SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998 Commission File Number 0-21041
OBJECT DESIGN, INC.
-------------------
(Exact name of registrant as specified in its charter)
Delaware 02-0424252
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Mall Road, Burlington, MA 01803
---------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 674-5000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.001
-----------------------------
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months(or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. _________
The aggregate market value of voting stock held by non-affiliates of the
Registrant, based on the closing price of the Common Stock on March 1, 1999 as
reported by the NASDAQ National Market, was approximately $118,749,795. For
purposes of the foregoing calculation, the Company has assumed that each
director, executive officer and holder of 10% or more of the voting stock of the
Registrant is an affiliate. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
As of March 1, 1999, the Registrant had outstanding
28,115,353 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of our Definitive Proxy Statement for our 1999 Annual Meeting
of Stockholders are incorporated by reference into Part III of this
Annual Report on Form 10-K.
<PAGE>
PART I
Item 1. Business
--------
Object Design, Inc. is a provider of enterprise and embedded data management
solutions, including object-oriented and eXtensible Markup Language ("XML") data
management solutions, and support services to companies throughout the world.
Customers use our products as the data management solution for a wide variety of
products, systems and applications, ranging from commercial Web sites,
telecommunications network management systems, large-scale financial trading
systems, to high-performance mobile computing applications and XML, internet and
intranet enterprise applications. Our products are designed to provide
high-performance data management, while maintaining data integrity and security,
in both stand-alone and multi-tier distributed computing environments. Our
products are marketed and sold worldwide through our direct sales force, systems
integrators, independent software vendors, international distributors and other
channel partners.
Our products have been deployed in telecommunications, publishing, finance,
consumer electronics, engineering analysis, manufacturing and Internet/Intranet
applications where rigorous requirements for high performance, reliability,
concurrency and scalability must be met. The open architecture of our products
provides compatibility with a wide range of third-party applications, tools and
programming languages. Our products operate on standard industry hardware
platforms and operating systems such as Windows 95, Windows NT and UNIX.
Products
Our core data management product offerings include: ObjectStore, our enterprise
object database management system; eXcelon, an XML data server; and ObjectStore
PSE Pro, a suite of "small footprint" embeddable databases that can be used
either to prototype ObjectStore applications or as the data management solution
for embedded systems. Each of these products is designed to help customers gain
competitive advantage in the marketplace, offering critical benefits including
high-performance, which is vital for today's demanding enterprise applications;
scalability, so customers can easily migrate their applications from single-user
to large-scale deployment; portability, so customers can deploy their
applications across all major computing platforms; and fast time-to-market.
ObjectStore
ObjectStore is an object-oriented database management system used by companies
throughout the world for applications ranging from high-performance e-commerce
Web sites, to global telecommunications systems and enterprise Java and C++
applications. One of the attributes that makes ObjectStore different from all
other databases is its patented Cache-Forward(TM) architecture. This
architecture maximizes application performance while reducing network traffic,
thus enabling applications to scale up to serve large volumes of users without
congesting the network.
ObjectStore includes a variety of features designed to support enterprise
computing applications, including support for distributed databases, two-phase
commit, on-line distributed backup and recovery, replication, automatic
failover, distributed archive logging and event notification. ObjectStore
includes development application program interfaces (APIs) for Java, C++ and
ActiveX.
We offer a full line of rapid database development tools to support developers
creating ObjectStore-based enterprise applications, including:
o ObjectStore Inspector--A graphical browser that enables users to view,
query and edit data stored in ObjectStore.
o ObjectStore Blueprint--A Rational Rose extension that enables developers to
visually define and generate ObjectStore schema.
o Object Managers--A series of ready-to-use components for enhancing Java and
C++ applications with support for persistent multimedia, time series,
spatial, XML and text document data.
o ObjectStore Performance Expert--A performance analysis and monitoring tool
that allows developers and database administrators to graphically view
performance-related information about ObjectStore servers and clients.
o Database Designer and Component Wizard--Tools that help developers create
the database infrastructure of their applications. The Database Designer is
a graphical database design tool and the Component Wizard uses the database
design to automatically generate reusable ObjectStore-ready C++ and Java
components.
2
<PAGE>
We also provide a full line of enterprise integration tools, including:
o ObjectStore DBconnect--A connectivity product that allows object-oriented
applications to integrate ObjectStore data with data stored in relational
databases from Oracle, Sybase, Informix, IBM and Microsoft.
o ObjectStore Active Toolkit--Provides an OLE DB interface to ObjectStore to
ease integration with Microsoft tools.
o ObjectForms--A development tool for building ObjectStore-based data-driven
Web applications.
eXcelon
eXcelon is an XML data server that enables companies to build enterprise Web
applications using XML, a new universal data standard from the World Wide Web
Consortium (W3C). A beta version of eXcelon was introduced in November 1998. The
product was released for general availability in March 1999.
eXcelon is a high-performance, highly scalable data server that stores, caches
and delivers all information to enterprise applications and Web servers in XML
format. eXcelon is designed to be an easy-to-use, general-purpose solution that
works with all data sources, application servers and client software. Customers
can use eXcelon in conjunction with existing data sources, such as relational
databases, or as a complete data management system for new XML-based
applications.
ObjectStore PSE Pro
ObjectStore PSE Pro is a suite of "small footprint" embeddable database
management systems including ObjectStore PSE Pro for Java and ObjectStore PSE
Pro for C++. They can be used to prototype ObjectStore applications or to serve
as the data management solution for embedded systems. ObjectStore PSE Pro also
includes a set of visual development tools, that allows developers to get their
embedded applications up and running quickly and easily. The suite is fully
compatible with the ObjectStore enterprise edition, making it easy for
developers to scale up their applications from small devices, to desktop
computers and all the way up to workgroup and enterprise servers.
Services
Training and consulting. We hold training courses at our various locations
around the world or at customer sites. We currently offer a schedule of eleven
different training courses covering subjects ranging from introductory
ObjectStore programming to advanced topics such as database performance tuning
and object-oriented computing application design using our products. We also
provide fee-based consulting services to our customers in the form of
project-based on-site services designed to provide assistance at key points in a
customer's product development cycle.
Support Services. Maintenance and support contracts are offered with the initial
software license and typically are renewable on an annual basis. Maintenance and
support fees are set as a fixed percentage of the current list price of the
product. Support services include maintenance of our software products in
accordance with specifications contained in the user's guide for such products
and access to technical support personnel.
Product Development
We believe that our future will depend in large part on our ability to maintain
and enhance our leadership in object-data management technology and develop new
products that meet an expanding range of customer requirements. Our research and
development organization is divided into teams consisting of development
engineers, quality assurance, testing and porting engineers, and technical
writers. Product definition is based on a consolidation of requirements from
existing and prospective customers and from our technical support, product
management and engineering groups. As of December 31, 1998, there were 68
employees on our research and development staff. Research and development
expenditures during 1998, 1997, and 1996 were $8.6 million, $7.7 and $7.5
million, respectively, and represented 14%, 16% and 20% of our total revenues,
respectively.
3
<PAGE>
Sales and Marketing
We employ a multi-channel sales and marketing strategy, using direct sales,
systems integrators, independent software vendors, distributors and other
channel partners to address our global market.
Direct Sales. We rely principally on the direct sales of our products. Our
direct sales force is organized in teams consisting of field sales
representatives and technical sales support representatives. As of December 31,
1998, our direct sales force included 122 employees in 22 locations worldwide.
Channel Partner Programs. We conduct programs aimed at attracting systems
integrators, independent software vendors and resellers that can complement our
direct sales force and broaden the worldwide penetration of our products. Our
systems integration partners include Alta Software, Andersen Consulting,
Cambridge Technology Partners, Deloitte & Touche, IXL Enterprises, Perot
Systems, Strategic Technology Resources and U.S. Web. We intend to significantly
expand our channel partner programs to attract additional channel partners to
market and distribute our eXcelon product that was released for general
availability in March 1999.
International Distributors. In certain international markets, we use third party
distributors and resellers that are supported by our sales organization.
Approximately 2.3%, 4.2% and 12.7% of our total revenues were derived from sales
to international distributors in 1998, 1997 and 1996, respectively. We intend to
increase the number of international distributors to broaden our international
market presence.
In support of our sales and marketing efforts, we conduct sales training
courses, targeted marketing programs including direct mail, trade shows, public
relations, advertising and seminars, and ongoing customer and third party
communications programs. We also seek to stimulate interest in our products and
services through speaking engagements, white papers, technical notes and other
publications. We maintain a Web site at http://www.objectdesign.com where
potential customers can obtain information about our products.
Customers
In the last several years we have increased our focus on the Internet and
Intranet computing markets. As a result, companies from a broad range of
industries have successfully deployed ObjectStore-based Java and C++
applications. Successful deployments have occurred among companies of all sizes,
in industries including computer retail, Web publishing and personalization
services, Web e-commerce, energy services, media, and financial services. We
have also realized continued success in the embedded software and
telecommunications markets. With the introduction of the new eXcelon product, we
expect to further expand our customer base to include companies seeking to
deploy XML-based applications. All of these applications have in common the
requirements for speed of data access, and use of rich data types. No customer
accounted for 10% or more of revenue during the years of 1998, 1997 and 1996.
Backlog
We maintain no material backlog because business, typically, is booked and
shipped in the same quarter.
Competition
The market in which we compete is intensely competitive, highly fragmented, and
characterized by rapidly changing technology and standards. Our current and
prospective competitors offer a variety of database solutions, including: object
databases available from Computer Associates, Gemstone, Objectivity, Poet,
Versant and Ardent; relational databases available from Computer Associates,
IBM, Informix, Microsoft, Oracle and Sybase; extended-relational and
object-relational databases available from IBM, Informix and Oracle;
object-to-relational middleware mapping tools such as the Java Blend product by
Sun Microsystems; and other specialized databases such as on-line analytical
processing databases. In addition, we expect to experience increased competition
from established vendors of relational database systems that have recently
offered extended-relational, object-relational or object-oriented database
solutions.
We expect additional competition from existing competitors and from a number of
other companies that may enter our existing and future markets. The additional
competition could adversely affect our business, results of operations and
financial condition. Some of our current and potential competitors have
substantially greater financial, marketing and technical resources than we have.
4
<PAGE>
Proprietary Rights
We rely primarily on a combination of trade secret, copyright, patent, and
trademark law and contractual provisions to protect our proprietary rights in
our software products. These protections may not be adequate in certain
circumstances. As of February 1999, we have two issued patents, expiring between
2011 and 2015, covering our cache forward architecture and other aspects of
software technology. Competitors may independently develop technologies that are
equivalent or substantially superior to our technology. In addition, patent,
copyright, trademark and trade secret protection for our products may be
unavailable or unreliable in certain foreign countries. As the number of
software products in the industry and the number of software patents increase,
we believe that software developers may become increasingly subject to
infringement claims.
While no significant claims of this type have been asserted against us, there
can be no assurance that such claims will not be asserted against us with
respect to existing or future products or that we would prevail against any such
claims that were asserted. If a lawsuit of this type is filed, it could result
in significant expense to us and divert the efforts of our technical and
management personnel, whether or not we ultimately prevail. While we believe
that our products do not infringe other parties' patents, copyrights, trade
secrets, trademarks and other proprietary rights, it cannot be certain that our
products are not doing so. Infringement of valid third party patents,
copyrights, trade secrets, trademarks and other proprietary rights could have an
adverse effect on our business and results of operations. With respect to an
increasing number of products offered, we rely on "Shrink-wrap" and "Click-wrap"
licenses not signed by the licensee to protect our proprietary rights.
"Shrink-wrap" and/or "Click-wrap" licenses may be unenforceable under the laws
of certain jurisdictions.
Employees
As of December 31, 1998, we employed 317 full-time employees, including 68 in
research and development, 135 in sales and marketing, 82 in professional
services and customer support, and 32 in finance and administration. None of our
employees are represented by a labor union and we consider our employee
relations to be good.
Item 2. Properties
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Our corporate headquarters is located in Burlington, Massachusetts, consisting
of approximately 60,000 square feet of office space under a lease expiring in
February 2003. We also lease sales offices in 22 locations worldwide. We believe
that our existing facilities and offices and additional space available to us
are adequate to meet our requirements over the next twelve months.
Item 3. Legal Proceedings
-----------------
As of the date of this Annual Report on Form 10-K, we are not a party to any
legal proceedings the outcome of which, in the opinion of management, would have
a material adverse effect on our results of operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of our stockholders during the quarter ended
December 31, 1998.
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
----------------------------------------------
Our Common Stock is listed on the NASDAQ National Market ("NASDAQ") under the
symbol "ODIS." The following table sets forth, for the periods indicated, the
high and low closing prices for the Common Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
High Low
---- ---
1998
<S> <C> <C>
First Quarter $7.88 $4.88
Second Quarter 7.75 5.03
Third Quarter 7.94 5.13
Fourth Quarter 7.50 3.94
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
High Low
---- ---
1997
<S> <C> <C>
First Quarter $12.00 $5.38
Second Quarter 9.13 4.75
Third Quarter 9.88 6.75
Fourth Quarter 11.75 7.75
</TABLE>
At December 31, 1998, there were approximately 191 holders of record of our
Common Stock. This number does not include beneficial owners for whom shares
were held in a "nominee" or "street" name. We believe that there are at least
400 beneficial owners of our Common Stock. We have never paid cash dividends on
our Common Stock. The current policy of our Board of Directors is to retain all
earnings for our continued growth.
Item 6. Selected Financial Data
-----------------------
The following table summarizes certain selected historical consolidated
financial data, which should be read in conjunction with our consolidated
financial statements and related notes included elsewhere herein.
Selected Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $62,358 $47,265 $38,339 $32,706 $ 25,489
Operating income (loss) 4,380 (436) 1,240 (10,406) (12,387)
Net income (loss) 4,823 800 520 (10,282) (12,021)
Earnings (loss) per share
Basic 0.17 0.03 0.03 (4.59) (5.85)
Diluted 0.17 0.03 0.02 (4.59) (5.85)
Balance Sheet Data:
Working capital $25,897 $23,968 $24,225 $ (990) $ 790
Total assets 48,992 38,878 38,461 17,154 25,629
Long-term obligations 18 236 120 476 858
Total stockholders' equity (deficit) 34,751 28,819 28,233 (32,756) (24,314)
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
Overview
Object Design, Inc. is a provider of enterprise and embedded data management
solutions, including object-oriented and eXtensible Markup Language ("XML") data
management solutions, and support services to companies throughout the world.
Our customers use our products as the data management solution for a wide
variety of products, systems and applications, ranging from commercial Web
sites, telecommunications network management systems, large-scale financial
trading systems, to high-performance mobile computing applications and XML,
internet and intranet enterprise applications. Our products are designed to
provide high-performance data management, while maintaining data integrity and
security, in both stand-alone and multi-tier distributed computing environments.
Our products are marketed and sold worldwide through our direct sales force,
systems integrators, independent software vendors, international distributors
and other channel partners.
Results of Operations
The following is an overview of our results of operations:
o Total revenue was $62.4 million for 1998, $47.3 million for 1997 and $38.3
million for 1996.
o Our year-over-year total revenue growth rate increased to 31.9% in 1998
from 23.3% in 1997 and was 17.2% in 1996.
o Our net income increased to $4.8 million in 1998 from $0.8 million in 1997
and $0.5 million in 1996.
6
<PAGE>
The following table sets forth certain consolidated financial data as a
percentage of our total revenues for each of the three years ended December 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Software 71% 71% 67%
Services 28 24 26
Related party software and services 1 5 7
---- ---- ----
Total revenues 100 100 100
---- ---- ----
Cost of revenues:
Cost of software 2 3 4
Cost of services 16 18 18
Cost of related party software and services 1 1 1
---- ---- ----
Total cost of revenues 19 22 23
---- ---- ----
Gross profit 81 78 77
Operating expenses:
Selling and marketing 51 53 45
Research and development 14 16 20
General and administrative 9 10 9
---- ---- ----
Total operating expenses 74 79 74
Operating income (loss) 7 (1) 3
Other income 2 3 1
---- ---- ----
Income before income taxes 9 2 4
Provision for income taxes 1 -- --
---- ---- ----
Net income 8% 2% 4%
==== ==== ====
</TABLE>
1998 Compared to 1997
Software Revenues. Software revenues increased 31.2%, to $44.0 million in 1998
from $33.6 million in 1997. The increase was primarily due to increased volume
of ObjectStore software licenses and the continued market acceptance of our
products.
Services Revenues. Services revenues increased 57.6%, to $18.0 million in 1998
from $11.4 million in 1997. The higher services revenue included increased
consulting revenues relating to customer deployments and higher billable
utilization of consulting personnel in 1998, as well as increased maintenance
revenues, reflecting growth in our installed base. Growing demand for our
consulting services has led us to increase the number of our consulting
personnel. As a result, we expect that our services revenues will grow in
absolute dollars in future periods, but may fluctuate as a percentage of total
revenues.
