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Filed Pursuant to
Rule 424(b)(3) and (c)
Commission File No. 333-83315
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 5, 1999)
THE VIALINK COMPANY
1,440,000 SHARES OF
COMMON STOCK
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THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 28, 2000
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This prospectus supplement supplements the prospectus dated August 5, 1999
of The viaLink Company relating to the public offering, which is not being
underwritten, and sale by several stockholders of viaLink, or by pledgees,
donees, transferees or other successors in interest to these selling
stockholders, of up to 1,440,000 shares of our common stock. These selling
stockholders received these shares upon the exercise of options to purchase
shares of our common stock. This supplement should be read in conjunction with
the prospectus, and is qualified by reference to the prospectus except to the
extent that information contained in this supplement supersedes the information
contained in the prospectus.
The viaLink Company's prospectus dated August 5, 1999 is hereby
supplemented by including viaLink's (1) Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999, as filed with the SEC on March 21, 2000;
and (2) Current Report on Form 8-K dated March 22, 2000, as filed with the
Securities and Exchange Commission on March 28, 2000. Copies of the Form 10-KSB
and Form 8-K are attached to this prospectus supplement.
In addition, viaLink filed a Registration Statement on Form SB-2 with the
SEC on March 22, 2000, relating to a follow-on offering of up to $120,000,000 of
its common stock. A copy of the press release announcing the filing is attached
to this prospectus supplement.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER: 000-21729
THE VIALINK COMPANY
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C>
DELAWARE 73-1247666
(State of Other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Indemnification No.)
13800 BENSON ROAD 73013-6417
EDMOND, OKLAHOMA (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
(405) 936-2500
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------------- ---------------------------------------------
None N/A
</TABLE>
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for the fiscal year ending December 31, 1999 were
$615,519.
As of March 3, 2000, the aggregate market value of the voting common stock
of the registrant held by non-affiliates of the registrant (affiliates for these
purposes being Registrant's directors, executive officers and holders of more
than 5% of Registrant's common stock on such date) computed by reference to the
price at which the common equity was sold, or the average bid and asked price of
such common equity on that date was $604.8 million.
As of March 3, 2000, the issuer had 19,735,416 outstanding shares of Common
Stock. This number, as well as all other share numbers in this Form 10-KSB
reflect the proposed 2-for-1 split of our common stock to be effected on March
28, 2000 in the form of a stock dividend paid to the stockholders of record on
March 17, 2000.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for issuer's 2000 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Annual Report
on Form 10-KSB
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PART 1
ITEM 1. BUSINESS
BUSINESS
We are a leading provider of subscription-based, business-to-business
electronic commerce services that enable consumer packaged goods (CPG) and
grocery industry participants to efficiently manage their highly complex supply
chain information. Our services allow manufacturers, wholesalers, distributors
and retailers to communicate and synchronize item, price and promotion
information in a more cost-effective and accessible way than has been possible
using traditional electronic and paper-based methods. Our syncLink service,
introduced in 1997, is a synchronized, secure, shared database of item codes,
descriptions and specifications, product authorizations and de-authorizations
and product prices, costs and promotions. synclink provides, the foundation for
our Chain Pricing, Item Movement and Scan Based Trading services.
INDUSTRY BACKGROUND
Growth of the Internet and Business-to-Business Electronic Commerce
The Internet has emerged as the fastest growing communications medium in
history, enabling millions of people to gather information, communicate and
conduct business electronically. According to GartnerGroup, the worldwide
business-to-business electronic commerce market is forecast to grow from $145
billion in 1999 to $7.3 trillion in 2004, representing 7% of forecast total
global sales. Due to the growing number of Web users and the increasing use of
the Internet for business-to-business communication, many businesses now
recognize the Internet as critical to their competitive position. Businesses are
capitalizing on the global reach of the Internet to expand into new markets and
are utilizing the Web as a powerful distribution channel to market and deliver
goods and services. Also, businesses are increasingly using the Internet to
interact with suppliers, distributors and other business partners to achieve
greater efficiencies.
The Consumer Packaged Goods and Grocery Industries
The CPG and grocery industries in the U.S. manufacture and distribute a
wide variety of prepackaged items primarily sold in supermarkets, convenience
stores, small grocery stores, mass merchandisers, warehouse clubs and chain
drugstores. Representative items include beverages, canned goods, dry goods,
snack foods and health and beauty products. The movement of merchandise from
manufacturer to retailer is characterized by various multi-tiered distribution
methods, such as direct-to-store deliveries and intermediate deliveries through
wholesalers, distributors and retailer warehouses. This distribution structure
is commonly referred to as the "supply chain." The CPG and grocery industries
are very large and highly fragmented. According to the U.S. Census Bureau, the
U.S. CPG and grocery industries represented $851 billion in retail sales in
1997. These sales were generated by 300,000 retail locations. These retail
locations represented over 4,200 retail chains and were supplied by over 20,000
manufacturers and over 50,000 wholesalers, distributors and brokers.
CPG and grocery industry participants must manage a large number of items,
each of which may be packaged, distributed and sold in different sizes and
configurations and potentially under different promotion terms. A typical
supermarket has an average of 40,000 unique items in its store inventory
supplied by up to 2,500 suppliers. A large format supermarket, or supercenter,
may have over 100,000 unique items in inventory supplied by up to 3,000
suppliers. A typical convenience store has an average of 2,800 items in
inventory supplied by up to 300 suppliers. The vast number of items are
delivered in many different packaging quantities, including bulk truckloads,
pallets, cases and individual units. Items, prices and promotions are often
unique to each trading partner, and individual stores within a retail chain can
be authorized to sell different products. Consequently, product assortment,
pricing and promotion can vary by geography, store size or demographic factors.
Moreover, item prices and promotions change frequently at every level of the
supply chain, sometimes more than once a week, and the terms of
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the promotion, for example, the start date, end date, percentage or absolute
dollar discounts, links to other promotions and quantity discounts, can be very
complex. Finally, according to New Product News, approximately 16,000 new
products were introduced in the CPG and grocery industries in 1999.
Challenges Faced By Industry Participants
To date, the CPG and grocery supply chain has been characterized by low
electronic commerce penetration, manually intensive business processes and high
purchase order and invoice error rates. According to the 1993 Joint Industry
Study on Efficient Consumer Response, improving efficiencies in critical supply
chain areas such as store assortment, replenishment, promotion and product
development, could reduce grocery supply chain costs by up to 10.8% of sales.
More specifically, the study indicated that costs related to promotion
administration, buying and selling processes, deductions and other clerical and
administrative areas could be reduced by over 3.4% of sales. We do not believe
the inefficiencies identified in the Joint Industry Study have been successfully
addressed since the time of its release. Supply chain information exchange
continues to remain largely paper-based and unsynchronized. The Joint Industry
Study also indicated that item, price and promotion information synchronization
is necessary to achieve the benefits of a paperless system.
One of the most significant challenges facing a retailer is the maintenance
of its "pricebook." The pricebook typically contains descriptions of each item
in a store's inventory, including supplier and retailer product codes, item
specifications (packaging and selling unit information), Universal Product Code
(UPC), purchase cost, retail sales price and any discounts to be received from
the supplier. The vast number of items, variability of pricing, lack of reliable
information exchanged between trading partners and the traditional practice of
manual updating all combine to make pricebook maintenance extremely difficult
and error prone and result in a lack of "synchronization" between trading
partners. A single retailer may have thousands of suppliers, each of which may
have different prices for the same item it supplies to different stores. Because
many retailers do not communicate electronically with their suppliers, retail
buyers manually key item and price information from a large number of suppliers'
reports, catalogs, e-mails, phone calls and faxes into their pricebook.
One of the most important pieces of information within a pricebook is the
product code used to track the item through the supply chain. Maintaining
product code information for each trading partner is difficult because the
commonly recognized UPC bar code printed on many item labels is typically not
used for tracking products throughout the entire supply chain. Rather, the UPC
bar code is most commonly used at the retail checkout register exclusively as a
standardized means to ensure selling price accuracy. In contrast, most
manufacturers, wholesalers, distributors and retailers use their own set of item
codes and naming protocols. As a result, a single product could be represented
by thousands of separate product codes. Therefore, retailers and suppliers spend
considerable time and resources translating and maintaining product code
information among their trading partners.
Due to the limited number of available alternatives, many suppliers and
retailers continue to employ paper-based communications to manage their supply
chain information, resulting in operational inefficiencies and administrative
errors. According to a 1999 Grocery Manufacturers of America study, 60% of all
invoices have errors, 60% of which are due to price and promotion issues. In
addition, 35% of all invoices result in the retailer taking deductions for
errors and discrepancies in invoices from suppliers. These deductions represent
approximately 8% of annual invoice sales from suppliers. Invoice errors and
discrepancies also cause significant administrative inefficiencies for both
suppliers and retailers attempting to research and reconcile the source of the
error. A 1998 Grocery Manufacturers of America study estimated that the
administrative cost of invoice errors averages $40 per error and can reach up to
$236 per error.
Limitations of Current Approaches
Currently, there is no established universal, low-cost electronic method
for manufacturers, wholesalers, distributors and retailers to share item, price
and promotion information easily and efficiently. In the traditional electronic
data interchange (EDI) model, a communication technology available for several
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years, each participant creates, or "maps," a "connection" with each one of its
participating supply chain partners. Suppliers and retailers that would have to
create hundreds of point-to-point connections to implement an electronic based
supply chain have found EDI too costly and technologically difficult.
Consequently, only a small percentage of the industries' suppliers and retailers
use EDI or have access to electronic supply chain applications. In addition,
without a shared database of record from which both trading partners can access
agreed upon item, price and promotion information, pricebook synchronization is
virtually impossible.
The unavailability of basic electronic commerce capabilities has impeded
the application of more advanced supply chain concepts, such as collaborative
planning, forecasting and replenishment, and scan based trading. For example,
many stores have automatic scanning capabilities at the check-out register;
however, only a small percentage of the information captured by the scanner is
shared with suppliers in a timely manner.
In order to improve the visibility and sharing of item, price and promotion
information throughout the supply chain, manage data complexity, collaborate on
product and promotion decisions, minimize supply chain information
inefficiencies, and improve overall service levels to their customers, trading
partners require a solution that enables them to:
- Synchronize item, price and promotion information between trading
partners in an easily accessible, cost-efficient and secure manner to use
as the foundation for electronic transactions;
- Seamlessly connect to all trading partners through multiple technology
platforms, including Extensible Markup Language (XML), an emerging
standard for the exchange of data over the Internet, and EDI, and across
significantly varied levels of technological sophistication; and
- Manage, map and maintain item, price and promotion information for tens
of thousands of unique items from up to thousands of trading partners.
We believe the inefficiencies and inadequacies of current approaches have
created a significant opportunity for a business-to-business electronic commerce
solution within the CPG and grocery industries.
THE VIALINK SOLUTION
We provide subscription-based, business-to-business electronic commerce
services that enable CPG and grocery industry participants to efficiently manage
their highly complex supply chain information. Our solution is designed to
operate across disparate technology platforms, application suites and item
coding structures and can be implemented and deployed rapidly. Customers make
only a single connection to our services. They may do this using a variety of
technologies, such as a standard Internet browser, e-mail, highly sophisticated
proprietary network infrastructure, standard EDI formats or XML.
Our syncLink service replaces the multiple connections among manufacturers,
wholesalers, distributors and retailers with a single electronic connection to a
shared database. syncLink provides our customers with a cost-effective,
reliable, scalable and secure way to communicate and synchronize trading and
pricebook information. As the item, price and promotion information-of-record
for participating trading partners, the syncLink database forms the foundation
for viaLink's other electronic commerce services:
- Chain Pricing -- an advanced information reporting service that
facilitates the sharing of syncLink data among authorized members
throughout all stages of the supply chain;
- Item Movement -- a service that allows retailers to share actual retail
item sales and warehouse item movement information with manufacturers and
distributors on a daily or weekly basis; and
- Scan Based Trading -- a service that enables retailers and suppliers to
transact business electronically based on actual retail sales data.
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We believe our solution provides suppliers and retailers with the following
benefits:
- Reduced manual data entry and pricebook maintenance, which can increase
overall administrative efficiency;
- Reduced invoice discrepancies through synchronization of trading
information, which can reduce deduction write-offs, working capital
inefficiencies and administrative costs associated with reconciling the
discrepancies;
- Reduced time spent resolving errors and disputes, which can increase
salesforce productivity and actual time selling;
- Enhanced promotion effectiveness and ability to facilitate more efficient
new product introductions due to greater trading information visibility;
and
- Improved item delivery and receiving processes.
We believe that the benefits of our solution will attract leading national
and regional retailers and suppliers to our network of CPG and grocery industry
participants. We also believe that the addition of these retailers and suppliers
will create a network effect that increases the value of our viaLink solution to
subscribers.
STRATEGY
Our objective is to become the industry-accepted electronic commerce
utility for synchronizing item, price and promotion information for the CPG and
grocery industries. We plan to accomplish this by implementing the following
strategies:
Target Leading Retailers and Suppliers to Create a Network Effect
We intend to create a network effect by targeting leading national and
regional retailers and suppliers and providing the services necessary to create
efficiencies for these key participants. We believe the adoption of our services
by these companies will be an important endorsement for the rest of the CPG and
grocery industries. As a result of this network effect, we believe the value of
our services to our subscribers will increase with the addition of new trading
partners, thereby increasing the overall value of our solution. Over the last
several months, we have signed a number of customers including Coors Brewing
Company, Kraft Foods, Spartan Stores and Unified Western Grocers.
Build on First Mover Advantage and Increase Brand Awareness
We believe our position as the first company to offer a synchronized,
secure, shared database containing item, price and promotion information
provides us with a first mover advantage to attract a critical mass of retailers
and suppliers. To increase the number of retailers and suppliers that use our
services, we intend to rapidly build awareness of our services by developing a
compelling brand and value proposition. Our plans include:
- Expanding the size and capabilities of our internal sales force;
- Working with existing customers to connect new suppliers and retailers;
- Advertising extensively in industry and business media;
- Participating in industry trade shows and conferences; and
- Working with industry trade associations to provide broad industry
influence.
Leverage Strategic Alliances and Relationships
We believe that strategic alliances and relationships enhance our ability
to reach new customers. We have established strategic, business and technology
alliances with leading organizations such as
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i2 Technologies, Ernst & Young and Hewlett-Packard. These alliances provide us
with technology services, financial resources and marketing and sales support
and enhance our ability to develop and deliver new services. We have also formed
alliances and relationships with ICS FoodOne, OMI International, Cyclone
Commerce and UCCnet and we are a member of the Oracle Partner Program. We
believe these alliances and relationships add to our credibility with potential
new customers, contribute to expanding awareness of our products and services
and are critical to achieving greater market penetration and acceptance of our
services. As opportunities arise, we intend to establish additional alliances
and relationships with key participants in a number of strategic markets or
acquire complementary services and technologies to further drive adoption of our
solution and enhance and expand our service offerings.
