-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3TXBg6C7dncyacCgQWpIyKKDcdpUFEM/NpiIZFLs/RSbyktHWTb60u5szEiJGyo 9h1PUwsUDWyUBYgJXXRYoQ== 0000903893-96-000450.txt : 19960705 0000903893-96-000450.hdr.sgml : 19960705 ACCESSION NUMBER: 0000903893-96-000450 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960628 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960703 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTWARE DEVELOPERS CO INC/DE/ CENTRAL INDEX KEY: 0000840824 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 042911320 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10139 FILM NUMBER: 96590559 BUSINESS ADDRESS: STREET 1: 90 INDUSTRIAL PARK RD CITY: HINGHAM STATE: MA ZIP: 02043 BUSINESS PHONE: 6177400101 MAIL ADDRESS: STREET 1: 90 INDUSTRIAL PARK ROAD CITY: HINGHAM STATE: MA ZIP: 02043 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): June 28, 1996 The Software Developer's Company, Inc. ---------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware -------------------------------------------- (State or other jurisdiction of incorporation) 1-10139 04-2911320 ------- ---------- (Commission File Number) (IRS Employer Identification No.) 245 Winter Street, Waltham, Massachusetts 02154 ----------------------------------------------- (Address of principal execute offices) (Zip Code) Registrant's telephone number, including area code: (617) 890-1700 -------------- 90 Industrial Park Road, Hingham, Massachusetts 02043 ----------------------------------------------------- (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION FORM 8-K DATE OF REPORT JUNE 28, 1996 PAGE 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On May 16, 1996, The Software Developer's Company, Inc. ("the Company") entered into an Agreement of Purchase and Sale of Assets with Programmer's Paradise, Inc. (the "Purchaser") (the "Agreement") to sell substantially all of its operating assets relating to its catalog operations, "The Programmer's SuperShop," its Web Site relating to its catalog operations, its corporate sales group, inbound and outbound telemarketing operations, reseller operations, and the operations of its German subsidiary, Software Developer's Company GmbH. On June 4, 1996, the Board of Directors caused to be distributed to stockholders of record as of May 24, 1996, a Notice and Consent Solicitation Statement for action to be taken by Written Consent in Lieu of a Meeting of Stockholders. As of the record date, there were issued and outstanding 8,405,017 shares of Common Stock and 628,330 shares of Series C Preferred Stock, each share entitled to one vote per share, in connection with the approval of the proposal put forth in the Consent Solicitation Statement. On June 14, 1996, the Company received sufficient shareholder consent (58% of the outstanding shares of all classes of stock) necessary to approve the transaction. In connection with the solicitation, stockholders acted upon the proposal to authorize and approve the proposed sale of certain assets of the Company to the Purchaser pursuant to the terms and conditions of the Agreement to authorize such further action by the Company's Board of Directors and proper officers as may in their discretion be necessary or desirable to carry out the intents and purposes of the Agreement; and in furtherance of the disposition contemplated by the Agreement, to authorize and approve an amendment to the Company's Restated Certificate of Incorporation to change the Company's name to Netegrity, Inc. Pursuant to the terms of the Agreement the Company agreed to sell to the Purchaser substantially all of its operating assets, comprised of all of the operating assets relating to its business of The Programmer's SuperShop ("TPS") catalog, its TPS Web Site, its corporate sales group, its German subsidiary, Software Developer's GmbH ("SDC Germany"), and SDC Communications (collectively, the "Target Business") for a consideration of $11,000,000 in cash, subject to certain adjustments and purchase price reductions based on revenues and tangible net assets as of the Closing. The aggregate purchase price consists of payment of $10,000,000 in immediately available funds and the deposit of $1,000,000 under an escrow arrangement. TPS offers software development tools, utilities, databases, languages and business productivity applications to software developers and business professionals. Also included in the purchased assets of the Target Business are all advertising and promotional operations of SDC Communications and its service and support operations relating to the TPS catalog business and the Company's German operations. The assets of the Target Business also include all tradenames, trademarks and copyrights, mailing lists and customer databases, computer SECURITIES AND EXCHANGE COMMISSION FORM 8-K DATE OF REPORT JUNE 28, 1996 PAGE 3 programs used internally or externally in the business, rights under reseller contracts with software manufacturers and distributors, all inventory relating to the TPS catalog and the Target Business, capital equipment and computer systems relating to the Target Business, all accounts receivable and unfilled sales and purchase orders relating to the Target Business, and all deferred charges and prepaid items, advance payments and prepayments for backlog orders relating to the Target Business. The aggregate purchase price of $11,000,000 assumes that the Company will transfer to the Purchaser as of the Closing tangible net assets of the Target Business that equal $1,500,000. These net assets are comprised primarily of accounts receivable, inventory, equipment, and other assets related tot he TPS catalog operation. In addition to the assets transferred, the Purchaser also agreed to assume certain liabilities, including accounts payable and other accrued expenses relating to the TPS catalog business. The Purchaser also agreed to assume a capitalized lease obligation of the Company for a computer system relating to the TPS catalog business. The following liabilities are specifically excluded from the transfer of assets relating to the Target Business: all employee-related expenses except those specifically assumed; brokerage or finder's fees; stockholder obligations; secured debt; taxes; product liability and warranty claims; leases of real property and certain operating leases of personal property; and shutdown costs associated with the Company's German operations, except that the Purchaser agrees to pay one-half of the German subsidiary shutdown costs up to $85,000. The purchase price is also adjusted for declines in revenues forecasted prior to the closing and set forth in a transition plan agreed to by the parties. If, during the thirty days preceding the closing date, the actual revenues from operations of the Target Business are no more than 12% less than the Company's projected revenues for this period reflected on the transition plan, the purchase price shall not be reduced. If, however, such revenues are greater than 12% and up to 17% less than that reflected on the transition plan, the purchase price is reduced by $1,000,000. If such revenues are greater than 17% and up to 27% less than that reflected on the transition plan, the purchase price is reduced by $2,000,000. If such revenues are greater than 27% and up to 32% less than that reflected on the transition plan, the purchase price is reduced by $4,000,000. If such revenues are greater than 32% and up to 42% less than that reflected on the transition plan, the purchase price is reduced by $6,000,000. Finally, if such revenues are more than 42% less than that reflected on the transition plan, the purchase price is reduced by $8,000,000. The Company and the Purchaser entered into a Closing Statement as of June 28, 1996 in which the Company and Purchaser agreed to cause the Agreement to be modified to provide for the purchase by Purchaser of all of the outstanding shares of capital stock of SDC Germany in lieu of the assets thereof included in the purchased assets. The parties also settled a disagreement regarding the inclusion of revenue associated with certain advertising contracts under the Agreement and the consequences of a purchase price adjustment based on not achieving the revenue goals outlined in the Agreement. At the closing, the parties also agreed to reduce the SECURITIES AND EXCHANGE COMMISSION FORM 8-K DATE OF REPORT JUNE 28, 1996 PAGE 4 escrow fund from $1,000,000 to $600,000 and establish an additional escrow, in the amount of $400,000 to be paid pending the closing of the purchase by Purchaser of the shares of SDC Germany and agreed that the Company would pay the Purchaser $400,000 for certain management services and $300,000 for certain moving, bonus, out-placement, employee, facilities and other fees and expenses. The parties also entered into a short term facilities and employee use agreement as set forth under the Agreement. