICI under the tripartite
agreement between ICICI, SEEC and ERA dated 1st June 1990.
ARTICLE XVI INITIAL PUBLIC OFFERING.
Section 1. In the event either party opts to make an initial public offering of
its shares, it shall give the other party written notice as follows:
(a) Within one (1) day of the date on which the corporation makes a
decision to make the initial public offering, with a
specification of that date;
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<PAGE> 23
(b) Within one (1) day of the effective date of the initial public
offering, with a specification of the effective date.
Section 2 ERA'S Covenant. In the event ERA opts to make an initial public
offering of its shares, and SEEC does not exercise its option to purchase ERA'S
R & D Facilities, ERA covenants and agrees that it will maintain its R & D
Facilities at a minimum of the same size and quality as before the initial
public offering.
ARTICLE XVII CHANGE OF CONTROL
Section 1. In the event either party is about to have, or has a Change of
Control, it shall give the other party written notice as follows:
(a) Within one (1) day of the date on which the corporation makes a
decision to approve the Change of Control;
(b) Within one (1) day of the effective date of the initial public
offering, with a specification of the effective date.
Section 2 ERA'S Covenant. In the event ERA undergoes a Change of Control, and
SEEC does not exercise its option to purchase ERA'S R & D Facilities, ERA
covenants and agrees that it will maintain its R & D Facilities at a minimum of
the same size and quality as before the Change of Control.
Section 3 SEEC'S right to Repurchase Shares. In the event ERA undergoes a
Change of Control other than a public offering, which change of control SEEC
does not approve of, SEEC or its designee(s) shall have the option to
repurchase some or all shares of SEEC owned by ERA at that time. The price per
share shall be determined in accordance with the formula prescribed by United
States Internal Revenue Service Regulations then in effect for valuing shares
of closely held corporations for estate tax purposes unless the parties agree
to a different method of valuation.
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<PAGE> 24
Section 4 Change of Control in SEEC In the event that SEEC undergoes a Change
of Control, ERA shall have the right, within ninety (90) days of the effective
date of the Change of Control, to request by written notice, a renegotiation of
any or all of the R & D provisions of this Agreement.
ARTiCLE XVIII MISCELLANEOUS
Section 1 Notices: Whenever this Agreement calls for a notice to be sent to a
party, the notice shall be in writing. Notices may be sent by mail or personal
delivery by an adult. If this Agreement does not specify when the notice shall
become effective, it shall become effective on receipt, unless there is no one
10 receive it during normal business hours, in which event, it shall be deemed
delivered if mailed by registered mail, on the date of mailing. Any notices
required to be sent under the terms of this Agreement shall be sent to the
parties as follows, or to such new address as a party may designate in writing.
If a party is aware that the following addresses are incorrect, the party shall
send written notices to both the addresses set forth below, and to the last
known address of the other party.
TO SEEC AT: TO ERA AT:
C/O Mr. Ravi Koka, C/O Dr. Kishore Buddhiraju
5001 Baum Blvd. ERA Software Systems PVT. LTD.
Pittsburgh, PA 15213. 4 Motilal Nehru Nagar
1st Floor, Begumpet Road
Hyderabad 500016, India
Section 2 Binding Arbitration:
(a) The parties agree that all claims, disputes and other matters in question
between them, arising out of or related to this Agreement, and the rights,
duties and obligations arising thereunder or the breach thereof, shall be
decided by common-law arbitration in Pittsburgh, PA, in accordance with the
Rules of the American Arbitration Association then prevailing, unless the
parties mutually agree otherwise; Provided however, either party shall have the
right to obtain
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<PAGE> 25
preliminary or permanent injunctive relief from a court of appropriate
jurisdiction while the arbitration process is continuing, and/or after the
Board of Arbitrators renders its decision on the merits.
(b) The parties agree that with respect to the provisions of this Agreement
specified below, which require mutual agreement of the parties, if the parties
are unable to agree, either party may request and obtain arbitration to
determine what would be a reasonable agreement in the circumstances, and,
subject to the provisions of Article XIV Section 7 pertaining to Termination,
the parties shall be bound by the decision of the arbitrators; provided
however, the arbitrators shall not have authority to amend the Agreement. The
"mutual agreement" provisions of this Agreement which may be submitted to
arbitration in the event of a failure to agree are as follows:
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
Article ______, Section______,
(c) The parties agree that with regard to all matters submitted to Arbitration
under this Agreement, the American Arbitration Association, and the Federal and
State Courts in Pittsburgh, PA and applicable appellate courts, shall have
jurisdiction over their persons. This Agreement shall not be construed as a
consent to arbitrate any dispute with any person who is not a party to this
Agreement.
Section 3 Service of Process in Arbitration or in Court, may be made upon
either party at the addresses specified in Section 1 above of this Article, by
personal delivery by an adult, by Express Mail or by any Courier Service, so
long as a written
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<PAGE> 26
receipt is obtained or an affidavit is made by the deliverer as to the
documents delivered, and the date, time and place of delivery. If delivery is
three times attempted during normal business hours, and cannot be effectuated,
the process server shall make an affidavit to that effect, and service shall be
deemed to have been made.
Section 4 Rights and Remedies. Except as provided in Section 2 above of this
Article, the duties and obligations imposed by this Agreement, and the rights
and remedies available thereunder may be exercised concurrently, and from time
to time, and shall be in addition to and not in limitation of, any duties,
obligations, rights and remedies otherwise imposed or available in law or in
equity.
Section 5 Governing Law. This Agreement shall be governed by Pennsylvania
law.
Section 6 Waiver. No action or failure to act by either party shall constitute
a waiver of any right or duty accorded to any party under this Agreement, nor
shall any such action or failure to act constitute an approval of, or
acquiescence in, any breach hereunder, except as may be specifically agreed to
in writing.
Section 7 Integration and Amendments. The terms and conditions contained herein
constitute the full understanding of the parties, a complete allocation of the
risks between them, and a complete and exclusive statement of the terms and
conditions of their agreement. No conditions, representations, understandings,
or agreements, not contained herein, and purporting to modify, waive, vary,
explain or supplement the terms or conditions of this contract shall be binding
unless hereafter made in writing and signed by a duly authorized representative
of the party to be bound.
Section 8 Successors and Assigns. The rights and obligations created by this
Agreement may not be assigned to any third party without the prior written
consent of the parties. Any attempted assignment without prior written consent
shall be deemed null and void. Except as provided to the contrary herein, the
terms and conditions of this Agreement shall be binding on the parties, and
their respective successors in interest.
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Section 9 Gender and Number. All references in this Agreement to the singular
and/or to the masculine gender, shall be deemed to include the plural and/or
feminine, where appropriate.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
(SEAL) By /s/ RAVINDRA KOKA
- ---------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
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<PAGE> 28
Section 9 Gender and Number. All references in this Agreement to the singular
and/or to the masculine gender, shall be deemed to include the plural and/or
feminine, where appropriate.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
/s/ JOHN D. GODFREY (SEAL) By /s/ RAVINDRA KOKA
- --------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
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<PAGE> 29
Exhibit A.
PRODUCTS WHICH ARE THE SUBJECT OF THIS AGREEMENT
EXISTING PRODUCTS.
REGULAR PRODUCTS:
Cobol Analyst
Cobol Slicer
Object Designer
Date Analyzer
PRODUCT DERIVATIVES:
Cobol Analyst for Unisys-A Series
ADD-ONS:
DBZ Analyzer
Synonym Processor
Code Walk Thru
ADW Export
Exhibit A page 1 of 2.
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<PAGE> 30
Exhibit A (continued)
FUTURE PRODUCTS
All products covered under the Agreement between SEEC and VIASOFT dated 29
November, 1993, and all products covered under the Agreement between SEEC and
ERA and ICICI dated 1st day June 1990, including without limiting the
generality of the foregoing all
--------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
and new versions, corrected versions, derivatives and add-ons.
* * * * * * *
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
--------------------- ----------------------
Signature Signature
Exhibit A page 2 of 2.
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<PAGE> 31
Exhibit B
SHAREHOLDERS' AGREEMENT.
MADE this 31st day of March 1996, by and between: SEEC, INC. a Pennsylvania
corporation having offices in Pittsburgh, PA,
("SEEC" hereinafter);
AND
ERA SOFTWARE SYSTEMS PRIVATE LIMITED, a corporation existing under the
laws of the Republic of India ("ERA" hereinafter):
AND
RAJ REDDY, RAVINDRA KOKA, JOHN GODFREY, ADAM YOUNG, AMAR
FOUNDATION, and ERA FOUNDATION,
constituting all of the present shareholders of SEEC
WITNESSETH:
WHEREAS, the parties wish to enter into this Agreement for the purpose of
setting forth the terms and conditions under which ERA may acquire, hold, and
sell shares of common stock in SEEC;
NOW THEREFORE:
For and in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto do covenant and agree
as follows:
ARTICLE I DEFINITIONS.
Section 1 As used in this Agreement, and in the dealings between the parties,
the following terms shall be deemed to have the following meanings:
"Agreement" means this Shareholders' Agreement, its Exhibits, and all
lawful amendments thereto.
-1-
<PAGE> 32
<TABLE>
<S> <C>
"PRODUCTS" means the existing and future products described in Exhibit A of
this Agreement, all work in progress, all information, all
Confidential Data, all derivatives, corrected versions and
add-ons, relating to the aforesaid, together with their
respective use Manuals.
"SEEC SHARES" means the Five Hundred Thousand (500,000) shares of common
stock in SEEC which may be transferred to ERA under the
terms of this Agreement.
"SEEC'S total
outstanding
shares/options" means at any given time the sum total of the following: the
total number of shares issued, or approved for issuance by the
Board of Directors of SEEC, and the total number of options to
purchase shares of SEEC'S common stock which are then owned by
any person who is then a shareholder of any shares of common
stock in SEEC or whose subscription for such shares has been
approved by the Board of Directors of SEEC
"Transfer" of
SEEC SHARES or
"transfer of any
interest" in
SEEC SHARES" means any sale, transfer, assignment, pledge, hypothecation, or
encumbrance of some or all of the SEEC SHARES, or the use of
some or all of the SEEC SHARES as collateral, or the giving of a
security interest or a beneficial interest in some or all such
shares, or otherwise disposing of or conveying any legal or
equitable interest whatsoever in all or any part of the SEEC
SHARES.
</TABLE>
ARTICLE II ERA'S ACQUISITION OF SEEC SHARES.
Section 1 SEEC'S Purchase of PRODUCTS. SEEC shall purchase, and ERA shall
transfer to SEEC all of ERA'S right, title and interest in and to the PRODUCTS,
free and clear of all liens and encumbrances, in accordance with the terms and
conditions of an agreement between SEEC and ERA of even date with this
Agreement ("Product Purchase Agreement" hereinafter).
-2-
<PAGE> 33
Section 2 Transfer of SEEC SHARES to ERA. In full payment for the said transfer
of ERA'S ownership interest in the PRODUCTS, SEEC shall transfer to ERA Five
Hundred Thousand (500,000) shares of common stock in SEEC, under the terms and
conditions set forth herein. ERA agrees to acquire, hold, and sell, its SEEC
SHARES only in accordance with the terms of this Agreement.