We recently announced an initiative to enable third-party technology
providers to connect to our services. This program, called the "viaLink ready
Program", allows technology providers to create and rapidly deploy solutions
that use our services and extend the capabilities of their own applications. We
expect to gain greater adoption and penetration of our solution by accessing the
customers of these third-party technology providers. The "viaLink ready Program"
is being facilitated by our implementation of XML. Currently, we have 13
companies participating in the "viaLink ready Program".
Expand Service Offerings
Given the significant complexities and inefficiencies prevalent in the CPG
and grocery supply chain, we expect suppliers and retailers will demand more
advanced supply chain services that assist them in tracking sales, forecasting
demand, replenishing inventory and managing transactions based on point-of-sale
data. syncLink, the foundation of our solution, allows us to develop and deploy
other value-added services. For example, we plan to deploy our Item Movement
service which, together with syncLink, allows trading partners to implement Scan
Based Trading. We will continue to invest resources to develop complementary
services that leverage the syncLink database and create efficiencies for our
subscribers.
Enter New Markets
We plan to expand internationally and to extend our solution to other
industries outside of the CPG and grocery industries. Over the next 12 months,
we plan to extend our solution to address the food service industry due to of
its similarities to the CPG and grocery industries and the overlap of supply
chain participants. We also intend to establish and expand our global presence
by opening sales offices in Europe and in the Asia/Pacific region. We expect to
expand into industries other than food service and into international markets
through our sales efforts and by leveraging our strategic relationship and
alliance partners.
SERVICES
We offer the following value-added electronic commerce services for the CPG
and grocery industries:
syncLink
Our subscription-based service, syncLink, is a synchronized, shared
database containing item, price and promotion information, including product
authorizations and de-authorizations. syncLink is maintained in a secure
environment and its data is accessible only to authorized subscribers.
Chain Pricing
Chain Pricing, a reporting service using syncLink data, allows authorized
manufacturers, wholesalers, distributors and retailers to share item, price and
promotion information. Chain Pricing provides item and pricing information
visibility though each level of multi-tiered distribution channels. For example,
a manufacturer may not have information on the prices and promotions offered by
its independently-owned distributors. By implementing syncLink and Chain Pricing
services at each of its distributors, a manufacturer is able to view prices and
promotions offered on its products by its distributors to specific retailers.
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Item Movement
Item Movement provides timely retail sales and warehouse item movement
information to manufacturers and suppliers using data within syncLink. For
example, a manufacturer can view information relating to items shipped from the
warehouse to a customer and can compare this movement information with
information relating to product sales at the retail store. This visibility of
price and item movement is important for manufacturers and suppliers and can
help optimize promotion spending and supply chain planning decisions.
Scan Based Trading
The traditional business-to-business trading environment in the CPG and
grocery industries is delivery-based, i.e., the point of transaction is the
supplier's point-of-delivery to the retailer. In traditional trading
relationships, the retailer purchases the inventory from the supplier. However,
a new operational environment, known as scan based trading, is emerging in which
the consumer point-of-sale becomes the new trading boundary between suppliers
and retailers. Our Scan Based Trading service allows trading partners to
transact business based upon items sold at the retail outlet scanner, similar to
consignment selling. Scan Based Trading requires reliable, synchronized exchange
of item, price and promotion information and a shared control system for
managing delivery information, retail sales data, inventories and shrink
reporting.
Scan Based Trading represents a significant change from current business
practices and has broad benefits for both retailers and suppliers, including
improved information visibility throughout the supply chain. Scan Based Trading
reduces a retailer's inventory investment, lowers administrative expenses and
allows the supplier to collect critical consumer pricing and promotion
information at the point of sale which can be used to make better production,
scheduling and promotion decisions. For the supplier, it also eliminates a
supply chain bottleneck because the supplier is no longer required to check-in
products upon arrival at each store. These and other efficiencies translate into
improved asset utilization, just-in-time product flows, improved assortment at
the store shelf and improved replenishment effectiveness.
The Direct Store Delivery Committee of the Grocery Manufacturers of America
selected us as their electronic commerce provider in a pilot program of item,
price and promotion synchronization and scan based trading. Schnuck Markets, in
St. Louis, Missouri, Andronico's, in Berkeley, California, and 23 suppliers are
piloting synchronization. Five of those suppliers are also piloting our Item
Movement and Scan Based Trading services.
Key Features
Our services have the following key features:
- Accessible. Our services can be accessed through a single connection from
a variety of technology platforms. Customers can access our services
using a standard Web browser, e-mail or a sophisticated private network
infrastructure.
- Subscription-Based. Through our partner Hewlett-Packard, we serve as the
database host and provide our services on a subscription basis, so that
each subscriber's technology and capital investments are minimized. Our
subscription fee is a cost-effective monthly charge, based on the number
of store and/or warehouse connections and the type of services (e.g.,
syncLink, Chain Pricing, Item Movement and/or Scan Based Trading) being
used. We also charge an implementation fee to cover the cost of mapping
the data and providing the interface connection.
- Secure. We protect customer information from unauthorized users with a
series of firewalls and passwords. Additionally, we provide access to
information in our database only to those authorized parties designated
by our customers.
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- Neutral. We provide our customers with an independent, secure database of
record for item, price and promotion information. syncLink can be used to
provide a neutral source of data to resolve disputes about prices,
products and promotions between trading partners.
- Flexible. We believe our service adds value to the trading partners by
providing data translation capabilities to facilitate efficient trading
using common item information. Our service allows our customers to
maintain their existing item definitions and coding structures.
IMPLEMENTATION, MAINTENANCE AND CUSTOMER SUPPORT
syncLink implementation begins with the supplier. Manufacturers,
wholesalers and distributors send their data to us in an agreed-upon format, and
our services perform an automated check against existing viaLink master items in
the syncLink database. This automated check matches information such as product
descriptions, UPC bar codes, size, quantities and case configurations. Items not
automatically matched are processed by our data management team for manual
matching. A viaLink or third-party implementation professional is assigned to
the supplier to help the supplier's staff link their items to the master items.
Depending on the retailer, a similar process may occur to match retailer item
codes to the syncLink database. Our implementation team also works with
customers to help link their technology platforms and interfaces to our services
and to define the data transmission formats required by each customer.
Once the implementation process is complete, the relationship with our
customer is transitioned to our customer support staff. We offer two levels of
support to our customers. Level 1 support manages issues related to Internet
connectivity and browsers, questions about the basic functionality of our
services, and administrative issues, including customer security access. Level 2
support addresses more complex matters such as business rule issues (e.g., data
mapping), transmission error corrections, data file export issues related to
customer data and connection issues. Our customer support services are available
to all customers 24 hours a day, 365 days a year.
Each supplier performs ongoing maintenance of item, price and promotion
information. These changes are then loaded into syncLink, either on-line or
through batch interfaces with supplier systems, and the information is made
available to the retailer for acceptance or rejection.
STRATEGIC ALLIANCES AND RELATIONSHIPS
We have formed a number of strategic alliances and relationships that we
believe are integral to driving rapid adoption and penetration of our services.
The continued establishment of strategic alliances is a fundamental business
strategy as we expand our services and enter new markets. Our strategic
alliances and relationships include the following:
Ernst & Young
In May 1999, we entered into a strategic alliance with Ernst & Young. As
part of this alliance, Ernst & Young has agreed to provide us with marketing and
sales support. In addition, Ernst & Young will provide us with its consulting
services at discounted rates, including services related to general systems
integration, technology enhancements, implementation, project management and
training. In connection with this alliance, Ernst & Young purchased $2.0 million
of our common stock.
i2 Technologies
In October 1999, we entered into a strategic alliance with i2 Technologies,
a leading supply chain planning software and e-business solutions provider. The
primary focus of this alliance is to integrate the products and services of our
two companies, extend the integrated solutions across multiple industries, and
develop joint sales and marketing programs. i2 Technologies has agreed to pay us
a royalty based upon revenues it receives from providing the syncLink and Chain
Pricing services outside of the CPG, grocery
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and food service industries. In connection with this alliance, i2 Technologies
purchased $5.0 million of our common stock and has a warrant to purchase an
additional $5.0 million of our common stock.
Hewlett-Packard
In February 1999, we entered into a strategic alliance with
Hewlett-Packard. As a result of this alliance, Hewlett-Packard provides us with
the secure technology infrastructure and platform, including agreed-to
performance, back-up and reliability criteria, to host our syncLink and other
services. Hewlett-Packard may also provide us with co-marketing and consulting
support from time to time. Additionally, Hewlett-Packard invested $6.0 million
in us in the form of convertible debt. We, in turn, will use up to $3.0 million
to purchase Hewlett-Packard products and services.
Other Alliances and Relationships
We have established alliances and relationships with other companies and
organizations to help enhance our ability to reach new customers, develop joint
marketing programs, connect to services with complementary functionality and
gain technical knowledge. Currently, we have entered into alliances and
relationships with the following companies and organizations:
- Cyclone Commerce -- We have integrated Cyclone's Internet data exchange
security technology with our services. We also have a joint sales and
marketing program with Cyclone.
- ICS FoodOne -- We are working together to connect our services to ICS
FoodOne's complementary new product introduction and promotion
announcement services.
- OMI International -- We are working together, including developing joint
marketing programs, to connect our services to OMI's retail order
management systems.
- Food Marketing Institute -- Utilizing our services, we are working with
the Food Marketing Institute on an initiative to improve promotion
efficiency for the food industry.
- Oracle Partner Program -- We joined Oracle's global partner program to
gain access to their technology support, education resources and
marketing support.
- UCCnet -- We joined UCCnet's alliance as an architect partner to leverage
our services through UCCnet's emerging electronic marketplace for the CPG
and grocery industries.
Cyclone, ICS FoodOne and OMI, along with 10 other companies, are the
initial members of our "viaLink ready Program".
TECHNOLOGY
Architecture
We have deployed a reliable, secure and readily available technology
platform based on open architectures and industry standard technologies. The
platform utilizes Oracle relational database technology and applications built
with the Smalltalk object-oriented programming and development language.
Smalltalk is a portable development and operational environment, well-suited to
manage mission-critical business applications.
Access to our services is provided through the Internet, as well as other
methods of electronic communication. In order to maintain the security of our
database, users do not have direct access to the underlying data stored in the
Oracle databases. Users connect to application programs, which interpret the
requests for service, then connect to the Oracle databases for access to the
underlying data.
Data Integrity and Security
Our production operations are housed and hosted in Hewlett-Packard's secure
facility in Atlanta, Georgia. This facility is secured through a variety of
technical and physical protection mechanisms,
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including full-time professional security staff. This facility provides
redundant infrastructure such as backup utilities and communication lines to
support a high availability operation. The Hewlett-Packard servers hosting our
services include fail-over capability, with redundant data storage and
communications resources.
To minimize the security risks associated with a shared network on the
Internet, we have implemented extensive security measures in our services. We
use encryption technologies to protect the confidentiality of information
transmitted over the Internet. Customer access to our services is controlled
through specific user identification and password combinations. We also protect
our services through firewalls, which are intended to restrict unauthorized use
and prevent security breaches. Additionally, we contract with third-party
organizations to test the integrity of our security protocols.
CUSTOMERS
We have offered our viaLink services for two years, and we currently have
more than 620 customers, including 420 Coors distributors. Our existing customer
base is primarily small suppliers and retailers. Currently, we are targeting
large national and regional customers. Recently, we have signed several large
national customers such as Coors Brewing Company, Kraft Foods, Spartan Stores
and Unified Western Grocers.
In addition to our viaLink services, we also provide web hosting activities
for a limited number of our customers. In 1999, web hosting services accounted
for 48% of our revenues.
Three customers individually accounted for 20%, 13% and 10% of our total
revenues in 1997; 13%, 11% and 11% of our total revenues in 1998; and 27%, 14%
and 12% of our total revenues in 1999. Likewise, approximately 57%, 49% and 70%
of our total revenues were attributable to five clients in 1997, 1998 and 1999,
respectively. Due to the sale of our consulting and systems integration assets,
we lost more than 90% of our historical revenue. We will continue to be
dependent upon revenues from a limited number of customers until we achieve
market penetration. In 1999, no one customer accounted for more than 27% of
revenues.
SALES AND MARKETING
We market our services to the CPG and grocery industries directly through
our sales and marketing team and senior staff members and indirectly through our
alliances, particularly Ernst & Young and i2 Technologies. As of March 3, 2000,
our sales and marketing team consisted of 16 full-time employees. We intend to
continue to expand our sales and marketing team in 2000 and to further leverage
our relationships with Ernst & Young, i2 Technologies, and Hewlett-Packard.
Our sales and marketing team is responsible for generating sales leads,
following-up on customer referrals, signing contracts with new customers and
providing input into our services and product development efforts based on
customer feedback and market data. We generate sales and marketing leads through
trade advertising, customer referrals, public relations, trade shows and
strategic relationships. We also use a variety of other consulting and
contractor relationships to help develop and promote our services. We believe
forming indirect sales and co-marketing relationships, such as with i2
Technologies and Ernst & Young, will allow us to leverage the significant
resources of these larger organizations and more rapidly penetrate our target
market.
Our marketing strategy is focused on increasing the awareness of the
viaLink brand and services, educating our target market on the benefits of
business-to-business electronic commerce and positioning ourselves as the
cornerstone of the CPG and grocery industries' electronic commerce strategy and
activities. To increase the awareness of our brand and understanding of our
services, we recently launched a brand awareness campaign that included a new
logo, advertising campaign, customer newsletter, Web site and sales collateral
and presentation materials.
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We intend to significantly expand our sales and marketing activities in
2000. We intend to continue to build our brand awareness and generate additional
sales leads by increasing our staff, marketing expenditures and advertising and
participating in trade shows.
PRODUCT DEVELOPMENT AND ENHANCEMENT
We initially introduced syncLink in 1997 and intend to continue to make
significant investments in product development and enhancements to improve and
extend our services, including enhancements to our Scan Based Trading service.
Our plans also include a wide deployment of XML to enable third-party technology
providers, including our "viaLink ready Program" members, to accelerate the
adoption of our services by the industry.
Growth of our services will require that we continue to invest in our
hardware platform, including additional servers, enterprise storage systems and
additional backup and recovery capabilities. We also expect to deploy our
services across multiple data centers to accommodate expansion into
international markets.
In addition to internal product development and enhancement efforts, we
intend to seek acquisitions of complementary businesses, products and
technologies, or enter into joint venture or license agreements to broaden our
service offerings and provide more comprehensive solutions to the CPG and
grocery supply chain.
Currently, the dynamic nature of the information technology industry places
significant research and development demands on businesses that desire to remain
competitive. Our future success, particularly our ability to achieve widespread
market adoption, depends on the success of our product development and
enhancement efforts in a timely manner. There are a number of risks and
challenges involved in the development of new features and technologies which,
if not successfully addressed, would harm our business.