Related Party Software and Services Revenues. Revenues from related parties
decreased to $0.3 million in 1998 from $2.3 million in 1997. The decrease was
primarily due to the fact that a large software purchase by IBM in the first
quarter of 1997 that was not repeated in 1998, and to the discontinuation in
1997 of a joint development project with IBM. We expect related party software
and services revenues to continue to decrease in significance in future periods.
Revenues from International Operations. Revenues from the operations of our
international subsidiaries increased $8.9 million in 1998 as compared to 1997
and also increased as a percentage of our total revenues, to 39.2% in 1998
compared with 32.9% in 1997. The increase is due to increased volume of
ObjectStore software licenses and is attributable to the expansion of our
international direct sales force and increased services revenue reflecting
growth in our international installed base.
Cost of Software Revenues. Cost of software revenues increased 10.9%, to $1.6
million in 1998 from $1.4 million in 1997, and decreased as a percentage of
software revenues to 3.6% from 4.3% for such years, respectively. The decrease
as a percentage of software revenues reflect lower royalty costs in 1998, due in
part to a change in revenue mix toward sales of ObjectStore and other products
that bear lower or no third-party royalties.
Cost of Services Revenues. Cost of services revenues increased 23.3%, to $10.3
million in 1998 from $8.4 million in 1997 and decreased as a percentage of
services revenues to 57.3% from 73.2% for such years, respectively. The increase
in dollar amount reflects the growth in staffing necessary to generate and
support increased worldwide service revenues and provide customer support to our
growing installed base. The decrease in cost of services as a percentage of
service revenues is primarily due to higher average utilization of consulting
personnel in 1998. We expect cost of services revenues to continue to grow in
absolute dollars in future periods.
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<PAGE>
Cost of Related Party Software and Services Revenues. The cost of related party
software and services revenues declined 39.9%, to $0.2 million in 1998 from $0.4
million in 1997, and increased as a percentage of related party software and
services revenues to 68.5% from 15.4% in such years, respectively. The increased
cost as a percentage of revenues was attributable to a shift in the mix of
revenues in 1998 from higher margin software revenues to lower margin
maintenance revenues.
Selling and Marketing Expense. Selling and marketing expense increased 25.2%, to
$31.6 million in 1998 from $25.2 million in 1997, and decreased as a percentage
of total revenues to 50.7% from 53.4% for such years, respectively. The increase
in dollar amount resulted primarily from continued efforts to expand and retain
our sales force and increased marketing investment, including increased
expenditures on salaries, recruiting fees, marketing programs, travel and other
related expenses, as well as higher sales commissions associated with higher
revenues. We intend to continue our efforts to expand and retain our sales force
and maintain higher levels of marketing investments throughout the next year
and, as a result, expect selling and marketing expense to continue to increase
in future years.
Research and Development Expense. Research and development expense increased
12.0%, to $8.6 million in 1998 from $7.7 million in 1997, but decreased as a
percentage of total revenues to 13.9% from 16.3% for 1997. The expense increase
was due principally to the addition of personnel, depreciation of capital
equipment and related overhead for enhancements to existing products and the
development of new products. We expect research and development expense to
increase in future years to enhance the ObjectStore enterprise database and to
develop new products.
General and Administrative Expense. General and administrative expense increased
22.3%, to $5.6 million in 1998 from $4.6 million in 1997, but decreased as a
percentage of total revenues to 9.0% in 1998 compared to 9.7% in 1997. The
increase in dollar amount is reflective of the increased staffing, investments
in information technology, professional expenses and other costs associated with
our expanding operations.
Other Income. Other income decreased 26.6%, to $1.0 million in 1998 from $1.3
million in 1997. The decrease was largely the result of lower rates of return on
cash and investments.
Provision for Income Taxes. Our effective tax rate of 10.0% and 10.8% for 1998
and 1997, respectively, reflects an alternative minimum tax provision for
federal taxes and certain foreign and state taxes. The effective tax rate in
both years is lower than the statutory rate principally due to the utilization
of net operating loss carryforwards.
1997 Compared to 1996
Software Revenues. Software revenues increased 30.9%, to $33.6 million in 1997
from $25.6 million in 1996. The increase was primarily due to increased volume
of ObjectStore software licenses. We continued to expand our customer base as a
result of our additional focus on selling to customers that are developing and
deploying component-based computing applications.
Services Revenues. Services revenues increased 13.9%, to $11.4 million in 1997
from $10.0 million in 1996. The increase was primarily the result of increased
maintenance revenues, reflecting growth in our installed base, as well as
increased consulting revenues relating to increased customer deployments.
Related Party Software and Services Revenues. Revenues from related parties
decreased to $2.3 million in 1997 from $2.7 million in 1996. The decrease was
primarily due to a drop in IBM revenue which resulted from the discontinuation
of a joint development project in 1997, which was partially offset by a single
large purchase of software licenses by IBM in the first quarter of 1997.
Revenues from International Operations. Revenues from the operations of our
international subsidiaries increased $3.8 million in 1997 as compared to 1996
and as a percentage of our total revenues, increased to 32.9% in 1997 compared
with 30.7% in 1996. The increase was due to increased volume of ObjectStore
software licenses and attributable to the expansion of the international direct
sales force and increased services revenues reflecting growth in our installed
base.
Cost of Software Revenues. Cost of software revenues declined 9.4%, to $1.5
million in 1997 from $1.6 million in 1996, and decreased as a percentage of
software revenues to 4.3% from 6.2% for such years, respectively. This decrease
reflected lower royalty costs in 1997, due in part to a change in revenue mix
toward sales of ObjectStore and other products that bear lower or no third-party
royalties.
8
<PAGE>
Cost of Services Revenues. Cost of services revenues increased 25.3%, to $8.4
million in 1997 from $6.7 million in 1996 and increased as a percentage of
service revenues to 73.2% from 66.6% for such years, respectively. The increase
in cost of services revenues as a percentage of services revenues reflected our
1997 initiative to invest in non-billable activities to ensure successful
customer deployments of ObjectStore, as well as the growth in staffing necessary
to generate and support increased worldwide service revenue and provide ongoing
quality customer support to our growing installed base.
Cost of Related Party Software and Services Revenues. The cost of related party
software and services revenues declined 26.1%, to $351,000 in 1997 from $475,000
in 1996, and declined as a percentage of related party software and services
revenues to 15.4% from 17.8% in such years, respectively. The decrease was
attributable to a shift in the mix of revenues in 1997 toward higher margin
software revenues and away from lower margin consulting revenues.
Selling and Marketing Expense. Selling and marketing expense increased 44.7%, to
$25.2 million in 1997 from $17.4 million in 1996, and increased as a percentage
of total revenues to 53.4% from 45.5% for such years, respectively. The increase
resulted primarily from the rapid expansion of our direct sales force and
increased marketing investment, including increased expenditures on salaries,
recruiting fees, marketing programs, travel and other related expenses as well
as higher sales commissions associated with higher revenues.
Research and Development Expense. Research and development expense increased
3.2%, to $7.7 million in 1997 from $7.5 million in 1996, but decreased as a
percentage of total revenues to 16.3% for 1997 from 19.5% for 1996. The expense
increase was due principally to the addition of personnel, depreciation of
capital equipment and related overhead for enhancements to existing products and
the development of new products.
General and Administrative Expense. General and administrative expense increased
33.7%, to $4.6 million in 1997 from $3.4 million in 1996, and increased from
9.0% to 9.7% of total revenues for such years, respectively. The increase in
dollar amount reflected increased staffing, investments in information
technology, professional expenses and other costs associated with expanding
operations.
Other Income. Other income increased 156.3%, to $1.3 million in 1997 from
$520,000 in 1996. This increase was largely the result of increased interest
income on increased cash balances resulting from our initial public offering in
July 1996.
Provision for Income Taxes. Our effective tax rate of 10.8% and 3.8% in 1997 and
1996, respectively, reflected an alternative minimum tax provision for federal
taxes and certain state taxes. The effective tax rate in both years is lower
than the statutory rate principally due to the utilization of net operating loss
carryforwards.
Liquidity and Capital Resources
At December 31, 1998, our principal sources of liquidity included $24.6 million
of cash and marketable securities, an increase of $5.7 million from 1997, and a
$2.0 million revolving line of credit. The line of credit expires in May 1999
and we expect to renew the line of credit at terms similar to the existing
agreement. No borrowings were outstanding under the line of credit during the
twelve months ended December 31, 1998, but letters of credit in the amount of
$450,000 under the line of credit were outstanding at that date.
Net cash provided by our operating activities was $10.1 million in 1998, as
compared to $189,000 used for operating activities in 1997. The increase in cash
provided was primarily the result of increased net income, improvement in
accounts receivable collections, increased deferred revenue associated with
prepaid maintenance fees and increased accrued expenses from expanding
operations.
Our investing activities used $12.2 million of cash in 1998 compared with cash
provided by our investing activities of $5.7 million in 1997. The increased use
of cash was attributable primarily to the net purchase of $7.2 million of
marketable securities in 1998, compared to the net sale of $8.5 million of
marketable securities in 1997, and $2.7 million of capitalized software in 1998.
Our financing activities provided cash of $933,000 and $816,000 for the years
ended December 31, 1998 and 1997, respectively. The increase was due to the
repayment of advances to shareholders and higher proceeds from our employee
stock plans, offset by the $251,000 purchase of treasury shares in 1998.
We believe that current cash, marketable securities, and funds generated from
operations, if any, will provide adequate liquidity to meet our capital and
operating requirements for the next twelve months.
9
<PAGE>
Year 2000 Compliance
Concerns have been widely expressed regarding the inability of certain computer
programs to properly process certain date information beyond the year 1999.
These concerns focus on the impact of the Year 2000 problem on business
operations and the potential costs associated with identifying and addressing
the problem.
State of Readiness
We have developed a Year 2000 readiness plan focusing on: (i) assessing the
readiness of our product offerings, internal business systems, and major vendors
and suppliers; (ii) addressing known risks; and (iii) planning and budgeting for
reasonably likely contingencies.
We are in the process of reviewing our current product offerings for Year 2000
compliance and believe that, with the exception of certain minor administrative
functions that do not affect the utility of the product, our current products
are Year 2000 compliant in all material respects. We are conducting only limited
testing of products that are no longer offered, and thus the Year 2000
compliance of such products is generally not known. Most of these untested
products are previous releases of current offerings that can be upgraded to
achieve Year 2000 compliance. Testing of certain third-party software programs
that are incorporated in our product offerings is in process and is expected to
be complete by July 1999.
We are also in the process of reviewing and upgrading our internal information
technology and business systems, both domestically and internationally, to
ensure Year 2000 readiness. This process is expected to be complete by July 1999
with respect to the majority of our mission-critical systems. We expect to
continue testing our internal systems and to undertake necessary corrective
measures throughout 1999.
Finally, we have commenced a program to survey the Year 2000 readiness of our
major vendors and suppliers, with a particular focus on the Year 2000 readiness
of our mission-critical vendors and suppliers. This process is expected to be
complete by the middle of 1999. Where we believe that a particular vendor or
supplier poses unacceptable Year 2000 risks, we will identify an alternative
supply source.
Costs of Year 2000 Compliance
Costs incurred in the year 2000 compliance effort will be expensed as incurred.
To date, we have incurred less than $50,000 of costs, not including internal
personnel time in the evaluation and remediation of the Year 2000 issues. While
our Year 2000 compliance evaluation is not yet complete, we do not at this time
expect to incur more than $100,000 of costs, not including internal personnel
time to remediate the Year 2000 problem. We cannot, of course, predict the
nature or materiality of the impact on our operations or operating results of
noncompliance by parties with whom we do not have a direct relationship. In
particular, the purchasing patterns of customers or potential customers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures may
result in reduced funds available for the purchase of our products and services.
Risk of Year 2000 Issues and Contingency Plans
Our worst-case Year 2000 scenarios include: (i) undetected errors or uncorrected
defects in our current product offerings; (ii) corruption of data contained in
our internal information systems; and (iii) the failure of infrastructure
services provided by third parties and government agencies (e.g., electricity,
phone service, Internet services, etc.) either which could significantly disrupt
our operations. We are in the process of reviewing our contingency planning in
all of these areas and expect the plans to include, among other things, the
availability of support personnel to assist with customer support issues, manual
"work arounds" for internal software failure, and substitution of systems, if
needed.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
and the Euro, making the Euro their common legal currency on that date. The
legacy currencies will remain legal tender in the participating countries as
denominations of the Euro between January 1, 1999 and January 1, 2002 (the
"transition period").
10
<PAGE>
During the transition period, public and private parties may pay for goods and
services using either the Euro or the participating country's legacy currency on
a "no compulsion, no prohibition" basis. However, conversion rates no longer
will be computed directly from one legacy currency to another. Instead, a
triangular process will apply whereby an amount denominated in one legacy
currency will first be converted into the Euro. The resultant Euro-denominated
amount will then be converted into the second legacy currency.
We have evaluated the business implications of conversion to the Euro, including
technical adaptation of information technology and other systems to accommodate
Euro-denominated transactions, long-term competitive implications of the
conversions and the effect on market risk with respect to financial instruments
and do not expect a material impact on our operations.
New Accounting Standards
On June 15, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 is effective for fiscal years
beginning after June 15, 1999. SFAS 133 requires that all derivative instruments
be recorded on the balance sheet at their fair values. Changes in the fair
values of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether or not a derivative is designated as
part of a hedge transaction and, if it is, depending on the type of hedge
transaction. We have not yet completed our evaluation of the impact of the
adoption of this new standard.
Certain Factors That May Affect Future Results
From time to time, information provided by us, statements made by our employees
or information included in our filings with the Securities and Exchange
Commission may contain statements which are not historical facts but which are
"forward looking statements" which involve risks and uncertainties. The words
"expect", "anticipate", "internal", "plan", "believe," "seek", "estimate" and
similar statements are intended to identify such forward looking statements. In
particular, statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" relating to our future shipments, revenue
and expense levels and profitability, as well as the sufficiency of capital to
meet working capital and capital expenditure requirements, may be
forward-looking statements. Our disclosures in Item 7A, " Quantitative and
Qualitative Disclosures About Market Risk," also constitute forward-looking
statements. This Report also contains other forward-looking statements. Such
statements are not guarantees of future performance, but are based on
assumptions and expectations of our management at the time such statements are
made, and involve certain risks, uncertainties and assumptions that could cause
our future results to differ materially from those expressed in any
forward-looking statements. The Company disclaims any intent or obligation to
update publicly any forward-looking statements whether in response to new
information, future events or otherwise. Important factors that may cause our
actual results to differ from such forward-looking statements include, but are
not limited to, the factors discussed below.
Our future success will depend to a substantial degree on the emergence and
widespread adoption of object-oriented programming as a methodology for
developing and deploying multi-user business applications. There can be no
assurance that object-oriented programming will become, and remain, an accepted
methodology for developing and deploying enterprise-wide business applications
or that our object-oriented database products and services will achieve or
maintain market acceptance. In addition, the success of our new eXcelon product
will depend on widespread adoption of the recently introduced XML data format by
companies building large-scale Web applications. There can be no assurance,
however, that the XML format will emerge as an industry standard or even achieve
common market acceptance as a basis for developing enterprise-wide Web
applications.
Our future success depends upon our ability to attract and retain highly skilled
technical, managerial and sales personnel. While we have not experienced any
significant difficulty in hiring qualified personnel to date, competition for
such personnel in the high technology industry is intense. We have experienced
attrition and this cannot be predicted. However, we continue to expend
significant resources to train and retain sales personnel to reduce attrition.
We assume that we will continue to be able to attract and retain such personnel.
The failure to recruit and retain sales personnel, however, could have a
material adverse effect on our future operating results.
As we have refocused our sales and marketing efforts, the profile of our
customers is shifting from large telecommunications and financial institutions
to a broader group of small and large companies in many industry segments. As a
result, sales personnel now need to develop and manage an increasing number of
smaller dollar value transactions. The result could be less accurate sales
11
<PAGE>
forecasting. Our marketing department also needs to develop a stream of
qualified leads at a more rapid pace than in the past in order to keep the sales
force at high productivity.
We depend on product innovation and new product releases to remain competitive.
Any delay in the release of products or failure of released products to meet the
market expectation of functionality and features could undermine our competitive
position. Furthermore, certain of our competitors are significantly larger and
are expending greater amounts on research and development and sales and
marketing than we are. The result could be new competitive product introductions
that could limit the salability of our products, put pressure on sales prices,
or diminish our reputation as a leader in object-oriented database technology.
We expect to expand our channel partner program primarily to market and
distribute our eXcelon product. Our channel partners are not within our control
and are not obligated to purchase our products and may also represent other
lines of products that may conflict with our product offerings. Although we
expect to expend significant resources developing and maintaining these
channels, there can be no assurance that we will be able to successfully develop
these channels or that any expansion of channels will increase revenues.
Our announced scheduled release dates for products and product enhancements are
forward-looking statements. The actual release dates for such products and
enhancements could differ materially from those announced as a result of a
variety of factors, including the ability of our engineers to solve technical
problems and test products as well as factors outside our control.