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Pro forma financial information. Pro forma financial information of the Registrant regarding the disposition of assets was filed as a part of the Consent Solicitation Statement dated June 4, 1996 and incorporated by reference. (c) Exhibits. 7.01 - Agreement of Purchase and Sale of Assets by and between Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Software Developer's Company GmbH dated May 16, 1996 (filed as Appendix A to Consent Solicitation Statement dated June 4, 1996 and incorporated by reference). 7.02 - Indemnification Escrow Agreement dated June 28, 1996 among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Golenbock, Eiseman, Assor & Bell. 7.03 - Closing Statement dated June 28, 1996 by and among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Software Developer's Company, GmbH. 7.04 - Letter Agreement by The Software Developer's Company, Inc. and Software Developer's Company GmbH to and agreed by Programmer's Paradise, Inc. dated June 28, 1996 re: Acquisition of Stock of SDEV Germany. 7.05 - Stock Acquisition Escrow Agreement dated June 28, 1996 among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Golenbock, Eiseman, Assor & Bell. SECURITIES AND EXCHANGE COMMISSION FORM 8-K DATE OF REPORT JUNE 28, 1996 PAGE 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this current report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. THE SOFTWARE DEVELOPER'S COMPANY, INC. By /s/ James O'Connor, Jr. ----------------------- James O'Connor, Jr. Chief Financial Officer SECURITIES AND EXCHANGE COMMISSION FORM 8-K DATE OF REPORT JUNE 28, 1996 PAGE 6
INDEX TO EXHIBITS Exhibit Number Description Sequential Page Number 7.01 Agreement of Purchase and Sale of Assets by and between Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Software Developer's Company GmbH dated May 16, 1996 (filed as Appendix A to Consent Solicitation Statement dated June 4, 1996 and incorporated by reference). 7.02 Indemnification Escrow Agreement dated June 28, 1996 among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Golenbock, Eiseman, Assor & Bell. 7.03 Closing Statement dated June 28, 1996 by and among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Software Developer's Company, GmbH. 7.04 Letter Agreement by The Software Developer's Company, Inc. and Software Developer's Company GmbH to and agreed by Programmer's Paradise, Inc. dated June 28, 1996 re: Acquisition of Stock of SDEV Germany. 7.05 Stock Acquisition Escrow Agreement dated June 28, 1996 among Programmer's Paradise, Inc., The Software Developer's Company, Inc. and Golenbock, Eiseman, Assor & Bell.
EX-99.7.02 2 INDEMNIFICATION ESCROW AGREEMENT EXHIBIT 7.02 INDEMNIFICATION ESCROW AGREEMENT AGREEMENT dated as of June 28, 1996, among Programmer's Paradise, Inc., a Delaware corporation, having offices at 1163 Shrewsbury Avenue, Shrewsbury, New Jersey 07702 ("Buyer"), The Software Developer's Company, Inc., having offices at 33 Riverside Drive, Pembroke, Massachusetts 02359 ("Seller"), and Golenbock, Eiseman, Assor & Bell, having offices at 437 Madison Avenue, New York, New York 10022 ("GEAB" or the "Escrow Agent").Buyer and Seller are hereinafter sometimes referred to as the "Parties." W I T N E S S E T H: WHEREAS, pursuant to that certain Agreement of Purchase and Sale of Assets, dated as of May 16, 1996 (the "Purchase Agreement"), among Buyer, Seller and Software Developers Company GmbH ("SDEV Germany"), Buyer is concurrently herewith purchasing from Seller and SDEV Germany the Purchased Assets, with any capitalized term used herein but not otherwise defined having the meaning ascribed to such term in the Purchase Agreement. WHEREAS, pursuant to Section 2.2(b) of the Purchase Agreement, the Parties have agreed that on the date hereof, $1,000,000 of the Purchase Price shall be deposited into escrow upon the terms stated herein. WHEREAS, the Parties desire to establish with the Escrow Agent the escrow contemplated by the Purchase Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: Appointment. The Parties hereby appoint and designate the law firm of GEAB as the Escrow Agent for the purposes herein set forth, and the Escrow Agent hereby accepts such appointment, subject to and in accordance with the provisions of this Escrow Agreement. Deposit. Seller hereby authorizes Buyer to deliver to the Escrow Agent on behalf of the Selling Parties, simultaneously with the execution and delivery of this Agreement and as partial payment of the Purchase Price under the Purchase Agreement, $1,000,000 (such amount, or any future balance thereof, being referred to herein as the "Escrow Fund"), to be held in accordance with the terms of this Agreement in a money-market account sponsored or managed by Republic National Bank, New York, New York (the "Escrow Account"). Upon the opening of the Escrow Account, the Escrow Agent will advise the Parties of the account number thereof. -2- 3. Claims Procedure. 1 Notice of Claims. At any time prior to the Escrow Termination Date (as hereinafter defined), Buyer may give notice to the Escrow Agent and Seller that pursuant to the terms of the Purchase Agreement Buyer is asserting a claim ("Claim") against a Selling Party. Such notice shall constitute the assertion of such Claim by Buyer against the Escrow Fund held in escrow hereunder. Buyer shall be entitled to make or assert a Claim under the Purchase Agreement that it is entitled to (a) an adjustment to the Purchase Price in accordance with Section 2.6 of the Purchase Agreement ("Purchase Price Claims"), or (b) indemnification under the Purchase Agreement. Upon the receipt of such notice of a Claim by the Escrow Agent in accordance with Section 8 hereof, the Escrow Agent shall hold in escrow hereunder such portion of the Escrow Fund as shall equal the amount of such Claim and all other pending Claims hereunder. Notice of a Claim given to the Escrow Agent and Seller pursuant to this Section 3.1 shall briefly set forth the basis of the Claim and, if then determinable by Buyer, a reasonable estimate of the amount thereof, which estimate may include an estimate of attorneys', accountants' and other fees to be incurred to resolve such Claim. If the estimated amount of a Claim is not set forth in the notice of the Claim given to the Escrow Agent and Seller, Buyer will give a further notice to the Escrow Agent and Seller setting forth Buyer's estimate of the amount of such Claim promptly after it is reasonably able to make such estimate. If the Claim is a Purchase Price Claim, Buyer shall state in such notice the status of the determination thereof pursuant to Section 2.6 of the Purchase Agreement and, if finally determined as therein provided, so indicate. 