As of March 3, 2000, our product development, technical support and
operations staff consisted of 27 full-time employees. Our product development
expenses were $1.2 million in 1998 and $2.8 million in 1999. We believe that
significant investments in product development and enhancement will be required
to remain competitive.
PROPRIETARY RIGHTS
Our success and ability to compete are dependent upon our ability to
develop and maintain the proprietary aspects of our technology and operate
without infringing on the proprietary rights of others. We have no patents or
patent applications pending. Instead, we rely primarily on a combination of
copyright, trademark and trade secret laws, confidentiality procedures and
contractual provisions to protect our proprietary rights. Because the software
development industry is characterized by rapid technological change, we believe
that factors such as the technological and creative skills of our personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are more important to establishing and maintaining
a technology leadership position than the various legal protections available
for our technology. viaLink(R) and Chainlink(R) are our registered trademarks.
viaLink ready(SM) and syncLink(SM) are our service marks.
We also require employee and third-party non-disclosure and confidentiality
agreements. We seek to protect our software, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. We cannot be certain that others will not develop technologies that
are similar or superior to our technology or design around the copyrights and
trade secrets owned by us. We believe, however, that these measures afford only
limited protection. Despite these precautions, it may be possible for
unauthorized parties to copy portions of our software products, reverse
engineer, or obtain and use information that we regard as proprietary.
Although we are not aware of any claims that we are infringing any
proprietary rights of third parties, there can be no assurance that third
parties will not claim infringement by us in the future. We expect
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that software product developers will increasingly be subject to infringement
claims as the number of products and competitors in our industry segment grows
and the functionality of products in different industry segments overlaps. Any
infringement claims against us, with or without merit, could be time consuming
to defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. In the event of a successful claim of product infringement
against us, should we fail or be unable to either license the infringed or
similar technology or develop alternative technology on a timely basis, our
business, operating results and financial condition could be materially
adversely affected.
We rely upon software that we license from third parties, including
software that is integrated with our internally developed software and is used
in our products to perform key functions. There can be no assurance that these
third-party software licenses will continue to be available to us on
commercially reasonable terms. The loss of or inability to maintain any such
software licenses could result in shipment delays or reductions until equivalent
software could be developed, identified, licensed and integrated and could
materially adversely affect our business, operating results and financial
condition.
COMPETITION
The business-to-business electronic commerce environment in which we
operate is still evolving and subject to rapid change. Currently, we compete
principally on the basis of the specialized nature and uniqueness of our
services. We believe the in-depth industry knowledge embedded in the
functionality of our services, our cost-effective subscription pricing, and the
accessibility of our services to all potential customers in the industry are
competitive advantages for us. Additionally, we believe we have the only
Internet-based electronic commerce solution in production today for
synchronization of item, price and promotion information for the CPG and grocery
industries.
Currently, we do not know of any direct competition for our electronic
commerce services. However, we believe direct competition for our services will
develop and increase in the future. Direct competition could develop from
several potential sources, including:
- Large, enterprise-wide software vendors, developers and integrators such
as EDS, i2 Technologies, IBM, Manugistics, Oracle and SAP;
- EDI providers such as GEIS and Sterling Commerce;
- Large business-to-business electronic commerce exchange vendors such as
Ariba, CommerceOne and VerticalNet;
- Other database vendors such as A.C. Nielsen, Information Resources and
QRS;
- Industry-led initiatives such as UCCnet;
- Big 5 consulting firms such as Andersen Consulting, Deloitte & Touche,
Ernst & Young, KPMG and PricewaterhouseCoopers; and
- Existing industry participants who may attempt to deploy their
proprietary systems as industry solutions.
These large potential competitors, if successful, may provide functionality
similar to our services. Many of our potential competitors have substantially
greater resources than we do. Any failure by us to achieve rapid market
penetration or to successfully address the risks posed by expected competition
would have a material adverse effect on our business, financial condition and
operating results.
We recently joined UCCnet's alliance as an architect partner to leverage
our services through UCCnet's emerging electronic marketplace for the CPG and
grocery industries. UCCnet also recently announced it had awarded a multi-year
contract to AppNet, Inc. to develop, build and maintain UCCnet's electronic
marketplace. AppNet will design and develop user interfaces, perform supply
chain integration, provide implementation and consulting services and will be
responsible for hosting and operations.
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Although we do not believe AppNet is a direct competitor to our syncLink service
at this time, they could become a competitor if they choose to build similar
functionality rather than use our services in the UCCnet marketplace.
EMPLOYEES
As of March 3, 2000, we had 103 full-time employees and three part-time
employees. Of the full-time employees, 16 were employed in sales and marketing,
27 were employed in product research and development, technical support and
operations, 41 were employed in implementation, customer support and service and
19 were employed in human resources, administration, finance and accounting.
None of our employees are represented by a labor union. We have not experienced
any work stoppages and consider our relations with our employees to be good.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
You should carefully consider these factors that may affect future results,
together with all of the other information included in this Form 10-KSB, in
evaluating our business. The risks and uncertainties described below are those
that we currently believe may materially affect us. Additional risks and
uncertainties that we are unaware of or that we currently deem immaterial also
may become important factors that affect us.
Keep these risks in mind when you read "forward-looking" statements
elsewhere in this Form 10-KSB. These are statements that relate to our
expectations for future events and time periods. Generally, the words
"anticipate," "expect," "intend," and similar expressions identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties, and future events and circumstances could differ significantly
from those anticipated in the forward-looking statements. Please see "Special
Cautionary Note Regarding Forward-Looking Statements" below in this Item 1.
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DUE TO THE RECENT SALE OF OUR CONSULTING AND SYSTEMS INTEGRATION ASSETS AND THE
SALE OF OUR SUBSIDIARY, IJOB, INC., WE NEED TO REPLACE MOST OF OUR HISTORICAL
REVENUES WITH REVENUES FROM OUR VIALINK SERVICES.
We have historically derived substantially all of our revenues from
providing management consulting services and computer systems integration
services to the retail and wholesale distribution industries. In order to permit
us to focus our resources solely on developing and marketing our viaLink
services, we sold the assets underlying our management consulting services and
computer systems integration services, and we sold our wholly-owned subsidiary,
ijob, Inc. We had previously generated over 90% of our total revenues from these
operations.
As a result of these sales, we are now substantially dependent on revenues
generated from our viaLink services. Our viaLink services have achieved limited
market acceptance and, to date, have accounted for an insignificant amount of
our historical revenues. Consequently, we resemble a development stage company
and will face many of the inherent risks and uncertainties that development
stage companies face. These risks include, but are not limited to, our:
- Need for our services to achieve market acceptance and produce a
sustainable revenue stream;
- Need to expand sales, support and product development capabilities;
- Need to manage rapidly changing operations;
- Dependence upon key personnel;
- Reliance on strategic alliances and relationships;
- Ability to obtain financing on acceptable terms; and
- Ability to offer greater value than our competitors.
Our business strategy may not successfully address these risks. If we fail
to recognize significant revenues to replace the revenues lost in these sales,
our business, financial condition and operating results would be materially
adversely affected.
WE ARE SUBSTANTIALLY DEPENDENT ON OUR VIALINK SERVICES. IF OUR VIALINK SERVICES
FAIL TO BECOME ACCEPTED BY THE CONSUMER PACKAGED GOODS AND GROCERY INDUSTRIES,
OUR BUSINESS WILL BE MATERIALLY ADVERSELY AFFECTED.
Virtually all of our revenues for the foreseeable future will be derived
from implementation fees and subscription revenues from our viaLink services,
which may not achieve market acceptance. To date we have received an
insignificant amount of revenues from these services. The acceptance of our
syncLink service as an industry-wide shared database will depend upon
subscriptions from a large number of industry manufacturers, suppliers and
retailers. We cannot predict when a significant number of manufacturers,
suppliers and retailers will subscribe to our services, if ever. If our services
do not achieve market acceptance, or if market acceptance develops more slowly
than expected, our business, operating results and financial condition will be
seriously damaged.
A number of factors will determine whether our services achieve market
acceptance, including:
- Performance and functionality of our services;
- Ease of adoption;
- Satisfaction of our initial subscribers;
- Success of our marketing efforts;
- Success of our strategic relationships and alliances;
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- Successful completion and favorable reporting of our synchronization and
Scan Based Trading pilot expected in June 2000; and
- Continued acceptance of the Internet for business use.
The market for business-to-business electronic commerce services is
evolving rapidly. As the market evolves, customers, including our current
customers, may not choose our services.
WIDESPREAD INDUSTRY ADOPTION OF OUR SERVICES IS DEPENDENT UPON A CRITICAL MASS
OF LARGE NATIONAL RETAILERS AND SUPPLIERS SUBSCRIBING TO OUR SERVICES.
Our success depends on a significant number of large retailers using our
services and linking with manufacturers, wholesalers and distributors over the
Internet through syncLink. To encourage purchasers to use our services, syncLink
must offer a broad range of product, price and promotion information from a
large number of suppliers. However, to attract suppliers to subscribe to
syncLink, we must increase the number of retailers who use our services. If we
are unable to quickly build a critical mass of retailers and suppliers, we will
not be able to benefit from a network effect where the value of our services to
each subscriber significantly increases with the addition of each new
subscriber. Our inability to achieve this network effect would reduce the
overall value of our services to retailers and suppliers and, consequently,
would harm our business.
WE DEPEND ON SUPPLIERS FOR THE SUCCESS AND ACCURACY OF OUR SERVICES.
We depend on suppliers to subscribe to our services in sufficient and
increasing numbers to make our services attractive to retailers and,
consequently, other suppliers. In order to provide retailers accurate data, we
rely on suppliers to update their item, price and promotion information stored
in our database. We cannot guarantee that the item, price and promotion
information available from our services will always be accurate, complete and
current, or that it will comply with governmental regulations. Incorrect
information could expose us to liability if it harms users of our services or
result in decreased adoption and use of our services.
WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT FUTURE OPERATING LOSSES.
We have a history of operating losses, and we expect to incur net losses
for the foreseeable future. We incurred net operating losses of approximately
$2.9 million in 1997, $1.5 million in 1998 and $13.8 million in 1999. As of
December 31, 1999, we had an accumulated deficit of approximately $13.6 million
representing the sum of our historical net losses. We expect to expend
significant resources to aggressively develop and market our services into an
unproven market. Therefore, we expect to have negative cash flow and net losses
from operations for the foreseeable future. We may never generate sufficient
revenues to achieve or sustain profitability or generate positive cash flow.
THE UNPREDICTABILITY OF OUR QUARTER-TO-QUARTER RESULTS COULD CAUSE OUR STOCK
PRICE TO BE VOLATILE OR DECLINE.
Our future operating results may vary significantly from quarter to quarter
due to a variety of factors, many of which are outside our control. Our expense
levels are based primarily on our estimates of future revenues and are largely
fixed in the short term. Due in large part to our uncertainty regarding the
success of our services, we cannot predict with certainty our quarterly revenues
and operating results. We may be unable to adjust spending rapidly enough to
compensate for any unexpected revenue shortfall caused by factors such as
delayed or lack of market acceptance of our services. Further, we believe that
period-to-period comparisons of our operating results are not necessarily a
meaningful indication of future performance, especially in light of the
significant changes in our business that we have undertaken. It is possible that
in one or more future quarters, our results may fall below the expectations of
securities analysts or investors. If this occurs, the trading price of our
common stock would likely be volatile or decline.
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OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has been volatile in the past and may
be volatile in the future. The market price of our common stock may be
significantly affected by various factors, including but not limited to:
- Fluctuations in our operating results;
- Changes in financial estimates by securities analysts or our failure to
perform in line with these estimates;
- Timing of large national retailers and suppliers subscribing to our
services;
- Changes in market valuations of other technology companies;
- Announcements by us or our potential competitors relating to significant
technical innovations, acquisitions, strategic alliances and
relationships, joint ventures or investments;
- Departures of key personnel; and
- Downturns in the general economy.
IF OUR STRATEGIC ALLIANCES AND RELATIONSHIPS DO NOT PRODUCE THE ANTICIPATED
BENEFITS OR IF WE ARE UNABLE TO ENTER INTO ADDITIONAL FUTURE ALLIANCES AND
RELATIONSHIPS, OUR SERVICES MAY NOT ACHIEVE MARKET ACCEPTANCE.
Our business depends substantially on developing and maintaining strategic
alliances and relationships to develop, market and sell our services. We believe
our current and future strategic alliances and relationships will help us to
validate our technology, facilitate broad market acceptance of our services and
enhance our sales and marketing. Our current strategic alliances and
relationships may not provide the benefits we expect or the access to new
customers we anticipate, and they may not be sustained on favorable terms, if at
all. Further, we may not be able to enter into successful new strategic
alliances and relationships in the future. If we are unable to develop key
alliances and relationships or maintain and enhance existing alliances and
relationships, our business, operating results and financial condition would be
harmed.
A PROMISSORY NOTE WE ISSUED TO HEWLETT-PACKARD HAS LEVERAGED US CONSIDERABLY,
CAUSING FINANCIAL AND OPERATING RISK, AND MAY RESULT IN SIGNIFICANT DILUTION TO
OUR STOCKHOLDERS.
As a result of our issuing a $6.0 million subordinated secured convertible
promissory note to Hewlett-Packard, our debt service requirements will increase
substantially when we are required to repay the note in February 2004. The
degree to which we are leveraged could materially adversely affect our ability
to obtain future financing and could make us more vulnerable to industry
downturns, general economic downturns and competitive pressures. Our ability to
meet our debt obligations will be dependent upon our future performance, which
will be subject to financial, business and other factors affecting our
operations. Additionally, beginning in August 2000, all principal and interest
due under the note may be converted into shares of our common stock at $1.75 per
share, a substantial discount from our current stock price, which would result
in substantial dilution to our stockholders.
WE ARE DEPENDENT UPON THE OPERATION OF HEWLETT-PACKARD'S DATA CENTER FOR THE
TIMELY AND SECURE DELIVERY OF OUR SERVICES.
We use Hewlett-Packard's data center as the host for our services. We are
dependent on our continued relationship with Hewlett-Packard and on their data
center for the timely and secure delivery of our services. If Hewlett-Packard's
data center fails to meet our expectations in terms of reliability and security,
our ability to deliver our services will be seriously harmed, resulting in the
potential loss of customers and subscription revenue. Furthermore, if our
relationship with Hewlett-Packard were terminated, we would be forced to find
another service provider to host our services. The transition to
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another service provider could result in interruptions of our services and could
increase the cost of providing our services.
OUR SINGLE-SITE INFRASTRUCTURE AND SYSTEMS MAY BE VULNERABLE TO NATURAL
DISASTERS AND OTHER UNEXPECTED EVENTS, AND LOSSES WE INCUR AS A RESULT OF THESE
EVENTS COULD EXCEED THE AMOUNT OF INSURANCE WE CARRY.