We typically receive the majority of our revenue in any quarter in the last
month of the quarter with a concentration of revenue in the latter half of such
month. This pattern, common to many software companies, makes it difficult to
forecast accurately, increasing the possibility of missing a quarterly revenue
or profit target. Any inability to obtain orders in large volume or to make
shipments in the period immediately preceding the end of any particular quarter
may cause the results for that quarter to fall short of our revenue targets. Any
failure to meet our quarterly revenue or earnings targets could adversely impact
the market price of our stock. A significant portion of our revenues are derived
from sales by our international subsidiaries and to distributors outside the
United States. There can be no assurance, however, that we will be able to
maintain or increase international market demand for ObjectStore or our other
products. As a result of the foregoing and other factors, we may experience
material fluctuations in future operating results on a quarterly or annual basis
which could materially and adversely affect our business, financial condition,
operating results and stock price.
Market prices for securities of software companies have generally been volatile.
In particular, the market price of our stock has been and may continue to be
subject to significant fluctuations.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
We face exposure to certain market risks, primarily adverse movements in foreign
currency exchange rates and changes in interest rates. We have not invested in
derivative instruments or derivative commodity instruments. We believe that the
fair value of other financial instruments reflected in our consolidated balance
sheets do not entail a market risk due to the nature of these instruments and
their short-term maturities. We also do not believe that our future earnings,
fair values and/or cash flows are subject to risk of material near term loss due
to changes in market rates or prices that we consider to be reasonably possible
in the near term. However, our exposure to market risk may change over time as
our business practices evolve, and could in the future materially adversely
effect our financial condition and results of operations. Our primary exposure
has been related to local currency revenue and operating expenses in Europe and
the Asia/Pacific region.
Financial Risk Management
The carrying amounts reflected in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, and accounts payable approximate fair
value at the balance sheet date due to the short maturities of these
instruments.
Our exposure to market rate risk for changes in interest rates relates primarily
to our investment portfolio. We have not used derivative financial instruments
in our investment portfolio. Information about our investment portfolio is set
forth in Note C of Notes to the Consolidated Financial Statements included in
Item 8 of this Form 10-K and is incorporated herein by reference.
12
<PAGE>
We maintain investment portfolio holdings of various issuers, types, and
maturities. These securities are classified as available for sale, and
consequently, are recorded on the balance sheet at fair value with unrealized
gains or losses included in stockholders' equity. To date, we have not
experienced material losses on our investments. We place our investments with
high quality issuers and, by policy, limit the amount of credit exposure to any
one issuer. Given the short maturities and investment grade quality of the
portfolio holdings at December 31, 1998, a sharp rise in interest rates should
not have a material adverse impact on the fair value of our investment
portfolio.
Foreign Currency Risk
Fluctuations in exchange rates can adversely effect our results of operations
and financial position. The financial statements of our international
subsidiaries, all of whose functional currencies are the local currency, are
translated using exchange rates in effect at the end of the period for assets
and liabilities and average exchange rates during the period for results of
operations. Foreign currency translation adjustments are recorded as a separate
component of stockholders' equity, and also are included in reporting
comprehensive income. We also engage in transactions denominated in foreign
currencies. Gains and losses from these transactions, which to date have been
immaterial, are reflected in the results of operations. The impact of future
exchange rate fluctuations on our results of operations and financial condition
cannot accurately be predicted. We do not currently engage in foreign currency
hedging activities.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The following statements are filed as part of this Annual Report on Form 10-K:
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Report of Independent Accountants 14
Consolidated Balance Sheets as of December 31, 1998 and 1997 15
Consolidated Statements of Income for the three
years ended December 31, 1998, 1997, 1996 16
Consolidated Statements of Cash Flows for the three
years ended December 31, 1998, 1997, 1996 17
Consolidated Statements of Stockholders' Equity for the three
years ended December 31, 1998, 1997, 1996 18
Notes to Consolidated Financial Statements 19
Report of Independent Accountants on Financial
Statement Schedule 29
Schedule II - Valuation and Qualifying Accounts 30
</TABLE>
13
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of Object Design, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, cash flows and stockholders' equity present
fairly, in all material respects, the financial position of Object Design, Inc.
and their subsidiaries (the "Company") at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 1999
14
<PAGE>
Object Design Inc.
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
--------------------------------
December 31,
1998 1997
---------------- ---------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 14,846 $ 16,345
Short-term investments 8,745 2,564
Accounts receivable, net of allowance for doubtful
accounts of $1,199 in 1998 and $800 in 1997 15,885 13,715
Accounts receivable - related parties -- 337
Prepaid expenses and other current assets 644 830
--------------------
Total current assets 40,120 33,791
Property and equipment, net 4,216 3,915
Marketable securities 1,020 --
Capitalized software 2,751 273
Other assets 885 899
--------------------
Total assets $ 48,992 $ 38,878
====================
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligations $ 13 $ 104
Accounts payable 2,900 2,852
Accrued expenses 2,281 953
Accrued compensation 3,596 1,968
Deferred revenue 5,433 3,637
Deferred revenue - related parties -- 309
--------------------
Total current liabilities 14,223 9,823
Long-term capital lease obligations 18 236
Commitments and contingencies (Note E)
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000 -- --
shares; no shares issued or outstanding
Common stock, $.001 par value; authorized 200,000 shares; 28,049
and 27,445 shares issued and outstanding in 1998 and
1997, respectively 28 27
Additional paid-in capital 64,977 63,839
Treasury stock, at cost, 40 shares in 1998 (251) --
Accumulated deficit (27,910) (32,733)
Other equity (1,406) (1,427)
Advances to stockholders (687) (887)
--------------------
Total stockholders' equity 34,751 28,819
--------------------
Total liabilities and stockholders' equity $ 48,992 $ 38,878
====================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
15
<PAGE>
Object Design Inc.
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Year Ended December 31,
1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Software $ 44,040 $ 33,560 $ 25,640
Services 18,010 11,425 10,028
Related party software and services 308 2,280 2,671
- -------------------------------------------------------------------------------------------
Total revenues 62,358 47,265 38,339
Cost of revenues:
Cost of software 1,605 1,447 1,597
Cost of services 10,311 8,365 6,674
Cost of related party software and services 211 351 475
- -------------------------------------------------------------------------------------------
Total cost of revenues 12,127 10,163 8,746
Gross profit 50,231 37,102 29,593
Operating expenses:
Selling and marketing 31,589 25,223 17,435
Research and development 8,643 7,719 7,481
General and administrative 5,619 4,596 3,437
- -------------------------------------------------------------------------------------------
Total operating expenses 45,851 37,538 28,353
- -------------------------------------------------------------------------------------------
Operating income (loss) 4,380 (436) 1,240
Other income 978 1,333 520
- -------------------------------------------------------------------------------------------
Income before income taxes 5,358 897 1,760
Provision for income taxes 535 97 67
- -------------------------------------------------------------------------------------------
Net income $ 4,823 $ 800 $ 1,693
Accretion of redeemable preferred stock -- -- (1,173)
- -------------------------------------------------------------------------------------------
Net income available to common stockholders $ 4,823 $ 800 $ 520
- -------------------------------------------------------------------------------------------
Net income per share--supplementary (note A)
- -------------------------------------------------------------------------------------------
Net income per share--basic $ 0.17 $ 0.03 $ 0.03
Weighted average number of
common shares outstanding--basic 27,756 27,050 18,070
- -------------------------------------------------------------------------------------------
Net income per share--diluted $ 0.17 $ 0.03 $ 0.02
Weighted average number of common and common
equivalent shares outstanding--diluted 29,064 29,242 20,807
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
16
<PAGE>
Object Design Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Year Ended December 31,
1998 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 4,823 $ 800 $ 1,693
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization 2,144 2,098 1,664
Bad debt expense 899 648 715
Other 106 105 8
Changes in operating assets and liabilities:
Accounts receivable (2,196) (3,472) (4,347)
Prepaids and other current assets 145 (213) (153)
Other assets (7) (101) (266)
Accounts payable and accrued expenses 2,857 41 208
Deferred revenue 1,369 (95) (2,874)
- -----------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 10,140 (189) (3,352)
- -----------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (2,354) (2,532) (1,313)
Capitalized software (2,675) (202) (277)
Purchases of marketable securities (12,527) (5,801) (16,837)
Proceeds from maturities and sales of
marketable securities 5,323 14,324 8,045
Purchase of minority interest -- (83) (53)
- -----------------------------------------------------------------------------------------
Net cash (used for) provided by investing activities (12,233) 5,706 (10,435)
- -----------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of preferred stock -- -- 4,917
Proceeds from initial public offering, net -- -- 18,216
Proceeds from exercise of stock options 1,048 911 350
Repayment of advances to stockholders 200 -- --
Purchase of treasury stock (251) -- --
Principal payments on long-term borrowings (64) (95) (1,034)
- -----------------------------------------------------------------------------------------
Net cash provided by financing activities 933 816 22,449
- -----------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (339) (940) (175)
Net change in cash and cash equivalents (1,499) 5,393 8,487
Cash and cash equivalents, beginning of year 16,345 10,952 2,465
- -----------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $14,846 $ 16,345 $ 10,952
=========================================================================================
Supplemental cash flow information:
Interest paid $ 5 $ 36 $ 68
Income taxes paid 153 91 67
Supplemental disclosure of non-cash transactions:
Equipment purchased under capital leases -- 272 --
=========================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
17
<PAGE>
OBJECT DESIGN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1998, 1997 and 1996 (in thousands)
<TABLE>
<CAPTION>
Additional
Common Paid-In Treasury Accumulated Other Advances to Comprehensive
Stock Capital Stock Deficit Equity Stockholders Total Income (loss)
----- ------- ------ ------- ------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 2 $1,551 $ -- $(34,053) $(56) $(200) $(32,756)
Exercise of stock options 4 353 357
Amortization of unearned compensation 31 31
Net unrealized gain on marketable
securities 20 20 20
Foreign currency translation
adjustment (175) (175) (175)
Accretion of preferred stock
to redemption value (1,173) (1,173) (1,173)
Advances to stockholders (687) (687)
Issuance of common stock, net 21 60,902 60,923
Net income 1,693 1,693 1,693
--------
Comprehensive income $ 365
---------------------------------------------------------------------------- ========
Balance at December 31, 1996 $ 27 $62,837 $ -- $(33,533) $(211) $(887) $28,233
Exercise of stock options 911 911
Amortization of unearned compensation 91 91
Net unrealized loss on marketable
securities (15) (15) (15)
Foreign currency translation adjustment (1,201) (1,201) (1,201)
Net income 800 800 800
--------
Comprehensive loss $(416)
---------------------------------------------------------------------------- ========
Balance at December 31, 1997 $ 27 $ 63,839 $ -- $(32,733) $(1,427) $(887) $28,819
Exercise of stock options 1 1,048 1,049
Amortization of unearned compensation 90 90
Repayment stockholder loan 200 200
Net unrealized loss on marketable
securities 12 12 12
Foreign currency translation adjustment 9 9 9
Purchase of treasury stock shares (251) (251)
Net income 4,823 4,823 4,823
---------
Comprehensive income $ 4,844
---------------------------------------------------------------------------- =========
Balance at December 31, 1998 $ 28 $64,977 $(251) $(27,910) $(1,406) $(687) $34,751
============================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE>
OBJECT DESIGN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies:
Business
Object Design, Inc. develops, markets and supports object-oriented
data-management solutions for C++, Java and XML based applications, used by
customers in a wide variety of industries to build component-based computing
applications. Our products are designed to provide high performance data
management, while maintaining data integrity and security, in multi-tier
distributed computing environments. Our products have been widely deployed in
telecommunications, finance, engineering analysis, manufacturing and
Internet/Intranet applications where rigorous requirements for high performance,
reliability, concurrency and scalability must be met. We operate in a single
industry segment: computer software and related services.
Basis of Presentation
The consolidated financial statements include the parent company and its wholly
owned subsidiaries, including those operating outside the U.S. All significant
intercompany balances and transactions have been eliminated in the financial
statements. Certain reclassifications have been made for consistent
presentation. We prepare our financial statements under generally accepted
accounting principles that require management to make estimates and assumptions
that affect the amounts reported and the related disclosures. Actual results
could differ from these estimates.
Cash Equivalents and Marketable Securities
Our cash is invested in debt instruments of financial institutions, government
entities, corporations, and mutual funds. We have established guidelines
relative to credit ratings, diversification and maturities that are intended to
maintain safety and liquidity. Our cash equivalents include highly liquid
investments with maturity periods of three months or less when purchased. Our
short-term investments include those investments with maturities in excess of
three months but less than one year. Our marketable securities are those with
maturities in excess of one year. Our cash equivalents and short-term and
marketable securities are classified as available for sale and reported at fair
value with unrealized gains and losses included in stockholders' equity. We have
not had any significant realized losses related to our investments.
Property and Equipment
Our property and equipment are stated at cost. We provide for depreciation by
using the straight-line method over the estimated useful lives of the assets as
follows:
<TABLE>
<CAPTION>
Asset Classification Estimated Useful Life
<S> <C>
Computer equipment 3-4 years
Office equipment 4 years
Furniture and fixtures 5 years
Leasehold improvements Shorter of lease term or estimated useful life.
</TABLE>
Maintenance and repairs are charged to expense as incurred. Upon retirement or
sale, the cost of the asset disposed of and the related accumulated depreciation
are removed from the accounts and any resulting gain or loss is credited or
charged to income.
Revenue Recognition
Our revenue is recognized in accordance with the provisions of AICPA Statement
of Position 97-2 "Software Revenue Recognition." Revenue from software license
fees is recognized when there is evidence of an arrangement, the product has
been shipped, fees are fixed and determinable, and collection of the related
receivable is deemed probable by management. Revenue from sales through
distributors is recorded net of distributor commissions. Maintenance revenue,
including those bundled with the initial license fee, are deferred and
recognized ratably over the service period, generally one-year. Consulting and
training service revenue is recognized as the services are performed.
19
<PAGE>
Concurrent Transactions
We occasionally enter into concurrent transactions in which our software
licenses are exchanged for products or services. These transactions are recorded
at the estimated fair market value of the product or service received and/or
software license value. In 1998, we purchased from our customers $2.5 million of
technology that will be incorporated in our products or resold as part of our
product offerings. These customers purchased products from us that accounted for
$2.0 million of software license revenues during the year. Management believes
that these transactions were entered into under normal commercial terms and
reflect the fair value of the technology received and the software licensed.
Foreign Currency
For our foreign operations where the functional currency is the local currency,
we translate assets and liabilities at rates in effect at the balance sheet date
and record translation adjustments in stockholders' equity. We translate income
statement amounts at average rates for the period. Transaction gains and losses
are recorded in other expense in the statement of income.
Concentrations of Credit Risk
The amounts reflected in the consolidated balance sheets for cash and cash
equivalents, accounts receivable, and accounts payable approximate their fair
value due to their short maturities. Financial instruments that potentially
subject us to concentration of credit risk consist primarily of investments and
trade receivables. Our cash, cash equivalents, and investments are held with
financial institutions with high credit standings. We sell to a broad base of
customers representing various geographic locations and industries. We perform
ongoing credit evaluations of our customers, but do not require collateral or
other security to support our customer receivables. We maintain reserves for
potential credit losses and such losses have been within our expectations.
Research and Development and Software Development Costs
Research and development expenditures are charged to operations as incurred. We
consider that technological feasibility has been established once a working
model of a product has been produced and tested. To date, we have not
capitalized software development costs after technological feasibility has been
established since costs incurred subsequent to the establishment of
technological feasibility have not been material.
Income Taxes
Our income tax expense includes U.S. and international income taxes. Certain
items of income and expense are not reported in tax returns and financial
statements in the same year. The tax effects of these differences are reported
as deferred tax assets and liabilities. Deferred tax assets are recognized, net
of valuation allowances, for the estimated future tax effects of deductible
temporary differences and tax operating loss and credit carryforwards. Changes
in deferred tax assets and liabilities are recorded in the provision for income
taxes. We have recorded a valuation allowance against the net deferred tax
assets, based upon the available evidence, that it is more likely than not that
some or all of the deferred tax assets will not be realized. We evaluate the
recoverability of the deferred tax assets and the level of the valuation
allowance on a quarterly basis. At such time as it is determined that it is more
likely than not that deferred tax assets are realizable, the valuation allowance
will be appropriately reduced.
Capitalized Software
We capitalize the cost of licensing third party software and amortize the cost
over the economic lives of the related products, typically two to three years,
beginning at their initial shipment date. Capitalized costs of third party
software consist of $2,751,000 and $273,000, net of accumulated amortization of
$469,000 and $272,000, at December 31, 1998 and 1997. Amortization charged to
expense was $197,000, $187,000, and $85,000 for the years ended December 31,
1998, 1997 and 1996, respectively.
20
<PAGE>
Intangibles
Included in our other assets are values attributable to intangible assets
acquired, such as goodwill, which are amortized over five years. Amortization
charges related to intangible assets totaled $50,000 for 1998, $39,000 for 1997
and $25,000 in 1996. Management regularly evaluates the net realizable value of
long-lived assets, including property and equipment, computer software costs,
and intangible assets, relying on a number of factors including operating
results, business plans, budgets, and economic projections.