3.2 Objection; Delivery. For a period of twenty (20) days after the giving of any such notice of Claim to Seller, the Escrow Agent shall make no payment of any of the Escrow Funds in respect thereof unless the Escrow Agent shall have received written authorization from Seller to make such payment with respect to such Claim; provided, that if such notice of Claim shall be with respect to a Purchase Price Claim that has been finally determined in accordance with Section 2.6 of the Purchase Agreement, as certified in such notice, the Escrow Agent shall deliver to Buyer, without regard to the twenty-day period in this Section 3.2, free and clear of any interest of the Selling Parties therein, from the Escrow Fund, an amount equal to the amount of such Claim payable to Buyer pursuant to such determination, without further authorization from or right to object by Seller. Except with respect to a Purchase Price Claim that has been finally determined as aforesaid, after the expiration of such twenty (20) day period, the Escrow Agent shall, to the extent of the Escrow Fund, make payment to Buyer of the amount stated in the notice of such Claim given by Buyer pursuant to Section 3.1 hereof, unless prior to the expiration of such twenty-day period the Escrow Agent and Buyer have received written notice from Seller that it disputes the Claim. In the event of a payment to Buyer, the Claim shall be deemed to have resulted in a determination in favor of Buyer, solely for purposes of delivery of the Escrow Fund to Buyer, it being understood that the provisions of Section 2.6 of the Purchase Agreement shall govern with respect to the determination of claims for purchase price adjustments under the Purchase Agreement and the provisions of Article 8 of the Purchase Agreement shall govern with respect to the determination of claims for indemnification under the Purchase Agreement. Any such written objection by Seller shall specify the amount stated in the notice of Claim, if any, Seller agrees Buyer is entitled to in respect of any such Claim. In the event of such specification by Seller, the Escrow Agent shall, to -3- the extent of the Escrow Fund, make payment to Buyer of the amount agreed to by Seller in such notice. In the event it is later determined that Buyer is entitled to receive an amount in respect of such Claim in excess of the amount agreed to by Seller in such notice, and Seller shall not have paid such additional amount to Buyer, the Escrow Agent shall, to the extent of the Escrow Fund, make payment to Buyer of the amount of such excess or additional sum. 3.3 Determination of Claims. In case Seller shall, in the manner provided in Section 3.2 hereof, object in respect of any Claim (or any portion thereof) made by Buyer, then Seller and Buyer shall, within the fifteen (15) day period beginning on the date of the receipt by Buyer of such written objection, attempt in good faith to agree upon the rights and obligations of the respective parties with respect to such Claim and how such Claim shall be paid. If Seller and Buyer so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties. The Escrow Agent shall be entitled to rely on any such memorandum and shall, to the extent of the Escrow Fund and the direction in such memorandum, make payment to Buyer as provided in such memorandum. If Seller and Buyer fail to so agree, such dispute shall be settled either by (a) mutual agreement of Buyer and Seller, evidenced by single written instructions to the Escrow Agent, (b) a binding and final arbitration award, provided the parties have agreed in the Purchase Agreement or otherwise to arbitration with respect to the matters in dispute, or (c) a final judgment, order or decree of a court of competent jurisdiction in the United States of America (the time for appeal therefrom having expired and no appeal having been perfected), all costs and expenses of which (including reasonable attorneys' fees) shall be borne as provided in the Purchase Agreement or, failing any such agreement therein, by the party against whom the dispute is settled as aforesaid. Buyer and Seller agree to proceed in good faith and use their best efforts to resolve any disputes hereunder in a timely and commercially reasonable manner. The Escrow Agent shall be under no duty to institute or defend any such proceedings, and none of the costs and expenses of any such proceedings shall be borne by the Escrow Agent. Notwithstanding anything contained herein to the contrary, a determination with respect to a Purchase Price Claim may be made in accordance with Section 2.6 of the Purchase Agreement, without regard to any other or further periods set forth in this Agreement, and upon receipt of a certificate of Buyer as to such determination the Escrow Agent shall deliver to Buyer free and clear of any interest of the Selling Parties, from the Escrow Fund, an amount equal to the amount of such Claim payable to Buyer pursuant to such determination. 4. Term. 4.1 Term. The term of the escrow under this Agreement shall continue until 5:00 p.m. on the day (1) one year from the date of this Agreement (the "Escrow Termination Date"), except with respect to any then pending Claim. 4.2 No Claims at Termination. If at the Escrow Termination Date there shall be no Claims pending or awards or judgments outstanding, the Escrow Agent shall deliver the Escrow Funds then being held by it in escrow to Seller. -4- 4.3 Claims at Termination. If at the Escrow Termination Date there shall be any Claims pending or awards or judgments outstanding, the Escrow Fund shall be reduced to and the Escrow Agent shall retain, until the final disposition of such Claim, such amount of the Escrow Fund as shall equal the amount of such Claim stated in the notice thereof, and the Escrow Agent shall deliver to Seller any portion of the Escrow Fund in excess of the aggregate of the outstanding or pending Claims, awards and judgments. If the Escrow Fund is equal to or less than the aggregate of the outstanding Claims, awards and judgments, the full amount of the Escrow Fund shall continue to be held in escrow. Any amount not theretofore delivered to Seller shall be delivered to Seller at such time or from time to time when the Claim, award or judgment to which the retained Escrow Funds relate has been fully rendered as herein provided and all amounts payable as a result thereof have been paid to Buyer. Notwithstanding anything to the contrary, in no event shall the Escrow Agent be required to release the Escrow Fund to Seller by reason of the occurrence of the Escrow Termination Date if Buyer shall object thereto by written notice to the Escrow Agent specifying the reasons for such objection. 4.4 Delivery. Promptly after the determination of a Claim in accordance with the provisions of Section 3.2 hereof and promptly after giving receipt of notice of the determination of a Claim in accordance with the provisions of Section 3.3 hereof, including a Purchase Price Claim (which notice shall be accompanied by a copy of any agreement, certificate, final arbitration award, provided that the parties hereto have agreed in the Purchase Agreement or otherwise to arbitration with respect to such matter, or final court order, judgment or decree evidencing such determination), the Escrow Agent shall deliver to Buyer, free and clear of any interest of the Selling Parties therein, from the Escrow Fund, an amount equal to the amount of such Claim payable to Buyer pursuant to such determination. If the amount of the Escrow Fund then held by the Escrow Agent is less than or equal to the amount of such Claim so payable, the Escrow Agent shall deliver to Buyer all of the Escrow Fund then held by it, free and clear of any interest of the Selling Parties therein. 4.5 Remedies Cumulative. The rights and remedies of Buyer under this Agreement are cumulative with, and in addition to, any and all other rights and remedies which Buyer may have under the Purchase Agreement. 4.6 Purchase Price Claim. Seller acknowledges that Buyer may, in its sole and absolute discretion, limit the amount to be delivered to it from the Escrow Fund in respect of a Purchase Price Claim to an amount not less than $500,000, and if a Purchase Price Claim or other Claim, as determined hereunder, shall exceed such limit, or the amount of the Escrow Fund, the Selling Parties shall be liable therefor. 5. The Escrow Agent. 