The performance of our server and networking hardware and software
infrastructure is critical to our business, reputation and ability to provide
high quality services and attract and retain users of our services. We depend on
our single-site infrastructure and systems which are located at a secure,
underground Hewlett-Packard facility in Atlanta, Georgia. Any disruption to this
infrastructure resulting from a natural disaster or other event could result in
an interruption in our services. These interruptions, if sustained or repeated,
could impair our reputation, the quality of our services and our ability to
attract and retain users of our services.
Our systems and operations may be vulnerable to damage or interruption from
human error, natural disasters, power loss, telecommunications failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. We do not have a formal disaster recovery plan or alternative provider
of hosting services. In addition, our business interruption insurance may not be
sufficient to compensate us for losses that could occur. Any system failure that
causes an interruption in services could result in fewer transactions and, if
sustained or repeated, could impair our reputation and the attractiveness of our
services or prevent us from providing our services entirely.
THE ROYALTIES WE MUST PAY TO ERNST & YOUNG AND I2 TECHNOLOGIES COULD ADVERSELY
AFFECT OUR ABILITY TO BECOME PROFITABLE.
Pursuant to an alliance agreement, we must pay Ernst & Young a royalty of
7% of our total revenues, excluding any revenues derived from Ernst & Young
audit clients, until May 2001. Upon meeting specified milestones relating to
significant Ernst & Young clients becoming our customers, these royalty payments
to Ernst & Young will continue in perpetuity.
Pursuant to a separate alliance agreement, we must pay i2 Technologies a
royalty of 5% of syncLink and Chain Pricing subscription services revenues over
the term of the agreement through December 31, 2003. The royalty payments we are
obligated to pay could inhibit our ability to become profitable and could have
an adverse effect on our operating results and financial condition.
WE EXPECT TO FACE INCREASED COMPETITION. IF WE ARE UNABLE TO COMPETE
SUCCESSFULLY, OUR BUSINESS WILL BE HARMED.
Currently, we do not know of any direct competition for our electronic
commerce services. However, we believe direct competition for our services will
develop and increase in the future. If we face increased competition, we may not
be able to sell our viaLink services on terms favorable to us. Furthermore,
increased competition could reduce our market share or require us to reduce the
price of our services.
To achieve market acceptance and thereafter to increase our market share,
we will need to continually develop additional services and introduce new
features and enhancements. Our potential competitors may have significant
advantages over us, including:
- Significantly greater financial, technical and marketing resources;
- Greater name recognition;
- Broader range of products and services; and
- Larger customer bases.
Consequently, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements.
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WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS TO REMAIN
COMPETITIVE.
The Web-based electronic commerce market is characterized by rapid changes
due to technological innovation, evolving industry standards and changes in
subscriber needs. Our future success will depend on our ability to continue to
develop and introduce a variety of new services and enhancements that are
responsive to technological change, evolving industry standards and customer
requirements on a timely basis. We cannot be certain that technological
developments and products and services our competitors introduce will not cause
our existing services, and new technologies in which we invest, to become
obsolete.
OUR OPERATING RESULTS MAY BE HARMED IF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE
OVER THE INTERNET DOES NOT CONTINUE TO GAIN ACCEPTANCE, PARTICULARLY IN THE
CONSUMER PACKAGED GOODS AND GROCERY INDUSTRIES.
Our ability to achieve market acceptance depends upon the consumer packaged
goods and grocery industries' widespread acceptance of the Internet as a vehicle
for business-to-business electronic commerce. There are a number of critical
issues concerning commercial use of the Internet, including security,
reliability, cost, quality of service and ease of use and access. Organizations
that have already invested substantial resources in other means of exchanging
information may be reluctant to implement Internet-based business strategies. We
cannot assure you that Internet-based information management utilizing viaLink,
or any other product, will become widespread. If the Internet fails to become
widely accepted by the consumer packaged goods and grocery industries, our
subscribers may be forced to use private communications networks which would
materially adversely affect our operating results.
UNDETECTED SOFTWARE ERRORS OR FAILURES FOUND IN OUR PRODUCTS MAY RESULT IN LOSS
OF OR DELAY IN MARKET ACCEPTANCE OF OUR PRODUCTS WHICH COULD MATERIALLY
ADVERSELY AFFECT OUR OPERATING RESULTS.
Errors or defects in our products may result in loss of revenues or delay
in market acceptance and could materially adversely affect our business,
operating results and financial condition. Applications such as ours may contain
errors or defects, sometimes called "bugs," particularly when first introduced
or when new versions or enhancements are released. Despite our testing, current
versions, new versions or enhancements of our products may still have defects
and errors after commencement of commercial operation. As a result of "bugs" in
our software, customers may experience data loss, data corruption or other
business disruption, which could subject us to potential liability.
PERFORMANCE PROBLEMS WITH OUR DATABASE OR SOFTWARE COULD SUBJECT US TO PRODUCT
LIABILITY CLAIMS WHICH, WHETHER OR NOT SUCCESSFUL, COULD MATERIALLY ADVERSELY
AFFECT OUR BUSINESS.
Our subscribers depend on our database to provide, access, manage and share
item, pricing and promotion information in an efficient and cost-effective
manner. Any errors, defects or other performance problems with our database,
software or services could result in financial or other damages to our
subscribers. A product liability claim, whether or not successful, could damage
our reputation and our business, operating results and financial condition. Our
service agreements with our subscribers typically contain provisions designed to
limit our exposure to potential liability claims. However, these contract
provisions may not preclude all potential claims. Product liability claims in
excess of insurance limits could require us to spend significant time and money
in litigation or to pay significant damages.
THE SECURITY OF OUR DATABASE COULD BE BREACHED, WHICH COULD DAMAGE OUR
REPUTATION AND DETER CUSTOMERS FROM USING OUR SERVICES.
We must protect our computer systems and networks from break-ins, security
breaches and other disruptive problems associated with the unauthorized use of
the Internet. Our database and services may be vulnerable to break-ins and
similar security breaches that jeopardize the security of the information stored
in our database and transmitted through our computer systems and networks and
those of our subscribers. In addition, we could, in the future, be subjected to
denial of service, vandalism and other attacks on our systems by Internet
hackers. Due to the highly proprietary information that we retain in our
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database, any security breach could adversely affect our ability to attract and
retain subscribers, damage our reputation and subject us to litigation.
Moreover, the security and privacy concerns of potential subscribers, as well as
concerns related to computer viruses, may inhibit the marketability of our
services.
Our services contain security protocols. We have also contracted with
third-party providers to provide security protocols for the transmission of data
over the Internet. Although we intend to continue our current security efforts
and to implement security technology and operational procedures to prevent
break-ins, damage and failures, these security efforts may fail. Our insurance
coverage may be insufficient in certain circumstances to cover claims that may
result from these events.
WE EXPECT OUR PLANNED AGGRESSIVE GROWTH TO STRAIN OUR RESOURCES.
We intend to expand our operations rapidly in the foreseeable future to
pursue existing and potential market opportunities. If this rapid growth occurs,
it will place significant demands on our management and operational resources.
We will need to hire additional sales and marketing, research and development
and technical personnel to increase and support our sales. We will also need to
hire additional support and administrative personnel, expand our customer
service capabilities, contract for third-party implementation resources and
expand our information management systems. From time to time, we have
experienced, and we expect to continue to experience, difficulty in hiring and
retaining talented and qualified employees. Our failure to attract and retain
the highly trained technical personnel that are essential to our product
development, marketing, service and support teams may limit the rate at which we
can generate revenue and develop new products or product enhancements. In order
to manage our growth effectively, we must implement and improve our operational
systems, procedures and controls on a timely basis. If we fail to implement and
improve these systems, our business, operating results and financial condition
may be materially adversely affected.
WE PLAN TO EXPAND INTO INTERNATIONAL MARKETS, WHICH WILL CAUSE OUR BUSINESS TO
BECOME SUSCEPTIBLE TO ADDITIONAL RISKS.
As part of our strategy, we plan to expand our presence and the sales of
our services outside the United States. Conducting international operations
would subject us to risks we do not face in the United States including:
- Currency exchange rate fluctuations;
- Unexpected changes in regulatory requirements;
- Longer accounts receivable payment cycles and difficulties in collecting
accounts receivables;
- Difficulties in managing and staffing international operations;
- Potentially adverse tax consequences, including restrictions on the
repatriation of earnings;
- The burdens of complying with a wide variety of foreign laws and
regulatory requirements;
- Reduced protection for intellectual property rights in some countries;
and
- Political and economic instability.
Each country may have unique operational characteristics in each of their
CPG and grocery industries that may require significant modifications to our
existing services. In addition, we have limited experience in marketing, selling
and supporting our services in foreign countries. Development of these skills
may be more difficult or take longer than we anticipate, especially due to
language barriers, currency exchange risks and the fact that the Internet may
not be used as widely in other countries, and the adoption of electronic
commerce may evolve slowly or may not evolve at all. As a result, we may not be
successful in marketing our services to retailers and suppliers in markets
outside the United States.
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WE PLAN TO MOVE OUR CORPORATE HEADQUARTERS TO DALLAS, TEXAS. THIS MOVE MAY
ADVERSELY AFFECT OUR OPERATIONS AND CAUSE US TO LOSE KEY PERSONNEL.
We intend to move our corporate headquarters from Edmond, Oklahoma to
Dallas, Texas within the next 12 months. We believe the move to Dallas will give
us greater access to technology and development personnel and resources. We
expect this move will place a significant strain on our operations and may cause
us to lose some of our employees, particularly our development staff. While we
anticipate that many of our employees will accept positions with us in Dallas,
we cannot assure you that all of our employees will be willing to relocate. If
we were to lose a significant number of employees, our management would have to
devote a significant amount of their time to recruiting and training efforts and
our business, financial condition and operating results may be materially
adversely affected. In addition, the lease on our facilities in Oklahoma extends
until 2005. If we are unable to sublease or assign these premises on acceptable
terms or if our landlord refuses to release us from our obligations under the
lease, we will remain liable for all or a portion of the remaining rental
payments, which would negatively affect our operating results.
OUR SUCCESS IS SUBSTANTIALLY DEPENDENT ON OUR ABILITY TO RETAIN AND ATTRACT KEY
PERSONNEL.
Our future performance depends on the continued service of our key senior
management team, Smalltalk programmers and sales personnel. The loss of the
services of one or more of our key personnel, in particular Lewis B. Kilbourne,
our Chief Executive Officer, could seriously harm our business. On October 1,
1998, we entered into an employment agreement with Dr. Kilbourne. This agreement
has a three-year term, with year-to-year renewals. We do not maintain a key man
life insurance policy for Dr. Kilbourne. Our future success also depends on our
continuing ability to attract, hire, train and retain a substantial number of
highly skilled managerial, technical, sales, marketing and customer support
personnel. Competition for qualified personnel is intense, and we may fail to
retain our key employees or to attract or retain other highly qualified
personnel.
IF WE MAKE FUTURE ACQUISITIONS OR ENTER INTO JOINT VENTURES OR ADDITIONAL
ALLIANCE ARRANGEMENTS, OUR MANAGEMENT'S ATTENTION MAY BE DIVERTED FROM OUR
OPERATIONS, WE MAY INCUR ADDITIONAL LIABILITIES AND WE MAY NOT SUCCESSFULLY
INTEGRATE ACQUIRED OPERATIONS.
In the future we may acquire additional businesses, products and
technologies, or enter into joint ventures or alliance arrangements that could
complement or expand our business. Management's negotiations of potential
acquisitions or joint ventures and alliance agreements and management's
integration of acquired businesses, products or technologies could divert their
time and resources. Any future acquisitions could require us to issue dilutive
equity securities, incur debt or contingent liabilities, amortize goodwill and
other intangibles or write-off in-process research and development and other
acquisition-related expenses. Further, we may not be able to successfully
integrate any acquired business, product or technology into our existing
operations or retain the key employees of the acquired business. If we are
unable to fully integrate an acquired business, product or technology, we may
not receive the intended benefits of that acquisition.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES.
Our success is in part dependent upon our proprietary software technology.
Companies in the software industry have experienced substantial litigation
regarding intellectual property. Our subscription agreements contain provisions
prohibiting the unauthorized use, copying and transfer of our proprietary
information. We own no patents; rather, we rely on a combination of trade
secret, copyright and trademark laws as well as non-disclosure and
confidentiality agreements to protect our proprietary technology. However, these
measures provide only limited protection, and we may not be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.
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Any litigation to enforce our intellectual property rights may divert
management resources and may not be adequate to protect our business. We also
could be subject to claims that we have infringed the intellectual property
rights of others. In addition, we may be required to indemnify our subscribers
for similar claims made against them. Any claims against us or any claims we may
seek to bring against others could require us to spend significant time and
money in litigation, pay damages, develop new intellectual property or acquire
licenses to intellectual property that is the subject of the infringement
claims. These licenses, if required, may not be available on acceptable terms.
Intellectual property claims against us could have a material adverse effect on
our business, operating results and financial condition.
WE DEPEND ON THIRD-PARTY TECHNOLOGY FOR USE IN OUR PRODUCTS. IF WE ARE UNABLE TO
CONTINUE TO USE THESE SOFTWARE LICENSES, OUR BUSINESS MAY BE MATERIALLY
ADVERSELY AFFECTED.
We currently, and in the future we expect to continue to, license or
otherwise obtain access to intellectual property of third parties. We rely upon
software that we license from third parties, including software that is
integrated with our internally developed software and used in our products to
perform key functions. These third-party software licenses may not continue to
be available to us on commercially reasonable terms. The loss of, or inability
to maintain or obtain, any of these software licenses, could result in delays in
our ability to provide our services or in reductions in the services we provide
until we integrate equivalent software that we develop internally or that we
identify and license from a third-party. Any delay in product development or in
providing our services could damage our business, operating results and
financial condition.
OUR CUSTOMER BASE IS CONCENTRATED AND OUR SUCCESS DEPENDS IN PART ON OUR ABILITY
TO RETAIN EXISTING CUSTOMERS AND SUBSCRIBERS.
If one or more of our major customers were to substantially reduce or
terminate their use of our services, our business, operating results and
financial condition would be harmed. In 1999, we derived 70% of our total
revenues from our five largest customers. Our largest customer in 1999 accounted
for approximately 27% of our total revenues. The amount of our revenues
attributable to specific customers is likely to vary from year to year. We do
not have long-term contractual commitments with any of our current subscribers,
and our subscribers may terminate their contracts with little or no advance
notice and without significant penalty. As a result, we cannot be certain that
any of our current subscribers will be subscribers in future periods. A
subscriber termination would not only result in lost revenue, but also the loss
of subscriber references that are necessary for securing future subscribers.
THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO SHARES ELIGIBLE FOR FUTURE
SALE.
Sales of a substantial number of shares of common stock could adversely
affect the market price of the common stock and could impair our ability to
raise capital through the sale of equity securities. As of March 3, 2000, we had
outstanding 19,735,416 shares of common stock. Of these shares:
- 16,047,780 shares are freely tradable without restriction or further
registration under the Securities Act unless purchased by our
"affiliates;" and
- 3,687,636 shares of common stock are "restricted securities" as defined
in Rule 144 of the Securities Act.