Section 3 The transfers described in Sections 1 and 2 above of this Agreement
shall occur at a time and place mutually agreed to by SEEC and ERA. Failing
mutual agreement, the aforesaid transfers shall take place at the time this
Agreement is signed by the parties.
Section 5 Restrictive Endorsement: The SEEC SHARES shall be endorsed on their
face with the following restrictive covenant prior to their delivery to ERA:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND/OR ENCUMBRANCE AS SET FORTH IN A
SHAREHOLDERS' AGREEMENT DATED _____________________ 1994. WHICH
AGREEMENT IS ON FILE WITH THE BOOKS AND RECORDS OF THE CORPORATION,
AND SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE TERMS OF THAT AGREEMENT."
Section 6 Title of SEEC SHARES. ERA may, at its sole election, take the SEEC
SHARES in its own name, or have them registered in the name of one or more
trustees or successor trustees ("TRUSTEES") to hold the same for ERA'S benefit;
provided however, ERA'S right and ability to have the said shares taken out in
the name of TRUSTEES, is contingent upon the following: (1) The Trust Agreement
must state on its face that the Trustees and their successors in interest are
bound by the terms of this Agreement, a copy of which shall be attached to the
Trust Agreement and made a part of the same, and (2) No person or entity may
serve as TRUSTEE, without receiving SEEC'S prior written approval. For purposes
of this Article, the term ERA shall be deemed to include any such TRUSTEES.
-3-
<PAGE> 34
ARTICLE III SALE OR TRANSFER OF ERA'S SEEC SHARES.
Section 1 Restrictions on Transfer. Any attempted transfer by ERA of any
interest in the SEEC SHARES, which does not conform to the terms and conditions
of this Agreement shall be null and void unless SEEC and ERA agree to the
contrary in writing.
Section 2 Securities Registration Exemption. ERA represents that it is not
purchasing the SEEC SHARES for resale, and agrees that it will not transfer all
or part of the SEEC SHARES to any person other than SEEC for a period of three
(3) years after the date on which it acquires the said shares. This restriction
on transfer shall not apply to a transfer made as part of an initial public
offering of SEEC'S shares of common stock.
Section 3 SEEC'S Consent. So long as SEEC is privately held, ERA shall not
transfer all or any part of its SEEC SHARES to any person except with the prior
written consent of SEEC.
Section 4 Right of First Purchase. If at any time ERA wishes to sell its SEEC
SHARES, other than as part of an initial public offering, SEEC shall have the
first right to purchase some or all of the SEEC SHARES in accordance with the
terms of this Agreement. The purchase price shall be calculated in accordance
with the provisions of Article IV, Section 1(b) below of this Agreement.
Section 5 Shareholders' Next Right to Purchase. So long as SEEC is privately
held, if SEEC declines or fails to purchase any part of the SEEC SHARES, each
person who is then an owner of one or more shares of SEEC'S common stock, other
than ERA, ("Shareholder(s)" hereinafter) shall have the next right to purchase
whatever portion of ERA'S SEEC SHARES that SEEC failed to purchase in the same
percentage as the Shareholder's percentage ownership of One Hundred (100%)
Percent of SEEC'S total outstanding shares/options, excluding ERA'S SEEC
SHARES. If any shareholder elects to purchase less than his proportional share
of ERA'S SEEC SHARES, or declines to purchase any of ERA'S SEEC SHARES, the
shares which such shareholder does not intend to purchase shall be made
available to the remaining shareholders in proportional percentage amounts.
Examples
-4-
<PAGE> 35
illustrating application of the foregoing formula to determine purchase rights
are attached as Exhibit B of this Agreement. The price per share at which each
Shareholder shall be entitled to buy ERA'S SEEC SHARES shall be calculated in
accordance with the provisions of Article IV, Section 1(b) below' of this
Agreement.
Section 6 Notice of Intent to Sell/Purchase. In effecting the sale of ERA'S
SEEC SHARES, the parties shall comply with the following notice requirements:
(a) Step One. ERA shall give SEEC written notice of its intent to
sell.
(b) Step Two. Within sixty (60) days of SEEC receiving ERA'S notice
of intent to sell, it shall send a written notice to ERA
specifying whether or not it will purchase ERA'S SEEC SHARES.
The failure of SEEC to respond timely shall be deemed a refusal
to purchase.
(c) Step Three. If SEEC declines to purchase ERA'S SEEC SHARES, ERA
shall send a written notice of its intent to sell to each
person or entity who is then a shareholder of SEEC.
(d) Step Four. Within thirty (30) days of receipt of ERA'S notice
of intent to sell, each shareholder of SEEC shall send a
written notice to ERA specifying whether or not it will
purchase some or all of its proportional share of ERA'S SEEC
SHARES. The failure of any party to timely respond shall be
deemed a refusal to purchase.
Section 7. Six Month Window for Sale of ERA'S SEEC SHARES to Third Parties. At
any time within six (6) months of the end of the Notice procedure set forth in
Section 6 above of this Article, ERA may sell, at any price, any shares of
ERA'S SEEC SHARES that SEEC or its shareholders did not give notice of intent
to purchase, to any third party not disapproved by SEEC in accordance with the
terms of Article III Section 3 of this Agreement. After the aforesaid six (6)
month period, ERA may not thereafter sell ERA'S SEEC SHARES without once again
offering them for sale to SEEC or its shareholders in accordance with the terms
of Sections 4, 5 and 6 above of this Article.
-5-
<PAGE> 36
ARTICLE IV PROCEDURE AND PRICE.
Section 1. To the extent that SEEC and/or its shareholders give written notice
of intent to purchase some or all of ERA'S SEEC SHARES, the parties shall be
governed by the terms and conditions set forth below for those shares. As used
herein, the term PURCHASER shall be deemed to refer individually to each entity
or person who is purchasing any part of ERA'S SEEC SHARES.
(a) Time. A Closing shall be held within SIXTY (60) days of ERA
receiving written notice of intent to purchase from the
PURCHASER. At the Closing, the shares to be sold to the
PURCHASER shall be transferred to him free and clear of all
liens and encumbrances and the purchase price shall be paid to
ERA at the time the shares are transferred. If some of the
shares are paid for by a Note, as set forth herein, tide to
such shares shall be transferred to the PURCHASER at the time
the Note is delivered to ERA.
(b) Price. The purchase price per share for ERA'S SEEC SHARES shall
be arrived at by using the formula for valuing shares specified
in the United States Internal Revenue Regulations then in
effect for valuing the shares of a private corporation for
estate tax purposes.
(c) Payment Terms by SEEC. If the purchase price to be paid by SEEC
is less than Fifty Thousand ($50,000.00) Dollars, it shall be
paid lumpsum in U.S. Dollars in cash or by certified or
cashier's check at the time the shares are transferred. If the
purchase price to be paid by SEEC is Fifty Thousand
($50,000.00) Dollars or more, it shall be paid as follows:
Forty Thousand ($40,000.00) Dollars shall be paid in cash at
the time the shares are transferred. The balance of the
purchase price shall be paid in the form of a Note. The terms
of the Note shall include the following, and may include such
other terms and conditions as the SEEC and ERA agree to:
-6-
<PAGE> 37
(i) The Note shall be repaid in equal monthly installments in
accordance with a specified amortization schedule over a period
of two (2) years;
(ii) interest on the declining unpaid balance shall be
determined at the prime rate of Mellon Bank NA, (or if Mellon
Bank is not then in existence, at the average prime market rate
for large institutional lenders in Western Pennsylvania),
prevailing at the time the note is issued;
(iii) The Note shall contain a standard confession of judgment
provision (with waiver of errors and exemptions) which
authorizes judgment to be confessed in favor of ERA and against
the PURCHASER in the event of a default, and provides for
reasonable attorneys' fees and costs for collection in favor of
ERA. The terms of the Note shall not permit judgment to be
confessed against the PURCHASER before default.
(d) Security Interest. If SEEC'S purchase price includes a Note,
SEEC shall give ERA such reasonable security as is mutually
agreed to. If the parties cannot at that time agree, SEEC shall
sign and deliver to ERA a UCC-1 Financing Statement which will
give ERA a security interest in whatever portion of the SEEC
ShARES is being purchased by the Note.
(e) Payment Terms by Individual Purchaser. If the PURCHASER is an
individual, he shall pay for the shares in cash at the time
ownership of the shares is transferred to him, unless ERA and
the PURCHASER agree to some other manner of payment.
ARTICLE V WARRANTIES.
Section 1 The parties agree that each of them is a sophisticated investor. Each
party agrees that it is fully aware of the value of the PRODUCTS and of the
value of
-7-
<PAGE> 38
the SEEC SHARES. Each party agrees that the other party has made available to
it any and all information necessary to make an informed decision regarding the
advisability of purchasing or selling, as the case may be, the PRODUCTS and the
SEEC SHARES.
Section 2 Each party agrees that in entering into this Agreement, it has not
relied on any representation by the other party regarding the value of the
PRODUCTS, or the value of the SEEC SHARES, and has made its decision to
purchase or sell, as the case may be, the PRODUCTS and the SEEC SHARES solely
on the basis of its own knowledge and investigations, and not in reliance on
any representation made by the other party.
Section 3 IF SEEC EXERCISES ITS OPTION TO PURCHASE THE PRODUCTS, SEEC
UNDERSTANDS AND AGREES THAT WILL BE PURCHASING THE PRODUCTS IN AS IS CONDITION,
AND ERA MAKES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PRODUCTS, THEIR
MARKETABILITY, OR THEIR FITNESS FOR THE PURPOSES INTENDED, OTHER THAN THOSE SET
FORTH IN THIS AGREEMENT.
Section 4 IF SEEC EXERCISES ITS OPTION TO PURCHASE THE PRODUCTS, ERA
UNDERSTANDS AND AGREES THAT IT WILL BE PURCHASING THE SEEC SHARES WITHOUT ANY
WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SAID SHARES, OTHER THAN THOSE SET
FORTH IN THIS AGREEMENT.
Section 5 ERA WARRANTS that if SEEC opts to purchase the PRODUCTS, ERA will
convey good and marketable title to the same, free and clear of all liens and
encumbrances, except such as the parties may agree to in writing. ERA further
WARRANTS that it has the legal ability to convey title to the PRODUCTS to SEEC
Section 6 SEEC WARRANTS that if SEEC opts to purchase the PRODUCTS, SEEC will
convey to ERA good and marketable title to the SEEC SHARES, free and clear of
all liens and encumbrances, except such as the parties may agree to in writing.
SEEC further WARRANTS that it has the legal ability to issue the SEEC SHARES to
ERA.
-8-
<PAGE> 39
ARTICLE VI TERM AND TERMINATION.
Section 1 Term. This Agreement shall be effective as of the date first above
written, and shall continue in full force and effect so long as ERA owns any
SEEC SHARES, and SEEC'S stock is not publicly traded, unless it is terminated
in accordance with the provisions of Section 2 below. The provisions of this
Agreement shall not apply if, at the time ERA wishes to sell ERA'S SEEC SHARES,
SEEC is a corporation whose shares are being publicly traded.
Section 2 Termination Mutual Consent. This Agreement may be terminated at any
time by mutual consent of SEEC and ERA.