5.1 Disputes. In the event the Escrow Agent shall believe there shall be any disagreement among or between the Parties resulting in adverse claims or demands being made in connection with the Escrow Fund, or in the event that the Escrow Agent in good faith is in doubt as to what action it should take hereunder, the Escrow Agent shall be entitled, at its option, (a) to -5- refuse to comply with any claims or demands on it as long as such disagreement shall continue and, in so refusing, shall make no delivery or other disposition of the Escrow Fund pursuant to the terms of this Agreement and shall not be or become liable in any way or to any person for its failure or refusal to comply with such conflicting or adverse claims or demands and shall be entitled to continue so to refrain from acting and so to refuse to act until the Escrow Agent shall have received (i) a final and non-appealable order of a court of competent jurisdiction directing delivery of the Escrow Fund, or (ii) a written agreement executed by Buyer and Seller directing delivery of the Escrow Fund, in which event the Escrow Agent shall disburse the Escrow Fund in accordance with such order or agreement, or (b) to place the Escrow Fund with a proper court and to apply to any court of competent jurisdiction (including the commencement of immediate action or suit) to determine the rights of the parties. Any court order referred to in (i) above shall be accompanied by a legal opinion by counsel for the presenting party satisfactory to the Escrow Agent to the effect that said court order is final and non-appealable. The Escrow Agent shall act on such court order and legal opinion without further question. 5.2 Performance. To induce the Escrow Agent to act hereunder, it is further agreed by the parties that: (a) The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Agreement. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be under any duty to give the Escrow Fund held by it hereunder any greater degree of care than it gives its own similar property and shall not be required to invest any funds held hereunder except as directed in this Agreement. Uninvested funds held hereunder shall not earn or accrue interest. (b) The Escrow Agent shall be entitled to rely upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it hereunder without being required to determine the authenticity or the correctness of any fact stated therein or the propriety or validity of the service thereof. The Escrow Agent may act in reliance upon any instrument or signature believed by it in good faith to be genuine and may assume, if in good faith, that any person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so. (c) The Escrow Agent shall not be bound or in any way affected by any notice of any modification or cancellation of this Agreement or the Purchase Agreement, or of any fact or circumstance affecting or alleged to affect rights or liabilities hereunder other than as is herein set forth, or affecting or alleged to affect the rights and liabilities of any other person, unless notice of the same is delivered to the Escrow Agent in writing, signed by the proper parties to the Escrow Agent's satisfaction and, in the case of modification of the duties or responsibilities of the Escrow Agent, unless such modification shall be satisfactory to the Escrow Agent and approved by the Escrow Agent in writing. -6- (d) The Escrow Agent shall not be liable for any error of judgment, or any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, except in the case of its gross negligence or bad faith, nor shall it be liable for the default or misconduct of any employee, agent or attorney appointed by it who shall have been selected with reasonable care. Except with respect to claims based upon such gross negligence or bad faith that are successfully asserted against the Escrow Agent, the Parties shall defend (by attorneys selected by the Escrow Agent), indemnify and hold harmless the Escrow Agent (and any successor escrow agent) from and against any and all losses, liabilities, claims, actions, judgments, damages, costs and expenses arising out of and in connection with this Agreement or the Escrow Agent's duties or services hereunder. This indemnity includes, without limitation, disbursements and reasonable attorneys' fees either paid to retain attorneys or representing the fair value of legal services rendered by the Escrow Agent to itself. Without limiting the foregoing, the Escrow Agent shall in no event be liable in connection with its investment or reinvestment of any cash held by it hereunder in good faith and in accordance with the terms hereof, including without limitation, any liability for any delays (not resulting from gross negligence or bad faith) in the investment or reinvestment of the Escrow Fund or any loss of interest incident to any such delays. (e) The Escrow Agent shall not charge a separate administrative fee for its services as Escrow Agent hereunder. However, the Parties agree to pay or reimburse the Escrow Agent upon request for all reasonable expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in the performance of its duties hereunder. (f) The Escrow Agent shall be entitled to consult with counsel of its own choice and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. (g) Escrow Agent shall be entitled to represent or to act as an advisor of Buyer and its affiliates in any lawsuit or any other matter. (h) The Escrow Agent does not have any interest in the Escrow Fund deposited hereunder but is serving as stakeholder only. Upon payment of the Escrow Fund as herein provided, the Escrow Agent shall be fully released from all liability and obligations with respect thereto. (i) Any payments of income from the Escrow Account shall be subject to withholding regulations then in force with respect to United States taxes. The Parties will provide the Escrow Agent with appropriate W-9 forms for tax I.D., number certification, or non-resident alien certification. The Escrow Agent shall have no responsibility for tax reporting or filing, and such reporting or filing, if required, shall be the responsibility of Seller. 6. Resignation. The Escrow Agent (and any successor escrow agent) at any time may be discharged from its duties and obligations hereunder by the delivery to it of notice of termination signed by the Parties or at any time may resign by giving written notice to such effect to the Parties. -7- Upon any such termination or resignation, the Escrow Agent shall deliver the Escrow Fund to any successor escrow agent designated by the Parties in writing, or to any court of competent jurisdiction if no such successor escrow agent is agreed upon, whereupon the Escrow Agent shall be discharged of and from any and all further obligations arising in connection with this Agreement. The termination or resignation of the Escrow Agent shall take effect on the earlier of (i) the appointment of a successor (including a court of competent jurisdiction) or (ii) the day that is 30 days after the date of delivery: (A) to the Escrow Agent of the other parties' notice of termination or (B) to the other parties hereto of the Escrow Agent's written notice of resignation. If at that time the Escrow Agent has not received a designation of a successor escrow agent, the Escrow Agent's sole responsibility after that time shall be to keep the Escrow Fund safe until receipt of a designation of successor escrow agent or a joint written disposition instruction by the other parties hereto or an enforceable order of a court of competent jurisdiction. 7. Jurisdiction and Venue. The Parties irrevocably (i) submit to the jurisdiction of any New York State or federal court sitting in New York in any action or proceeding arising out of or relating to this Agreement, (ii) agree that all claims with respect to such action or proceeding shall be heard and determined in such New York State or federal court and (iii) waive, to the fullest extent possible, the defenses of an inconvenient forum. The parties hereby consent to and grant any such court jurisdiction over the persons of such parties and over the subject matter of any such dispute and agree that delivery or mailing of process or other papers in connection with any such action or proceeding in the manner provided hereinabove, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. 8. Notices. All notices, instructions and other communications required or permitted to be given, forwarded or transmitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been duly given if delivered personally, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to it at its address set forth above (with a copy thereof as aforesaid to counsel designated by it), or when delivered to a nationally recognized overnight courier service or when sent by electronic facsimile transmission (with a copy to follow by mail as aforesaid), or to such other address as the person to whom notice is to be given shall have given notice of pursuant hereto. 