An additional 1,541,052 shares of common stock are issuable upon the
exercise of currently exercisable options.
An additional 45,000 shares of common stock are issuable upon the exercise
of currently exercisable warrants. All of the shares issued upon the exercise of
these warrants will be freely tradable.
Pursuant to the $6.0 million subordinated secured convertible promissory
note we issued to Hewlett-Packard, Hewlett-Packard may convert the note into
shares of our common stock at a conversion price of $1.75 per share beginning in
August 2000.
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Pursuant to our agreement with Ernst & Young, Ernst & Young is entitled to
request the registration of 750,000 shares of our common stock which were
purchased by them upon the exercise of a warrant. Pursuant to our agreement with
i2 Technologies, i2 Technologies is entitled to request the registration of
895,536 shares of our common stock which were purchased by them and 746,268
shares of common stock issuable to them upon exercise of a warrant.
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT, DELAY OR
IMPEDE A CHANGE IN CONTROL OF US AND MAY REDUCE THE MARKET PRICE OF OUR COMMON
STOCK.
Provisions of our certificate of incorporation and bylaws, including those
relating to our classified board and our ability to offer "blank check"
preferred stock, could have the effect of discouraging, delaying or preventing a
merger or acquisition that a stockholder may consider favorable. We are also
subject to the anti-takeover laws of Delaware which may discourage, delay or
prevent someone from acquiring or merging with us, which may adversely affect
the market price of our common stock. Please see "Description of
Securities -- Anti-Takeover Effects" for more information concerning
anti-takeover provisions.
SPECIAL PRECAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10KSB contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "intend," "anticipate,"
"believe," "estimate," "continue" and other similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, make projections of our future results of operations or of our
financial condition or state other "forward-looking" information. We believe
that it is important to communicate our future expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or control. The factors listed in the sections captioned "Additional
Factors That May Affect Future Results" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," as well as any
cautionary language in this Form 10KSB, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements.
ITEM 2. DESCRIPTION OF PROPERTY
We currently lease the following facilities under operating leases
- Approximately 30,000 square feet of space in Edmond, Oklahoma for our
corporate headquarters under a ten-year lease expiring on June 30, 2006.
The lease requires monthly rental payments of $27,500 until June 2001,
and $28,750 during the remaining term of the lease. Netplex currently
subleases approximately 18,000 square feet of the office facility from
the Company for monthly rental payments of approximately $17,100.
- Approximately 21,700 square feet of space in Dallas, Texas for our
executive and financial offices under a lease expiring on October 31,
2001. The lease requires monthly rental payments over the term of the
lease of $21,145 subject to normal operating expense escalations
beginning January 2001.
- Approximately 1,950 square feet of space in Chicago, Illinois for our
marketing office under a lease expiring on December 7, 2002. The lease
requires monthly rental payments of $2,607 until November 2000, $2,685
from December 2000 to December 2001, and $2,765 for the remaining term of
the lease.
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We believe that our existing facilities are adequate for our current needs
and that additional space will be available as needed.
ITEM 3. LEGAL PROCEEDINGS
On July 16, 1999, Investor Awareness filed suit against us in the District
Court for Cook County Illinois alleging that we breached a contract between
Investor Awareness and us relating to investor relations services. Investor
Awareness has alleged that we agreed to issue options to it pursuant to the
terms of that contract. Investor Awareness is seeking a declaratory judgment for
the options it allegedly earned under the agreement and for damages of
approximately $67,500 plus costs and attorneys fees. We have filed an answer
stating that we have not breached any of our duties under the contract. We will
vigorously defend the claims of this suit. However, we may not prevail in this
litigation.
There are no other material legal proceedings pending or, to our knowledge,
threatened against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock has been quoted on the Nasdaq SmallCap Market under the
symbol "IQIQ" since November 1996. The following table sets forth, for the
periods indicated, the high and low closing prices of the common stock as
reported by the Nasdaq SmallCap Market.
<TABLE>
<CAPTION>
COMMON STOCK
PRICE
--------------
HIGH LOW
------ -----
<S> <C> <C>
1997:
First Quarter............................................... $ 1.34 $0.92
Second Quarter.............................................. 1.06 0.75
Third Quarter............................................... 1.38 0.77
Fourth Quarter.............................................. 1.13 0.75
1998:
First Quarter............................................... 1.03 0.75
Second Quarter.............................................. 1.23 0.66
Third Quarter............................................... 0.88 0.59
Fourth Quarter.............................................. 2.81 0.61
1999:
First Quarter............................................... 7.75 2.92
Second Quarter.............................................. 5.75 3.31
Third Quarter............................................... 4.61 3.31
Fourth Quarter.............................................. 18.19 4.53
</TABLE>
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DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock and we
do not intend to pay cash dividends on our capital stock in the foreseeable
future. We currently expect to retain any future earnings to fund the operation
and expansion of our business. Any future determination as to the payment of
dividends will be at the discretion of our board of directors. In addition, the
terms of the secured subordinated promissory note we issued to Hewlett-Packard
prohibit us from paying any dividends while any amounts remain outstanding under
this note.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and related notes. The following discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those discussed below and elsewhere in this
Form 10-KSB, particularly under the heading "Additional Factors That May Affect
Future Results."
OVERVIEW
We are a leading provider of subscription-based, business-to-business
electronic commerce services that enable CPG and grocery industry participants
to efficiently manage their highly complex supply chain information. Our
services allow manufacturers, wholesalers, distributors and retailers to
communicate and synchronize item, price and promotion information in a more
cost-effective and accessible way than has been possible using traditional
electronic and paper-based methods.
We were originally formed in 1985 as Applied Intelligence Group, Inc. From
inception, our operations consisted primarily of consulting services related to
the planning, designing, building and installation of computerized information
management systems and computerized checkout or point-of-sale systems in the
retail and distribution industry. We also provided a Web-based human resource
recruiting application.
In 1993, we began the design and development of viaLink, an Internet-based
subscription service to complement our existing consulting business. We
introduced the syncLink service, formerly marketed and sold as Item Catalog, in
January 1997. In 1998, we made the strategic decision to focus exclusively on
our viaLink services. As a result, we sold our management consulting and systems
integration assets to The NetPlex Group, Inc. in September 1998 and changed our
name to The viaLink Company in October 1998. In December 1998, we sold ijob, our
wholly-owned subsidiary which operated our Web-based human resources recruiting
application, to DCM Company.
Prior to 1999, we derived substantially all of our revenues from our
consulting and systems integration assets. As a result of the sales of our
management consulting and systems integration assets and ijob, we resemble a
development stage company because our planned principal operations have not yet
generated significant revenues. This fundamental change in our business is
extremely risky, and we cannot be certain that our strategic decision to shift
our focus from our historical businesses to our viaLink services ultimately will
be successful.
We expect to generate our future revenues primarily from monthly
subscriptions to our services. For use of our syncLink service, retailers pay us
based on the number of suppliers from whom they receive data and suppliers pay
us based on the number of retailers that subscribe to their data. Our basic
syncLink subscription service fee is a monthly flat fee per trading partner per
store for direct-store-delivery customers. We have a similar pricing model for
warehouse-delivered products. Our other services, Chain Pricing, Item Movement
and Scan Based Trading, are available for additional fees. Previously, we priced
our services based on a flat monthly subscription rate with no variable
component for the number of stores or warehouse connections.
We also charge an implementation fee ranging from $1,200 for an on-line
implementation to over $100,000 for more complex supplier and retailer
installations. Our implementation fees are separately priced based on time and
materials. Implementation costs consist primarily of labor by technical support
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personnel to configure customer data and establish a connection to our services.
Our typical implementation fee is approximately $20,000. Additionally, we
receive revenues from the performance of certain Web-hosting services, but we
expect to reduce our focus and reliance on providing these services in the
future.
We recognize revenues for our subscription and Web-hosting services as they
are provided. Revenues collected in advance are deferred and recognized as
earned. Revenues for implementations are recognized as the implementations are
completed. We have agreed to pay a royalty of up to 7% of our total revenues to
Ernst & Young and 5% of our syncLink and Chain Pricing subscription revenues to
i2 Technologies.
We reported a substantial loss from operations for the fiscal year ended
December 31, 1999 and we expect to report substantial losses for the foreseeable
future. The extent of these losses will depend primarily on the amount of
revenues generated from implementations of and subscriptions to our viaLink
services, which have not yet achieved market acceptance or significant market
penetration. In order to achieve market penetration, we expect to continue our
high level of expenditures for sales and marketing and development of our
viaLink services. These expenses substantially exceed our revenues, which to
date have been minimal. As a result, we expect to incur losses in future periods
until such time as the recurring revenues from these services are sufficient to
cover expenses.
RESULTS OF OPERATIONS
The sale of our consulting and systems integration assets was effective
September 1, 1998, and the sale of ijob was effective December 31, 1998. As a
result of the sale of our consulting and systems integration assets, we are no
longer a reseller of hardware and software. Consequently, our results of
operations for the year ended December 31, 1999 do not include the results of
operations related to the consulting and systems integration assets or the
operations of ijob. Our results of operations for the years ended December 31,
1997 and 1998 include the sales, expenses and results of operations related to
the consulting and systems integration assets through August 31, 1998 and the
operations of ijob for the entire period. Therefore, the results of operations
for the year ended December 31, 1999 are not comparable to the year ended
December 31, 1998 and the results of operations for the year ended December 31,
1998 are not comparable to the year ended December 31, 1997
Comparison of 1999 to 1998
Revenues. Our total revenues decreased 93%, from $8.2 million for the
fiscal year ended December 31, 1998, to $616,000 for the fiscal year ended
December 31, 1999. The decrease in revenues was the result of the sales of our
management consulting and systems integration assets and ijob.
Direct Cost of Sales. Direct cost of sales consists of purchased hardware
and certain software for resale, and costs associated with viaLink's proprietary
software products. Direct cost of sales were eliminated in 1999 as the result of
the sale of our consulting and systems integration assets in 1998.
Customer Operations. Customer operations expense consists of personnel
costs associated with implementation, consulting and other services and costs of
operating, maintaining and accessing our technical operations and hosting
facilities. Customer operations expense also includes the cost of providing
support and maintenance to customers. Our customer operations expense decreased
29%, from $3.8 million for the fiscal year ended December 31, 1998, to $2.7
million for the fiscal year ended December 31, 1999. This decrease was largely
due to a decrease in the personnel costs which resulted from the sale of the
consulting and systems integration assets during 1998.
Development. Development expense includes personnel and contract labor
costs and professional fees incurred for product development, enhancements,
upgrades, quality assurance and testing. Our development expenses increased
132%, from $1.2 million for the fiscal year ended December 31, 1998, to $2.8
million for the fiscal year ended December 31, 1999. This increase was due
primarily to an increase in development staff from 15 persons at January 1, 1999
to 27 persons at December 31, 1999. Additionally, $487,000 of non-cash service
costs is included in development expense in 1999 for the
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amortization of a portion of the fair value of the warrants issued to Ernst &
Young and i2 Technologies, reflecting the development efforts provided by these
alliance partners. We are utilizing and will increase our reliance on our
alliance partners and other vendors to advance our development efforts. We are
currently undertaking various projects that we expect will result in continued
increases in these types of expenses for the foreseeable future.
Selling and Marketing. Selling and marketing expense consists primarily of
personnel costs, commissions, travel, promotional events, including trade shows,
seminars and technical conferences, advertising and public relations programs.
Selling and marketing expense increased 570%, from $436,000 for the fiscal year
ended December 31, 1998, to $2.9 million for the fiscal year ended December 31,
1999. This increase in selling and marketing expense was primarily due to (a)
the expansion of our sales, business development and marketing team from four
persons at January 1, 1999 to 15 persons at December 31, 1999, resulting in
$900,000 in increased personnel costs, (b) our new marketing and promotional
program to promote our viaLink services, resulting in approximately a $1.1
million increase in advertising, travel and other fees and (c) $487,000 of
non-cash service costs for the amortization of a portion of the fair value of
the warrants issued to Ernst & Young and i2 Technologies reflecting the selling
and marketing efforts provided by these alliance partners. We expect these types
of expenses will continue to increase in the foreseeable future.
General and Administrative (G&A). G&A expense consists primarily of the
personnel and other costs of the finance, human resources, administrative and
executive departments and the fees and expenses associated with legal,
accounting and other services. G&A expense increased 138%, from $2.3 million for
the fiscal year ended December 31, 1998, to $5.4 million for the fiscal year
ended December 31, 1999. This increase in G&A expense is primarily attributable
to the recruiting, staffing and relocation of key executive and management staff
and the related increase in personnel expenses for the administrative
infrastructure built to support future operations. In addition, G&A expense also
increased due to an increase in legal, consulting and other professional fees.
As a result of our significant efforts to develop internal processes and
infrastructure to support the expected increase in operational activity and
scale, we anticipate that our G&A expense will continue to increase in absolute
dollars for the foreseeable future.
Depreciation and Amortization. Depreciation and amortization expense
increased 30%, from $458,000 for the fiscal year ended December 31, 1998, to
$594,000 for the fiscal year ended December 31, 1999. This increase reflects the
effect of $2.3 million in capital expenditures in 1999 for new computer hardware
and software to support the viaLink services. This effect is partially offset by
the sale of our consulting and systems integration assets on September 1, 1998,
and the sale of ijob on December 31, 1998.
Interest Expense, Net. Interest expense, net, increased from $161,000 for
the fiscal year ended December 31, 1998, to $4.0 million for the fiscal year
ended December 31, 1999. This increase is due to the promissory note we issued
to Hewlett-Packard for $6.0 million at 11.5% interest, plus the amortization of
the beneficial conversion feature of the note as more fully discussed in Note 5
to the financial statements. We will continue to record non-cash interest
charges of approximately $1.0 million per quarter until the conversion date of
August 5, 2000. Interest expense is offset by interest income on short-term
investments.
Gain on Sale of Assets. Gain on sale of assets decreased 62%, from $3.3
million for the fiscal year ended December 31, 1998, to $1.3 million for the
fiscal year ended December 31, 1999. On March 11, 1999, DCM Company paid the
note receivable of $800,000 plus accrued interest in full due to us in
connection with the sale of ijob, and we recognized the deferred gain of
$462,000 during the first quarter of 1999. We also recorded $801,000 of income
under the earn-out agreement with NetPlex during 1999. Due to the potential for
non-payment, no amounts have been recorded under the NetPlex earn-out agreement
subsequent to September 30, 1999. We will continue to record income under the
earn-out agreement as we receive payments.
Realized Gain on Sale of Marketable Securities. During the second quarter
of 1999, we converted 643,770 shares of NetPlex preferred stock we received as
consideration for the sale of the consulting assets into 643,770 shares of
freely-tradable common stock of NetPlex. In December 1999, we sold all of our
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<PAGE> 29
shares of NetPlex common stock for proceeds of $4.9 million. This sale resulted
in a realized gain of $3.9 million recorded for the fiscal year ended December
31, 1999.