Transfer of Financial Assets
We offer our customers the option to purchase software and services through
payment plans, financing, or leasing contracts. In general, we transfer future
payments under these contracts to financing institutions on a non-recourse
basis. We record such transfers as sales of the related accounts receivable when
we surrender control of such receivables under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. Fair market
value of all service assets and liabilities were immaterial for all periods.
Net Income Per Share
Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the sum of the
weighted-average number of common shares outstanding for the period plus the
number of common shares issuable upon the assumed exercise of all dilutive
securities, such as stock options. The following is a calculation of basic and
diluted earnings per share:
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
Basic EPS Computation 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net income $ 4,823 $ 800 $ 520
Weighted average common shares outstanding 27,756 27,050 18,070
Basic EPS $ 0.17 $ 0.03 $ 0.03
Diluted EPS Computation
Net income $ 4,823 $ 800 $ 520
Weighted average common shares outstanding 27,756 27,050 18,070
Stock options (dilutive) 1,308 2,192 2,737
------- ------- -------
Total shares 29,064 29,242 20,807
Diluted EPS $ 0.17 $ 0.03 $ 0.02
</TABLE>
Options to purchase 1,800,941, 364,894 and 52,637 shares of Common Stock were
outstanding during 1998, 1997 and 1996, respectively, but were not included in
the computations of diluted earnings per share as the inclusion of these shares
would have been anti-dilutive.
Supplementary Earnings Per Share
Net income per share on a supplementary basis treats all outstanding shares of
Redeemable Convertible Preferred Stock that were converted into Common Stock
upon the effectiveness of our Initial Public Offering as having been converted
into Common Stock at the date of original issuance. Net income on a
supplementary basis for the year ended December 31, 1996 was $1.7 million. Basic
and diluted earnings per share on a supplementary basis was $0.06. The shares
used to calculate basic and diluted earnings per share on a supplementary basis
share were 26,500,000 and 29,237,000, respectively.
21
<PAGE>
Accounting Standards
On June 15, 1998, the Financial Accounting Standards Board issued SFAS 133
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133 is
effective for fiscal years beginning after June 15, 1999. SFAS 133 requires that
all derivative instruments be recorded on the balance sheet at their fair
values. Changes in the fair values of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether or not a
derivative is designated as part of a hedge transaction and, if it is, depending
on the type of hedge transaction. We have not yet completed the evaluation of
the impact of the adoption of this new standard.
B. Property and Equipment:
Our property and equipment consisted of the following, in thousands:
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
<S> <C> <C>
Computer and computer-related equipment $ 8,357 $ 7,838
Office equipment, furniture and purchased
computer software 3,587 3,237
Leasehold improvements 914 540
Automobiles 67 472
------- -------
Gross property and equipment 12,925 12,087
Less accumulated depreciation and amortization (8,709) (8,172)
------- -------
Net property and equipment $ 4,216 $ 3,915
======= =======
</TABLE>
At December 31, 1998 and 1997 property and equipment included $67,000 and
$472,000 of automobiles under capital leases. Accumulated amortization of
automobiles under capital leases at December 31, 1998 and 1997 totaled $44,000
and $143,000 respectively. Depreciation expense was $1,897,000, $2,098,000 and
$1,664,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
C. Marketable Securities:
The fair values of our investments have been determined through information
obtained from market sources and management estimates. We use the specific
identification cost method to determine the gross realized gains and losses on
the sale of our securities. Realized gains and losses on the sale of investments
were immaterial for all periods presented in the consolidated financial
statements. Net unrealized gains and losses are recorded as other equity in
stockholders' equity. Marketable securities held as available for sale can be
summarized as follows, in thousands:
<TABLE>
<CAPTION>
Gross Gross
December 31, 1998 Amortized Estimated Unrealized Unrealized
Cost Fair Value Gains Losses
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Government obligations $ 750 $ 750 $ -- $ --
Other government obligations 2,725 2,725 -- --
Corporate obligations 10,740 10,744 5 (1)
Other 2,300 2,300 -- --
------- ------- ----- -----
Total Investments $16,515 $16,519 $ 5 $ (1)
======= ======= ===== =====
Amounts included in:
Cash and cash equivalents $ 6,754 $ 6,754 $ -- $ --
Short-term investments 8,744 8,745 2 (1)
Marketable securities, non-current 1,017 1,020 3 --
------- ------- ----- -----
Total Investments $16,515 $16,519 $ 5 $ (1)
======= ======= ===== =====
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
December 31, 1997 Amortized Estimated Unrealized Unrealized
Cost Fair Value Gains Losses
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Government obligations $ 1,398 $ 1,397 $ -- $ (1)
Other government obligations 1,760 1,760 -- --
Corporate obligations 2,289 2,282 -- (7)
Other 5,474 5,474 -- --
------- ------- ----- -----
Total Investments $10,921 $10,913 $ -- $ (8)
======= ======= ===== =====
Amounts included in:
Cash and cash equivalents $ 8,349 $ 8,349 $ -- $ --
Short-term investments 2,572 2,564 -- (8)
------- ------- ----- -----
Total Investments $10,921 $10,913 $ -- $ (8)
======= ======= ===== =====
</TABLE>
At December 31, 1998, the contractual maturities of our short-term investments
available for sale range from over 3 months to 12 months. The contractual
maturities of the non-current marketable securities available for sale are for
26 months.
D. Credit Agreement
We have a line of credit with a bank, which expires in May 1999. We may borrow
up to $2,000,000 on an unsecured basis, some or all of which may be used for
issuance of letters of credit, subject to compliance with certain covenants. At
December 31, 1998 and 1997 no borrowings were outstanding, but letters of credit
in the amount of $450,000 and $500,000, respectively, had been issued under the
line of credit. Any amounts outstanding under the line of credit would bear
interest at the bank's prime rate. At December 31, 1998, we were in compliance
with the bank's covenants.
E. Commitments:
Capital and Operating Leases
We lease office facilities and certain equipment under operating leases expiring
at various dates through 2004. In addition to rent, certain leases require us to
pay directly for taxes, insurance, maintenance, and other operating expenses.
Rent expense under operating leases was approximately $3.4 million, $2.3 million
and $1.4 million for the years ended December 31, 1998, 1997 and 1996,
respectively. At December 31, 1998 our future minimum lease payments under
capital and operating leases are as follows, in thousands:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
<S> <C> <C>
1999 $ 15 $ 2,526
2000 18 1,928
2001 -- 1,714
2002 -- 1,752
2003 -- 568
2004 -- 141
---- -------
Total future minimum lease payments $ 33 $ 8,629
=======
Less amount representing interest 2
----
Present value of net future minimum lease payments 31
Less current portion of capital lease obligations 13
----
Long-term portion of capital lease obligations $ 18
====
</TABLE>
F. Initial Public Offering
On July 23, 1996, we completed our IPO and sold 3,000,000 shares of our Common
Stock at $7.00 per share, resulting in net proceeds, after deducting
underwriting discounts and expenses, of approximately $18,500,000. In addition,
upon the closing of the IPO all issued and outstanding shares of our Redeemable
Convertible Preferred Stock (Series A through J) were automatically converted
into 17,891,654 shares of Common Stock in accordance with the underlying
agreements. Additionally, 57,858 warrants to purchase Series B Preferred Stock
were converted into 46,286 shares of our Common Stock.
23
<PAGE>
G. Stockholders' Equity:
Capital
Our certificate of incorporation authorizes us to issue up to 200 million shares
of our Common Stock at par value $0.001 per share and 5 million shares of
undesignated preferred stock, par value $0.01 per share. The terms of our line
of credit prohibit the payment of cash dividends on the Common Stock. We may
issue our preferred stock in one or more series and our Board of Directors is
authorized to fix the rights and terms for each such series of preferred stock
without additional shareholder approval. As of December 31, 1998 and 1997, there
were no issued or outstanding shares of preferred stock.
Stock Repurchase Program
In November 1998, our Board of Directors authorized a stock repurchase program
whereby we could purchase up to 2 million shares of our Common Stock to meet
requirements of our employee stock option and stock purchase plans. No minimum
number or value of shares to be repurchased has been fixed nor has a time limit
as to the duration of the program been established. During the year ended
December 31, 1998, we repurchased 39,700 shares of our Common Stock at a cost of
$251,000.
Stock Option Plans
We have two stock option plans currently in effect under which future grants
may be issued. A total of 13,882,000 shares have been authorized by the Company
for grants of options or shares. All stock options have been issued at fair
market value at the date of grant except that in 1995 and 1997 certain employees
were granted non-qualified stock options to purchase an aggregate of 647,775
shares at an exercise prices below fair market value at the date of grant. Stock
options generally have a maximum term of ten years and vest over three to four
years. As of December 31, 1998, 1,812,963 options were available for grant and
6,488,307 shares of Common Stock were reserved for future issuance upon exercise
of options outstanding under the stock option plans.
Our 1996 Incentive and Nonqualified Stock Option Plan ("the 1996 Plan") was
adopted by our stockholders in July 1996. The 1996 Plan authorizes grants of
options to purchase up to 2,700,000 shares of our Common Stock. The 1996 Plan
initially provided authorization of 1,200,000 shares with the number increasing
by 300,000 annually up to a maximum of 2,700,000 shares. In May 1998, our
stockholders at our annual meeting increased the maximum to 3,700,000 shares.
Our Board of Directors adopted in April 1997 the 1997 Nonqualified Stock Option
Plan. The 1997 Nonqualified Stock Option Plan authorizes the grant to
non-officers of the Company of non-qualified options to purchase up to 1,500,000
shares of Common Stock. In July 1998, our Board of Directors increased the
authorization to 2,500,000 shares.
In October 1998, our Board of Directors approved a one-for-one stock option
exchange program that provided employees the opportunity to exchange stock
options previously granted for new options with a current market price and new
vesting period. Executive officers and directors were not eligible to
participate in the program. The new options were priced at $3.94 based upon the
closing price of our stock as reported by NASDAQ on October 28, 1998, vest in
equal annual installments over four years from October 28, 1998 and expire on
October 28, 2008. A total of 1.3 million shares with exercise prices ranging
from $5.19 to $16.50 per share were exchanged under the program. The exchange of
such options is presented in the following table of stock option activity for
the three years ended December 31, 1998 as cancellations and subsequent grants:
24
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
- -------------------------------------------------------------------------------------------------------
Number Weighted Number Weighted Number Weighted
of Average of Average of Average
Options Exercise Price Options Exercise Price Options Exercise
Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 3,813,144 $3.84 3,266,991 $1.90 5,598,078 $0.36
Granted 3,548,150 5.35 1,923,500 7.01 1,494,950 3.91
Cancelled (2,148,214) 6.34 (710,177) 0.63 (3,334,524) 0.29
Exercised (537,736) 0.98 (667,170) 7.00 (491,513) 1.33
--------- --------- ---------
Outstanding at
end of year 4,675,344 $4.16 3,813,144 $3.84 3,266,991 $1.90
========= ========= =========
Exercisable 1,234,433 $2.66 1,151,686 $1.37 1,024,589 $0.69
========= ========= =========
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------------------------------------------------------------
Weighted Avg.
Range of Number of Shares Remaining Contract Weighted Avg. Number Weighted Avg.
Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price
<S> <C> <C> <C> <C> <C>
$0.01-$ 2.00 1,173,431 6.53 $ 1.05 832,326 $ 1.02
3.00- 3.50 39,250 2.85 3.18 39,038 3.18
3.94- 3.94 1,327,900 9.82 3.94 500 3.94
3.95- 5.88 967,513 9.08 5.08 180,090 5.46
6.00- 12.13 1,167,250 8.91 6.83 182,479 7.28
--------- ---------
$0.01-$12.13 4,675,344 8.56 $ 4.16 1,234,433 $ 2.66
</TABLE>
Valuation of Stock Plans
We have not recognized compensation expense in connection with our stock option
plans. However, had compensation cost of our stock option plans been determined
in accordance with the provisions of SFAS 123, our net income per share and
diluted net income per share would have been reduced to the pro forma amounts
indicated below in thousands except per share amounts:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
As Reported
Net income available to common stockholders $4,823 $ 800 $ 520
Net income per share - basic 0.17 0.03 0.03
Net income per share - diluted 0.17 0.03 0.02
Pro Forma
Net income - pro forma 2,466 403 395
Net income per share - basic 0.09 0.01 0.02
Net income per share - diluted 0.08 0.01 0.02
</TABLE>
The fair value of these options at the date of grant was estimated using the
Black-Scholes model with the following assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Risk free interest rate 5.5% 6.5% 6.2%
Dividend yield 0% 0% 0%
Expected volatility 80% 75% 60%
Expected life 5 years 5 years 5 years
</TABLE>
The weighted average fair value of the options granted during 1998, 1997 and
1996 was $3.37, $4.36 and $0.29 per share, respectively. Pro forma effect of
applying SFAS No. 123 for prior years is not necessarily representative of pro
forma effect to be expected in future years.
25
<PAGE>
Advances to Stockholders
In April 1996, options to purchase 2,760,000 shares of our Common Stock issued
to two officers in December 1995 were accelerated, and the officers exercised
these options in exchange for cash of $2,760 and full recourse promissory notes
in the amount of $687,240. The promissory notes bear interest at 7.0% and are
due on the earlier of April 1, 2001 or upon termination of employment. Pursuant
to these agreements, we may repurchase the shares at the amounts paid by the
officers for the shares under certain conditions.
Employee Stock Purchase Plan
We offer an employee stock purchase plan for all eligible employees. Under the
plan up to 300,000 shares of our Common Stock may purchased at 85% of the lower
of the fair market value of the stock on the first or the last day of each
six-month offering period. Employees may elect to have up to 6% of their base
pay withheld and applied toward the purchase of shares in each offering, up to a
maximum of $25,000 withheld in any year. In 1998 and 1997, we issued 104,835 and
105,150 shares at average purchase prices of $4.40 and $4.36. At December 31,
1998, we have 90,015 shares reserved for future issuance under the plan.
H. Income Taxes:
Our income before income taxes is as follows, in thousands:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1998 1997 1996
-------------------------------------
<S> <C> <C> <C>
Domestic $ 6,958 $ 2,190 $ 1,887
Foreign (1,600) (1,293) (127)
------- ------- -------
$ 5,358 $ 897 $ 1,760
======= ======= =======
</TABLE>
Our provision for income taxes consists of the following, in thousands:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1998 1997 1996
-------------------------
<S> <C> <C> <C>
Foreign $ 1 $ (2) $ 1
Federal 486 75 56
State 48 24 10
-------------------------
$ 535 $ 97 $ 67
-------------------------
</TABLE>
The following is a reconciliation between the U.S. federal statutory rate and
our effective tax rate:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1998 1997 1996
--------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory rate 34.0% 34.0% 34.0%
State taxes, net of federal benefit 1.0 1.8 0.4
Foreign tax difference from U.S. rate (1.6) (8.0) (10.8)
Non-deductible expenses 3.1 10.8 4.9
Previously unbenefitted net
operating loss carryforwards (34.3) (102.8) --
Change in valuation allowance 7.8 75.0 (24.7)
--------------------------------------------------
Effective income tax rate 10.0% 10.8% 3.8%
--------------------------------------------------
</TABLE>
The significant temporary differences that create deferred tax assets and
liabilities are shown below, in thousands:
<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1997
----------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 11,422 $ 11,588
Tax credit carryforwards 2,866 2,061
Reserves not currently deductible 840 536
Other 148 567
Depreciation and amortization 210 317
----------------------------
15,486 15,069
Valuation allowance (15,486) (15,069)
----------------------------
Net deferred tax assets $ -- $ --
----------------------------
</TABLE>
26
<PAGE>
Due to the uncertainty surrounding the realization of these favorable tax
attributes in future tax returns, the net deferred tax assets have been fully
offset by a valuation allowance. As of December 31, 1998, our federal net
operating loss ("NOL") and research and experimentation credit carryforwards
were approximately $22,700,000 and $2,000,000, respectively, available to offset
future federal income tax liabilities, which expire at various dates through
2019. The utilization of a portion of the NOL and research and experimentation
credit carryforwards is subject to Section 382 of the Internal Revenue Code.
This section establishes an annual limitation, based on changes in our
ownership, on the amount of income which may be offset by these tax
carryfowards. As of December 31, 1998, our foreign subsidiaries had NOL
carryforwards of approximately $5,500,000.
I. 401(k) Plan:
We sponsor a defined contribution employees' investment and savings plan under
Section 401(k) of the Internal Revenue Code. This plan covers all eligible (as
defined) employees. To date, we have made no matching contributions to the plan.
J. Agreements with Related Parties:
For the years ended December 31, 1998, 1997 and 1996, we sold a total of
$308,000, $2,280,000, and $2,671,000 respectively, in software and services, to
certain stockholders, primarily International Business Machines Corporation
(IBM). In 1993, we entered into certain agreements with IBM whereby IBM would be
entitled to develop and market products in which our ObjectStore database
management system would be embedded, and the parties would undertake certain
joint product development and marketing activities. In 1997, we exercised a
break-up option that terminated certain agreements and modified the terms of
certain others. Following the exercise of the break-up option, our revenues from
IBM have declined. Related party revenues and accounts receivables also include
amounts attributable to other customers that were our stockholders during the
reported periods.