9. Miscellaneous. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and assigns and shall not be enforceable by or inure to the benefit of any other third party except as provided with respect to the termination of, or resignation by, the Escrow Agent. No party may assign any of its rights or obligations under this Agreement without the written consent of the other parties. No waiver hereunder shall be effective unless in a writing signed by the party to be charged. This Agreement may be amended, modified, superseded, or canceled, and any of the terms hereof may be waived, only by a written instrument executed by the parties hereto. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without reference to conflicts of laws. -8- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first above written. PROGRAMMER'S PARADISE, INC. By: /s/ Roger Paradis ------------------ Roger Paradis, President THE SOFTWARE DEVELOPER'S COMPANY, INC. By: /s/ Barry N. Bycoff -------------------- GOLENBOCK, EISEMAN, ASSOR & BELL, as Escrow Agent By: /s/ Lawrence M. Bell -------------------- Lawrence M. Bell, Partner EX-99.7.03 3 CLOSING STATEMENT EXHIBIT 7.03 CLOSING STATEMENT In connection with the closing of the transactions contemplated by that certain Agreement of Purchase and Sale of Assets, dated as of May 16, 1996, among the undersigned (the "Purchase Agreement"), the undersigned hereby agree as follows (with all capitalized terms used herein and not otherwise defined having the meanings ascribed to such terms in the Purchase Agreement): 1. (a) Buyer and Seller have agreed to cause the Purchase Agreement to be modified to provide for the purchase by Buyer of all of the outstanding shares of capital stock of SDEV Germany in lieu of the assets thereof included in the Purchased Assets, on the terms and conditions set forth on Annex A to this Closing Statement, and to include all of such capital stock within the definition of the term "Purchased Assets." In this connection, the parties have agreed that an amount equal to (i) the net amount of assets (other than net operating losses), debts, obligations and liabilities inherited by Buyer solely due to the change of the form of the acquisition of SDEV Germany from an asset transaction to a stock transaction (the "German Share Adjustment"), times (ii) 50%, shall be an additional Permitted Adjustment with respect to the Estimated Balance Sheet and the Closing Balance Sheet and for purposes of calculating Estimated Tangible Net Assets and Tangible Net Assets; provided that the maximum aggregate amount that the Purchase Price may be decreased in respect of such adjustment shall be $90,000, and the amount of the German Share Adjustment in excess of $180,000 shall be an Excluded Liability and borne solely by Seller. (b) Without limiting the foregoing, the German Share Adjustment shall reflect, as of the Release Date, (i) as an asset, the amount of cash on hand of SDEV Germany transferred to Buyer (other than any cash transferred to SDEV Germany pursuant to paragraph 6 below) and (ii) as liabilities, except for any of same specifically assumed by Buyer as Assumed Liabilities under the Purchase Agreement and otherwise reflected in the calculation of Estimated Tangible Net Assets or Tangible Net Assets, (A) all liabilities for line items reflected or reserved against on the balance sheet of SDEV Germany furnished to Buyer and reflecting a stockholders equity of negative $1,176,254.39, including without limitation, accrued payroll, (B) statutory severance payments by SDEV Germany up to an aggregate of $45,000, and (C) the aggregate amount payable by SDEV Germany in respect of all contractual liabilities and obligations, including without limitation, obligations for operating and capital leases and related maintenance and support contracts and obligations, such as, but not limited to, the lease of the premises occupied by SDEV Germany in Dortmund, the lease of the telephone system used by SDEV Germany at such location and certain miscellaneous leases of minor office equipment, except that any statutory severance payments shall be dealt with as provided in paragraph 5 below and intercompany indebtedness shall be dealt with as provided in paragraph 6 below. All debts, liabilities and obligations of SDEV Germany of any nature whatsoever (whether absolute, accrued, contingent or otherwise) relating to or arising out of any act, transaction, circumstance or state of facts which occurred or existed on or before the Buyer Control Date, whether or not then known, due or payable, which have not been disclosed to Buyer in a Schedule pursuant to the Purchase Agreement, and all liabilities under or in respect of any and all litigation, and legal and accounting expenses, in all instances shall be Excluded Liabilities. (c) Seller has confirmed its agreement to indemnify Buyer in respect of Excluded Liabilities, and has agreed to indemnify and hold Buyer harmless from, against and in respect of, and shall on demand reimburse Buyer for, an amount equal to 50% of the amount of such German Share Adjustment applied as a Permitted Adjustment, all in accordance with Article 8 of the Purchase Agreement. 2. The parties have had a disagreement regarding the determination and inclusion of revenue associated with certain advertising contracts and catalog insertion orders under Section 2.6(g)(i) of the Purchase Agreement, but have reached the agreements contained in this Closing Statement in settlement of such dispute. On the terms and subject to the complete and timely satisfaction and fulfillment of obligations of the parties contained in this Closing Statement and in the Purchase Agreement, the parties have agreed that the Purchase Price shall not be reduced by, nor shall the Selling Parties be required to make any payments associated with, any "Negative Variation to Transition Plan" set forth in Section 2.6(g) of the Purchase Agreement with respect to revenue from operations of the Business and determined under the Closing Statement of Revenue. Notwithstanding the preceding sentence, the Purchase Price shall still be subject to adjustment with respect to the Tangible Net Assets of the Business as determined on the Closing Balance Sheet. In the event of any conflict between the terms of this Closing Statement and the Purchase Agreement, the terms of this document shall govern. 3. The Estimated Adjustment shall be $22,089, calculated by taking the excess of the Estimated Tangible Net Assets ($1,587,089) on the Estimated Balance Sheet over $1,500,00, and pursuant to the German Share Adjustment, subtracting from such difference an amount equal to 50% of $130,000 (the estimated German Share Adjustment), or $65,000. The Closing Payment shall be $10,022,089, which amount has been paid and delivered by Buyer to Seller by wire transfer and certified check payable to Testa, Hurwitz & Thibeault Agents & Attorneys Account. 4. The Escrow Fund shall be reduced from $1,000,000 to $600,000, which amount has been paid and delivered by Buyer to the Escrow Agent by wire transfer, to be held by the Escrow Agent in accordance with the Escrow Agreement referred to in Section 2.2(b) of the Purchase Agreement. In addition, the parties have agreed to establish an additional escrow, in the amount of $400,000, which amount has also been paid and delivered by Buyer to the Escrow Agent by wire transfer, to be held by the Escrow Agent pending the closing of the purchase by Buyer of the shares of SDEV Germany in accordance with the Stock Acquisition Escrow Agreement attached to this Closing Statement as Annex B. 5. In addition, the parties have agreed as follows: (a) Pursuant to Section 2.8 of the Purchase Agreement, Seller shall reimburse Buyer (within thirty days) for one-half of the portion of the Shut-Down Expenses paid or payable by Buyer to employees of SDEV Germany in respect of statutory severance pursuant to the -2- German Civil Code and in accordance with the German Shut-Down Plan, at the rate of $.50 for each $1.00 of such severance paid, up to an aggregate amount payable by Buyer in respect of such severance of $45,000; and any amounts payable by Buyer in excess of such $45,000 shall be Excluded Liabilities. (b) At the Closing, Seller shall make the following payments: (i) $200,000 to On-line 2000 GmbH, an indirect subsidiary of Buyer, for certain management services through June 28, 1996; (ii) $200,000 to Buyer for certain management services through June 28, 1996; and (iii) $300,000 to Buyer, on a non-accountable basis, in respect of certain moving, bonus, out-placement, employee, facilities and other fees and expenses, as shall be determined and allocated by Buyer. 