ARTICLE VII MISCELLANEOUS
Section 1 Notices: Whenever this Agreement calls for a notice to be sent to a
party, the notice shall be in writing. Notices may be sent by mail or personal
delivery by an adult. If this Agreement does not specify when the notice shall
become effective, it shall become effective on receipt, unless there is no one
to receive it during normal business hours, in which event, it shall be deemed
delivered if mailed by registered mail, postage pre-paid, on the date of
mailing. Any notices required to be sent under the terms of this Agreement
shall be sent to the parties as follows, or to such new address as a party may
designate in writing. If any party is aware that the following addresses are
incorrect, the party shall send written notices to both the addresses set forth
below, and to the last known address of the other party.
TO SEEC AT: TO ERA AT:
C/O Mr. Ravi Koka, C/O Dr. Kishore Buddhiraju
5001 Baum Blvd. ERA Software Systems PVT. LTD.
Pittsburgh, PA 15213. 4 Motilal Nehru Nagar
1st Floor, Begumpet Road
Hyderabad 500016, India
-9-
<PAGE> 40
TO EACH SHAREHOLDER OF SEEC. At the Shareholder's address on file with SEEC
Provided however, if ERA is not able to obtain any such address from SEEC, ERA
may deliver the notice addressed to the Shareholder in care of SEEC at SEEC'S
address.
Section 2 Binding Arbitration:
(a) The parties agree that all claims, disputes and other matters in question
between them, arising out of or related to this Agreement, and the rights,
duties and obligations arising thereunder or the breach thereof, shall be
decided by common-law arbitration in Pittsburgh, PA, in accordance with the
Rules of the American Arbitration Association then prevailing, unless the
parties mutually agree otherwise; Provided however, either party shall have the
right to obtain preliminary or permanent injunctive relief from a court of
appropriate jurisdiction before or during arbitration proceedings, or after the
Board of Arbitrators has rendered its decision on the merits.
(b) The parties agree that with regard to all matters submitted to Arbitration
under this Agreement, the American Arbitration Association, and the Federal and
State Courts in Pittsburgh, PA and applicable appellate courts, shall have
jurisdiction over their persons. This Agreement shall not be construed as a
consent to arbitrate any dispute with any person who is not a party to this
Agreement.
Section 3 Service of Process in Arbitration or in Court, may be made upon
either party at the addresses specified in Section 1 above of this Article, by
personal delivery by an adult, by Express Mail or by any Courier Service, so
long as a written receipt is obtained or an affidavit is made by the deliverer
as to the documents delivered, and the date, time and place of delivery. If
delivery is three times attempted during normal business hours, and cannot be
effectuated, the process server shall make an affidavit to that effect, and
service shall be deemed to have been made.
- 10 -
<PAGE> 41
Section 4 Rights and Remedies. Except as provided in Section 2 above of this
Article, the duties and obligations imposed by this Agreement, and the rights
and remedies available thereunder may be exercised concurrently, and from time
to time, and shall be in addition to and not in limitation of, any duties,
obligations, rights and remedies otherwise imposed or available in law or in
equity.
Section 5 Governing Law. This Agreement shall be governed by Pennsylvania law.
Section 6 Waiver. No action or failure to act by either party shall constitute
a waiver of any right or duty accorded to any party under this Agreement, nor
shall any such action or failure to act constitute an approval of, or
acquiescence in, any breach hereunder, except as may be specifically agreed to
in writing.
Section 7 Integration and Amendments. The terms and conditions contained herein
constitute the full understanding of the parties, a complete allocation of the
risks between them, and a complete and exclusive statement of the terms and
conditions of their agreement. No conditions, representations, understandings,
or agreements, not contained herein, and purporting to modify, waive, vary,
explain or supplement the terms or conditions of this contract shall be binding
unless hereafter made in writing and signed by a duly authorized representative
of the party to be bound.
Section 8 Successors and Assigns. The rights and obligations created by this
Agreement may not be assigned to any third party without the prior written
consent of the parties. Any attempted assignment without prior written consent
shall be deemed null and void. Except as provided to the contrary herein, the
terms and conditions of this Agreement shall be binding on the parties, and
their respective successors in interest.
Section 9 Gender and Number. All references in this Agreement to the singular
and/or to the masculine gender, shall be deemed to include the plural and/or
feminine, where appropriate.
- 11 -
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
(SEAL) By /s/ RAVINDRA KOKA
- ---------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
WITNESS:
- ---------------------- ----------------------------
RAJ REDDY
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
RAVINDRA KOKA
- ---------------------- ----------------------------
JOHN GODFREY
- ---------------------- ----------------------------
ADAM YOUNG
- ---------------------- ----------------------------
AMAR FOUNDATION
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
ERA FOUNDATION
- 12 -
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
(SEAL) By /s/ RAVINDRA KOKA
- ---------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
WITNESS:
- ---------------------- ----------------------------
RAJ REDDY
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
RAVINDRA KOKA
- ---------------------- ----------------------------
JOHN GODFREY
/s/ ADAM YOUNG
- ---------------------- -----------------------------
ADAM YOUNG
- ---------------------- ----------------------------
AMAR FOUNDATION
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
ERA FOUNDATION
- 12 -
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
JOHN D. GODFREY (SEAL) By /s/ RAVINDRA KOKA
- ---------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
WITNESS:
- ---------------------- ----------------------------
RAJ REDDY
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
RAVINDRA KOKA
/s/ JOHN D. GODFREY
- ---------------------- ----------------------------
JOHN GODFREY
- ---------------------- -----------------------------
ADAM YOUNG
- ---------------------- ----------------------------
AMAR FOUNDATION
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
ERA FOUNDATION
- 12 -
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
(SEAL) By /s/ RAVINDRA KOKA
- ---------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
WITNESS:
- ---------------------- ----------------------------
RAJ REDDY
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
RAVINDRA KOKA
- ---------------------- ----------------------------
JOHN GODFREY
- ---------------------- -----------------------------
ADAM YOUNG
/s/ NEERU KHOSLA
- ---------------------- ----------------------------
AMAR FOUNDATION
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
ERA FOUNDATION
- 12 -
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
ATTEST: SEEC, INC.
(SEAL) By /s/ RAVINDRA KOKA
- ---------------------- -----------------------------
Secretary or Treasurer President
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LTD.
By /s/ K. BUDDHIRAJU
- ---------------------- -----------------------------
Secretary or Treasurer President or Vice President.
WITNESS:
/s/ RAJ REDDY
- ---------------------- ----------------------------
RAJ REDDY
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
RAVINDRA KOKA
- ---------------------- ----------------------------
JOHN GODFREY
- ---------------------- -----------------------------
ADAM YOUNG
- ---------------------- ----------------------------
AMAR FOUNDATION
/s/ RAVINDRA KOKA
- ---------------------- ----------------------------
ERA FOUNDATION
- 12 -
<PAGE> 47
Exhibit I
PRODUCTS WHICH ARE THE SUBJECT OF THIS AGREEMENT
REGULAR PRODUCTS:
Cobol Analyst
Cobol Slicer
Object Designer
Date Analyzer
PRODUCT DERIVATIVES:
Cobol Analyst for unisys-A series
ADD-ONS:
DBZ Analyzer
Synonym Processor
Code walk Thru
ADW Export
* * * * * * *
ERA SEEC
By By /s/ RAVINDRA KOKA
-------------------- -----------------------
Signature Signature
- 13 -
<PAGE> 48
Exhibit II
EXAMPLES OF FORMULA FOR DETERMINING SHAREHOLDERS'
RIGHT TO PURCHASE ERA'S SEEC SHARES.
These examples are for purposes of illustration only, and shall not be deemed
to be the only instances in which a shareholder of SEEC shall be entitled to
purchase ERA'S SEEC SHARES. Such entitlement shall be determined by the terms
of the Agreement between the parties.
Example One.
At a given time, Mr. A owns 10% of SEEC'S shares of common stock, and has an
option to purchase an additional 5% of such shares. For purposes of calculating
what percent of ERA'S SEEC SHARES he is entitled to buy, his percentage
interest in SEEC'S shares of common stock shall be deemed to be 15%, and he
shall be entitled to purchase 15% of ERA'S SEEC SHARES.
Example Two.
At a given time, Mr. B owns 10% of SEEC'S shares of common stock. In addition,
his subscription to purchase an additional 10% of SEEC'S common stock has been
approved by the Board of Directors, although the shares have not yet been
issued. In addition, he has an option (which he has not exercised) to purchase
an additional 5% of SEEC'S common stock. For purposes of calculating what
percent of ERA'S SEEC SHARES he is entitled to buy, his percentage interest in
SEEC'S shares of common stock shall be deemed to be 25%, and he shall be
entitled to purchase 25% of ERA'S SEEC SHARES.
Example Three
At a given time, Mr. C does not own any shares of SEEC'S common stock. His
subscription to purchase 12% of SEEC'S shares of common stock has been approved
by the Board of Directors but the shares have not yet been issued. For purposes
of calculating what percent of ERA'S SEEC SHARES he is entitled to buy, his
- 14 -
<PAGE> 49
percentage interest in SEEC'S shares of common stock shall be deemed to be 12%,
and he shall be entitled to purchase 12% of ERA'S SEEC SHARES.
Example Four.
At a given time, Mr. D does not own any shares of SEEC'S common stock, but he
has an option to purchase 1,500 shares of SEEC's common stock. Mr. Z would not
be deemed one of the persons entitled to purchase any percentage of ERA'S SEEC
SHARES under Article ________ Section __________ of this Agreement.
Example Five.
At a given time, Mr. B is entitled to purchase 33.33% of ERA'S SEEC SHARES, but
does not wish to purchase them. SEEC has two other shareholders, each of whom
is entitled to purchase 33.33% of ERA'S SEEC SHARES. Bach of these two
remaining shareholders are entitled to purchase one half of the shares Mr. B
would have been entitled, but did not wish, to purchase.
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
-------------------- -----------------------
Signature Signature
- 15 -
<PAGE> 50
Exhibit C
PRODUCTS TO BE DEVELOPED BY ERA, AND DEVELOPMENT
SCHEDULE
1. COBOL Analyst - 32-bit version for Windows NT and Windows 95
2. COBOL Analyst 2000 - 32-bit version for Windows NT and Windows 95
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
------------------------------- -----------------------------
Signature Signature
<PAGE> 51
Exhibit D
MINIMUM R & D INFRASTRUCTURE AND PERSONNEL TO BE MAINTAINED BY ERA
HARDWARE
- --------
o TWO Intel 80486 based Novell Servers, with ample disk capacity and tape
backup facility. One server will be shared by the R&D and Maintenance
groups. The other will be for the exclusive use of Quality Assurance group.
o ONE Intel 80486 based PC, which can be configured as different servers. This
machine will be configurable as a OS/2 LAN Server Windows for Workgroups
Server or ???? Server, to facilitate development and testing of LAN version
of the products.
o ONE Intel 80486 based PC Microsoft NT Server.
o TWELVE Intel 80486 or Pentium based workstations. Workstations will be
configured with 16-32MB RAM, ample disk space, network connectivity to the
serves and Microsoft Windows, Windows 95 or Windows NT.