K. Geographic Data:
We operate in a single industry segment comprised of developing and marketing
computer software and providing related maintenance and consulting services.
Sales and marketing operations outside the United States are conducted
principally through foreign sales subsidiaries in Europe and Asia/Pacific.
Financial information, summarized by geographic area, is as follows, in
thousands:
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues
North America $ 37,939 $ 31,714 $ 26,570
United Kingdom 10,448 5,733 3,542
Rest of Europe 7,395 5,486 4,287
Asia Pacific 6,576 4,332 3,940
-------- -------- --------
Total revenues $ 62,358 $ 47,265 $ 38,339
======== ======== ========
Identifiable assets
North America $ 49,758 $ 48,723 $ 56,602
United Kingdom 4,321 5,786 3,266
Rest of Europe 4,254 3,496 2,366
Asia Pacific 4,960 4,628 3,172
Eliminations (14,301) (23,755) (26,945)
-------- -------- --------
Total identifiable
assets $ 48,992 $ 38,878 $ 38,461
======== ======== ========
Operating income (loss)
North America $ 6,021 $ 870 $ 901
United Kingdom (294) (159) (306)
Rest of Europe (1,009) (995) (3)
Asia Pacific (338) (152) 648
-------- -------- --------
Total operating
income (loss) $ 4,380 $ (436) $ 1,240
======== ======== ========
</TABLE>
27
<PAGE>
L. Legal Proceedings:
We are also subject to various legal proceedings and claims that arise in the
ordinary course of business. We currently believe that resolving these matters
will not have a material adverse impact on our consolidated financial
statements.
M. Quarterly Results of Operations:
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998 First Quarter Second Quarter Third Quarter Fourth Quarter
- ---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenue $13,026 $15,602 $16,628 $17,102
Operating income (loss) (172) 919 1,807 1,826
Net income 25 1,034 1,867 1,897
Net income per share - basic 0.00 0.04 0.07 0.07
Net income per share - diluted 0.00 0.04 0.06 0.06
</TABLE>
<TABLE>
<CAPTION>
1997 First Quarter Second Quarter Third Quarter Fourth Quarter
- ---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenue $11,155 $11,175 $13,015 $11,920
Operating income (loss) 649 84 615 (1,784)
Net income (loss) 926 447 925 (1,498)
Net income (loss) per share - basic 0.03 0.02 0.03 (0.05)
Net income (loss) per share - diluted 0.03 0.02 0.03 (0.05)
</TABLE>
28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of Object Design, Inc.:
Our report on the consolidated financial statements of Object Design, Inc. is
included on page 14 of this Annual Report on Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule for each of the three years in the period ending December 31,
1998, listed in the index of this Annual Report on Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 1999
29
<PAGE>
Object Design, Inc.
Schedule II-Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Charged to Balance at Charged to Charged to Balance of
Beginning Costs and Other End of
of Period Expenses Accounts Period
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for doubtful accounts $ 800 $ 899 $(500) $1,199
Year ended December 31, 1997
Allowance for doubtful accounts 823 648 (671) 800
Year ended December 31, 1996
Allowance for doubtful accounts 591 715 (483) 823
</TABLE>
30
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- -----------------------------------------------------------------------
Not Applicable
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information set forth under the captions "Directors and Executive Officers"
and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Definitive
Proxy Statement for the Annual Meeting of Stockholders to be held on May 26,
1999, which is expected to be filed with the Securities and Exchange Commission
not later than 120 days after the end of our fiscal year ended December 31, 1998
(the "Definitive Proxy Statement"), is incorporated herein by reference.
Item 11. Executive Compensation
----------------------
The information set forth under the caption "Remuneration of Executive Officers
and Directors" in the Definitive Proxy Statement is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Definitive Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information set forth under the caption "Certain Transactions" in the
Definitive Proxy Statement is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) The following documents are filed as part of this Report:
(1) Financial Statements
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Income for the years ended December 31,
1998, 1997, 1996 Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997, 1996 Consolidated Statements of
Stockholders' Equity for the years ended December 31, 1998, 1997, 1996
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
Report of Independent Accountants on Financial Schedule
All other schedules are omitted because the required information is either
inapplicable or presented in the Consolidated Financial Statements.
31
<PAGE>
(3) Exhibits
(a) Exhibits
<TABLE>
<S> <C>
*3.3 Amended and Restated Certificate of Incorporation
*3.5 Amended and Restated By-Laws of the Company
*4.1 Specimen certificate for Common Stock of the Company
*10.1* 1989 Incentive and Nonqualified Stock Option Plan
*10.2* 1995 Nonqualified Stock Option Plan
*10.3* 1996 Incentive and Nonqualified Stock Option Plan
*10.4* 1996 Employee Stock Purchase Plan
*10.12 Lease dated September 15, 1993 between the Company and 25 Mall Road Trust
*10.13 First Amendment to Lease dated June 28, 1994 between the Company
and 25 Mall Road Trust
*10.14 Second Amendment to Lease dated March 1, 1996 between the
Company and 25 Mall Road Trust
*10.15* Employment Agreement dated December 21, 1995 between the Company
and Robert N. Goldman, as amended by Amendment to Employment
Agreement dated May, 1996
*10.16* Employment Agreement dated December 21, 1995 between the Company
and Justin J. Perreault, as amended by Employment Agreement
dated May, 1996
10.17* Executive Employment Agreement dated November 19, 1998 between
the Company and Lacey Brandt (filed herewith)
10.18* Executive Employment Agreement dated November 19, 1998 between the Company and Kirk Bowman (filed herewith)
10.19* Executive Employment Agreement dated November 19, 1998 between the Company and Brian Otis (filed herewith)
10.20* Executive Employment Agreement dated November 19, 1998 between the Company and Lawrence Alston (filed
herewith)
*10.21 Sixth Amended and Restated Stockholders' Agreement dated February 13, 1996, among the Company and certain of its
stockholders
*10.22 Amended and Restated IBM Stockholders' Agreement dated May 14,
1993 among the Company, International Business Machines
Corporation ("IBM") and certain other stockholders of the
Company, as amended by a Second Amendment dated March 31, 1994,
by a Third Amendment dated June 10, 1994 and by a Fourth
Amendment dated February 14, 1996
*10.23 Amended and Restated Registration Rights Agreement dated June 29, 1990 among the Company and certain of its
stockholders, as amended by Amendment No. 1 dated October 1, 1990, by Amendment No. 2 dated July 29, 1991, by
Amendment No. 3 dated March 12, 1992, by Amendment No. 4 dated April 12, 1993, by Amendment No. 5 dated May
14, 1993, by Amendment No. 6 dated March 31, 1994 and by Amendment No. 7 dated February 13, 1996
*10.25 Internal Use and Substrate Agreement dated April 10, 1993 between the Company and IBM
*10.26 Break-Up Agreement dated April 10, 1993 between the Company and IBM
*10.27 Escrow Agreement dated April 10, 1993 between the Company and IBM
*10.28 Master Agreement dated April 10, 1993 between the Company and IBM
*10.29 First Amended and Restated Agreement Regarding Confidential Information dated February 11, 1993 between Company
and IBM
**10.30 Loan and Security Agreement dated December 17, 1996 between the Company and Bank of Boston, as amended
**10.31 $2,000,000 Revolving Note dated December 17, 1996 payable by the Company to Bank of Boston, as amended
# 10.32* 1997 Nonqualified Stock Option Plan
# 10.33 Third Amendment to Lease dated March 1, 1996 between the Company
and 25 Mall Road Trust
10.34 Third Amendment to the Loan and Security Agreement and Second Amendment to the Revolving Note dated
December 17, 1996 between the Company and Bank Boston (filed herewith)
10.35 Fourth Amendment to the Loan and Security Agreement and Third Amendment to the Revolving Note dated
December 17, 1996 between the Company and Bank Boston (filed herewith)
10.36* Executive Employment Agreement dated November 19, 1998 between the Company and Robert N. Goldman (filed
herewith)
10.37* Executive Employment Agreement dated November 19, 1998 between the Company and Justin J. Perreault (filed
herewith)
10.38* Amended and Restated Executive Employment Agreement dated February 23, 1999 between the Company and Justin J.
Perreault (filed herewith)
10.39* Amended and Restated Executive Employment Agreement dated February 23, 1999 between the Company and Robert N.
Goldman (filed herewith)
21.1 List of Subsidiaries of the Company (filed herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)
27.1 Financial Data Schedule (filed herewith)
</TABLE>
32
<PAGE>
* Before an exhibit number: This exhibit is incorporated by reference to the
similarly numbered exhibit filed as part of our Registration Statement on Form
S-1, Securities and Exchange Commission File No. 333-05241.
** Before an exhibit number: This exhibit is incorporated by reference to the
similarly numbered exhibit to our Annual Report on Form 10-K for the year ended
December 31, 1996.
# Before an exhibit number: This exhibit is incorporated by reference to the
similarly numbered exhibit to our Annual Report on Form 10-K for the year ended
December 31, 1997.
* After an exhibit number: Management contracts and compensatory arrangements.
(b) Reports on Form 8-K
The Company did not file any Report on Form 8-K during the quarter ended
December 31, 1998.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
OBJECT DESIGN, INC.
Date: March 30, 1999 /s/ Justin J. Perreault
-------------------------------
Justin J. Perreault
President and Chief Executive
Officer and Director
Date: March 30, 1999 /s/ Lacey Brandt
-------------------------------
Lacey Brandt
Chief Financial Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ Justin J. Perreault President and Chief
- ---------------------------- Executive Officer
Justin J. Perreault (Principal Executive
Officer and Director) March 30, 1999
/s/ Lacey Brandt Chief Financial
- ---------------------------- Officer (Principal
Lacey Brandt Financial and Accounting
Officer) March 30, 1999
/s/ Robert N. Goldman Chairman of the
- ---------------------------- Board of Directors March 30, 1999
Robert N. Goldman
/s/Gerald Bay Director March 30, 1999
- ----------------------------
Gerald Bay
/s/Arthur Marks Director March 30, 1999
- ----------------------------
Arthur Marks
/s/ Kevin Burns Director March 30, 1999
- ----------------------------
Kevin Burns
/s/ David Litwack Director March 30, 1999
- ----------------------------
David Litwack
</TABLE>
34
10.17 Executive Employment Agreement dated November 19, 1998 Between ODI and
Lacey Brandt
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Lacey Brandt, an
individual residing at 7 Alhambra, Wellesley, MA 02181 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Chief Financial Officer;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Separation Benefits (as hereinafter defined).
For the purposes of this Agreement, "Cause" shall mean:
(i) The Executive's material breach in respect to her assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after written
notice thereof from ODI to the Executive specifying the acts
constituting the breach and requesting that they be remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or employees,
including without limitation, the Executive having been convicted
of a felony during the term of her employment with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates her employment for any reason, including
without limitation death and disability, there shall be no Separation
Benefits (as hereinafter defined). Notwithstanding the foregoing, in
the event of a Change of Control (as hereinafter defined) where the
Executive's compensation, duties and/or responsibilities are
materially reduced from those currently exercised by the Executive
with ODI and/or ODI requires the Executive to be based at any office
or location other than ODI's principal place of business, the
Executive may voluntarily terminate her employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates
the Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual,
entity, group or any other person of beneficial ownership of
thirty-five percent (35%) or more of either (i) the then-outstanding
shares of common stock of ODI or (ii) the combined voting power of the
election of directors for ODI; and/or (b) the sale of substantially
all of ODI's assets or a merger or sale of stock wherein the holders
of ODI's capital stock immediately prior to such sale do not hold at
least a majority of the outstanding capital stock of ODI or its
successor immediately following
<PAGE>
such sale; and/or (c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) one
hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if she
remained in the employ of ODI and all performance goals and other
criteria were met (whether or not such goals or criteria are in fact
met) multiplied by one (1), and payable in one lump sum upon the date
of termination. In addition to the Separation Amount, ODI shall
provide the Executive with the following additional benefits: for
twelve (12) months following the effective date of such termination
due to a Change in Control, ODI shall continue to pay and provide to
the Executive medical and dental insurance benefits consistent with
those provided to the Executive immediately prior to such termination,
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive such insurance benefits
under another employer-provided plan, the insurance benefits set forth
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such additional benefits
under this paragraph, together with the Separation Amount, are
hereinafter referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any
successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that ODI would be required to perform it if no such succession
had taken place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
<PAGE>
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim,
right or action which ODI may have against the Executive (under this
Agreement or otherwise) or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount she would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set
forth above or at such other address as is provided by a party
pursuant to the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire
understanding, and supersedes all other oral or written agreements or
understandings, between the parties regarding the subject matter
hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement. No change, alteration
or modification hereof may be made except in a writing signed by both
parties hereto. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed
by the laws of The Commonwealth of Massachusetts (disregarding any
choice of law rules which may look to the laws of any other
jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Robert Goldman
------------------
Its Chief Executive Officer
/s/ Lacey Brandt
----------------
Lacey Brandt
<PAGE>
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
<PAGE>
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
<PAGE>
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be
<PAGE>
the sole owner of all patents, copyrights and other rights relating to
Developments. I acknowledge that all Developments are "work(s) made for hire",
as defined under the United States Copyright Act, and become the property of the
Company, and shall communicate, without cost or delay, and without publishing
the same, all available information relating thereto (with all necessary plans
and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate
<PAGE>
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s). No change, alteration,
modification, waiver or termination of this Agreement or any of the provisions
herein contained shall be binding upon me or the Company unless made in writing
and signed by myself and an authorized officer of the Company. In the event of
any inconsistency between this Agreement and any other contract between me and
the Company, the provisions of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
/s/ Lacey Brandt
----------------
Signature Lacey Brandt
Address:
7 Alhambra Road
---------------
Wellesley, MA 02181
------------- -----
Date: 11/19/98
--------
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Robert Goldman
------------------
Name: Robert Goldman
Title: Chief Executive Officer
Date: 11/19/98
10.18 Executive Employment Agreement dated November 19, 1998 between ODI and
Kirk Bowman
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Kirk Bowman, an
individual residing at 10 Old Colony Road, Weston, MA 02193 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Senior Vice President, Worldwide Sales and Services;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Separation Benefits (as hereinafter defined).
For the purposes of this Agreement, "Cause" shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after written
notice thereof from ODI to the Executive specifying the acts
constituting the breach and requesting that they be remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or employees,
including without limitation, the Executive having been convicted
of a felony during the term of his employment with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including
without limitation death and disability, there shall be no Separation
Benefits (as hereinafter defined). Notwithstanding the foregoing, in
the event of a Change of Control (as hereinafter defined) where the
Executive's compensation, duties and/or responsibilities are
materially reduced from those currently exercised by the Executive
with ODI and/or ODI requires the Executive to be based at any office
or location other than ODI's principal place of business, the
Executive may voluntarily terminate his employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates
the Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual,
entity, group or any other person of beneficial ownership of
thirty-five percent (35%) or more of either (i) the then-outstanding
shares of common stock of ODI or (ii) the combined voting power of the
election of directors for ODI; and/or (b) the sale of substantially
all of ODI's assets or a merger or sale of stock wherein the holders
of ODI's capital stock immediately prior to such sale do not hold at
least a majority of the outstanding capital stock of ODI or its
successor immediately following
<PAGE>
such sale; and/or (c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) one
hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he
remained in the employ of ODI and all performance goals and other
criteria were met (whether or not such goals or criteria are in fact
met) multiplied by one (1), and payable in one lump sum upon the date
of termination. In addition to the Separation Amount, ODI shall
provide the Executive with the following additional benefits: for
twelve (12) months following the effective date of such termination
due to a Change in Control, ODI shall continue to pay and provide to
the Executive medical and dental insurance benefits consistent with
those provided to the Executive immediately prior to such termination,
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive such insurance benefits
under another employer-provided plan, the insurance benefits set forth
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such additional benefits
under this paragraph, together with the Separation Amount, are
hereinafter referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any
successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that ODI would be required to perform it if no such succession
had taken place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
<PAGE>
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim,
right or action which ODI may have against the Executive (under this
Agreement or otherwise) or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set
forth above or at such other address as is provided by a party
pursuant to the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire
understanding, and supersedes all other oral or written agreements or
understandings, between the parties regarding the subject matter
hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement. No change, alteration
or modification hereof may be made except in a writing signed by both
parties hereto. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed
by the laws of The Commonwealth of Massachusetts (disregarding any
choice of law rules which may look to the laws of any other
jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Robert Goldman
------------------
Its: Chief Executive Officer
/s/ Kirk D. Bowman
------------------
Kirk Bowman
Name: /s/ Kirk Bowman
Title: Executive Vice President Sales
and Services
Date: 11/19/98
<PAGE>
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
<PAGE>
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
<PAGE>
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be
<PAGE>
the sole owner of all patents, copyrights and other rights relating to
Developments. I acknowledge that all Developments are "work(s) made for hire",
as defined under the United States Copyright Act, and become the property of the
Company, and shall communicate, without cost or delay, and without publishing
the same, all available information relating thereto (with all necessary plans
and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate
<PAGE>
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s). No change, alteration,
modification, waiver or termination of this Agreement or any of the provisions
herein contained shall be binding upon me or the Company unless made in writing
and signed by myself and an authorized officer of the Company. In the event of
any inconsistency between this Agreement and any other contract between me and
the Company, the provisions of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
/s/ Kirk Bowman
---------------
Signature Kirk Bowman
Address:
10 Old Colony Road
------------------
Weston, MA 02193
----------------
Date: 11/19/98
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Robert Goldman
Name: Robert Goldman
Title: Chief Executive Officer
Date: 11/19/98
10.19 Executive Employment Agreement dated November 19, 1998 between ODI and
Brian Otis
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Brian Otis, an
individual residing at 1510 Salem St., North Andover, MA 01845 (the
"Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Senior Vice President, Development and Support;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Separation Benefits (as hereinafter defined).