6. The provisions of this paragraph shall have no effect on the German Share Adjustment or any other asset-based closing adjustment. Prior to the Release Date (as defined in Annex A), Seller shall pay in full and satisfy all indebtedness for borrowed money owed by SDEV Germany to third parties and, except as otherwise agreed by Buyer and Seller in writing, in a manner satisfactory to Buyer, Seller shall contribute to the capital of SDEV Germany, with such security arrangements as shall be satisfactory to the parties (which may comprise release of all Escrow Funds to Seller if no satisfactory arrangement is offered by Buyer) any and all indebt-edness, liabilities and obligations owing or which may be owed by or due from SDEV Germany to Seller or any affiliate thereof without satisfying any such indebtedness, and within thirty (30) days after the Release Date, SDEV Germany shall satisfy such intercompany obligations. After the fifth business day after the Release Date in Germany, if such intercompany obligation shall not be so satisfied, it shall bear interest until paid in full at the rate of ten Percent (10%) per annum. All matter in this paragraph shall occur without affecting the net operating loss or other tax attributes of SDEV Germany and without SDEV Germany recognizing any -3- income or gain in respect of the elimination of such indebtedness or other liabilities and obligations. 7. Except as expressly modified and supplemented by this Closing Statement and the Annexes hereto, the parties hereby confirm that the Purchase Agreement, as so modified and supplemented, shall remain in full force and effect. Dated as of June 28, 1996 THE SOFTWARE DEVELOPER'S COMPANY, INC. By: /s/ James O'Connor, Jr. ----------------------------- PROGRAMMER'S PARADISE, INC. By: /s/ Roger Paradis ----------------------------- SOFTWARE DEVELOPER'S COMPANY GmbH By: /s/ Barry N. Bycoff ----------------------------- -4- EX-99.7.04 4 LETTER AGREEMENT EXHIBIT 7.04 THE SOFTWARE DEVELOPER'S COMPANY, INC. 33 Riverside Drive Pembroke, Massachusetts 02359 Programmer's Paradise, Inc. 1163 Shrewsbury Avenue Shrewsbury, New Jersey 07702 Re: Acquisition of Stock of SDEV Germany Gentlemen: Reference is hereby made to that certain Agreement of Purchase and Sale of Assets, dated as of May 16, 1996 (the "Purchase Agreement"), by and among Programmer's Paradise, Inc. ("Buyer"), The Software Developer's Company, Inc. ("Seller") and Software Developer's Company GmbH ("SDEV Germany" and, together with Seller, the "Selling Parties"), pursuant to which Buyer agreed to purchase from the Selling Parties and the Selling Parties agreed to sell to Buyer substantially all of their assets, including all of the operations of SDEV Germany. In addition, pursuant to Section 1.6 of the Purchase Agreement, the parties agreed that they could agree to convert the form of the acquisition of SDEV Germany to a purchase of all of its outstanding shares in lieu of a purchase of assets. The purpose of this agreement is to set forth the terms of such purchase of shares specifically applicable due to the change from an asset to a share purchase transaction, including the manner in which such share purchase shall be consummated and the deliveries to be made in connection with such purchase. Accordingly, Seller hereby agrees to sell to Buyer or its assigns, on the Release Date (as defined below), all of the outstanding equity (the "Shares") of SDEV Germany, on the following terms and conditions (with all capitalized terms used herein and not otherwise defined having the meanings ascribed to such terms in the Purchase Agreement): 1. At the Closing under the Purchase Agreement, $400,000 of the Purchase Price shall be delivered to Golenbock, Eiseman, Assor & Bell, as Escrow Agent, to be held and released in accordance with the terms of the Stock Acquisition Escrow Agreement attached hereto (the "Share Escrow"). The date of release to Seller thereunder is referred to herein as the "Release Date". For purposes of the Purchase Agreement, the transfer of the Shares shall be effective at and as of the Closing under the Purchase Agreement, and the operations of SDEV, including without limitation, profits and losses, shall be for the account of Buyer from and after such date (subject to the consummation of the transfer of the Shares as herein provided). 2. Seller shall, prior to July 22, 1996, prepare, file and record, and cause to be notarized and sealed, all documentation necessary to transfer the Shares to Buyer, which documentation shall be effective to transfer the Shares to Buyer free and clear of any and all Liens and shall be satisfactory as to form and content to Buyer and its German counsel (the "Transfer Documentation"). 3. Seller has delivered to Buyer financial statements of SDEV Germany as of and for the periods ended March 31, 1996 and 1995 and the Buyer Control Date, and such balance sheet as of the Buyer Control Date shall be deemed included within the term "Balance Sheet", and such financial statements shall be deemed included within references to financial statements of Seller or the Selling Parties for purposes of the Purchase Agreement. As of the Release Date, the available net operating loss of SDEV Germany shall be at least $1,150,000, without expiration. 4. Seller has agreed to indemnify and hold Buyer harmless from, against and in respect of, and shall on demand reimburse Buyer for, any and all loss, liability, damage, or deficiency suffered or incurred by Buyer in respect of or in connection with any liabilities of or to Seller or any other member of the consolidated group of which Seller is a member (other than SDEV Germany) arising out of such status as a member of such group. 5. There shall be delivered to Buyer on the Release Date: (a) a stock certificate representing the Shares, registered in the name of Buyer or its assignee, in proper form, together copies of notations, seals and recordations of all appropriate public and private registrars, clerks and other authorities reflecting that such transfer has been made; (b) the opinion of Coopers & Lybrand LLP or other independent certified auditors reasonably acceptable to Buyer, confirmed by Ernst & Young LLP, in form and substance acceptable to Buyer, that the net operating losses of SDEV Germany as of the Release Date shall be equal to at least $1,150,000, all of which shall thereafter be able to be utilized by Buyer's existing German subsidiaries without expiration; -2- (c) confirmation reasonably acceptable to Buyer and Seller that Seller shall have contributed to SDEV Germany and that SDEV Germany shall have retained an amount of cash equal to all intercompany obligations owed by SDEV Germany to Seller or any affiliate thereof; (d) the opinion of Haarmann, Hemmelrath & Partner, in form and substance acceptable to Buyer, that (i) the Transfer Documentation is sufficient to transfer to Buyer all right, title and interest in and to the Shares, free and clear of any and all Liens and as otherwise contemplated by this Agreement and the Purchase Agreement with respect to the Purchased Assets, (ii) the transfer of the Shares has been properly recorded on all appropriate public and private registrars; (e) a certificate of the Managing Director of SDEV Germany, certifying to the articles of organization, bylaws, authorizing resolutions, existence and good standing of SDEV Germany; (f) a certificate of the Selling Parties as to the truth of Sections 4.1, 4.2 and 4.3 of the Purchase Agreement on the Release Date; and (g) a copy (in paper and electronic form) of the Mailing List of SDEV Germany, and possession and control over all other assets of SDEV Germany. 