Tax Provision. Deferred tax assets and deferred tax liabilities are
separately recognized and measured at currently enacted tax rates for the tax
effect of temporary differences between the financial reporting and tax
reporting bases of assets and liabilities, and net operating loss and tax credit
carryforwards for tax purposes. A valuation allowance must be established for
deferred tax assets if it is "more likely than not" that all or a portion will
not be realized. Prior to the third quarter of 1998, we had recorded a tax
benefit of $1.0 million related to the pre-tax losses incurred in prior years,
and no valuation allowance had been established prior to the third quarter of
1998. As a result of the net gain on the sale of our consulting and systems
integration assets, the deferred tax asset of $1.0 million was realized and a
valuation allowance of $190,000 was established for the remaining net deferred
tax asset as of September 30, 1998. The deferred tax asset at December 31, 1998
and December 31, 1999, generated by losses recorded in the fourth quarter of
1998 and during 1999, is offset by a full valuation allowance. We will continue
to provide a full valuation allowance for future and current net deferred tax
assets until such time as we believe it is more likely than not that the asset
will be realized.
Other Comprehensive Income. Other comprehensive income for the fiscal year
ended December 31, 1998 includes an unrealized loss of $316,000, representing
the net decrease in market value of the 643,770 shares of NetPlex stock received
as consideration from the sale of our consulting and systems integration assets
from September 1, 1998 to December 31, 1998. During 1999, and through the date
of sale of the NetPlex shares, we continued to record other comprehensive income
for the fluctuations in market value. All such unrealized gains were realized as
gain on sale of securities in December 1999.
Comparison of 1998 to 1997
Revenues. Our total revenues decreased 9%, from $9.0 million for the fiscal
year ended December 31, 1997, to $8.2 million for the fiscal year ended December
31, 1998. This decrease in revenues was primarily attributable to the sale of
our consulting assets.
Direct Cost of Sales. Direct cost of sales decreased 29%, from $2.2 million
for the fiscal year ended December 31, 1997, to $1.6 million for the fiscal year
ended December 31, 1998. This decrease corresponded with the decrease in
hardware and product sales, offset by an increase in consulting and proprietary
solution sales for the fiscal year ended December 31, 1998.
Customer Operations. Customer operations expense decreased by 17%, from
$4.5 million for the fiscal year ended December 31, 1997, to $3.8 million for
the fiscal year ended December 31, 1998. This decrease was due to the sale of
our consulting and systems integration assets.
Development. Development expense increased 7%, from $1.1 million for the
fiscal year ended December 31, 1997 to $1.2 million for the fiscal year ended
December 31, 1998. This increase was due primarily to increased development
activity for our services. We incurred costs of approximately $1.9 million and
$1.8 million for product development in 1997 and 1998, respectively. For the
same periods we capitalized $752,000 and $617,000, respectively, in software
development costs.
Selling and Marketing. Selling and marketing expense decreased 38%, from
$709,000 for the fiscal year ended December 31, 1997, to $436,000 for the fiscal
year ended December 31, 1998. This decrease was primarily a result of management
initiatives to improve cash flow by reducing sales and marketing expense.
General and Administrative. G&A expense decreased 20%, from $2.8 million
for the fiscal year ended December 31, 1997, to $2.3 million for the fiscal year
ended December 31, 1998. This decrease was primarily as a result of management
initiatives to improve cash flow by reducing G&A expense.
Depreciation and Amortization. Depreciation and amortization expense
decreased 9%, from $503,000 for the fiscal year ended December 31, 1997, to
$458,000 for the fiscal year ended December 31, 1998.
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This decrease is due to decreased depreciation and amortization related to the
consulting assets sold in 1998.
Interest Expense, Net. Interest expense, net, increased from $74,000 for
the fiscal year ended December 31, 1997, to $161,000 for the fiscal year ended
December 31, 1998. This increase was due to increased borrowing under our line
of credit in 1998.
Gain on Sale of Assets. As a result of the sale of our consulting and
systems integration assets, we recorded a one-time net gain of $3.0 million for
the fiscal year ended December 31, 1998. Additionally, we accrued $341,000 under
the earn-out agreement with NetPlex in 1998.
Tax Provision (Benefit). Prior to the third quarter of 1998, we recorded a
tax benefit of $1.0 million related to the pre-tax losses incurred in prior
years, and no valuation allowance was established prior to the third quarter of
1998. As a result of the net gain on the sale of our consulting and systems
integration assets in the third quarter of 1998, the deferred tax asset of $1.0
million was realized and a valuation allowance of $190,000 was established for
the remaining net deferred tax asset as of September 30, 1998. Losses were
incurred in the fourth quarter of 1998, for which no net deferred tax asset was
recorded. We will not record any further tax benefits and deferred tax assets
until such time as management believes it is more likely than not that the asset
may be realized.
Other Comprehensive Loss. Other comprehensive loss of $316,000 is the
result of the write-down to market value at December 31, 1998 of the NetPlex
preferred stock received in connection with the sale of our consulting and
systems integration assets to NetPlex.
LIQUIDITY AND CAPITAL RESOURCES
Due to the sale of our consulting and systems integration assets and the
sale of ijob, we are unable to rely on our historical revenues and expect cash
requirements in connection with sales and marketing and investment in our
viaLink services will be substantial. As a result of these sales, we now
resemble a development stage company because our planned principal operations
have not yet generated significant revenues. As of December 31, 1999, we had
cash, cash equivalents and short-term investments of $15.1 million.
During 1999, we used $8.5 million in operating activities, reflecting a net
loss of $12.6 million. Cash used in operating activities also reflects the
effects of the gain on sale of marketable securities of $3.9 million, $6.5
million for non-cash stock compensation and interest expense for the conversion
feature of the Hewlett-Packard note, $1.0 million of depreciation and
amortization and a $900,000 increase in cash provided by other working capital
changes.
During 1999, we used $3.8 million in investing activities. Cash used in
investment activities consisted primarily of increases in short-term
investments, capital expenditures and capitalized software development costs.
Also included in investing activities were proceeds of $4.9 million received by
us in connection with the sale of our NetPlex common stock. In March 1999, we
received proceeds of $812,444 for payment of the note receivable and accrued
interest due to us in connection with the sale of ijob. Additionally, we
invested $1.3 million in computer hardware, $768,000 in computer software and
$275,000 in various other fixed assets in 1999, compared to $42,000 in total
expenditures in 1998. We also invested $607,000 in software development costs
during 1999, compared to $617,000 in 1998.
During 1999, financing activities provided net cash of $20.2 million,
primarily the result of the investments made by certain of our alliance
partners. Additionally, we received $7.6 million in proceeds from the exercise
of our stock options and warrants, offset in part by approximately $400,000 of
registration costs. In February 1999, we completed a financing with
Hewlett-Packard, whereby Hewlett-Packard provided us with $6.0 million through a
subordinated secured promissory note. In connection with our agreement with
Ernst & Young, which was entered into in May 1999, we issued a warrant to
purchase up to 1,000,000 shares of our common stock at a price of $2.00 per
share. In August 1999, Ernst & Young exercised warrants to purchase 250,000
shares of our common stock resulting in gross proceeds to us of $500,000. In
November 1999, Ernst & Young exercised warrants to purchase the remaining
750,000 shares
27
<PAGE> 31
of our common stock from this agreement, resulting in gross proceeds to us of
$1.5 million. In October 1999, i2 Technologies invested $5.0 million in us in
exchange for 895,536 shares of our common stock and a warrant to purchase up to
an additional 746,268 shares of our common stock at an exercise price of $6.70
per share.
We currently do not have a credit facility available to borrow additional
funds. We have incurred operating losses and negative cash flow in the past and
expect to incur operating losses and negative cash flow for the foreseeable
future. We expect our spending to increase steadily for the foreseeable future
for further technology and product development, increased marketing expenditures
and other technology and database costs. We also expect to hire additional
management and support/service employees. To support this level of spending, we
must use our current cash, cash equivalents and collection of accounts
receivable to operate the business and/or eventually obtain additional
financing. We cannot be certain when operating revenues will exceed operating
costs, if ever.
We believe that our available cash resources will be sufficient to finance
our presently anticipated operating losses and working capital expenditure
requirements for the foreseeable future. Our future capital requirements will
depend on our revenue growth, profitability, working capital requirements, level
of investment in long term assets and other financing sources. Increases in
these capital requirements or a lack of revenue due to delayed or less than
expected market acceptance of our viaLink services would accelerate the use of
our cash, cash equivalents and short-term investments.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes standards for accounting
and reporting for derivative instruments. The effective date for SFAS No. 133,
as amended by SFAS No. 137, is effective for fiscal years beginning after June
15, 2001. We are currently not a party to any derivative instruments and do not
expect the adoption of SFAS No. 133 to have a significant impact on our
financial position or operating results.
ITEM 7. FINANCIAL STATEMENTS
See Index to Financial Statements on Page F-1 of this Annual Report on Form
10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) Previous independent accountants
(i) Effective December 7, 1999, PricewaterhouseCoopers LLP has
resigned as The viaLink Company's independent accountants.
(ii) The reports of PricewaterhouseCoopers LLP on the financial
statements for the past two fiscal years contained no adverse opinion or
disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
(iii) In connection with its audits for the two most recent fiscal
years and through December 7, 1999, there have been no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused them to make reference thereto
in their report on the financial statements for such years.
(b) New independent accountants
(i) The Company engaged KPMG LLP as its new independent accountants as
of December 10, 1999.
(ii) During the Company's most recent two fiscal years, the Company
did not consult with KPMG LLP regarding the application of accounting
principles as to a specified transaction or the
28
<PAGE> 32
type of opinion that might be rendered on the Company's financial
statements or any matter that was either the subject of a disagreement or a
reportable event.
The Company's Board of Directors participated in and approved the
decision to engage KPMG LLP as the Company's new independent accountants.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is set forth under the caption
"Management" in the Company's definitive Proxy Statement (the "Proxy
Statement"), which will be filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 and is
incorporated herein by reference.
ITEM 10. EXECUTIVE COMPENSATION
The information required by this Item is set forth under the caption
"Executive Compensation" in the Proxy Statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 and is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the Proxy
Statement, which will be filed with the Securities and Exchange Commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 and is
incorporated herein by reference.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth under the caption
"Certain Transactions" in the Proxy Statement, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 and is incorporated herein by reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual report on Form
10-KSB:
1. Financial Statements.
See Index to Financial Statements on page F-1 of this Annual Report
on Form 10-KSB
2. Financial Statements Schedules.
Financial statement schedules under the applicable rules and
regulations of the Securities and Exchange Commission have been omitted
as the schedules are not applicable or the information required thereby
is included in the Company's financial statements or notes thereto.
3. Exhibits.
29
<PAGE> 33
The following instruments are included as exhibits to the report.
Exhibits incorporated by reference are so indicated.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1** Agreement and Plan of Merger dated May 8, 1996 by and among
the Registrant, Vantage Capital Resources, Inc., John
Simonelli, Larry E. Howell, Robert L. Barcum, Robert N.
Baker and David B. North
2.2(1) Asset Purchase Agreement dated June 12, 1997 by and among
ijob, Inc., Human Technologies, Inc., David C. Mitchell and
Ron Beasley
2.3(2) Asset Acquisition Agreement dated August 31, 1998 by and
between the Registrant and The NetPlex Group, Inc.
2.4(2) First Amendment to Asset Acquisition Agreement dated
September 9, 1998 by and between Registrant and The NetPlex
Group, Inc.
2.5(2) Stock Purchase Agreement dated December 31, 1998 by and
among Registrant, DCM Company, Inc., David C. Mitchell and
ijob, Inc.
3.1(3) Form of Certificate of Incorporation
3.2(3) Form of Bylaws
4.1(4) Form of Certificate of Common Stock
4.2 See Exhibits 3.1 and 3.2 for provisions of the Registrant's
Certificate of Incorporation and Bylaws defining rights of
holders of common stock of the Registrant
4.3** Form of Underwriter's Warrant Agreement by and between
Barron Chase Securities Inc. and the Registrant
4.4(5) Shareholder Agreement dated as of February 4, 1999 by and
between Registrant and Hewlett-Packard Company
4.5(6) Stock Option Agreement dated as of December 18, 1998 by and
between Registrant and Brian Herman
4.6(7) Registration Rights Agreement dated May 3, 1999 by and
between Registrant and Ernst & Young LLP
4.7(8) Securities Purchase Agreement dated October 12, 1999, by and
between the Registrant and i2 Technologies, Inc.
4.8(8) Common Stock Purchase Warrant dated October 12, 1999, issued
by the Registrant to i2 Technologies, Inc.
4.9(8) Registration Rights Agreement dated October 12, 1999, by and
between the Registrant and i2 Technologies, Inc.
10.1(6) Note Purchase Agreement dated as of February 4, 1999 by and
between the Registrant and Hewlett-Packard Company
10.2** Lease dated October 3, 1994 by and between the Registrant
and Oklahoma Christian Investment Corporation
10.3(3) Form of Subordinated Secured Convertible Promissory Note
dated as of February 4, 1999 issued by the Registrant in
favor of Hewlett-Packard Company
10.4(6) Security Agreement dated as of February 4, 1999 by and
between the Registrant and Hewlett-Packard Company
10.5** Exchange Agreement dated October 14, 1996 by and among the
Registrant, Robert L. Barcum, Robert N. Baker, Russell L.
Reinhardt, David B. North, John Simonelli, and Larry E.
Howell
</TABLE>
30
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.6(2) Earn-out Agreement dated September 30, 1998 by and between
the Registrant and The NetPlex Group, Inc.
10.7(9) Administrative Services Agreement dated August 31, 1998 by
and between the Registrant and The NetPlex Group, Inc
10.8(9) Sublease dated September 1, 1998 by and between Applied
Intelligence Group, Inc. and The NetPlex Group, Inc.
10.9(9) Software Remarketing and Reselling Agreement effective as of
September 1, 1998 by and between the Registrant and The
NetPlex Group, Inc.
10.10(3) Form of Indemnification Agreement dated February 9, 1998 by
and between the Registrant and the Registrant's executive
officers
10.11(3) Employment Agreement dated October 1, 1998 by and between
the Registrant and Lewis B. Kilbourne
10.12(3) Employment Agreement dated October 1, 1998 by and between
the Registrant and Robert N. Baker
10.13(10) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1995 Stock Option Plan, as amended and restated effective
September 1, 1998
10.14(11) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1998 Non-Qualified Stock Option Plan
10.15(12) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1998 Stock Grant Plan
10.16(13) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1997 Employee Stock Purchase Plan
10.17(4) The viaLink Company 1999 Stock Option/Stock Issuance Plan
10.18(14) 1999 Stock Option/Stock Issuance Plan Form of Stock Option
Agreement
10.19(14) 1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
Agreement
10.20(14) 1999 Stock Option/Stock Issuance Plan Form of Automatic
Stock Option Agreement
10.21(4) The viaLink Company 1999 Employee Stock Purchase Plan
10.22(7) Amended and Restated Alliance Agreement dated as of May 3,
1999 by and between the Registrant and Ernst & Young LLP
10.23(7) Master Services Agreement dated May 3, 1999 by and between
the Registrant and Ernst & Young LLP
10.24(8) Alliance and Marketing Agreement dated October 12, 1999, by
and between the Registrant and i2 Technologies, Inc.