For the purposes of this Agreement, "Cause" shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after written
notice thereof from ODI to the Executive specifying the acts
constituting the breach and requesting that they be remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or employees,
including without limitation, the Executive having been convicted
of a felony during the term of his employment with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including
without limitation death and disability, there shall be no Separation
Benefits (as hereinafter defined). Notwithstanding the foregoing, in
the event of a Change of Control (as hereinafter defined) where the
Executive's compensation, duties and/or responsibilities are
materially reduced from those currently exercised by the Executive
with ODI and/or ODI requires the Executive to be based at any office
or location other than ODI's principal place of business, the
Executive may voluntarily terminate his employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates
the Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual,
entity, group or any other person of beneficial ownership of
thirty-five percent (35%) or more of either (i) the then-outstanding
shares of common stock of ODI or (ii) the combined voting power of the
election of directors for ODI; and/or (b) the sale of substantially
all of ODI's assets or a merger or sale of stock wherein the holders
of ODI's capital stock immediately prior to such sale do not hold at
least a majority of the outstanding capital stock of ODI or its
successor immediately following
<PAGE>
such sale; and/or (c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) one
hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he
remained in the employ of ODI and all performance goals and other
criteria were met (whether or not such goals or criteria are in fact
met) multiplied by one (1), and payable in one lump sum upon the date
of termination. In addition to the Separation Amount, ODI shall
provide the Executive with the following additional benefits: for
twelve (12) months following the effective date of such termination
due to a Change in Control, ODI shall continue to pay and provide to
the Executive medical and dental insurance benefits consistent with
those provided to the Executive immediately prior to such termination,
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive such insurance benefits
under another employer-provided plan, the insurance benefits set forth
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such additional benefits
under this paragraph, together with the Separation Amount, are
hereinafter referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any
successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that ODI would be required to perform it if no such succession
had taken place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
<PAGE>
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim,
right or action which ODI may have against the Executive (under this
Agreement or otherwise) or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set
forth above or at such other address as is provided by a party
pursuant to the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire
understanding, and supersedes all other oral or written agreements or
understandings, between the parties regarding the subject matter
hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement. No change, alteration
or modification hereof may be made except in a writing signed by both
parties hereto. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed
by the laws of The Commonwealth of Massachusetts (disregarding any
choice of law rules which may look to the laws of any other
jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Robert Goldman
------------------
Its: Chief Executive Officer
/s/ Brian W. Otis
-----------------
Brian W. Otis
<PAGE>
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
<PAGE>
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
<PAGE>
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be
<PAGE>
the sole owner of all patents, copyrights and other rights relating to
Developments. I acknowledge that all Developments are "work(s) made for hire",
as defined under the United States Copyright Act, and become the property of the
Company, and shall communicate, without cost or delay, and without publishing
the same, all available information relating thereto (with all necessary plans
and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate
<PAGE>
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s). No change, alteration,
modification, waiver or termination of this Agreement or any of the provisions
herein contained shall be binding upon me or the Company unless made in writing
and signed by myself and an authorized officer of the Company. In the event of
any inconsistency between this Agreement and any other contract between me and
the Company, the provisions of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
/s/ Brian Otis
--------------
Signature Brian Otis
Address:
1510 Salem St.
--------------
N. Andover, MA 01845
--------------------
Date: 11/19/98
--------
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By:/s/ Robert Goldman
--------------
Name: Robert Goldman
Title: Chief Executive Officer
Date: 11/19/98
10.20 Executive Employment Agreement dated November 19, 1998 between ODI and
Lawrence Alston
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Lawrence Alston, an
individual residing at 7 Morningside Ave., Natick, MA 01760 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Vice President, Marketing;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Separation Benefits (as hereinafter defined).
For the purposes of this Agreement, "Cause" shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after written
notice thereof from ODI to the Executive specifying the acts
constituting the breach and requesting that they be remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or employees,
including without limitation, the Executive having been convicted
of a felony during the term of his employment with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including
without limitation death and disability, there shall be no Separation
Benefits (as hereinafter defined). Notwithstanding the foregoing, in
the event of a Change of Control (as hereinafter defined) where the
Executive's compensation, duties and/or responsibilities are
materially reduced from those currently exercised by the Executive
with ODI and/or ODI requires the Executive to be based at any office
or location other than ODI's principal place of business, the
Executive may voluntarily terminate his employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates
the Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual,
entity, group or any other person of beneficial ownership of
thirty-five percent (35%) or more of either (i) the then-outstanding
shares of common stock of ODI or (ii) the combined voting power of the
election of directors for ODI; and/or (b) the sale of substantially
all of ODI's assets or a merger or sale of stock wherein the holders
of ODI's capital stock immediately prior to such sale do not hold at
least a majority of the outstanding capital stock of ODI or its
successor immediately following
<PAGE>
such sale; and/or (c) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) one
hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he
remained in the employ of ODI and all performance goals and other
criteria were met (whether or not such goals or criteria are in fact
met) multiplied by one (1), and payable in one lump sum upon the date
of termination. In addition to the Separation Amount, ODI shall
provide the Executive with the following additional benefits: for
twelve (12) months following the effective date of such termination
due to a Change in Control, ODI shall continue to pay and provide to
the Executive medical and dental insurance benefits consistent with
those provided to the Executive immediately prior to such termination,
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive such insurance benefits
under another employer-provided plan, the insurance benefits set forth
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such additional benefits
under this paragraph, together with the Separation Amount, are
hereinafter referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any
successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that ODI would be required to perform it if no such succession
had taken place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
<PAGE>
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim,
right or action which ODI may have against the Executive (under this
Agreement or otherwise) or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set
forth above or at such other address as is provided by a party
pursuant to the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire
understanding, and supersedes all other oral or written agreements or
understandings, between the parties regarding the subject matter
hereof, including without limitation any terms and conditions of any
employment agreement or other similar agreement. No change, alteration
or modification hereof may be made except in a writing signed by both
parties hereto. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed
by the laws of The Commonwealth of Massachusetts (disregarding any
choice of law rules which may look to the laws of any other
jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Robert Goldman
------------------
Its: Chief Executive Officer
/s/ Lawrence Alston
Lawrence Alston
<PAGE>
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
<PAGE>
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
<PAGE>
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be
<PAGE>
the sole owner of all patents, copyrights and other rights relating to
Developments. I acknowledge that all Developments are "work(s) made for hire",
as defined under the United States Copyright Act, and become the property of the
Company, and shall communicate, without cost or delay, and without publishing
the same, all available information relating thereto (with all necessary plans
and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate
<PAGE>
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s). No change, alteration,
modification, waiver or termination of this Agreement or any of the provisions
herein contained shall be binding upon me or the Company unless made in writing
and signed by myself and an authorized officer of the Company. In the event of
any inconsistency between this Agreement and any other contract between me and
the Company, the provisions of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
/s/ Lawrence Alston
-------------------
Signature Lawrence Alston
Address:
7 Morningside Ave.
Natick, MA 01760
Date: 11/19/98
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Robert Goldman
------------------
Name: Robert Goldman
Title: Chief Executive Officer
Date: 11/19/98
Exhibit 10.34
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT AND SECOND
AMENDMENT TO NOTE
WHEREAS, Object Design, Inc. (the "Company") has entered into a certain Loan and
Security Agreement dated as of December 17, 1996 (as amended, the "Agreement")
with The First National Bank of Boston (now known as BankBoston, N.A.)( the
"Bank");
WHEREAS, the Company has requested, and the Bank has agreed pursuant to the
terms hereof, to extend the Revolving Credit Termination Date (as defined in the
Agreement) from September 30, 1998 to November 30, 1998. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Bank hereby agree as follows:
I. Amendment to Agreement.
The definition of: "Revolving Credit Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended and restated in its entirety as
follows:
"Revolving Credit Termination Date. November 30, 1998."
II. Amendment to Note.
The Note is hereby amended by changing the date "September 30, 1998" in
the first and last sentences of the first paragraph thereof to "November 30,
1998".
III. Miscellaneous.
1. Other than as amended hereby, all terms and provisions of the
Agreement, the Note, and related documents are ratified and affirmed as
of the date hereof.
2. The Company represents and warrants to the Bank that, after giving
affect to this Amendment, no Default exists under the Agreement or
related documents.
<PAGE>
Upon receipt of a fully executed copy of this Amendment by the Bank, this
Amendment shall be deemed to be an instrument executed under seal to be governed
by the laws of The Commonwealth of Massachusetts effective as of the date
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
their duly authorized officers as of November 4, 1998.
BANKBOSTON, N.A.
(formerly known as "THE FIRST NATIONAL BANK OF BOSTON")
By: /s/ David Crane
Its: Director
OBJECT DESIGN, INC.
By: /s/ Lacey Brandt
Its: Chief Financial Officer
Exhibit 10.35
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND THIRD AMENDMENT TO NOTE
WHEREAS, Object Design, Inc. (the "Company") has entered into a certain
Loan and Security Agreement dated as of December 17, 1996 (as amended, the
"Agreement") with The First National Bank of Boston (now known as BankBoston,
N.A.)( the "Bank");
WHEREAS, the Company has requested, and the Bank has agreed, pursuant
to the terms hereof, to extend the Revolving Credit Termination Date (as defined
in the Agreement) from November 30, 1998 to May 31, 1999. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Agreement.
WHEREAS, the Company has requested, and the Bank has agreed, pursuant
to the terms hereof, to amend certain terms of the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and the Bank hereby agree as follows:
I. Amendment to Agreement.
1. The definition of: "Revolving Credit Termination Date" set forth in
Section 1.1 of the Agreement is hereby amended and restated in its entirety as
follows:
"Revolving Credit Termination Date. May 31, 1999."
2. Paragraphs (iii), (ix) and (x) of the definition of "Eligible
Account" are hereby amended and restated in their entirety, respectively, as
follows:
"(iii) such Account is not past due more than 60 days;"
"(ix) such Account is not owing by an account debtor whose
then-existing accounts owing to the Company exceed in face amount 5% of the
Company's total Eligible Accounts;"
"(x) such Account is not owing by an account debtor when 25%
of all then-existing accounts owing to the Company by such account debtor are
past due more than 60 days."
3. Sections A.2.(i) and A.2.(viii) of Exhibit G of the Agreement,
titled "Borrowing Base Certificate," are hereby amended and restated in their
entirety, respectively, as follows:
"(i) more than 60 days past due"
"(viii) due from debtor with 25% or more in face value of
accounts more than 60 days past due."
<PAGE>
II. Amendment to Note.
The Note is hereby amended by changing the date "November 30, 1998" in
the first and last sentences of the first paragraph thereof to "May 31, 1999."
III. Miscellaneous.
1. Other than as amended hereby, all terms and provisions of the
Agreement, the Note, and related documents are ratified and affirmed as of the
date hereof.
2. The Company represents and warrants to the Bank that, after giving
affect to this Amendment, no Default exists under the Agreement or related
documents. Upon receipt of a fully executed copy of this Amendment by the Bank,
this Amendment shall be deemed to be an instrument executed under seal to be
governed by the laws of The Commonwealth of Massachusetts effective as of the
date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
their duly authorized officers as of November 30, 1998.
BANKBOSTON, N.A.
(formerly known as "THE FIRST
NATIONAL BANK OF BOSTON")
By /s/ David Crane
Its: Director
OBJECT DESIGN, INC.
By: /s/ Lacey Brandt
Its: Chief Financial Officer
10.36 Executive Employment Agreement dated November 19, 1998 between ODI and
Robert Goldman
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Robert N. Goldman, an
individual residing at 91 Beacon Street, Boston, MA 02108 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as President and Chief Executive Officer;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination by ODI. If for any reason other than for Cause (as
hereinafter defined) and Change in Control (as hereinafter defined),
ODI terminates the Executive's employment, ODI shall pay to the
Executive the Severance Amount (as hereinafter defined) on the
effective date of such termination. The Severance Amount shall be
equal to the sum of (i) the Executive's then-current monthly salary
multiplied by twelve (12), plus (ii) one hundred (100) percent of the
maximum performance bonus amount, including without limitation any and
all commissions, pursuant to existing compensation agreements in
effect for the year in which such termination occurs which the
Executive could have earned if he remained in the employ of ODI and
all performance goals and other criteria were met (whether or not such
goals or criteria are in fact met) multiplied by one (1), and payable
in one lump sum upon the date of termination. In addition to the
Severance Amount, ODI shall provide the Executive with the following
additional benefits: for twelve (12) months following the effective
date of such termination ODI shall continue to pay and provide to the
Executive medical and dental insurance benefits consistent with those
provided to the Executive immediately prior to such termination,
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive such insurance benefits
under another employer-provided plan, the insurance benefits set forth
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such additional
benefits, together with the Severance Amount, are hereinafter referred
to as the "Severance Benefits").
(b) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Severance Benefits and/or Separation Benefits
(as hereinafter defined). For the purposes of this Agreement, "Cause"
shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after written
notice thereof from ODI to the Executive specifying the acts
constituting the breach and requesting that they be remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or employees,
including without limitation, the
<PAGE>
Executive having been convicted of a felony during the term of
his employment with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including
without limitation death and disability, there shall be no Severance
Benefits and/or Separation Benefits (as hereinafter defined).
Notwithstanding the foregoing, in the event of a Change of Control (as
hereinafter defined) where the Executive's compensation, duties and/or
responsibilities are materially reduced from those currently exercised
by the Executive with ODI and/or ODI requires the Executive to be
based at any office or location other than ODI's principal place of
business, the Executive may voluntarily terminate his employment with
ODI or a successor and shall be entitled to receive the Separation
Benefits (as hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates
the Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual,
entity, group or any other person of beneficial ownership of
thirty-five percent (35%) or more of either (i) the then-outstanding
shares of common stock of ODI or (ii) the combined voting power of the
election of directors for ODI; and/or (b) the sale of substantially
all of ODI's assets or a merger or sale of stock wherein the holders
of ODI's capital stock immediately prior to such sale do not hold at
least a majority of the outstanding capital stock of ODI or its
successor immediately following such sale; and/or (c) individuals who,
as of the date hereof, constitute the Board of Directors (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors, provided, however, that any
individual becoming a director subsequently to the date hereof whose
election, or nomination for election by ODI's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board of Directors), ODI shall pay to the
Executive the Separation Amount (as hereinafter defined) on the
effective date of such termination. The Separation Amount shall be
equal to the sum of (i) the Executive's then-current monthly salary
multiplied by twenty-four (24), plus (ii) one hundred (100) percent of
the maximum performance bonus amount, including without limitation any
and all commissions, pursuant to existing compensation agreements in
effect for the year in which such termination occurs which the
Executive could have earned if he remained in the employ of ODI and
all performance goals and other criteria were met (whether or not such
goals or criteria are in fact met) multiplied by two (2), and payable
in one lump sum upon the date of termination. In addition to the
Separation Amount, ODI shall provide the Executive with the following
additional benefits: for twenty-four (24) months following the
effective date of such termination due to a Change in Control, ODI
shall continue to pay and provide to the Executive medical and dental
insurance benefits consistent with those provided to the Executive
immediately prior to such termination, provided, however, that if the
Executive becomes re-employed with another employer and is eligible to
receive such insurance benefits under another employer-provided plan,
the insurance benefits set forth herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility (such additional benefits under this paragraph, together
with the Separation Amount, are hereinafter referred to as the
"Separation Benefits").