SOFTWARE
- --------
o Novell Netware 3.xx, OS/2 LAN Server, Unix, NT Backoffice Server, Windows for
Workgroups 3.1x, Windows 95, Windows NT and OS/2.
o Development and other products installed on the server and workstations will
include Microsoft Visual C++ (16 and 32 bit versions), PVCS, Btrieve
Development Kit. PKWARE Compression library, Oracle Database Server and SDK,
Sybase Database Server and SDK, MicroFocus COBOL Workbench, Realia COBOL
Workbench, Numega's BoundsChecker, ADW 2.7, LEX and YACC.
o Microsoft Test 4.0 for use by the QA group to automate the product testing.
PERSONNEL
- ---------
Project Manager 1
Project Leaders 3
Software Engineers 5
QA Team 3
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
----------------------------- -------------------------------
Signature Signature
<PAGE> 52
Exhibit E
SCHEDULES FOR DIFFERENT LEVELS OF SEVERITY AND ERA'S
MAINTENANCE OBLIGATIONS
PROBLEM SEVERITY CODES
Following are the different problem severity codes in communicating problems
to ERA.
Severity 1 High impact product error - Use of the product results in erroneous
product behavior by more than one customer in a predictable and
repeatable manner. The customer indicates that the problem is
resulting in inability to use the product, causing slip in a
project. Documented product design limitations are excluded from
this severity.
Severity 2 Product error - The product exhibits erroneous behavior, but the
user is able to use the product with certain restrictions on
limited product functions which are not critical to overall use of
the product.
Severity 3 Low priority product error - The product exhibits erroneous
behavior, but the user is able to use the product with minor
inconveniences not critical to the use of the product and for which
simple workarounds are available.
PROBLEM RESOLUTION AND COMMITMENTS
The response and resolution goals are attached to the severity codes.
Severity 1 Addressed as high priority by the maintenance group at ERA.
Identification of the cause of the problem and supplying a
workaround acceptable to SEEC within 3 working days or resolution
of the problem with an emergency release within 7 working days,
followed by a maintenance release in 25 days.
Severity 2 Addressed as medium priority by the maintenance group.
Identification of the cause of the problem and supplying a
workaround acceptable to SEEC within 5 working days. Resolution of
the problem with a maintenance release within 25 working days or
indicate a plan of action for the resolution of the problem.
Severity 3 Addressed as low priority by the maintenance group. Identification
of the cause of the problem and supplying a workaround acceptable
to SEEC on a discretionary basis. No commitment for a short term
solution to the problem. Resolution of the problem with a
maintenance release within 60 days or indicate a plan of action for
the resolution of the problem.
PRODUCT ENHANCEMENTS
From time to time, SEEC will determine the need for incorporating product
enhancements. These enhancements will be documented in detail and based an
discussions between the R&D group at Era and SEEC, a development plan and time
schedule will be agreed upon.
<PAGE> 53
Exhibit F
MINIMUM MAINTENANCE INFRASTRUCTURE AND PERSONNEL TO BE MAINTAINED BY ERA
HARDWARE
- --------
o The Novell servers, NT Server and the configurable server will be shared by
the R & D and maintenance groups.
o THREE Intel 80486 or Pentium based workstations connected to the servers.
Workstations will be configured with 16-32MB RAM, ample disk space, network
connectivity to the serves and Microsoft Windows, Windows 95 or Windows NT.
SOFTWARE
- --------
o Novell Netware 3.xx, OS/2 LAN Server, Unix, NT Backoffice Server, Windows for
Workgroups 3.1x, Windows 95, Windows NT and OS/2.
o Development and other products installed on the server and workstations will
include Microsoft Visual C++ (16 and 32 bit versions), PVCS, Btrieve
Development Kit, PKWARE Compression library, Oracle Database Server and SDK,
Sybase Database Server and SDK, MicroFocus COBOL Workbench, Realia COBOL
Workbench, Numega's BoundsChecker, ADW 2.7 LEX and YACC.
o Microsoft Test 4.0 for use by the QA group to automate the product testing.
PERSONNEL
- ---------
Project Manager 1 responsible for R & D and Maintenance groups
Project Leaders 1
Software Engineers 2
QA Team 3 services both R & D and maintenance groups
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
----------------------------- -------------------------------
Signature Signature
<PAGE> 54
DEFINITION OF MATERIAL DEFAULT
Failure of ERA to adhere to the PROBLEM RESOLUTION AND COMMITMENTS schedule
described above THREE TIMES IN A CALENDAR YEAR shall constitute the basis for a
Material Default.
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
----------------------------- -------------------------------
Signature Signature
<PAGE> 55
Exhibit G.
MAINTENANCE FEES
See Section 7 of Article IX
ERA SEEC
By /s/ K. BUDDHIRAJU By /s/ RAVINDRA KOKA
-------------------- -----------------------
Signature Signature
- 35 -
<PAGE> 56
Exhibit H.
SECURITY PROCEDURES TO BE MAINTAINED BY ERA FOR PROTECTION OF
SOURCE CODE.
[SPECIFY WHAT FAILURES -- (A) WITH OPPORTUNITY TO CURE, AND (B) WITHOUT
OPPORTUNITY TO CURE - WILL BE AN EVENT OF DEFAULT JUSTIFYING TERMINATION OF
ThIS AGREEMENT]
ERA SEEC
By By
-------------------- -----------------------
Signature Signature
- 36 -
<PAGE> 57
AMENDMENT NO. 1 TO PRODUCT PURCHASE AGREEMENT
This Amendment is made this ___ day of__________________ , 1996 by and
between SEEC, INC., a Pennsylvania corporation ("SEEC") and ERA SOFTWARE SYSTEMS
PRIVATE LIMITED, a corporation existing under the laws of the Republic of India
("ERA").
WITNESSETH:
WHEREAS, the parties have entered into a Product Purchase Agreement
dated March 31, 1996 (the "Agreement"); and
WHEREAS, the parties wish to amend the Agreement in order to clarify
their mutual understanding regarding payment of royalties to ERA.
THEREFORE, the parties agree as follows with the intent to be legally
bound:
1. Article XI, Section 6 of the Agreement shall be amended and
restated in its entirety to read as follows:
Section 6. In the event that the R&D fees specified in Section
5(a) above of this Article are less than Twelve Thousand (U.S. $12,000)
Dollars per quarter ("Minimum R&D Fee"), SEEC will, within sixty (60)
days pay ERA such additional amounts as may be necessary to bring the
total R&D payment under Section 5(a) above up to the amount of the
Minimum R&D Fee.
2. Except as set forth in this Amendment, the Agreement shall
remain unchanged and in full force and effect.
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
ATTEST: SEEC, INC.
By: /s/ RAVINDRA KOKA
- ---------------------------------- ----------------------------------
Secretary Title: President
-------------------------------
ATTEST: ERA SOFTWARE SYSTEMS PRIVATE LIMITED
By: /s/ K. BUDDHIRAJU
- ---------------------------------- ----------------------------------
Secretary Title: President
-------------------------------
-2-
<PAGE> 1
Exhibit 10.6
MARKETING AGREEMENT.
MADE this 1st day of March, 1996, by and between:
SEEC, INC. a corporation domiciled in the United States of America,
("SEEC" hereinafter);
AND
ERA Software Systems Private Limited ("DISTRIBUTOR" hereinafter):
For and in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto do covenant and agree
as follows:
ARTICLE I DEFINITIONS.
SECTION 1 As used in this Agreement, and in the dealings between the parties,
the following terms shall be deemed to have the following meanings:
<TABLE>
<S> <C>
"India" means the Republic of India
"List price" means the price at which a unit of the
PRODUCT is licensed by SEEC to end-users. It
does not mean the transfer of any ownership
rights in the copyrighted technology in any
unit of the PRODUCT.
"Promote" and
"Promotion" means advertisements, press releases, printed
materials, participation in trade shows, and
any and all activities calculated to market the
PRODUCTS.
"Sales" "Sell" means the licensing of a unit of the
PRODUCT to DISTRIBUTOR, for sublicensing to
end-users. It does not mean the transfer of any
ownership rights in the copyrighted technology
in any unit of the PRODUCT.
SEEC
family of products means SEEC products that address the
technical challenges in re-engineering legacy
business applications. These products cover
capture, storage, analysis and presentation of
existing software systems.
"SEEC product
derivatives" SEEC COBOL Analyst is a core product and is
made up of the Application Capture Tool,
Application Analyst tool and CARE data
dictionary. Application development tools and
CASE tools are used for application development
and maintenance. These tools broadly cover
compilers, data modelling tools, structured
analysis and design tools, code generators,
fourth generation languages, project management
software, source and version control tools,
librarians and editors. SEEC builds, and plans
to build, links to Application development/CASE
tools and customer provided tools, based on
customer requirements. Typically the interface
will result in a derivative which will consist
of COBOL Analyst and the interface. These are
SEEC product derivatives, and they are not
within the scope of this Agreement.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Value Added
Resellers (VARS) means entities with whom SEEC may
contract, on either an exclusive or
non-exclusive basis, to sell SEEC product
derivatives. VARS may also distribute Cobol
Analyst.
</TABLE>
ARTICLE II PRODUCTS.
Section 1 PRODUCTS. The Products which are the subject of this Agreement
are the English versions of the Products listed in Exhibit A of this Agreement,
and all updated versions of the same together with their respective use Manuals
(collectively referred to in this Agreement as the "PRODUCTS"). As used in this
Agreement, the term PRODUCTS shall not be deemed to include SEEC product
derivatives which are not within the scope of this Agreement. SEEC product
derivatives will not be deemed updated versions of the PRODUCT.
ARTICLE III MARKETING RIGHTS
Section 1 Subject to the terms and conditions of this Agreement, SEEC
gives DISTRIBUTOR the right to market the PRODUCTS in the Territories specified
herein, and in accordance with the terms and conditions of this Agreement, by
licensing end-users to use the same in accordance with SEEC'S licensing
provisions accompanying each unit of the PRODUCTS.
Section 2 This right to market the PRODUCTS does not include any right to
manufacture, copy, or modify the PRODUCTS, or authorize any third party to do
so, except such copying as may specifically be permitted in SEEC'S licensing
provisions accompanying each unit of the PRODUCTS.
Section 3 This right to market the PRODUCTS does not include, or transfer
to DISTRIBUTOR, any rights other than the rights specifically enumerated in
this Agreement. This Agreement shall not be deemed to create any implied
rights.
Section 4 This Agreement does not transfer any ownership rights in the
PRODUCTS, and/or their source codes and object codes.
Section 5 This Agreement does not transfer any ownership rights in the
copyrights and/or trademarks and/or patents covering the PRODUCTS.
Section 6 SEEC retains all rights of ownership in and to the PRODUCTS,
its codes, copyrights, trademarks, and/or patents. And DISTRIBUTOR agrees that
it will do nothing to infringe or jeopardize SEEC's said rights.
<PAGE> 3
SECTION 7 This Agreement will not be construed to prevent SEEC from
building into the PRODUCTS such security devices as it deems appropriate to
protect SEEC'S proprietary and other interests in the PRODUCTS.
SECTION 8 SEEC will obtain legal counsel in India to advise it regarding
any necessary revisions to SEEC'S licensing provisions accompanying each unit
of the PRODUCTS, to comply with Indian law. DISTRIBUTOR will reimburse SEEC for
such legal costs.
