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Appendix II to the management agreement was a Software
Marketing Agreement (submarketer agreement) by and between CPSG,
Inc. and CP Software Export Pty Ltd., an entity affiliated with
CPG. Under this agreement, CPSG, Inc. would acquire a sublicense
to market certain software products developed with funding from
the syndicates in exchange for royalty payments. Despite
extensive negotiations, this agreement was never executed by the
parties. Although the agreement was never executed, the parties
decided to operate as if it had been.
In or about May 1995, CPG informed CPSG, Inc. that the
syndicates’ development funding would terminate in July 1995. In
or about July 1995, the syndicates’ development funding
terminated. The planned development and improvement of the
software was not completed. No new marketable and competitive
products resulted from the underfunded and unfinished
development. Without additional development funding, CPSG, Inc.
and its subsidiaries would lose their current customers and would
not have software products to attract new customers.
On July 7, 1995, the syndicates notified CPSG, Inc. to cease
and desist marketing CPG’s software technology purportedly
licensed from CPG.6 The syndicates took the position that CPSG,
6By the terms of the submarketer agreement, CPSG, Inc. was
granted an exclusive license to the newly developed software
technology. However, pursuant to par. 2.4, the management
agreement provided that its terms could not violate the operating
(continued...)
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