10.25(8) Software License dated October 12, 1999, by and between the
Registrant and i2 Technologies, Inc.
10.26 Office Building Sublease effective as of December 16, 1999,
between Kerr-McGee Corporation and the Registrant
10.27 Employment Agreement made as of April 1, 1999, by and
between the Registrant and J. Andrew Kerner
10.28 Employment Agreement made as of April 9, 1999, by and
between the Registrant and David M. Lloyd
10.29 Employment Agreement made as of April 8, 1999, by and
between the Registrant and Robert I. Noe
10.30 Employment Agreement effective January 4, 2000 by and
between the Registrant and Patrick Fitzgerald.
</TABLE>
31
<PAGE> 35
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.31 Form of Addendum to Employment Agreement between the
Registrant and J. Andrew Kerner
10.32 Form of Addendum to Employment Agreement between the
Registrant and David M. Lloyd
10.33 Form of Addendum to Employment Agreement between the
Registrant and Robert I. Noe
21.1(3) Subsidiaries of Registrant
23.1 Consent of KPMG LLP
23.2 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
</TABLE>
- ---------------
** Incorporated herein by reference to the Registrant's Registration Statement
on Form SB-2 (Reg. No. 333-5038-D), as amended.
(1) Incorporated herein by reference to the Registrant's Annual Report on Form
10-KSB for the year ending December 31, 1997.
(2) Incorporated herein by reference to the Registrant's Definitive Information
Statement on Schedule 14-C filed October 15, 1998.
(3) Incorporated herein by reference to the Registrant's Definitive Proxy
Statement on Schedule 14A (File No. 000-21729) filed April 19, 1999.
(4) Incorporated herein by reference to the Registrant's Registration Statement
on Form 8-A/A (File No. 333-05038-D) filed under Section 12(g) of the
Exchange Act.
(5) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated February 4, 1999.
(6) Incorporated herein by reference to the Registrant's Annual Report on Form
10-KSB for the year ending December 31, 1998.
(7) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated May 3, 1999.
(8) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated October 12, 1999.
(9) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated October 27, 1998.
(10) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-69203).
(11) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-69319).
(12) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-47547).
(13) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-30073).
4. Reports on Form 8-K.
The Registrant filed a Current Report on Form 8-K, dated October 4,
1999, reporting pursuant to Item 5 of such Form the Notice of Redemption
of Redeemable Common Stock Purchase Warrants of viaLink Company sent to
the holders of our Redeemable Common Stock Purchase Warrants. This
notice set the redemption date of November 5, 1999.
The Registrant filed a Current Report on Form 8-K, dated October
12, 1999, reporting pursuant to Items 5 and 7 of such Form the
Registrant's strategic relationship with i2 Technologies, Inc., to
integrate certain of the products and services of the Registrant and i2;
32
<PAGE> 36
and i2's investment of $5.0 million in exchange for common stock and
issuance of a warrant to purchase an additional $5.0 million in common
stock.
The Registrant filed a Current Report on Form 8-K, dated November
16, 1999, reporting pursuant to Items 5 and 7 of such Form the
completion of the Registrant's reincorporation in Delaware.
The Registrant filed a Current Report on Form 8-K, dated December
7, 1999, reporting pursuant to Items 4 and 7 of such Form the change in
the Registrant's Certifying Accountants. Effective December 7, 1999,
PricewaterhouseCoopers LLP resigned as The viaLink Company's independent
accountants and the Registrant subsequently engaged KPMG LLP as its new
independent accountants as of December 10, 1999.
The Registrant filed a Current Report on Form 8-K, dated March 1,
2000, reporting pursuant to Items 5 and 7 of such Form the declaration
of a two-for-one split of shares of the Registrant's common stock to be
effected in the form of a stock dividend of one share for each share of
common stock outstanding payable to stockholders of record on March 17,
2000.
33
<PAGE> 37
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, as of the 21st day of March, 2000.
THE VIALINK COMPANY
(Registrant)
By: /s/ LEWIS B. KILBOURNE
----------------------------------
Lewis B. Kilbourne
Chief Executive Officer
By: /s/ J. ANDREW KERNER
----------------------------------
J. Andrew Kerner
Senior Vice President, Finance
Chief Financial Officer
(principal financial and
accounting officer)
34
<PAGE> 38
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
FINANCIAL STATEMENTS OF THE VIALINK COMPANY
Independent Auditors' Reports............................. F-2
The viaLink Company Balance Sheets as of December 31, 1998
and 1999............................................... F-4
The viaLink Company Statements of Operations and
Comprehensive Income (Loss)
for the Years Ended December 31, 1997, 1998 and 1999... F-5
The viaLink Company Statements of Stockholders' Equity for
the Years Ended December 31, 1997, 1998 and 1999....... F-6
The viaLink Company Statements of Cash Flows for the Years
Ended December 31, 1997, 1998 and 1999................. F-7
The viaLink Company Notes to Financial Statements......... F-8
</TABLE>
F-1
<PAGE> 39
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
The viaLink Company:
We have audited the accompanying balance sheet of The viaLink Company as of
December 31, 1999, and the related statements of operations and comprehensive
income (loss), stockholders' equity and cash flows for the year then ended.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The viaLink Company as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
KPMG LLP
Dallas, Texas
February 3, 2000, except as
to Note 13, which is as of
March 1, 2000
F-2
<PAGE> 40
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
The viaLink Company
In our opinion, the accompanying balance sheet and the related statements
of operations and comprehensive income (loss), of stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
The viaLink Company at December 31, 1998, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 1998,
in conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United States,
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.
PRICEWATERHOUSECOOPERS LLP
Oklahoma City, Oklahoma
February 22, 1999, except as to the
stock splits described in Note 8 and
Note 13 relating to the 1997 and
1998 share and per share data,
which is as of March 14, 2000.
F-3
<PAGE> 41
THE VIALINK COMPANY
BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
ASSETS
<TABLE>
<CAPTION>
1998 1999
---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 715,446 $ 8,616,305
Short-term investments, held to maturity.................. -- 6,479,443
Accounts receivable -- trade, net of allowance for
doubtful accounts of $7,841 in 1998 and $41,416 in
1999................................................... 158,117 122,796
Other receivables......................................... 585,778 472,599
Prepaid expenses.......................................... 16,716 395,513
Marketable securities, available for sale................. 684,327 --
---------- ------------
Total current assets.............................. 2,160,384 16,086,656
Furniture, equipment and leasehold improvements, net........ 719,910 2,473,281
Software development costs, net............................. 1,340,230 1,523,588
Note receivable, net of deferred gain on sale............... 337,958 --
Deferred service fees....................................... -- 3,046,302
Other assets................................................ 38,564 108,762
---------- ------------
Total assets...................................... $4,597,046 $ 23,238,589
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $1,066,273 $ 2,236,521
Current portion of capital lease obligations.............. 44,194 --
---------- ------------
Total current liabilities......................... 1,110,467 2,236,521
Long-term debt.............................................. -- 4,230,720
---------- ------------
Total liabilities................................. 1,110,467 6,467,241
Commitments and Contingencies(Notes 7 and 11)
Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares
authorized; 2,826,613 and 19,569,644 shares issued and
outstanding at December 31, 1998 and 1999,
respectively........................................... 2,827 19,570
Additional paid-in capital................................ 4,763,569 31,740,964
Unearned stock compensation............................... -- (1,389,079)
Accumulated deficit....................................... (964,144) (13,600,107)
Accumulated other comprehensive loss...................... (315,673) --
---------- ------------
Total stockholders' equity........................ 3,486,579 16,771,348
---------- ------------
Total liabilities and stockholders' equity........ $4,597,046 $ 23,238,589
========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 42
THE VIALINK COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Revenues............................................. $ 9,022,842 $ 8,230,628 $ 615,519
Operating expenses:
Direct cost of sales............................... 2,211,956 1,563,757 --
Customer operations................................ 4,526,968 3,759,626 2,655,113
Development........................................ 1,131,093 1,205,743 2,803,247
Selling and marketing.............................. 708,652 435,978 2,919,857
General and administrative......................... 2,840,978 2,285,955 5,430,466
Depreciation and amortization...................... 502,559 458,259 594,373
----------- ----------- ------------
Total operating expenses................... 11,922,206 9,709,318 14,403,056
----------- ----------- ------------
Loss from operations................................. (2,899,364) (1,478,690) (13,787,537)
Interest expense, net................................ (73,581) (161,355) (3,983,785)
Gain on sale of assets............................... -- 3,339,123 1,262,921
Realized gain on sale of marketable securities....... -- -- 3,872,438
----------- ----------- ------------
Income (loss) before income taxes.................... (2,972,945) 1,699,078 (12,635,963)
Provision (benefit) for income taxes................. (1,112,127) 1,049,440 --
----------- ----------- ------------
Net income (loss).................................... (1,860,818) 649,638 (12,635,963)
Other comprehensive income (loss):
Unrealized income (loss) on marketable securities,
net of tax...................................... -- (315,673) 315,673
----------- ----------- ------------
Comprehensive income (loss).......................... $(1,860,818) $ 333,965 $(12,320,290)
=========== =========== ============
Net income (loss) per common share --
-- Basic........................................... $ (0.17) $ 0.06 $ (0.96)
=========== =========== ============
-- Diluted......................................... $ (0.17) $ 0.05 $ (0.96)
=========== =========== ============
Weighted average common shares outstanding --
-- Basic........................................... 10,909,752 10,964,164 13,114,028
=========== =========== ============
-- Diluted......................................... 10,909,752 12,409,772 13,114,028
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 43
THE VIALINK COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL UNEARNED OTHER ACCUMULATED
-------------------- PAID-IN STOCK COMPREHENSIVE EARNINGS
SHARES AMOUNTS CAPITAL COMPENSATION INCOME (LOSS) (DEFICIT) TOTAL
---------- ------- ----------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996...... 2,726,500 $2,727 $ 4,491,226 $ -- $ -- $ 247,036 $ 4,740,989
Exercise of stock options..... 444 -- 279 279
Stock issued under employee
stock purchase plan......... 2,565 3 7,483 7,486
Net loss...................... (1,860,818) (1,860,818)
---------- ------- ----------- ----------- -------- ------------ ------------
Balance, December 31, 1997...... 2,729,509 2,730 4,498,988 -- -- (1,613,782) 2,887,936
Exercise of stock options..... 88,610 89 240,303 240,392
Stock issued under employee
stock purchase plan......... 3,461 3 8,555 8,558
Stock issued under employee
bonus plan.................. 5,033 5 15,723 15,728
Net income.................... 649,638 649,638
Unrealized loss on securities
available for sale.......... (315,673) (315,673)
---------- ------- ----------- ----------- -------- ------------ ------------
Balance, December 31, 1998...... 2,826,613 2,827 4,763,569 -- (315,673) (964,144) 3,486,579
Exercise of stock options..... 575,435 575 1,993,311 1,993,886
Stock issued under employee
stock purchase plan......... 172 -- 1,891 1,891
Proceeds from Hewlett-Packard
note........................ 6,000,000 6,000,000
Issuance of stock options to
employees................... 2,185,736 (2,185,736) --
Issuance of stock purchase
warrants.................... 4,006,468 4,006,468
Amortization of unearned stock
compensation................ 796,657 796,657
Proceeds from exercise of
common stock warrants....... 1,068,042 1,068 5,621,192 5,622,260
Exercise of common stock
warrants, Ernst & Young..... 250,000 250 1,999,750 2,000,000
Issuance of common stock for
services.................... 20,480 21 549,639 549,660
Proceeds from issuance of
common stock to i2
Technologies, Inc. ......... 223,884 224 4,999,776 5,000,000
Registration costs............ (365,763) (365,763)
Two-for-one stock split on
November 29, 1999........... 4,820,196 4,820 (4,820) --
Two-for-one stock split on
March 1, 2000 (note 13)..... 9,784,822 9,785 (9,785) --
Unrealized gain on securities,
net of reclassification
adjustment.................. 315,673 315,673
Net loss...................... (12,635,963) (12,635,963)
---------- ------- ----------- ----------- -------- ------------ ------------
Balance, December 31, 1999...... 19,569,644 $19,570 $31,740,964 $(1,389,079) -- $(13,600,107) $ 16,771,348
========== ======= =========== =========== ======== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 44
THE VIALINK COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $(1,860,818) $ 649,638 $(12,635,963)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization........................... 827,396 925,134 1,015,609
Deferred income tax provision (benefit)................. (1,112,127) 1,049,440 --
Gain on sale of assets.................................. -- (2,998,453) (462,042)
Gain on sale of marketable securities................... -- -- (3,872,438)
Amortization of unearned stock compensation............. -- -- 796,657
Amortization of deferred service fee.................... -- -- 960,166
Loss on disposal of fixed assets........................ -- 12,694 --
Non-cash interest expense on convertible debt........... -- -- 4,230,720
Professional fees paid with common shares............... -- -- 549,660
Increase (decrease) in cash for changes in:
Accounts receivable, net.............................. 672,515 1,054,162 35,321
Other receivables..................................... 269,981 (540,885) 113,179
Prepaid expenses and other assets..................... 127,830 32,407 (448,995)
Accounts payable and accrued liabilities.............. 428,512 (397,899) 1,170,248
Deferred revenue...................................... (96,315) (236,134) --
----------- ----------- ------------
Net cash used in operating activities.............. (743,026) (449,896) (8,547,878)
----------- ----------- ------------
Cash flows from investing activities:
Proceeds from sale of assets, net of costs................ -- 2,607,731 --
Proceeds from sale of marketable securities............... -- -- 4,872,438
Capital expenditures...................................... (332,987) (41,785) (2,345,157)
Collection on note receivable from sale of ijob........... -- -- 800,000
Purchase of short-term investments........................ -- -- (9,099,443)
Proceeds upon maturity of short-term investments.......... -- -- 2,620,000
Capitalized expenditures for software development......... (752,158) (617,180) (607,181)
----------- ----------- ------------
Net cash provided by (used in) investing
activities....................................... (1,085,145) 1,948,766 (3,759,343)
----------- ----------- ------------
Cash flows from financing activities:
Decrease in bank overdraft................................ (261,141) (23,619) --
Proceeds from convertible debt............................ -- -- 6,000,000
Proceeds from long-term debt.............................. 1,270,000 3,522,639 --
Proceeds from stockholder notes........................... 6,455 -- --
Proceeds from exercise of stock option and purchase
plans................................................... 7,765 264,678 1,995,777
Proceeds from exercise of common stock purchase warrants,
net of registration costs............................... -- -- 7,256,497
Proceeds from issuance of common stock to i2
Technologies, Inc. ..................................... -- -- 5,000,000
Payments of capital lease obligations..................... (135,153) (132,422) (44,194)
Payment of stockholder notes.............................. (20,000) (482,830) --
Payments of long-term debt................................ (780,000) (4,012,639) --
----------- ----------- ------------
Net cash provided by (used in) financing
activities....................................... 87,926 (864,193) 20,208,080
----------- ----------- ------------
Net increase (decrease) in cash and cash equivalents........ (1,740,245) 634,677 7,900,859
Cash and cash equivalents, beginning of period.............. 1,821,014 80,769 715,446
----------- ----------- ------------
Cash and cash equivalents, end of period.................... $ 80,769 $ 715,446 $ 8,616,305
=========== =========== ============
Supplemental disclosures of cash flow information:
Cash paid for interest.................................... $ 123,778 $ 220,553 $ --
=========== =========== ============
Cash paid for income taxes, net of refunds................ $ 114,852 $ 26,454 $ --
=========== =========== ============
Supplemental schedule of non-cash investment activities:
Issuance of stock purchase warrants for future services... $ -- $ -- $ 4,006,468
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 45
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Description of Business -- The viaLink Company (the "Company")
provides subscription-based, business-to-business electronic commerce solutions
that enable the CPG and grocery industries to more efficiently manage their
highly complex supply chain information. Our services allow manufacturers,
wholesalers, distributors and retailers to communicate, exchange and synchronize
item, pricing and promotion information in a more cost-effective and accessible
way than has been possible using traditional methods.