<PAGE>
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any
successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same
extent that ODI would be required to perform it if no such succession
had taken place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim,
right or action which ODI may have against the Executive (under this
Agreement or otherwise) or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set
forth above or at such other address as is provided by a party
pursuant to the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire
understanding, and supersedes all other oral or written agreements or
understandings, between the parties regarding the subject matter
hereof, including without limitation any terms and conditions
<PAGE>
of any employment agreement or other similar agreement(s),
inconsistent with the terms and conditions herein. No change,
alteration or modification hereof may be made except in a writing
signed by both parties hereto. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance
with and governed by the laws of The Commonwealth of Massachusetts
(disregarding any choice of law rules which may look to the laws of
any other jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Justin Perreault
--------------------
Its: Chief Operating Officer
/s/ Robert Goldman
------------------
Robert N. Goldman
<PAGE>
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
<PAGE>
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
<PAGE>
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be
<PAGE>
the sole owner of all patents, copyrights and other rights relating to
Developments. I acknowledge that all Developments are "work(s) made for hire",
as defined under the United States Copyright Act, and become the property of the
Company, and shall communicate, without cost or delay, and without publishing
the same, all available information relating thereto (with all necessary plans
and models) to the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate
<PAGE>
judicial body by limiting and reducing it or them, so as to be enforceable to
the maximum extent compatible with the applicable law as it shall then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s), inconsistent with the
terms and conditions herein. No change, alteration, modification, waiver or
termination of this Agreement or any of the provisions herein contained shall be
binding upon me or the Company unless made in writing and signed by myself and
an authorized officer of the Company. In the event of any inconsistency between
this Agreement and any other contract between me and the Company, the provisions
of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
<PAGE>
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
/s/ Robert Goldman
------------------
Signature Robert N. Goldman
Address:
81 Beacon Street
----------------
Boston, MA 02108
----------------
Date: 11/19/98
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Justin Perreault
----------------
Name: Justin Perreault
Title: Chief Operating Officer
Date: 11/19/98
ODI CONFIDENTIAL
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of November 19, 1998 by and
between Object Design, Inc., a Delaware corporation with its principal offices
located at 25 Mall Road, Burlington, MA 01803 ("ODI") and Justin Perreault, an
individual residing at 123 Chandler Street, Boston, MA 02116 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Executive Vice President and Chief Operating Officer;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination by ODI. If for any reason other than for Cause (as
hereinafter defined) and Change in Control (as hereinafter defined),
ODI terminates the Executive's employment, ODI shall pay to the
Executive the Severance Amount (as hereinafter defined) on the
effective date of such termination. The Severance Amount shall be equal
to the sum of (i) the Executive's then-current monthly salary
multiplied by six (6), plus (ii) one hundred (100) percent of the
maximum performance bonus amount, including without limitation any and
all commissions, pursuant to existing compensation agreements in effect
for the year in which such termination occurs which the Executive could
have earned if he remained in the employ of ODI and all performance
goals and other criteria were met (whether or not such goals or
criteria are in fact met) multiplied by one-half (1/2), and payable in
one lump sum upon the date of termination. In addition to the Severance
Amount, ODI shall provide the Executive with the following additional
benefits: for six (6) months following the effective date of such
termination ODI shall continue to pay and provide to the Executive
medical and dental insurance benefits consistent with those provided to
the Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits, together
with the Severance Amount, are hereinafter referred to as the
"Severance Benefits").
(b) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Severance Benefits and/or Separation Benefits
(as hereinafter defined). For the purposes of this Agreement, "Cause"
shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after
written notice thereof from ODI to the Executive specifying
the acts constituting the breach and requesting that they be
remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or
employees, including without limitation, the Executive having
been convicted of a felony during the term of his employment
with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including without
limitation death and disability, there shall be no Severance Benefits
and/or Separation Benefits (as hereinafter defined). Notwithstanding
the
<PAGE>
foregoing, in the event of a Change of Control (as hereinafter defined)
where the Executive's compensation, duties and/or responsibilities are
materially reduced from those currently exercised by the Executive with
ODI and/or ODI requires the Executive to be based at any office or
location other than ODI's principal place of business, the Executive
may voluntarily terminate his employment with ODI or a successor and
shall be entitled to receive the Separation Benefits (as hereinafter
defined).
(d) Termination by ODI due to a Change in Control If ODI terminates the
Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual, entity,
group or any other person of beneficial ownership of thirty-five
percent (35%) or more of either (i) the then-outstanding shares of
common stock of ODI or (ii) the combined voting power of the election
of directors for ODI; and/or (b) the sale of substantially all of ODI's
assets or a merger or sale of stock wherein the holders of ODI's
capital stock immediately prior to such sale do not hold at least a
majority of the outstanding capital stock of ODI or its successor
immediately following such sale; and/or (c) individuals who, as of the
date hereof, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) one
hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he remained
in the employ of ODI and all performance goals and other criteria were
met (whether or not such goals or criteria are in fact met) multiplied
by one (1), and payable in one lump sum upon the date of termination.
In addition to the Separation Amount, ODI shall provide the Executive
with the following additional benefits: for twelve (12) months
following the effective date of such termination due to a Change in
Control, ODI shall continue to pay and provide to the Executive medical
and dental insurance benefits consistent with those provided to the
Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits under this
paragraph, together with the Separation Amount, are hereinafter
referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any successor
via a Change in Control (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that
ODI would be required to perform it if no such succession had taken
place.
<PAGE>
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or
action which ODI may have against the Executive (under this Agreement
or otherwise) or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set forth
above or at such other address as is provided by a party pursuant to
the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire understanding,
and supersedes all other oral or written agreements or understandings,
between the parties regarding the subject matter hereof, including
without limitation any terms and conditions of any employment agreement
or other similar agreement(s), inconsistent with the terms and
conditions herein. No change, alteration or modification hereof may be
made except in a writing signed by both parties hereto. This Agreement
and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC.
By: /s/ Robert N. Goldman
-------------------------
Robert N. Goldman
Its: Chief Executive Officer
By: /s/ Justin Perreault
-------------------------
Justin Perreault
<PAGE>
ODI CONFIDENTIAL
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether
any business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the
Company the Company determines to change its line of business so as to provide
goods or services other than those sold or licensed, or under development, by
the Company at the commencement of my Employment, then the Company shall give me
notice of such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the
1
<PAGE>
ODI CONFIDENTIAL
termination of my Employment), or assist in such hiring by any other person or
business entity or encourage any such employee to terminate his or her
employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to an of the foregoing (in each case whether
or not reduced to tangible form); and
(ii) the name of any customer, employee, prospective customer or
consultant, any sales plan, marketing material, plan or survey, business plan or
projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the
2
<PAGE>
ODI CONFIDENTIAL
benefit of the Company and in the course of my duties as an employee, or at any
time after my employment ends. As part of my obligations to maintain the
confidentiality of Confidential Information, I agree to comply with any Company
policy, if any, on the protection of intellectual property. I further agree that
after the termination and/or expiration of my employment, I shall not use or
permit the use of any Confidential Information, it being agreed that all
Confidential Information shall be and remain the sole and exclusive property of
the Company and that within ten (10) days after the termination or expiration of
my employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be the sole owner of
all patents, copyrights and other rights relating to Developments. I acknowledge
that all Developments are "work(s) made for hire", as defined under the United
States Copyright Act, and become the property of the Company, and shall
communicate, without cost or delay, and without publishing the same, all
available information relating thereto (with all necessary plans and models) to
the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained
or vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of
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ODI CONFIDENTIAL
my physical or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney-in-fact, to act for and in my behalf and
stead to execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance of letters
of patent, copyright or other analogous protection thereon with the same legal
force and effect as if executed by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it shall
then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
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ODI CONFIDENTIAL
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s), inconsistent with the
terms and conditions herein. No change, alteration, modification, waiver or
termination of this Agreement or any of the provisions herein contained shall be
binding upon me or the Company unless made in writing and signed by myself and
an authorized officer of the Company. In the event of any inconsistency between
this Agreement and any other contract between me and the Company, the provisions
of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
By: /s/ Justin Perreault
----------------------------
Signature Justin Perreault
Address:
123 Chandler Street
Boston, MA 02116
Date: November 19, 1998
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Robert N. Goldman
-----------------------------
Robert N. Goldman
Name: Robert N. Goldman
Title: Chief Executive Officer
Date: November 19, 1998
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ODI CONFIDENTIAL
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement (i) amends and restates
the provisions of the Executive Employment Agreement, dated November 19, 1998
between Justin Perreault and ODI (hereinafter the "Executive Employment
Agreement"); (ii) replaces and supersedes the Executive Employment Agreement;
and (iii) has been duly authorized by the Board of Directors of ODI.
This Amended and Restated Employment Agreement (the "Agreement") dated as of
February 23, 1999 by and between Object Design, Inc., a Delaware corporation
with its principal offices located at 25 Mall Road, Burlington, MA 01803 ("ODI")
and Justin Perreault, an individual residing at 123 Chandler Street, Boston, MA
02116 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as President and Chief Executive Officer;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination by ODI. If for any reason other than for Cause (as
hereinafter defined) and Change in Control (as hereinafter defined),
ODI terminates the Executive's employment, ODI shall pay to the
Executive the Severance Amount (as hereinafter defined) on the
effective date of such termination. The Severance Amount shall be equal
to the sum of (i) the Executive's then-current monthly salary
multiplied by twelve (12), plus (ii) one hundred (100) percent of the
maximum performance bonus amount, including without limitation any and
all commissions, pursuant to existing compensation agreements in effect
for the year in which such termination occurs which the Executive could
have earned if he remained in the employ of ODI and all performance
goals and other criteria were met (whether or not such goals or
criteria are in fact met) multiplied by one (1), and payable in one
lump sum upon the date of termination. In addition to the Severance
Amount, ODI shall provide the Executive with the following additional
benefits: for twelve (12) months following the effective date of such
termination ODI shall continue to pay and provide to the Executive
medical and dental insurance benefits consistent with those provided to
the Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits, together
with the Severance Amount, are hereinafter referred to as the
"Severance Benefits").
(b) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Severance Benefits and/or Separation Benefits
(as hereinafter defined). For the purposes of this Agreement, "Cause"
shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after
written notice thereof from ODI to the Executive specifying
the acts constituting the breach and requesting that they be
remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or
employees, including without limitation, the Executive having
been convicted of a felony during the term of his employment
with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including without
limitation death and disability, there shall be no Severance Benefits
and/or Separation Benefits (as hereinafter defined). Notwithstanding
the foregoing, in the event of a Change of Control (as hereinafter
defined) where the Executive's compensation, duties and/or
responsibilities are materially reduced from those currently exercised
by the Executive with ODI and/or ODI requires the Executive to be based
at any
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ODI CONFIDENTIAL
office or location other than ODI's principal place of business, the
Executive may voluntarily terminate his employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates the
Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual, entity,
group or any other person of beneficial ownership of thirty-five
percent (35%) or more of either (i) the then-outstanding shares of
common stock of ODI or (ii) the combined voting power of the election
of directors for ODI; and/or (b) the sale of substantially all of ODI's
assets or a merger or sale of stock wherein the holders of ODI's
capital stock immediately prior to such sale do not hold at least a
majority of the outstanding capital stock of ODI or its successor
immediately following such sale; and/or (c) individuals who, as of the
date hereof, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twenty-four (24), plus (ii)
one hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he remained
in the employ of ODI and all performance goals and other criteria were
met (whether or not such goals or criteria are in fact met) multiplied
by two (2), and payable in one lump sum upon the date of termination.
In addition to the Separation Amount, ODI shall provide the Executive
with the following additional benefits: for twenty-four (24) months
following the effective date of such termination due to a Change in
Control, ODI shall continue to pay and provide to the Executive medical
and dental insurance benefits consistent with those provided to the
Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits under this
paragraph, together with the Separation Amount, are hereinafter
referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any successor
via a Change in Control (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that
ODI would be required to perform it if no such succession had taken
place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by
any set-off,
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ODI CONFIDENTIAL
counterclaim, recoupment, defense or other claim, right or action which
ODI may have against the Executive (under this Agreement or otherwise)
or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive
obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set forth
above or at such other address as is provided by a party pursuant to
the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire understanding,
and supersedes all other oral or written agreements or understandings,
between the parties regarding the subject matter hereof, including
without limitation any terms and conditions of any employment agreement
or other similar agreement(s), inconsistent with the terms and
conditions herein. No change, alteration or modification hereof may be
made except in a writing signed by both parties hereto. This Agreement
and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC. EXECUTIVE
By: /s/ Lacey Brandt By: /s/ Justin Perreault
- ---------------------- -------------------------
Lacey Brandt Justin Perreault
Its: Chief Financial Officer
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ODI CONFIDENTIAL
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
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ODI CONFIDENTIAL
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential Information and established
commercial relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be
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ODI CONFIDENTIAL
and remain the sole and exclusive property of the Company and that within ten
(10) days after the termination or expiration of my employment I shall either
(i) deliver all Confidential Information, and all copies thereof, to the
Company, at its main office or (ii) destroy all Confidential Information, and
all copies thereof, and deliver a sworn notice to the Company certifying to such
destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be the sole owner of
all patents, copyrights and other rights relating to Developments. I acknowledge
that all Developments are "work(s) made for hire", as defined under the United
States Copyright Act, and become the property of the Company, and shall
communicate, without cost or delay, and without publishing the same, all
available information relating thereto (with all necessary plans and models) to
the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
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ODI CONFIDENTIAL
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it shall
then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s), inconsistent with the
terms and conditions herein. No change, alteration, modification, waiver or
termination of this Agreement or any of the provisions herein contained shall be
binding upon me or the Company unless made in writing and signed by myself and
an authorized officer of the Company. In the event of any inconsistency between
this Agreement and any other contract between me and the Company, the provisions
of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
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ODI CONFIDENTIAL
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
By: /s/ Justin Perreault
-------------------------------
Signature Justin Perreault
Address:
123 Chandler Street
Boston, MA 02116
Date: February 23, 1999
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Lacey Brandt
-------------------------------
Lacey Brandt
Name: Lacey Brandt
Title: Chief Financial Officer
Date: February 23, 1999
8
ODI CONFIDENTIAL
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement (i) amends and restates
the provisions of the Executive Employment Agreement, dated November 19, 1998,
between Robert N. Goldman and ODI (hereinafter the "Executive Employment
Agreement"); (ii) replaces and supersedes the Executive Employment Agreement;
and (iii) has been duly authorized by the Board of Directors of ODI.
This Amended and Restated Employment Agreement (the "Agreement") dated as of
February 23, 1999 by and between Object Design, Inc., a Delaware corporation
with its principal offices located at 25 Mall Road, Burlington, MA 01803 ("ODI")
and Robert N. Goldman, an individual residing at 81 Beacon Street, Boston, MA
02108 (the "Executive").
WHEREAS, ODI has offered employment to the Executive, and Executive has accepted
employment by ODI, as Chairman of the Board of ODI;
NOW, therefore, ODI and the Executive agree as follows:
1. Termination of Employment and Severance
(a) Termination by ODI. If for any reason other than for Cause (as
hereinafter defined) and Change in Control (as hereinafter defined),
ODI terminates the Executive's employment, ODI shall pay to the
Executive the Severance Amount (as hereinafter defined) on the
effective date of such termination. The Severance Amount shall be equal
to the sum of (i) the Executive's then-current monthly salary
multiplied by twelve (12), plus (ii) one hundred (100) percent of the
maximum performance bonus amount, including without limitation any and
all commissions, pursuant to existing compensation agreements in effect
for the year in which such termination occurs which the Executive could
have earned if he remained in the employ of ODI and all performance
goals and other criteria were met (whether or not such goals or
criteria are in fact met) multiplied by one (1), and payable in one
lump sum upon the date of termination. In addition to the Severance
Amount, ODI shall provide the Executive with the following additional
benefits: for twelve (12) months following the effective date of such
termination ODI shall continue to pay and provide to the Executive
medical and dental insurance benefits consistent with those provided to
the Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits, together
with the Severance Amount, are hereinafter referred to as the
"Severance Benefits").
(b) Termination for Cause. If the Executive is terminated by ODI for
Cause, there shall be no Severance Benefits and/or Separation Benefits
(as hereinafter defined). For the purposes of this Agreement, "Cause"
shall mean:
(i) The Executive's material breach in respect to his assigned
duties, and compliance with any and all policies, directives,
standards and regulations adopted by ODI, including without
limitation compliance with the terms and conditions of the
attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT and ODI's Insider Trading Policy, such
breach continuing unremedied for thirty (30) days after
written notice thereof from ODI to the Executive specifying
the acts constituting the breach and requesting that they be
remedied; or
(ii) Any dishonesty or other malicious act by the Executive
materially detrimental to the goodwill of ODI, or materially
damaging to ODI's relationships with its customers or
employees, including without limitation, the Executive having
been convicted of a felony during the term of his employment
with ODI.
(c) Voluntary Termination by the Executive. If the Executive
voluntarily terminates his employment for any reason, including without
limitation death and disability, there shall be no Severance Benefits
and/or Separation Benefits (as hereinafter defined). Notwithstanding
the foregoing, in the event of a Change of Control (as hereinafter
defined) where the Executive's compensation, duties and/or
responsibilities are materially reduced from those currently exercised
by the Executive with ODI and/or ODI requires the Executive to be based
at any
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ODI CONFIDENTIAL
office or location other than ODI's principal place of business, the
Executive may voluntarily terminate his employment with ODI or a
successor and shall be entitled to receive the Separation Benefits (as
hereinafter defined).