6. If for any reason the Release Date shall not occur prior to the close of business on July 22, 1996, (a) all obligations of Buyer to assume any obligations and make any payments in respect of the operations or employees of SDEV Germany by reason of its agreemnet to purchase the Shares shall cease, (b) Buyer shall be deemed as of the date hereof to have consummated the purchase of the operations of SDEV Germany and Purchased Assets and Assumed Liabilities relating thereto as an asset transaction in accordance with the Purchase Agreement. In such event, the purchase price for such assets shall be $135,000, payable by Buyer from the Share Escrow against receipt of instruments of transfer and other closing documents with respect to such purchase as shall be comparable to those delivered to Buyer in connection with the purchase of Seller's United States assets (modified for the German context) and such other documents as Buyer shall reasonably request. At such time as the Escrow Agent shall deliver to Seller the purchase price for the Purchased Assets of SDEV Germany as aforesaid, the Escrow Agent shall deliver to Buyer the balance of the Share Escrow held by it. 7. This Agreement shall be deemed a part of the Purchase Agreement, and the representations, warranties, covenants, agreements, indemnities, rights and benefits contained -3- therein shall be applicable to the Shares as a Purchased Asset and assets, liabilities and operations of SDEV Germany as contemplated by the Purchase Agreement. 8. At any time and from time to time after the date hereof, at Buyer's request, and without further consideration therefor, each of the Selling Parties will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as Buyer may reasonably deem necessary or desirable in order more effectively to transfer, convey and assign to Buyer or its assignee, and to confirm Buyer's or such assignee's title to, all of the Shares, and to assist Buyer or its assignee in exercising all rights with respect thereto. Dated as of June 28, 1996 THE SOFTWARE DEVELOPER'S COMPANY, INC. By: /s/ James O'Connor, Jr. ------------------------ SOFTWARE DEVELOPER'S COMPANY, GMBH By: /s/ Barry N. Bycoff ------------------------ Agreed: PROGRAMMER'S PARADISE, INC. By: /s/ Roger Paradis ----------------- -4- EX-99.7.05 5 STOCK ACQUISITION ESCROW AGREEMENT EXHIBIT 7.05 STOCK ACQUISITION ESCROW AGREEMENT AGREEMENT dated as of June 28, 1996, among Programmer's Paradise, Inc., a Delaware corporation, having offices at 1163 Shrewsbury Avenue, Shrewsbury, New Jersey 07702 ("Buyer"), The Software Developer's Company, Inc., having offices at 33 Riverside Drive, Pembroke, Massachusetts 02359 ("Seller"), and Golenbock, Eiseman, Assor & Bell, having offices at 437 Madison Avenue, New York, New York 10022 ("GEAB" or the "Escrow Agent"). Buyer and Seller are hereinafter sometimes referred to as the "Parties". W I T N E S S E T H: WHEREAS, pursuant to that certain Agreement of Purchase and Sale of Assets, dated as of May 16, 1996 (the "Purchase Agreement"), among Buyer, Seller and Software Developers Company GmbH ("SDEV Germany"), Buyer is currently herewith purchasing from Seller and SDEV Germany the Purchased Assets, with any capitalized term used herein but not otherwise defined having the meaning ascribed to such term in the Purchase Agreement. WHEREAS, it is intended that the Purchased Assets are to include all of the outstanding capital stock of SDEV Germany (the "Shares"), but due to the inherent delay in transferring and delivering to Buyer the Shares, pending the receipt of the Shares and certain other deliveries set forth in that certain Letter Agreement attached as Annex A to the Closing Statement dated as of June 28, 1996 entered into between Buyer and the Selling Parties (the "Stock Transfer Letter Agreement"), Buyer and the Selling Parties desire to place a certain portion of the Purchase Price in escrow pursuant to the terms hereof. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: 1. Appointment. The Parties hereby appoint and designate the law firm of GEAB as the Escrow Agent for the purposes herein set forth, and the Escrow Agent hereby accepts such appointment, subject to and in accordance with the provisions of this Escrow Agreement. 2. Deposit. Seller hereby authorizes Buyer to deliver to the Escrow Agent on behalf of the Selling Parties, simultaneously with the execution and delivery of this Agreement $400,000 (such amount, or any future balance thereof, being referred to herein as the "Escrow Fund"), to be held in accordance with the terms of this Agreement in a money-market account sponsored or managed by Republic National Bank, New York, New York (the "Escrow Account"). Upon the opening of the Escrow Account, the Escrow Agent will advise the Parties of the account number thereof. 3. Release of Escrow Fund. (a) The Escrow Agent shall release the Escrow Fund, in such amounts and to such of the Parties, in accordance with the first to occur of the following: (i) receipt of the joint written instructions of Buyer and Seller in connection with the closing of the purchase of the Shares, in which event the Escrow Fund shall be released to Seller; (ii) receipt of a notice from Buyer at any time after July 22, 1996, stating that a copy thereof has been sent to Seller concurrently therewith in connection with Buyer's acquisition of the assets of SDEV Germany in accordance with the Purchase Agreement, in which event $135,000 of the Escrow Fund shall be delivered to Seller and the balance shall be delivered to Buyer; or (iii) receipt of a copy of a (A) binding and final arbitration award, or (B) final judgment, order or decree of a court of competent jurisdiction in the United States of America (the time for appeal therefrom having expired and no appeal having been perfected). 4. Term. The term of the escrow under this Agreement shall continue until the Escrow Funds are released in accordance with Section 3 hereof. 5. The Escrow Agent. 5.1 Disputes. In the event the Escrow Agent shall believe there shall be any disagreement among or between the Parties resulting in adverse claims or demands being made in connection with the Escrow Fund, or in the event that the Escrow Agent in good faith is in doubt as to what action it should take hereunder, the Escrow Agent shall be entitled, at its option,(a) to refuse to comply with any claims or demands on it as long as such disagreement shall continue and, in so refusing, shall make no delivery or other disposition of the Escrow Fund pursuant to the terms of this Agreement and shall not be or become liable in any way or to any person for its failure or refusal to comply with such conflicting or adverse claims or demands and shall be entitled to continue so to refrain from acting and so to refuse to act until the Escrow Agent shall have received (i) a final and non-appealable order of a court of competent jurisdiction directing delivery of the Escrow Fund, or (ii) a written agreement executed by Buyer and Seller directing delivery of the Escrow Fund, in which event the Escrow Agent shall disburse the Escrow Fund in accordance with such order or agreement, or (b) to place the Escrow Fund with a proper court and to apply to any court of competent jurisdiction (including the commencement of immediate action or suit) to determine the rights of the parties. Any court order referred to in (i) above shall be accompanied by a legal opinion by counsel for the presenting party satisfactory to the Escrow Agent to the effect that said court order is final and non-appealable. The Escrow Agent shall act on such court order and legal opinion without further question. -2- 5.2 Performance. To induce the Escrow Agent to act hereunder, it is further agreed by the parties that: (a) The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Agreement. