David M. and Teri L. Saykally - Page 7

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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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