ARTICLE IV BUSINESS PLAN.
SECTION 1 DISTRIBUTOR will market the PRODUCTS in accordance with such
Business Plans as the parties may, from time to time agree upon.
SECTION 2 The first such Business Plan is attached hereto as Exhibit B of
this Agreement. DISTRIBUTOR will update the Business Plan periodically, but not
less frequently than annually. The terms of the updated Business Plans must be
mutually satisfactory to SEEC and DISTRIBUTOR.
SECTION 3 In each Business Plan DISTRIBUTOR will identify key technical,
sales and marketing personnel.
SECTION 4 DISTRIBUTOR will ensure that all Business Plans and this
Agreement are in compliance with all applicable laws, including without
limiting the generality of the foregoing, all applicable anti-trust,
distribution, licensing and marketing laws and regulations of the United
States, and of each country in which DISTRIBUTOR'S marketing activities are
carried out. DISTRIBUTOR will indemnify SEEC and hold SEEC harmless from any
and all damages caused by any Business Plan, this Agreement, or any activity of
DISTRIBUTOR'S, its Agents and Sub-distributors, not being in compliance with
all applicable laws.
ARTICLE V AGENTS AND DISTRIBUTORS OF DISTRIBUTOR.
SECTION 1 In marketing and promoting the PRODUCTS, as specified in this
Agreement, DISTRIBUTOR may appoint Agents or sub-distributors of DISTRIBUTOR;
provided however, DISTRIBUTOR will ensure that all its Agents or
Sub-distributors market and/or promote the PRODUCTS in accordance with the
obligations of DISTRIBUTOR under this Agreement, and in accordance with SEEC'S
licensing provisions accompanying each unit of the PRODUCTS. Wherever this
Agreement imposes an obligation or limitation on DISTRIBUTOR, the said
<PAGE> 4
obligation or limitation shall be deemed to apply also to all Agents and
sub-distributors of DISTRIBUTOR.
SECTION 2 DISTRIBUTOR will enter into appropriate contracts with its
Agents and sub-distributors which will require them to comply with
DISTRIBUTOR'S obligations and limitations under the terms of this Agreement.
SEEC shall be designated a third-party beneficiary of all such agreements for
the purposes of enforcing compliance with all such obligations and limitations,
or obtaining damages for the failure to so comply, should it choose to do so.
SECTION 3 DISTRIBUTOR will further ensure that no Agent or
sub-distributor will have any rights under any applicable laws, that are
greater than the rights that DISTRIBUTOR has under the terms of this Agreement
under Pennsylvania law, and that when this Agreement terminates at the end of
its term, or is lawfully terminated before that time, the right or authority of
any Agent or sub-distributor to market the PRODUCTS will likewise terminate
(except for the right to market existing inventory as specified in Article XVI,
Section 3 of this Agreement), without any liability on the part of SEEC for
such termination.
SECTION 4 DISTRIBUTOR assumes full responsibility for the actions, (or
failure to act as required) of DISTRIBUTOR'S Agents and sub-distributors, and
DISTRIBUTOR will indemnify SEEC and hold SEEC harmless from any and all damages
which SEEC may incur, or for which SEEC may become liable, because of the act,
or failure to act, of any Agent or sub-distributor of DISTRIBUTOR.
SECTION 5 The remedies set forth in Sections 2 and 4 of this Article
shall not be deemed mutually exclusive, and SEEC may, from time to time, and at
any time, utilize either one or both such remedies, at its discretion; provided
however, in no event shall SEEC be entitled to collect a double recovery.
SECTION 6 SEEC agrees not to enter into distribution agreements with
DISTRIBUTOR'S existing Agents identified in Exhibit C of this Agreement.
ARTICLE VI AGENCY/JOINT VENTURE.
SECTION 1 This Agreement shall not be deemed to create a joint-venture.
DISTRIBUTOR is not an agent of SEEC, nor is SEEC an agent of DISTRIBUTOR.
Neither party wi II have the authority to bind the other to any contractual or
other commitments without the prior written approval of the party to be bound.
SECTION 2 No Agent or Sub-distributor of DISTRIBUTOR shall be deemed an
agent or distributor or representative of SEEC. Nor shall any such Agent or
Sub-distributor of
<PAGE> 5
DISTRIBUTOR have any authority to bind SEEC to any contractual or other
commitments without SEEC'S prior written approval.
ARTICLE VII TERRITORY.
SECTION 1 NON-EXCLUSIVE TERRITORY. SEEC hereby gives DISTRIBUTOR the
non-exclusive right to market the PRODUCTS in the following Territory in
accordance with the terms and conditions of this Agreement and for the term of
this Agreement.
India
- ------------------------------------------------------------------------------
- ---------
SECTION 2 DISTRIBUTOR shall not market the PRODUCTS to customers outside
the Territory, without SEEC'S prior written consent.
ARTICLE VIII PROMOTIONAL ACTIVITIES.
SECTION 1 NON-EXCLUSIVE PROMOTION RIGHTS. Subject to the provisions of
Article 3 of this Agreement, and while this Agreement is in effect, SEEC hereby
gives DISTRIBUTOR the non-exclusive right to promote the PRODUCTS in:
India,
including without limiting the generality of the foregoing, the distribution of
brochures, direct mail, and participation at trade shows; provided however, all
promotional materials and activity shall:
(a) Require the prior written approval of SEEC, and be in a form
approved by SEEC;
(b) Maintain the high standard of quality embodied in SEEC's standard
promotional activities;
(c) Identify the PRODUCTS by SEEC'S standard names and titles, with
appropriate copyright and trademark designations;
(d) Maintain the integrity of, and not do anything to impair, SEEC'S
trademarks and copyrights;
(e) Retain SEEC'S (or the Developer's) standard identifying marks on
the PRODUCTS and on any related marketing literature in the mariner
and quality reflective of SEEC'S standards.
(f) Do nothing to confuse or obscure the ownership or identity of the
PRODUCTS.
SECTION 2 It is understood and agreed that other marketers of PRODUCTS in
India:
(a) will be free to distribute literature regarding the PRODUCTS which
are the subject of this Agreement, in the form of brochures and
direct mail, or any other form approved by SEEC;
<PAGE> 6
(b) will be free to demonstrate the PRODUCTS which are the subject of
this Agreement at trade shows and conferences;
(c) will be permitted to mention the PRODUCTS which are the subject of
this Agreement in their general product advertisements, so long as
such advertisements are not solely (100%) devoted to the PRODUCTS
which are the subject of this Agreement.
SECTION 3 EXCLUSIVE PROMOTION RIGHTS. SEEC hereby retains for itself the
exclusive right to engage in the following promotion activities for the
PRODUCTS in India:
(a) Advertisements that are one hundred (100%) per cent devoted to the
PRODUCTS, (i.e. in which no product other than the PRODUCTS are
mentioned),
(b) Press conferences in India related to the PRODUCTS.
SECTION 4 DISTRIBUTOR will maintain a minimum level of promotion and
sales, which level will be mutually agreed to in the Business Plans and their
updates. Failure by the parties to mutually agree to a minimum level of
promotion and sales will entitle SEEC to terminate this Agreement after the
first eighteen (18) months.
SECTION 5 DISTRIBUTOR agrees that it will not conduct itself in such a
manner as may reflect discredit on SEEC or on the PRODUCTS. SEEC reserves the
right to direct DISTRIBUTOR to discontinue any marketing activities of which
SEEC disapproves.
SECTION 6 DISTRIBUTOR will not use SEEC'S name, SEEC'S trademarks, or
PRODUCT names in any manner whatsoever, without the prior written consent of
SEEC.
ARTICLE IX CONFIDENTIALITY
SECTION 1 The parties agree to keep confidential all technical and
commercial information, which either party may designate to the other in
writing as confidential, unless any such data is published and in the public
domain. This obligation to keep data confidential shall include proprietary
data even though it may not fall within the common law definition of trade
secrets, so long as the party providing the information designates it as
confidential, and so long as it is not published and in the public domain.
<PAGE> 7
ARTICLE X NON-COMPETE COVENANT.
SECTION 1 While this Agreement is in effect, DISTRIBUTOR will not market
or promote any products that compete with SEEC products in any Territory
covered by this Agreement.
SECTION 2 If, while this Agreement is in effect, DISTRIBUTOR develops or
acquires, directly or indirectly, a whole or part interest in a product that is
similar to any one of the PRODUCTS covered by this Agreement, DISTRIBUTOR will
inform SEEC, and SEEC will have the absolute right, at its sole discretion, to
terminate this Agreement.
ARTICLE XI ROYALTIES
SECTION 1 PAID-UP ROYALTIES. At the time this Agreement is signed,
DISTRIBUTOR will pay SEEC the amount of: Nil ($0) DOLLARS (US) in paid-up,
non-refundable royalties, for the right to market the PRODUCTS in the Territory
covered by this Agreement. The unit royalties described in Section 2 of this
Article will be credited against these paid up royalties until the same has
been used up.
SECTION 2 UNIT ROYALTIES. DISTRIBUTOR will pay SEEC in dollars, unit
royalties computed at Forty (40%) of the suggested International list price on
each unit of the PRODUCTS obtained by DISTRIBUTOR from SEEC for sublicensing to
end-users through its marketing network for a period of 180 days effective from
the date of this agreement as promotional offer. After the end of the
promotional period, DISTRIBUTOR will pay SEEC in dollars, unit royalties
computed at Fifty (50%) of the suggested International list price on each unit
of the PRODUCTS obtained by DISTRIBUTOR from SEEC, The current International
list price, and the royalties to be paid by DISTRIBUTOR on the PRODUCTS are Set
forth in Exhibit D hereof. These prices may be revised by SEEC at its sole
discretion, at any time, and from time to time. Following the exhaustion of the
paid-up royalties specified in Section 1 above, payment of unit royalties will
be net ten (10) days. After ten (10) days, unpaid invoices will carry interest
at the rate of 1% per month. Repeated failures to timely pay unit royalties in
a timely fashion w ill entitle SEEC to terminate this Agreement before the end
of its three (3) year term.
SECTION 3 International List Prices will be the dollar equivalent in the
currency of Indian Rupees. Unit royalties will be paid to SEEC by DISTRIBUTOR
in the dollar equivalent of 50 per cent of the dollar list price in each
country Prices will not be revised for fluctuations in exchange rates of up to
ten (10%) per cent. If the exchange rate fluctuates beyond ten (10%) percent,
SEEC will revise the Price List for that country.
SECTION 4 All prices will be FOB Pittsburgh, PA and do not include
shipping, packing and insurance.
<PAGE> 8
SECTION 5 Subject to applicable anti-trust laws, SEEC agrees establish a
dollar List Price for sale of the PRODUCTS in India, and will not sell the
PRODUCTS to any end-user or Distributor at less than the applicable Dollar List
Price. If this provision is in violation of applicable anti-trust laws, this
provision will be deemed void and unenforceable.
ARTICLE XII NEW PRODUCTS.
SECTION 1 While this Agreement is in effect, SEEC will give DISTRIBUTOR a
right of first refusal on non-exclusive marketing rights in the Territory
covered by this Agreement, for such new products in the SEEC family of
products, as may be developed by SEEC New products, as used in this provision,
will not include SEEC product derivatives, or any products developed for VARS
or for any other entity.