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be under any duty to give the Escrow Fund held by it hereunder any greater degree of care than it gives its own similar property and shall not be required to invest any funds held hereunder except as directed in this Agreement. Uninvested funds held hereunder shall not earn or accrue interest. (b) The Escrow Agent shall be entitled to rely upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it hereunder without being required to determine the authenticity or the correctness of any fact stated therein or the propriety or validity of the service thereof. The Escrow Agent may act in reliance upon any instrument or signature believed by it in good faith to be genuine and may assume, if in good faith, that any person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so. (c) The Escrow Agent shall not be bound or in any way affected by any notice of any modification or cancellation of this Agreement or the Purchase Agreement, or of any fact or circumstance affecting or alleged to affect rights or liabilities hereunder other than as is herein set forth, or affecting or alleged to affect the rights and liabilities of any other person, unless notice of the same is delivered to the Escrow Agent in writing, signed by the proper parties to the Escrow Agent's satisfaction and, in the case of modification of the duties or responsibilities of the Escrow Agent, unless such modification shall be satisfactory to the Escrow Agent and approved by the Escrow Agent in writing. -3- (d) The Escrow Agent shall not be liable for any error of judgment, or any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, except in the case of its gross negligence or bad faith, nor shall it be liable for the default or misconduct of any employee, agent or attorney appointed by it who shall have been selected with reasonable care. Except with respect to claims based upon such gross negligence or bad faith that are successfully asserted against the Escrow Agent, the Parties shall defend (by attorneys selected by the Escrow Agent), indemnify and hold harmless the Escrow Agent (and any successor escrow agent) from and against any and all losses, liabilities, claims, actions, judgments, damages, costs and expenses arising out of and in connection with this Agreement or the Escrow Agent's duties or services hereunder. This indemnity includes, without limitation, disbursements and reasonable attorneys' fees either paid to retain attorneys or representing the fair value of legal services rendered by the Escrow Agent to itself. Without limiting the foregoing, the Escrow Agent shall in no event be liable in connection with its investment or reinvestment of any cash held by it hereunder in good faith and in accordance with the terms hereof, including without limitation, any liability for any delays (not resulting from gross negligence or bad faith) in the investment or reinvestment of the Escrow Fund or any loss of interest incident to any such delays. (e) The Escrow Agent shall not charge a separate administrative fee for its services as Escrow Agent hereunder. However, the Parties agree to pay or reimburse the Escrow Agent upon request for all reasonable expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in the performance of its duties hereunder. (f) The Escrow Agent shall be entitled to consult with counsel of its own choice and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. (g) Escrow Agent shall be entitled to represent or to act as an advisor of Buyer and its affiliates in any lawsuit or any other matter. (h) The Escrow Agent does not have any interest in the Escrow Fund deposited hereunder but is serving as stakeholder only. Upon payment of the Escrow Fund as herein provided, the Escrow Agent shall be fully released from all liability and obligations with respect thereto. (i) Any payments of income from the Escrow Account shall be subject to withholding regulations then in force with respect to United States taxes. The Parties will provide the Escrow Agent with appropriate W-9 forms for tax I.D., number certification, or non-resident alien certification. The Escrow Agent shall have no responsibility for tax reporting or filing, and such reporting or filing, if required, shall be the responsibility of Seller. -4- 6. Resignation. The Escrow Agent (and any successor escrow agent) at any time may be discharged from its duties and obligations hereunder by the delivery to it of notice of termination signed by the Parties or at any time may resign by giving written notice to such effect to the Parties. Upon any such termination or resignation, the Escrow Agent shall deliver the Escrow Fund to any successor escrow agent designated by the Parties in writing, or to any court of competent jurisdiction if no such successor escrow agent is agreed upon, whereupon the Escrow Agent shall be discharged of and from any and all further obligations arising in connection with this Agreement. The termination or resignation of the Escrow Agent shall take effect on the earlier of (i) the appointment of a successor (including a court of competent jurisdiction) or (ii) the day that is 30 days after the date of delivery: (A) to the Escrow Agent of the other parties' notice of termination or (B) to the other parties hereto of the Escrow Agent's written notice of resignation. If at that time the Escrow Agent has not received a designation of a successor escrow agent, the Escrow Agent's sole responsibility after that time shall be to keep the Escrow Fund safe until receipt of a designation of successor escrow agent or a joint written disposition instruction by the other parties hereto or an enforceable order of a court of competent jurisdiction. 7. Jurisdiction and Venue. The Parties irrevocably (i) submit to the jurisdiction of any New York State or federal court sitting in New York in any action or proceeding arising out of or relating to this Agreement, (ii) agree that all claims with respect to such action or proceeding shall be heard and determined in such New York State or federal court and (iii) waive, to the fullest extent possible, the defenses of an inconvenient forum. The parties hereby consent to and grant any such court jurisdiction over the persons of such parties and over the subject matter of any such dispute and agree that delivery or mailing of process or other papers in connection with any such action or proceeding in the manner provided hereinabove, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. 8. Notices. All notices, instructions and other communications required or permitted to be given, forwarded or transmitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been duly given if delivered personally, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to it at its address set forth above (with a copy thereof as aforesaid to counsel designated by it), or when delivered to a nationally recognized overnight courier service or when sent by electronic facsimile transmission (with a copy to follow by mail as aforesaid), or to such other address as the person to whom notice is to be given shall have given notice of pursuant hereto. 9. Miscellaneous. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and assigns and shall not be enforceable by or inure to the benefit of any other third party except as provided with respect to the termination of, or resignation by, the Escrow Agent. No party may assign any of its rights or obligations under this Agreement without the written consent of the other parties. No waiver hereunder shall be effective unless in a writing signed by the party to be charged. This Agreement may be amended, modified, superseded, or canceled, and any of the terms hereof may be waived, only by a written instrument executed by the parties hereto. This Agreement shall be -5- governed by and construed and enforced in accordance with the internal laws of the State of New York, without reference to conflicts of laws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first above written. PROGRAMMER'S PARADISE, INC. By: /s/ Roger Paradis ---------------------- Roger Paradis, President THE SOFTWARE DEVELOPER'S COMPANY, INC. By: /s/ James O'Connor, Jr. ----------------------- GOLENBOCK, EISEMAN, ASSOR & BELL, as Escrow Agent By: /s/ Lawrence M. Bell ----------------------- Lawrence M. Bell, Partner -6- -----END PRIVACY-ENHANCED MESSAGE-----