(d) Termination by ODI due to a Change in Control If ODI terminates the
Executive's employment within twelve (12) months after a Change in
Control (which shall mean (a) the acquisition by an individual, entity,
group or any other person of beneficial ownership of thirty-five
percent (35%) or more of either (i) the then-outstanding shares of
common stock of ODI or (ii) the combined voting power of the election
of directors for ODI; and/or (b) the sale of substantially all of ODI's
assets or a merger or sale of stock wherein the holders of ODI's
capital stock immediately prior to such sale do not hold at least a
majority of the outstanding capital stock of ODI or its successor
immediately following such sale; and/or (c) individuals who, as of the
date hereof, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors, provided, however, that any individual becoming a director
subsequently to the date hereof whose election, or nomination for
election by ODI's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of
Directors), ODI shall pay to the Executive the Separation Amount (as
hereinafter defined) on the effective date of such termination. The
Separation Amount shall be equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twenty-four (24), plus (ii)
one hundred (100) percent of the maximum performance bonus amount,
including without limitation any and all commissions, pursuant to
existing compensation agreements in effect for the year in which such
termination occurs which the Executive could have earned if he remained
in the employ of ODI and all performance goals and other criteria were
met (whether or not such goals or criteria are in fact met) multiplied
by two (2), and payable in one lump sum upon the date of termination.
In addition to the Separation Amount, ODI shall provide the Executive
with the following additional benefits: for twenty-four (24) months
following the effective date of such termination due to a Change in
Control, ODI shall continue to pay and provide to the Executive medical
and dental insurance benefits consistent with those provided to the
Executive immediately prior to such termination, provided, however,
that if the Executive becomes re-employed with another employer and is
eligible to receive such insurance benefits under another
employer-provided plan, the insurance benefits set forth herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility (such additional benefits under this
paragraph, together with the Separation Amount, are hereinafter
referred to as the "Separation Benefits").
2. Effect of a Change in Control of ODI
(a) Acceleration of Vesting of Stock Options Upon any Change in
Control, any and all options granted to the Executive under any ODI
stock option plan shall be deemed immediately vested upon the date of
such Change in Control.
(b) Assumption of Obligations Hereunder ODI shall require any successor
via a Change in Control (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that
ODI would be required to perform it if no such succession had taken
place.
3. Executive's Responsibilities
As a condition precedent to ODI's obligations hereunder, the Executive
shall enter into the attached NON-COMPETITION, NON-SOLICITATION,
NON-DISCLOSURE AND DEVELOPMENTS AGREEMENT with ODI, which is
incorporated herein by reference.
4. Miscellaneous
(a) Provision of Full Settlement Except as set forth herein, ODI's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by
any set-off,
2
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ODI CONFIDENTIAL
counterclaim, recoupment, defense or other claim, right or action which
ODI may have against the Executive (under this Agreement or otherwise)
or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive
obtains other employment.
(b) Amounts Payable Less Withholding Taxes The amounts payable by ODI
hereunder shall be less any federal, state or local withholding taxes
and social security.
(c) Excise Tax To the extent that payments or other benefits to the
Executive pursuant to this Agreement (together with any other payments
or benefits, stock awards received by the Executive in connection with
a Change in Control) would result in triggering the provisions of the
Sections 280G and 4999 of the Code, this Agreement provides for the
payment of an additional amount such that the Executive receives, net
of excise taxes, the amount he would have been entitled to receive in
the absence of the excise tax provided in Section 4999 of the Code.
(d) Notice All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, within the continental United
States by first class, registered mail, receipt requested, postage and
registry fees prepaid, to the applicable party at the address set forth
above or at such other address as is provided by a party pursuant to
the terms hereof.
(e) Entire Agreement. This Agreement embodies the entire understanding,
and supersedes all other oral or written agreements or understandings,
between the parties regarding the subject matter hereof, including
without limitation any terms and conditions of any employment agreement
or other similar agreement(s), inconsistent with the terms and
conditions herein. No change, alteration or modification hereof may be
made except in a writing signed by both parties hereto. This Agreement
and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
OBJECT DESIGN, INC. EXECUTIVE
By: /s/ Lacey Brandt By: /s/ Robert N. Goldman
- ---------------------- -------------------------
Lacey Brandt Robert N. Goldman
Its: Chief Financial Officer
3
<PAGE>
ODI CONFIDENTIAL
NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE
AND DEVELOPMENTS AGREEMENT
In consideration of my employment, consulting or advisory relationship
("Employment"), as the case may be, with Object Design, Inc., a Delaware
corporation with its principal place of business located at 25 Mall Road,
Burlington, Massachusetts 01803 (the "Company"), and in recognition of the fact
that as a result of such relationship I will or may have access to confidential
information, I agree with the Company as follows:
1. Non-Compete and Non-Solicitation Agreement
(a) As long as I am employed or retained by the Company and for a period of one
year after the termination of my Employment with the Company by me or the
Company for any reason, including expiration of the previously agreed upon term
of my Employment, or by the Company for Cause (as defined in the Executive
Employment Agreement), I shall not, directly or indirectly, on my behalf or on
behalf of any third-party, or as owner, manager, stockholder, consultant,
director, officer or employee of any business entity, participate in the
development, manufacture, license, provision or sale of any goods or services
which are competitive with goods or services sold or licensed, or under
development, by the Company without the prior written authorization of the
Company; provided, however, that I may, without the Company's prior written
authorization, own up to one percent (1%) of the issued and outstanding
securities of any publicly held corporation or any securities in any non-public
corporation which I owned prior to the date of my Employment.
(i) In the event that the Company and I disagree about whether any
business entity develops or provides goods or services which are competitive
with goods or services sold or licensed, or under development, by the Company,
the disagreement shall be resolved either by decision of the Company's Board of
Directors at their next regularly scheduled board meeting acting in good faith
after giving me a suitable opportunity to present my view in person and/or in
writing, or if either I or the Company gives notice to the Board of our
objection to the decision of the Board within 30 days after such decision, by
arbitration as provided herein.
(ii) The Company and I agree that goods or services which are
competitive with goods or services developed or provided, or under development,
by the Company shall not include goods and services used by any person or entity
for use as a component in a good or service which is not competitive with goods
or services developed or provided, or under development, by the Company.
(iii) If after the commencement of my Employment with the Company the
Company determines to change its line of business so as to provide goods or
services other than those sold or licensed, or under development, by the Company
at the commencement of my Employment, then the Company shall give me notice of
such determination.
(b) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I will not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
take away any of the customers that the Company had enjoyed during my Employment
with the Company.
(c) Except with the prior written consent of the Company, during my employment
with the Company and for a period of one year after that employment ends for any
reason, including expiration of the previously agreed upon term of my
Employment, or by the Company for Cause, I shall not directly or indirectly,
either for myself or for any other entity or third-party, or as owner, manager,
stockholder, consultant, director, officer or employee of any business entity,
solicit, induce or attempt to hire away from the Company any employee of the
Company (or any other person who may have been employed by the Company during
the six months prior to the termination of my Employment), or assist in such
hiring by any other person or business entity or encourage any such employee to
terminate his or her employment with the Company.
(d) I recognize that the Company is developing highly specialized products and
services in competition with other business entities throughout the United
States and the world, which products and services are designed to compete in
regional, nation-wide and world-wide markets. In light of the competitive nature
of the Company's products and services, I agree that the restrictions contained
in this Section 1 cannot be limited to any geographic area, and I further
recognize that the restrictions set forth in this Section 1 are intended to
protect the Company's interests in its Confidential
4
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ODI CONFIDENTIAL
Information and established commercial relationships and goodwill, and agree
that such restrictions are reasonable and appropriate for this purpose.
(e) If the period of time, geographic area, or other term of any non-competition
or non-solicitation restraint specified in this Agreement is judged by a court
to be unreasonable, I agree that such term should be modified by the court so
that the term can be enforced as the court decides is reasonable.
(f) If I violate any non-competition or non-solicitation restraint specified in
this Agreement, I agree that the period of the restraint shall not run during
the period of the violation. I understand that the purpose of this paragraph is
to give the Company the protection of the restraint for the full agreed-upon
duration.
2. Confidentiality Agreement
(a) I acknowledge that in the course of my employment, I will gain access to and
may gain possession of Confidential Information of the Company. The term
"Confidential Information" as used throughout this Agreement shall mean all
trade secrets, proprietary information and other data or information (and any
tangible evidence, record or representation thereof), whether prepared,
conceived or developed by an employee of the Company (including myself) or
received by the Company from an outside source, which is in the possession of
the Company (whether or not the property of the Company), which in any way
relates to the present or future business of the Company or any customer or
supplier of the Company, and/or which is maintained in confidence by the
Company. Without limiting the generality of the foregoing, "Confidential
Information" shall mean all trade secrets, know-how, proprietary information and
other information or data relating to the present or future business of the
Company, including but not limited to:
(i) any idea, improvement, invention, innovation, development,
technical data, design, formula, device, pattern, concept, computer program,
software, firmware, source code, object code, algorithm, subroutine, object
module, schematic, model, diagram, flow chart, chip masking specification, user
manual, training or service manual, product specification, plan for a new or
revised product, compilation of information, or work in process, and any and all
revisions and improvements relating to any of the foregoing (in each case
whether or not reduced to tangible form); and
(ii) the name of any customer, employee, prospective customer
or consultant, any sales plan, marketing material, plan or survey, business plan
or projections, customer list, product or development plan or specification,
business proposal, financial record, business record, advertiser lists, supplier
lists, customer sales analyses, price lists and any other non-public information
or other record relating to the business of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not apply
to information which has otherwise lawfully entered the public domain, or is
generally known in the industry.
(b) I agree to keep all Confidential Information strictly confidential and not
to use Confidential Information for any purpose or disclose Confidential
Information, including Confidential Information of any third party which the
Company is under an obligation to keep confidential, to any person or entity
during my employment, except as expressly authorized by and for the benefit of
the Company and in the course of my duties as an employee, or at any time after
my employment ends. As part of my obligations to maintain the confidentiality of
Confidential Information, I agree to comply with any Company policy, if any, on
the protection of intellectual property. I further agree that after the
termination and/or expiration of my employment, I shall not use or permit the
use of any Confidential Information, it being agreed that all Confidential
Information shall be and remain the sole and exclusive property of the Company
and that within ten (10) days after the termination or expiration of my
employment I shall either (i) deliver all Confidential Information, and all
copies thereof, to the Company, at its main office or (ii) destroy all
Confidential Information, and all copies thereof, and deliver a sworn notice to
the Company certifying to such destruction.
(c) I hereby represent that my performance of all of the terms of this Agreement
and as an employee, consultant or advisor of the Company does not and will not
breach any agreement to keep in confidence Confidential Information acquired by
me prior to my Employment by the Company. I have not entered into, and I agree I
will not enter into, any agreement either written or oral in conflict herewith.
5
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ODI CONFIDENTIAL
3. Developments Agreement
(a) If at any time or times during my Employment, I shall (either alone or with
others) make, conceive, learn, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret, concept, idea, and fixed expression thereof or any interest therein
(whether or not patentable or registrable under copyright, patent, trademark or
similar statutes or subject to analogous protection) (herein called
"Developments") that relate to the business of the Company, whether directly or
indirectly, and/or that relate to software provided by suppliers to the Company
and incorporated in the Company's products, or any of the goods and services
sold, licensed or under development by the Company; and/or result from the use
of premises, facilities or personal property tangible or intangible owned,
leased or contracted for by the Company; and/or that occur during the period of,
as a consequence of, or in connection with my employment by the Company; and/or
that result from tasks assigned to me by the Company; such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns, and I shall promptly disclose to the Company (or any
persons designated by it) each such Development and hereby assign any rights I
may have or acquire in the Developments and benefits and/or rights resulting
therefrom to the Company and its assigns without further compensation and waive
any and all moral rights to all Developments. All Developments shall be the sole
property of the Company and its assigns. The Company shall be the sole owner of
all patents, copyrights and other rights relating to Developments. I acknowledge
that all Developments are "work(s) made for hire", as defined under the United
States Copyright Act, and become the property of the Company, and shall
communicate, without cost or delay, and without publishing the same, all
available information relating thereto (with all necessary plans and models) to
the Company.
(b) Upon disclosure of each Development to the Company, I will, during my
Employment and at any time thereafter, at the request and cost of the Company,
sign, execute, make and do all such deeds, documents, acts and things as the
Company and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Company alone
(unless the Company otherwise directs) letters of patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters of patent, copyright or other analogous protection.
In the event the Company is unable, after reasonable effort, to secure my
signature on any letters of patent, copyright or other analogous protection
relating to a Development, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters of patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
(c) This Section 3 shall not apply to any Development which meets all of the
following three conditions: (i) I do the work entirely by myself without use of
the Company's facilities, knowledge, property or resources, (ii) I do the work
entirely on my own time, and (iii) the Development does not relate, either,
directly or indirectly, to the Company's business or research or to its planned
business or research.
4. Miscellaneous
(a) I agree that because of the nature of the Company's business, the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the legitimate interests of the Company.
(b) I understand that this Agreement does not create an obligation on the
Company or any other person or entity to continue my Employment.
(c) Any waiver by the Company of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.
6
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ODI CONFIDENTIAL
(d) I hereby agree that each provision herein shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it shall
then appear.
(e) I recognize that money damages alone would not adequately compensate the
Company in the event of breach by me of this Agreement, and I therefore agree
that, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled to injunctive relief for the enforcement
hereof. Failure by the Company to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
terms, covenants or conditions.
(f) My obligations under this Agreement shall survive the termination or
expiration of my Employment regardless of the manner of termination, except that
the provisions of Section 1 shall survive in accordance with their terms.
(g) The term "Company" shall include Object Design, Inc. and any of its
subsidiaries, subdivisions or affiliates. The Company shall have the right to
assign this Agreement to its successor and assigns, and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by said
successors or assigns.
(h) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (disregarding any choice of law rules
which may look to the laws of any other jurisdiction). In the event of any court
action to enforce any provision of this Agreement, The parties consent to and
submit to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
(i) This Agreement embodies the entire understanding, and supersedes all other
oral or written agreements or understandings, between the parties regarding the
subject matter hereof, including without limitation any terms and conditions of
any employment agreement or other similar agreement(s), inconsistent with the
terms and conditions herein. No change, alteration, modification, waiver or
termination of this Agreement or any of the provisions herein contained shall be
binding upon me or the Company unless made in writing and signed by myself and
an authorized officer of the Company. In the event of any inconsistency between
this Agreement and any other contract between me and the Company, the provisions
of this Agreement shall prevail.
(j) All notices, requests, demands and other communications hereunder must be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, within the continental United States by first class, registered mail,
receipt requested, postage and registry fees prepaid, to the applicable party at
the address set forth below or at such other address as is provided by a party
pursuant to the terms hereof.
(k) Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof and shall be final and binding
upon the parties hereto. Notwithstanding anything to the contrary contained in
this Section 4(k), the Company shall have the right to seek injunctive relief,
specific performance or other equitable relief against me in a court of
competent jurisdiction.
BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE READ ALL OF THE
PROVISIONS OF THIS AGREEMENT AND THAT I AGREE TO ALL OF ITS TERMS.
By: /s/ Robert N. Goldman
-------------------------------
Signature Robert N. Goldman
7
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ODI CONFIDENTIAL
Address:
81 Beacon Street
Boston, MA 02108
Date: February 23, 1999
Accepted:
OBJECT DESIGN, INC.
25 Mall Road
Burlington, MA 01803
By: /s/ Lacey Brandt
-------------------------------
Lacey Brandt
Name: Lacey Brandt
Title: Chief Financial Officer
Date: February 23, 1999
8
Exhibit 21.1
SUBSIDIARIES OF OBJECT DESIGN, INC.
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Object Design Security Corporation Massachusetts
Object Design Japan Co., Ltd. Japan
Object Design (U.K.) Limited United Kingdom
Object Design S.A.R.L. France
Object Design GmbH Germany
Object Design Pty., Ltd Australia
Object Design Italia S.R.L. Italy
Object Design, N.V. Belgium
Object Design, B.V. Netherlands
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Object Design, Inc. on Form S-8 (files no. 333-14741, 333-31521, and 333-66219)
of our reports dated February 11, 1999, on our audits of the Consolidated
Financial Statements and Financial Statement Schedule of Object Design, Inc. as
of December 31, 1998 and 1997 and for each of the three years ended December 31,
1998, 1997, and 1996 which reports are included in this Annual Report on Form
10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 30, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 14,846
<SECURITIES> 8,745
<RECEIVABLES> 17,084
<ALLOWANCES> 1,199
<INVENTORY> 0
<CURRENT-ASSETS> 40,120
<PP&E> 12,925
<DEPRECIATION> 8,709
<TOTAL-ASSETS> 48,992
<CURRENT-LIABILITIES> 14,223
<BONDS> 18
0
0
<COMMON> 28
<OTHER-SE> 34,723
<TOTAL-LIABILITY-AND-EQUITY> 48,992
<SALES> 44,040
<TOTAL-REVENUES> 62,358
<CGS> 1,605
<TOTAL-COSTS> 12,127
<OTHER-EXPENSES> 45,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,358
<INCOME-TAX> 535
<INCOME-CONTINUING> 4,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,823
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