ARTICLE XIII TECHNICAL SUPPORT.
SECTION 1 SEEC will provide three days of technical support and training,
in English, for DISTRIBUTOR'S personnel in Pittsburgh. SEEC will bear the
travel and living costs for its personnel. DISTRIBUTOR will bear the costs of
travel for its personnel and will make the necessary class room arrangements
for the training sessions, at its cost.
SECTION 2 DISTRIBUTOR will be responsible for providing all technical and
customer support in DISTRIBUTOR'S Territory, and will ensure that adequate
technical and customer support is available to its end-users, so that the
marketability and reputation of the PRODUCTS will not suffer for want of
adequate customer support.
SECTION 3 SEEC will provide telephone support to the product manager of
DISTRIBUTOR during SEEC'S normal office hours in the US. DISTRIBUTOR will
co-ordinate with all of its offices in India.
ARTICLE XIV REPRESENTATIONS AND WARRANTIES.
SECTION 1 SEEC warrants that it has the right to enter into this
Agreement with DISTRIBUTOR, and give the marketing and promotion rights for the
PRODUCTS, which are the subject of this Agreement.
SECTION 2 SEEC, at its cost, will replace, FOB Pittsburgh, PA, all
defective materials returned to its Pittsburgh office. Replacement will be only
for parts that are defective. Costs of
<PAGE> 9
transportation for replacement of defective parts will be borne by DISTRIBUTOR
or DISTRIBUTOR'S end user.
SECTION 3 THERE ARE NO EXPRESS OR IMPLIED WARRANTIES BY SEEC TO
DISTRIBUTOR, TO DISTRIBUTOR'S AGENTS OR SUB-DISTRIBUTORS, OR TO DISTRIBUTOR'S
END-USERS, OTHER THAN THE ABOVE SPECIFIED OBLIGATION TO REPLACE DEFECTIVE
MATERIALS.
SECTION 4 SEEC will have no liability for direct damages, incidental
damages, consequential damages, punitive damages, indemnification or
contribution to DISTRIBUTOR, to DISTRIBUTOR'S Agents or Sub-distributors, or to
any end-user, other than the above specified obligation to replace defective
materials.
SECTION 5 In marketing and promoting the PRODUCTS, DISTRIBUTOR shall not
make any representations regarding the PRODUCTS, warranties, service, price, or
any other representations whatsoever, except as set forth in the PRODUCTS
literature supplied by SEEC, without SEEC'S prior written approval.
SECTION 6 In making proposals to end-users, DISTRIBUTOR will ensure that
the end-user is aware of all technical and other requirements necessary for the
proper functioning of the PRODUCTS.
SECTION 7 DISTRIBUTOR will ensure that its Agreements with its Agents,
Sub-distributors, and end-users contain adequate provisions to effectuate the
provisions of this Article, and will indemnify SEEC and save SEEC harmless from
any and all liability caused by DISTRIBUTOR'S failure to do so.
SECTION 8 DISTRIBUTOR will use its best efforts to market and promote the
PRODUCTS in its Territory, in accordance with the terms of this Agreement, the
terms of SEEC'S licensing provisions accompanying each unit of the PRODUCTS,
and the Business Plans mutually agreed to by the parties.
ARTICLE XVI DURATION AND TERMINATION.
SECTION 1 INITIAL TERM. This Agreement shall become effective as of the
date first above written, and shall continue in full force and effect for a
period of three (3) years from that date, unless terminated before that time by
either party upon thirty (30) day's written notice, for cause. Unless renewed
by mutual agreement, at the end of the aforesaid three (3) year term,
DISTRIBUTOR'S right to market and promote the PRODUCTS shall terminate
absolutely, without any liability by SEEC to DISTRIBUTOR. its Agents or
Distributors, for the said
<PAGE> 10
termination. DISTRIBUTOR will ensure that its Agreements with its Agents and
Distributors so provide.
SECTION 2 RENEWAL. The parties may mutually agree to renew this Agreement
upon the same, or mutually agreed to different terms, for another three (3)
year term, or for a mutually agreed to new term. There will be no automatic
right to renewal of this Agreement by either party. Renewal by SEEC will be
subject to DISTRIBUTOR'S sales performance, to SEEC'S satisfaction with
DISTRIBUTOR as a marketer and promoter of the PRODUCTS, and to the negotiation
of mutually satisfactory economic terms, all of which shall be decided by SEEC
at its sole discretion. Renewal by DISTRIBUTOR will likewise be subject to
DISTRIBUTOR'S satisfaction with the PRODUCTS, with SEEC, and with the
negotiation of mutually satisfactory economic terms, all of which shall be
decided by DISTRIBUTOR at its sole discretion. Failure to renew by either
party, for any reason, or for no reason, shall not be deemed a breach of this
Agreement or an actionable wrong.
SECTION 3 DISTRIBUTOR'S RIGHTS AND DUTIES UPON TERMINATION.
(a) Upon termination, DISTRIBUTOR will have the right to sell all unused
inventory of the PRODUCTS after termination of the Agreement.
(b) Within ten (10) days of date of termination, DISTRIBUTOR will return to
SEEC all catalogues, price lists, and all materials obtained from SEEC, and all
recorded materials (whether recorded on paper, on computer hard drive, computer
disks, or any other recording devices whatsoever) which may be related to the
subject matter of DISTRIBUTOR's marketing of the PRODUCTS.
(c) Upon termination, DISTRIBUTOR shall remit all amounts due to SEEC and,
unless SEEC instructs DISTRIBUTOR differently, DISTRIBUTOR shall notify in
writing, with a copy to SEEC, all of its Agents, sub-distributors and
end-users, that all future communications regarding the PRODUCTS should be made
directly to SEEC at the address specified in this Agreement.
(d) If DISTRIBUTOR has not made timely payment to SEEC for any PRODUCT, within
ten (10) days of termination of this Agreement, DISTRIBUTOR shall, at SEEC'S
option, assign its right to receive any payments from third parties for
PRODUCTS for which DISTRIBUTOR has not paid SEEC, and DISTRIBUTOR, at SEEC'S
option, shall notify in writing, with a copy of SEEC, all of its Agents,
sub-distributors, and end-users involved in the sub-licensing of such
unpaid-for PRODUCTS, that all future payments for such unpaid-for PRODUCTS
shall be made directly to SEEC at the address specified in this Agreement.
DISTRIBUTOR'S liability to SEEC for such unpaid-for PRODUCTS shall be reduced
by all amounts which SEEC actually receives from third parties for such
unpaid-for PRODUCTS marketed by DISTRIBUTOR under the terms of this
<PAGE> 11
Agreement, SEEC shall not be obligated to incur any expense to collect such
payments from such third parties.
SECTION 4 TERMINATION FOR DEFAULT. Any violation of this Agreement by
DISTRIBUTOR shall be deemed a default. Without limiting the generality of the
foregoing, DISTRIBUTOR'S failure to make any payment to SEEC when due, whether
or not interest is charged for the delay, shall also be deemed a default. In
the event of any default, SEEC may send a written notice to DISTRIBUTOR to
correct the default, and if DISTRIBUTOR fails to do so within thirty (30) days
after the date of such notice, SEEC may at any time thereafter terminate this
Agreement. If the nature of the default is such that it cannot be cured (for
example, a breach of confidentiality) this Agreement may be terminated by SEEC
on written notice, without the thirty day period for an opportunity to cure. In
the event of repeated defaults, not necessarily of the same type, SEEC may
terminate this Agreement upon written notice, without giving further
opportunity to cure.
SECTION 5. TERMINATION BY BUY-OUT. At any time after the first twelve
months of this Agreement, SEEC may terminate this Agreement, without cause, by
paying DISTRIBUTOR an amount equal to one hundred and fifty (150%) per cent of
DISTRIBUTOR'S previous twelve (12) month's gross revenue from the PRODUCTS
only, excluding any revenues derived from services or other activities related
to the PRODUCTS. This method of termination shall not apply to termination
under Sections 1, 2, or 4 of this Article.
SECTION 6 TERMINATION FOR OTHER REASONS.
(a) Failure by the parties to mutually agree to a minimum level of promotion
and sales to be achieved by DISTRIBUTOR will entitle SEEC to terminate this
Agreement at any time after the first eighteen (18) months.
(b) Six (6) months after signing this Agreement, the parties will agree upon
the minimum amount of DISTRIBUTOR'S first year sales, and the minimum annual
percentage increase in sales to be achieved by DISTRIBUTOR thereafter. If such
sales performance is not achieved by DISTRIBUTOR, SEEC may at any time
thereafter, terminate this Agreement upon ninety (90) days written notice to
DISTRIBUTOR.
(c) Failure by the parties to mutually agree to a business plan under Article
IV, Section 2, of this Agreement will entitle either party to terminate this
Agreement at any time after the first eighteen (18) months.
<PAGE> 12
(d) This Agreement may be terminated at any time by mutual agreement of SEEC
and DISTRIBUTOR.
ARTICLE XVII MISCELLANEOUS
SECTION 1 NOTICES: Any notices required to be sent under the terms of
this Agreement shall be sent to the parties as follows:
TO SEEC AT: TO THE DISTRIBUTOR AT:
5001, Baum Blvd., 4, Motilal Nehru Nagar,
Pittsburgh, PA 15213 1st Floor, Begumpet Road,
Hyderabad, 500 016 India
SECTION 2 BINDING ARBITRATION: The parties agree that all claims,
disputes and other matters in question between them, arising out of or related
to this Agreement, and the rights, duties and obligations arising thereunder or
the breach thereof, shall be decided by common-law arbitration in Pittsburgh,
PA, in accordance with the Rules of the American Arbitration Association then
prevailing, unless the parties mutually agree otherwise. This Agreement shall
not be construed as a consent to arbitrate any dispute with any person who is
not a party to this Agreement; Provided however, SEEC shall have the right to
obtain preliminary of permanent injunctive relief from a court of appropriate
jurisdiction while the arbitration process is continuing, and until such time
as the Board of Arbitrators renders its decision on the merits. The parties
agree that with regard to all such claims, disputes and remedies, arising out
of this Agreement, the American Arbitration Association, and the Federal and
State Courts in Pittsburgh, PA and applicable appellate courts, shall have
jurisdiction over their persons.
SECTION 3 SERVICE OF PROCESS in Arbitration or in Court, may be made by
certified mail , return receipt requested, to either party at the address
specified in Section 1 above of this Article.
SECTION 4 RIGHTS AND REMEDIES. Except as provided in Section 2 above of
this Article, the duties and obligations imposed by this Agreement, and the
rights and remedies available thereunder, shall be m addition to and not in
limitation of, any duties, obligations, rights and remedies otherwise imposed
or available in law or in equity.
SECTION 5 GOVERNING LAW: This: Agreement shall be governed by
Pennsylvania law.
SECTION 6 WAIVER: No action or failure to act by either party shall
constitute a waiver of any right or duty accorded to any of them under this
Agreement, nor shall any such action or
<PAGE> 13
failure to act constitute an approval of, or acquiescence in, any breach
hereunder, except as may be specifically agreed to in writing.
SECTION 7 INTEGRATION AND AMENDMENTS. The terms and conditions contained
herein constitute the full understanding of the parties, a complete allocation
of the risks between them, and a complete and exclusive statement of the terms
and conditions of their agreement. No conditions, representations, usages of
trade, understandings, or agreements, not contained herein, and purporting to
modify, waive, vary, explain or supplement the terms: or conditions of this
contract shall be binding unless hereafter made in writing and signed by a duly
authorized representative of the party to be bound.
SECTION 8 SUCCESSORS AND ASSIGNS. Any attempted assignment by DISTRIBUTOR
of the rights and obligations created by this Agreement shall be voidable at
SEEC'S sole discretion. SEEC may at any time assign its rights, obligations and
interests in this Agreement. Except as provided to the contrary herein, the
terms and conditions of this: Agreement shall be binding on the parties, their
respective executors, personal representatives, heirs, successors in interest
and assigns.
SECTION 9 GENDER AND NUMBER. All references in this Agreement to the
singular and/or to the masculine gender, shall be deemed to include the plural
and/or feminine, where appropriate.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, as of the date first above written.
ATTEST: SEEC, INC.
/s/ JOHN D. GODFREY (SEAL) By /s/ RAVINDRA KOKA
- ---------------------- ---------------------------
Secretary or Treasurer President or Vice President.
ATTEST: ERA SOFTWARE SYSTEMS PVT. LTD.
By /s/ R. RAMANA
- ---------------------- ---------------------------
Secretary or Treasurer President or Vice President.
<PAGE> 14
Exhibit A.
PRODUCTS WHICH ARE THE SUBJECT OF THIS AGREEMENT
SEEC Bundled COBOL Analyst
SEEC Bundled COBOL ANALYST 2000
SEEC DATE ANALYZER
SEEC SERVER COMPONENT
SEEC INVENTORY/ANALYSIS
SEEC YEAR 2000 REPORTS
SEEC ADABAS SUPPORT
SEEC IDMS SUPPORT
SEEC COBOL SLICER
/s/ RAVINDRA KOKA /s/ R. ROMANA
- ----------------- -------------
Initial Initial
<PAGE> 15
Exhibit B.
BUSINESS PLAN FOR NON-EXCLUSIVE MARKETING OF
THE PRODUCTS IN DISTRIBUTOR'S TERRITORY
FOR THE YEAR APRIL 96 - MARCH 97
ESTIMATED SALES BY QUARTER
<TABLE>
<CAPTION>
Apr.-Jun. Jul.-Sep. Oct.-Dec. Jan.-Mar. TOTAL
<S> <C> <C> <C> <C>
Total US$ 45,000. 78,000. 75,000. 112,000 300,000.
</TABLE>
[THE BUSINESS PLAN SHOULD BE SIGNED AT THE END IN THE SAME FORMAT
AS THE SIGNATURES AT THE END OF THE AGREEMENT]
/s/ RAVINDRA KOKA /s/ R. ROMANA
- ----------------- -------------
<PAGE> 16
Exhibit C.
Existing DISTRIBUTOR Agents and Distributors
No Agents or Sub-Distributors exist currently.
/s/ RAVINDRA KOKA /s/ R. ROMANA
- ----------------- -------------
Initial Initial
<PAGE> 17
Exhibit D
SEEC PRODUCT
PRICE LIST
March 1996
For a SEEC Year 2000 Solutions package for COBOL Legacy applications, the
customer must purchase at least 1 copy of COBOL Analyst 2000, 1 copy of the
Inventory/Analysis Module, and 1 copy of the Year 2000 Reports Module.
Additional copies may be configured on a need basis. For other languages, Date
Analyser can be used stand alone.
SINGLE USER PER SEAT MODULES
<TABLE>
<CAPTION>
Product COBOL COBOL Analyst Date Analyser COBOL
Analyst 2000 Slicer
Single User
Single Single US$ Single User
User User
US$ US$ US$
<S> <C> <C> <C> <C> <C>
1-5 Users 2750. 3300. 5500. 8250.
6-10 Users 2475. 3025. 4950. 7700.
11-20 Users 2200. 1925. 4400. 7150.
20+ Users 1650. 1375 3850. 6600.
</TABLE>
TEMPLATES FOR DATE ANALYSER -- Template for any one language is free with the
first copy of Date Analyzer. Additional template for other languages are priced
at US$1,000/per template per seat.
PROCESS LICENSING FEE SCHEDULE
<TABLE>
<CAPTION>
Number of Lines of Code Total Cost
<S> <C>
1 to 50 Million Lines of Code (MLOC) $2,000 per million
50 to 100 Million Lines of Code (MLOC) $1,500 per million
100 or more Million Lines of Code (MLOC) $1,000 per million
</TABLE>
PROCESS LICENSING FEES COBOL Analyst and Date Analyser Attract a usage fee of
US$2000. per million lines of code captured using the modules.
<PAGE> 18
DISTRIBUTORS OUTSIDE THE US
THE COBOL ANALYST AND THE COBOL ANALYST 2000 PACKAGE includes three add-on
products (Synonym Processor, Code Walk-thru and DB2 Analyzer).
COBOL ANALYST & COBOL ANALYST 2000 TOOLS
SYNONYM PROCESSOR - Detects and identifies redundant data across programs,
screens, files and databases in an application.
CODE WALK-THRU - Guides programmers through multiple execution scenarios and
records traversed paths for future analysis and follow-up.
DB2 ANALYZER - Loads and analyzes the DB2 DDL and embedded SQL in an
application with drill-down capability to explore design details.
21ST CENTURY ANALYSIS IN COBOL ANALYST 2000 - Combines powerful,
heuristics-based processing with the Scan, Synonym and Impact Analysis
functions to identify items for Century Date updation. These items may be
database or file formats, data items in programs, screens and reports.
SERVER MODULES
SERVER COMPONENT is required with Network version of COBOL Analyst and COBOL
Analyst 2000 and is priced separately at $5,500 for each server.
INVENTORY/ANALYSIS MODULE - Feeds a relational database enabling both canned
and ad hoc queries. Priced separately at $8,250/SERVER.
YEAR 2000 REPORTS MODULE - Microsoft Access templates specially designed for
ease of COBOL Analyst 2000 report generation. Priced separately at
$5,500/SERVER.
ADABAS SUPPORT - Analyzes ADABAS calls and records to derive a CRUD matrix and
relates data items in the COBOL programs to the ADABAS files. Priced separately
at $5,500/SERVER.
IDMS SUPPORT - Analyzes IDMS copybooks and embedded DML to derive a CRUD matrix
and relates data items in COBOL programs in IDMS records. Priced separately at
$5,500/SERVER.
ANNUAL SUPPORT
Includes major program updates and technical support via telephone, priced at
20% of the total purchase, depending on quantity. Renewable annually.
SHIPPING AND HANDLING
(not included in above prices)
All shipping charges will be on actuals depending on the class of shipment.
All prices are subject to change without
notice at the sole discretion of SEEC, Inc.
Prices do not include taxes and duties where
applicable. Customers should contact SEEC,
Inc. for current prices. Prices are shown and
payment is required in US dollars. COBOL
Analyst is a trademark of SEEC, Inc. ADW is a
trademark of its respective company.
-18-
<PAGE> 1
Exhibit 10.13
AGREEMENT
MADE as of this 16th day of July 1996, by and between:
RAJ REDDY, an individual, ("REDDY" hereinafter)
AND
SEEC, INC., a Pennsylvania corporation, ("SEEC" hereinafter),
WITNESSETH:
WHEREAS, REDDY has paid funds to SEEC totalling $75,000.00 to finance
research and development of the PRODUCT as hereinafter defined, and has
therefore acquired an interest in the PRODUCT; and
WHEREAS, SEEC wishes to purchase REDDY'S said interest in the PRODUCT
for a total consideration of sixty six thousand six hundred and eighty eight
shares of SEEC'S common stock; and
WHEREAS, REDDY is willing to take the aforesaid shares of SEEC stock as
full payment for his interest in the said PRODUCT;
NOW THEREFORE:
For and in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto do covenant and agree
as follows:
Section 1. Definitions: For the purposes of this Agreement, the following words
shall have the following meanings:
(a) "PRODUCT" means a Parser for embedded TOTAL/SUPRA database
manipulation language (DML), which will enable analysis and
loading of database operations in COBOL programs that use
Cincom's TOTAL and SUPRA databases. The products are
written using LEX and YACC and require understanding the
syntax and semantics of the DML.
Page 1 of 4.
<PAGE> 2
Section 2. Payment of Purchase Price. SEEC hereby transfers and assigns to
REDDY, free and clear of all liens, claims and encumbrances, all right title
and interest in and to Share Certificate No. 18 representing sixty six thousand
six hundred and eighty eight (66,688) shares of the common stock of SEEC
("Share Certificate"), in full payment of REDDY'S interest in the PRODUCT.
REDDY hereby acknowledges receipt of the said Share Certificate. SEEC warrants
that it has the legal ability to issue the shares represented by the said Share
Certificate, and that the said shares are free and clear of all liens, claims
and encumbrances.
Section 3. Transfer of REDDY'S Interest in the PRODUCT. REDDY hereby assigns,
transfers, remises and forever quitclaims to SEEC, free and clear of all liens,
claims and encumbrances, all of REDDY'S right, title and interest in and to the
PRODUCT whatsoever, whether legal or equitable, whether statutory or under
common law, which interest arose out of REDDY'S funding of the research and
development of the PRODUCT. This assignment and transfer does not renounce any
interest which REDDY may have in the PRODUCT deriving from his status as an
existing shareholder of SEEC, which interest he shares with all other
shareholders of SEEC REDDY warrants that he has the legal ability to transfer
and assign to SEEC his aforesaid interest in the PRODUCT, and that the said
interest is free and clear of all liens, claims and encumbrances.
Section 4. Binding Arbitration: The parties agree that all claims, disputes and
other matters in question between them, arising out of or related to this
Agreement, and the rights, duties and obligations arising thereunder or the
breach thereof, shall be decided by common-law arbitration in Pittsburgh, PA,
in accordance with the Rules of the American Arbitration Association then
prevailing, unless the parties mutually agree otherwise. The parties agree that
with regard to all such claims, disputes and remedies, arising out of this
Agreement, the American Arbitration Association, and the Federal and State
Courts in Pittsburgh, PA and applicable appellate courts, shall have
jurisdiction over their persons. This Agreement shall not be construed as a
consent to arbitrate any dispute with any person who is not a party to this
Agreement, unless either party also has an agreement with such third party or
parties to resolve or adjudicate all disputes and claims between them, by
binding arbitration, and the subject matter is in any way related to the
subject matter of this Agreement.
Page 2 of 4.
<PAGE> 3
Section 5. Governing Law: This Agreement shall be governed by Pennsylvania law,
excluding only its laws on conflicts of laws.
Section 6. Waiver: No action or failure to act by either party shall constitute
a waiver of any right or duty accorded to any of them under this Agreement, nor
shall any such action or failure to act constitute an approval of, or
acquiescence in, any breach hereunder, except as may be specifically agreed to
in writing.
Section 7. Integration and Amendments. The terms and conditions contained
herein constitute the full understanding of the parties, a complete allocation
of the risks between them, and a complete and exclusive statement of the terms
and conditions of their agreement. No conditions, representations, usages of
trade, understandings, or agreements, not contained herein, and purporting to
modify, waive, vary, explain or supplement the terms or conditions of this
contract shall be binding unless hereafter made in writing and signed by a duly
authorized representative of the party to be bound.
Section 8. Successors and Assigns. The terms and conditions of this Agreement
shall be binding on the parties, their respective executors, personal
representatives, heirs, successors in interest and assigns.
Section 9. Gender and Number. All references in this Agreement to the singular
and/or to the masculine gender, shall be deemed to include the plural and/or
feminine, where appropriate.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
as of the date first above written.
WITNESS
/s/ RAJ REDDY
- ------------------- ------------------------
RAJ REDDY
Page 3 of 4.
<PAGE> 4
ATTEST: SEEC, INC.,
(SEAL) /s/ RAVINDRA KOKA
- ----------------------- --------------------------
Secretary or Treasurer President.
Page 4 of 4.
<PAGE> 1
Exhibit 10.14
TRUST AGREEMENT
By and Between
SEEC, INC.
and
RAVINDRA KOKA, President of SEEC, INC.
and DR. K. BUDDHIRAJU, Managing Director
of ERA Software Systems Pvt. Ltd.
<PAGE> 2
TRUST AGREEMENT
THIS TRUST AGREEMENT is made in triplicate this ____ day of
__________________, 1992, between SEEC, INC., a corporation organized under the
laws of Pennsylvania, hereinafter called "Settlor", and RAVINDRA KOKA,
President of SEEC, INC. and Dr. K. Buddhiraju, Managing Director of ERA
Software Systems Pvt. Ltd., known as and hereinafter called "ERA".
1. The aforesaid Ravindra Koka and Dr. K. Buddhiraju are hereinafter
called "Trustees" of the trust created by this instrument, to be known as "ERA
Foundation for the Administration of the SEEC, Inc. Stock option Plan"
(hereinafter "ERA Foundation").
2. Settlor hereby transfers to ERA Foundation and its trustees shares
of common stock of SEEC, INC. in the following amounts, and for distribution to
the described beneficiaries on the following terms and conditions:
A. Settlor hereby transfers to ERA Foundation and its trustees
500,000 shares of common stock of SEEC, INC., to be held in trust for the
benefit of ERA and to be distributed to ERA or to ERA's shareholders at the
termination of this trust as defined in Paragraph 14 of this trust instrument.
B. Settlor hereby transfers to ERA Foundation and its trustees an
additional 100,000 shares of common stock of SEEC, INC. to be held in trust for
the employees of ERA. Trustees may, from time to time pursuant to the SEEC,
Inc. Stock Option Plan, and
<PAGE> 3
Incentive Stock Option Agreement, in their sole discretion, grant to said ERA
employees the option right to purchase specified units of said 100,000 shares,
at the price of one (1) cent a share or at such other value as may be
determined by Trustees, in consideration of, and as a reward for, the services
of said employees in advancing the interests of ERA and SEEC, INC. Trustees
shall have the sole discretion to determine the value of said services and the
proportionate amount of shares for which the trustees may transfer an option
right to purchase to said employees.
3. In the event of the death of any beneficiary of this trust who has
been granted the option right to purchase shares of common stock of SEEC, INC.,
said option right shall pass to the heir or heirs of said beneficiary as
determined by the law of domicile of said beneficiary.
4. Any named trustee may resign at any time without court approval.
5. In the event of death, resignation, or incapacitation of either of
the named trustees, a successor trustee may be elected by the beneficiaries of
this trust, whether corporate or individual, who have theretofore been granted
option rights to purchase the stock held by ERA Foundation and trustees. A
majority of said beneficiaries shall elect the successor trustee by an
instrument signed and acknowledged by them and delivered to the surviving
trustee. Such successor trustee shall qualify by filing his or her written
consent to act as same with the trust records.
6. Trustees shall serve without compensation, but shall be reimbursed
by ERA for any expenses incurred by said trustees in
<PAGE> 4
discharging their duties as trustees, including, but not limited to, telephone,
postage, and travel expenses.
7. Settlor hereby waives any conflict of interest that may arise from
a) the ownership of any shares of stock by either trustee in either SEEC, INC.
or in ERA; or b) employment of either trustee by SEEC, INC. or ERA.
8. Trustees shall not be liable to any beneficiary for any loss or
depreciation in value of the shares of common stock of SEEC, INC. transferred
by this instrument to the trust.
9. The duties, powers and liabilities of trustees shall not be changed
without their consent.
10. Trustees may receive further transfers of stock of SEEC, INC.
which will be held by trustees subject to the terms of this trust agreement.
Trustees agree to hold such additions in trust for the uses and in the manner
set forth herein.
11. Prior to transfer of the shares of SEEC, Inc. to ERA pursuant to
paragraph 2A of this Trust Agreement, and prior to the transfer of shares to
ERA employees upon their exercise of the stock options granted to them pursuant
to paragraph 2B, such dividends as may be declared from time to time by SEEC,
Inc. on its stock shall be paid to trustees.
12. Trustees shall have the power to invest said dividends and
reinvest, at their discretion, whether in common and preferred stocks, or in
such common trust, diversified, money market, or mutual funds, as they deem
appropriate. Trustees shall also have the discretionary power to distribute
said dividends to
<PAGE> 5
the employees of ERA to whom stock options have been granted by trustees
pursuant to paragraph 2B of this trust instrument.
13. At the termination of the trust, any undistributed dividends as
augmented by any investments, shall pass to the beneficiaries together with the
shares as specified in paragraph 14 below.
14. This trust shall terminate in the event that SEEC, INC. is
acquired by another corporation, or in the event that SEEC, INC. makes a public
offering of its shares for public sale, or at the passage of ten (10) years
from the date of this instrument, whichever first occurs. Upon termination of
the trust, Trustees will transfer to ERA or to ERA's shareholders the 500,000
shares of SEEC, INC. held in trust for ERA. Further, upon termination of the
trust, the option rights of the beneficiary-employees of ERA to purchase shares
of SEEC, INC. that they may theretofore have acquired shall be deemed fully
vested and exercisable. Upon exercise by said beneficiary-employees of ERA
their options, Trustees will transfer to them the shares of SEEC, INC.
encompassed by said options at the price previously determined by Trustees
pursuant to Paragraph 2B of this trust instrument.
15. Upon termination of the trust, any shares of SEEC, INC. remaining
in the trust, the purchase option rights for which have not been granted to any
beneficiary, and any funds representing dividends or investment of dividends on
said shares, together with any funds obtained from the beneficiaries upon
exercise of purchase option rights granted to them, shall revert and pass to
Settlor.
<PAGE> 6
16. Until termination of this trust, the shareholder's right to vote
the shares of SEEC, INC. transferred to Trustees by this trust agreement shall
reside in Trustees.
17. Questions pertaining to the validity, construction and
administration of the trusts created by this instrument shall be determined in
accordance with the laws of the Commonwealth of Pennsylvania. If litigation
over any dispute arising hereunder is pursued such lawsuit or lawsuits shall be
filed in the courts of the Commonwealth of Pennsylvania.
18. The situs of this trust shall be in the Commonwealth of
Pennsylvania.
19. Trustees shall provide to the trust beneficiaries an annual
statement of the administration of the trust by trustees.
SIGNED, SEALED and DELIVERED this _______ day of ____________________
, 1992, in the presence of
SEEC, INC., Settlor
By: /s/ RAVINDRA KOKA
- --------------------- ----------------------------
Witness RAVINDRA KOKA, President
/s/ RAVINDRA KOKA
- --------------------- ----------------------------
Witness RAVINDRA KOKA, Trustee
/s/ DR. K. BUDDHIRAJU
- --------------------- ----------------------------
Witness DR. K. BUDDHIRAJU, Trustee
Managing Director, ERA
Software Systems Pvt. Ltd.
<PAGE> 1
EXHIBIT 11.1
SEEC, INC.
COMPUTATION OF SHARES USED IN COMPUTING NET INCOME (LOSS)
PER COMMON AND COMMON EQUIVALENT SHARES
YEARS ENDED MARCH 31, 1992, 1993, 1994, 1995 AND 1996,
AND THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED MARCH 31 SEPTEMBER 30
----------------------------------------------------------------------- ---------------------------
1992 1993 1994 1995 1996 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted average number
of common and common
equivalent shares not
subject to the
provisions of SAB No. 83:
Common shares issued
and outstanding.... 1,175,300 1,356,116 1,356,116 1,356,568 1,360,712 1,358,376 1,419,283
Common equivalent
shares consisting
of options and
warrants........... -- -- -- -- -- -- 129,976
Reduction in common
equivalent shares
through application
of the treasury
stock method....... -- -- -- -- -- -- (488)
---------- ---------- ---------- ---------- ---------- ---------- ----------
1,175,300 1,356,116 1,356,116 1,356,568 1,360,712 1,358,376 1,548,771
---------- ---------- ---------- ---------- ---------- ---------- ----------
Common and common
equivalent shares
subject to the
provisions of SAB No. 83:
Issuance of common
stock to:
ERA Software
Systems Private,
Ltd. an
affiliate, in
connection with
the acquisition
of software
rights........... 150,679 150,679 150,679 150,679 150,679 150,679 150,679
Related party note
holders in
exchange for
principal and
accrued
interest......... 122,636 122,636 122,636 122,636 122,636 122,636 122,636
Officers/shareholders
in exchange for
the outstanding
balance of
deferred
compensation and
accrued
interest......... 35,173 35,173 35,173 35,173 35,173 35,173 35,173
Related parties
through private
placements....... 31,685 31,685 31,685 31,685 31,685 31,685 31,685
Unrelated third
parties through
private
placements....... 109,080 109,080 109,080 109,080 109,080 109,080 109,080
Common stock
equivalents
consisting of stock
options............ 43,185 43,185 43,185 43,185 43,185 43,185 43,185
Reduction in common
and common
equivalent shares
through application
of the treasury
stock method....... (68,687) (68,687) (68,687) (68,687) (68,687) (68,687) (68,687)
---------- ---------- ---------- ---------- ---------- ---------- ----------
423,751 423,751 423,751 423,751 423,751 423,751 423,751
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average number
of common and common
equivalent shares
outstanding.......... 1,599,051 1,779,867 1,779,867 1,780,319 1,784,463 1,782,127 1,972,522
========== ========== ========== ========== ========== ========== ==========
Net income (loss)
applicable to common
and common equivalent
shares............... $ (194,293) $ (416,396) $ (154,809) $ (255,558) $ (153,172) $ (117,715) $ 125,476
========== ========== ========== ========== ========== ========== ==========
Net income (loss) per
common and common
equivalent share..... $ (.12) $ (.23) $ (.09) $ (.14) $ (.09) $ (.07) $ .06
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
SEEC, Inc.
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated August 30, 1996, except for Notes 15
and 16(d), (e) and (f), as to which the date is October 1, 1996, and the
recapitalization described in Note 1, as to which the date is November , 1996,
relating to the financial statements of SEEC, Inc., which is contained in that
Prospectus, and of our report dated August 30, 1996, relating to the schedule,
which is contained in Part II of the Registration Statement.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
Boston, Massachusetts
November 18, 1996