Our strategy is to continue our investment in marketing and sales
activities, development of our viaLink services and customer support services to
facilitate our plan to penetrate the market and build recurring revenues
generated from subscriptions to our viaLink services. In order to implement this
strategy, we believe that we will need significant additional capital resources
and we are seeking additional financing sources and other potential technology,
strategic and marketing partners. Consequently, we resemble a development stage
company and will face many of the inherent risks and uncertainties that
development stage companies face. There can be no assurance, however, that these
efforts will be successful or that we will be able to obtain additional
financing or agreements with other partners on commercially reasonable terms, if
at all. Our failure to successfully negotiate such arrangements would have a
material adverse effect on our business, financial condition and results of
operations, including our viability as an enterprise. As a result of the high
level of expenditures for investment in technology development, implementation,
customer support services, and selling and marketing expenses, we expect to
incur losses in the foreseeable future periods until such time, if ever, as the
recurring revenues from our viaLink services are sufficient to cover the
expenses.
Our clients and customers range from small, rapidly growing companies to
large corporations in the consumer packaged goods and grocery industries and are
geographically dispersed throughout the United States.
Basis of Presentation -- The financial statements include the accounts of
the Company and, prior to December 31, 1998, its wholly-owned subsidiary, ijob,
Inc., which was formed June 30, 1997. All material intercompany balances and
transactions have been eliminated. On December 31, 1998, ijob, Inc. was sold,
and therefore, is not included in the Company's financial statements subsequent
to that date.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires the use of management's
estimates and assumptions in determining the carrying values of certain assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts for certain revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents and Short-term Investments -- For purposes of the
statement of cash flows, the Company considers all highly liquid investments
with a maturity of three months or less at the time of purchase to be cash
equivalents. Similar investments with a maturity, at purchase, of more than
three months are classified as short-term investments held to maturity and are
carried at amortized cost.
Marketable Securities -- The Company classifies its investment in
marketable securities as available-for-sale in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
Company's securities are carried at fair market value, with the unrealized gains
and losses reported as other comprehensive income or loss until realized.
Risks from Concentrations -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
temporary cash investments, notes receivable and accounts receivable. The
Company places its temporary cash investments with high credit quality financial
institutions. Concentrations of credit risk with respect to accounts receivable
are limited due to the large
F-8
<PAGE> 46
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
number of individual accounts and their dispersion across different regions. The
Company does not believe a material risk of loss exists with respect to its
financial position due to concentrations of credit risk.
The Company received, as consideration for the sale of its management
consulting and systems integration assets, 643,770 shares of preferred stock
which were converted into common shares of the NetPlex Group, Inc. Such shares
were classified as available-for-sale marketable securities and were subject to
fluctuations in value due to market conditions until the sale of such securities
in December 1999.
Prior to 1999, the Company's revenues were in part dependent on large
license fees and systems integration contracts from a limited number of
customers. In 1999, three customers individually accounted for 27, 14 and 12
percent of revenues. In 1997, 1998 and 1999, approximately 57, 49 and 70
percent, respectively, of the Company's total revenues were attributable to five
clients. During 1998, the Company sold its wholly owned subsidiary, ijob, Inc.,
and the assets underlying its management consulting and systems integration
services (see Note 2). Historically, over 90% of the Company's revenues were
generated from assets sold pursuant to these sales. As a result of the sales,
the Company resembles a development stage company since its planned principal
operations have not yet generated significant revenues. We will continue to be
dependent upon revenues from a limited number of customers until we achieve
market penetration.
Furniture, equipment and leasehold improvements -- Furniture, equipment and
leasehold improvements are stated at cost. Expenditures for repairs and
maintenance are charged to expense as incurred. Upon disposition, the cost and
related accumulated depreciation are removed from the accounts and the resulting
gain or loss is reflected in operations for the period. The Company depreciates
furniture and equipment using the straight-line method over their estimated
useful lives ranging from 3 to 10 years. Leasehold improvements are amortized
over the lease term using the straight-line method.
Revenue Recognition -- Prior to 1999, the Company's revenues were primarily
realized from providing management consulting services, systems integration
services and reselling hardware and software products. The Company recognized
revenue as the services were provided and products were delivered. Revenues from
fixed-price contracts were recognized using the percentage of completion method.
The Company's revenues in 1999 consist of recurring monthly subscription fees
for customer use of the viaLink services, implementation fees, and recurring
monthly fees for hosting customer websites. Contracts for customer use of the
viaLink services are generally for a one-year period, but are generally
cancelable with 30 days notice. The Company recognizes revenue for the use of
the viaLink services and for hosting customer websites as these services are
provided. Implementation fees for the viaLink services are nonrefundable and are
separately priced from the use of the viaLink services based on time and
materials, and are recognized when each implementation is complete.
Implementation costs consist primarily of labor by technical support personnel
to configure customer data and establish a connection to the viaLink database.
The Company has no obligation to perform any future services and no additional
implementation services are necessary upon renewal of the service by the
customer. Revenues collected in advance are deferred and recognized as earned.
Direct Cost of Sales -- Direct cost of sales represents the cost of
hardware and certain point-of-sale software acquired for resale, including
royalty payments required for sale of the Company's proprietary software
products.
Development -- The Company incurred costs and expenses of approximately
$1.9 million, $1.8 million and $3.4 million for product development in 1997,
1998 and 1999, respectively. The Company capitalizes certain of these costs,
including interest, that are directly related to the development of software to
be sold and software developed for internal use. Capitalization of costs for
internal use software begins after the preliminary project stage and ends when
the software is substantially complete and ready for its intended
F-9
<PAGE> 47
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
use. The Company also capitalizes certain of these costs, including interest,
for software to be sold beginning when technological feasibility has been
established and ending when the product is available for customers. Capitalized
software development costs are amortized using the straight-line method over the
estimated useful life of three to five years and are subject to impairment
evaluation in accordance with the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Earnings Per Share -- Basic earnings per share is calculated by dividing
net income (loss) by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is calculated by dividing net
income (loss) by the weighted-average number of common shares and dilutive
potential common shares outstanding during the period. Diluted earnings per
share also includes the impact of convertible debt, if dilutive, using the
if-converted method.
Income Taxes -- The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires deferred tax liabilities or assets to be
recognized for the anticipated future tax effects of temporary differences that
arise as a result of the differences in the carrying amounts and tax bases of
assets and liabilities, and for loss carryforwards and tax credit carryforwards.
SFAS 109 requires that the Company record a valuation allowance when it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.
Reclassifications -- Certain prior year amounts have been reclassified to
conform to the 1999 financial statement presentation.
2. DIVESTITURES
On December 31, 1998, the Company sold its wholly-owned subsidiary, ijob,
Inc. to DCM Company ("DCM"), a corporation wholly-owned by David C. Mitchell,
the President and a member of the board of directors of ijob at the time of the
sale. DCM purchased all of the outstanding stock of ijob for a collateralized,
ten-year $800,000 promissory note that accrued interest at 8% per annum. The
promissory note was collateralized by substantially all of ijob's fixed assets,
contract rights, accounts receivable and general intangibles. The net gain of
$462,042 on the sale was deferred and netted against the $800,000 promissory
note at December 31, 1998, as DCM was considered to be a highly leveraged
entity. On March 11, 1999, the promissory note and accrued interest were paid in
full. Accordingly, the deferred gain on the sale of $462,042 was recognized in
the 1999 statement of operations.
Effective September 1, 1998, the Company sold the assets related to its
management consulting and systems integration services (including the Company's
proprietary Retail Services Application ("RSA") software) to NetPlex Group, Inc.
("Consulting Assets Sale"). The Company received $3.0 million in cash and
643,770 shares of NetPlex preferred stock, with a market value of approximately
$1.0 million at the date of the sale. The Company used the cash proceeds from
the sale to repay (i) $551,062 of long-term debt, (ii) $565,094 of stockholder
loans including interest and (iii) expenses attributable to the Consulting
Assets Sale. The net gain from the Consulting Assets Sale was $2,998,453. At
December 31, 1998, the market value of the 643,770 shares of NetPlex preferred
stock was $684,327, yielding an unrealized loss of $315,673, which was included
in other comprehensive loss in 1998. In December 1999, the Company sold the
643,770 shares for $4.87 million resulting in a realized gain of $3.87 million
included in the 1999
F-10
<PAGE> 48
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
statement of operations. The following represents condensed unaudited results of
operations related to the management consulting and systems integration
services:
<TABLE>
<CAPTION>
EIGHT MONTHS
YEAR ENDED ENDED
DECEMBER 31, AUGUST 31,
1997 1998
------------ ------------
<S> <C> <C>
Revenues.................................................... $7,544,678 $6,831,916
Expenses.................................................... 7,335,395 5,045,104
---------- ----------
Income before income taxes.................................. $ 209,283 $1,786,812
========== ==========
</TABLE>
In conjunction with the Consulting Assets Sale, the Company entered into an
earn-out agreement that provides for quarterly cash payments aggregating up to
$1.5 million based on revenues generated from the assets sold to NetPlex through
March 31, 2000. During 1999, the Company accrued payments in accordance with the
Consulting Assets Sale earn-out agreement in the amount of $801,000,
representing the estimated earn-out through September 30, 1999. NetPlex did not
make the contractually required payments in the time periods specified in the
earn-out agreement. Subsequent to December 31, 1999, however, the Company
received payment for the amounts recognized through September 30, 1999. Due to
this uncertainty, no amounts have been recorded under the earn-out agreement
subsequent to September 30, 1999. The earn-out agreement includes certain
acceleration provisions upon any breach by NetPlex, including increased cash
earn-out payments up to $1.5 million and issuance to the Company of an
additional 643,770 shares of NetPlex common stock. The Company has not
recognized any amounts which may become due under these acceleration provisions
and will recognize income under the earn-out agreement as payments are received.
The Company's balance sheets as of December 31, 1998 and 1999 and the
statement of operations for 1999, do not include the assets and operations of
the consulting and systems integration assets, nor do they include the assets
and operations of ijob, which are included in the comparable period of 1998.
Therefore, the years presented are not comparable.
3. SHORT-TERM INVESTMENTS
At December 31, 1999, all marketable debt securities were classified as
held-to-maturity and carried at amortized cost. Short-term investments consisted
of the following:
<TABLE>
<S> <C>
Certificates of deposit.................................. $ 100,000
Commercial paper......................................... 5,038,141
Bankers acceptances...................................... 744,480
U.S. government securities............................... 596,822
----------
Total short-term investments................... $6,479,443
==========
</TABLE>
At December 31, 1999, the estimated fair value of each investment
approximated its amortized cost, and therefore, there were no significant
unrealized gains or losses.
F-11
<PAGE> 49
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. FURNITURE, EQUIPMENT, LEASEHOLD IMPROVEMENTS AND SOFTWARE DEVELOPMENT COSTS
Furniture, equipment and leasehold improvements at December 31, 1998 and
1999 consisted of the following:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Furniture and fixtures..................................... $ 286,583 $ 388,918
Computer equipment......................................... 1,432,776 2,734,831
Computer software.......................................... 492,790 1,260,472
Leasehold improvements..................................... 49,669 222,755
----------- -----------
2,261,818 4,606,976
Less: accumulated depreciation and amortization............ (1,541,908) (2,133,695)
----------- -----------
Furniture, equipment and leasehold improvements, net....... $ 719,910 $ 2,473,281
=========== ===========
</TABLE>
Computer equipment in 1998 and 1999 included $321,840 of assets under
capital leases. Furniture and fixtures in 1998 and 1999 included $88,766 of
assets under capital leases. Accumulated depreciation for all assets under
capital leases at December 31, 1998 and 1999 was $262,537 and $344,658,
respectively.
The Company incurred total costs of approximately $1.9 million, $1.8
million and $3.4 million for development of software in 1997, 1998 and 1999,
respectively. We capitalized $752,158, $617,180 and $607,181 of these costs for
development of software in 1997, 1998 and 1999, respectively. Interest
capitalized during 1997, 1998 and 1999 was not material. Amortization of
developed software during 1997, 1998 and 1999 was $324,837, $466,375 and
$423,823, respectively. Accumulated amortization at December 31, 1998 and 1999
was $763,755 and $1,187,578, respectively.
5. LONG-TERM DEBT
On July 19, 1995, the Company entered into a revolving credit agreement
(the "Agreement") with a bank whereby the Company could borrow, under two
separate notes, up to the lesser of $3,000,000 or the borrowing base as defined
in the agreement. Pursuant to the terms of the revolving credit agreement, upon
successful completion of the Company's initial public offering, the working
capital note of $800,000 was paid in full on November 27, 1996, and in October
1997 and December 1997, the terms of the remaining note were renegotiated to a
credit line of $500,000. Interest on the note was prime plus 0.5% at December
31, 1997, which was 9%.
During the first quarter of 1998, the Company completed a new credit
facility with a commercial lender that replaced the revolving credit agreement
with the bank. Under the new credit facility the Company could borrow up to
$1,000,000; however, amounts borrowed were limited to 75% of the Company's
accounts receivable as defined by the new facility. The facility was
collateralized by accounts receivable and all tangible assets of the Company and
was guaranteed by three principal officers of the Company. The interest rate on
the new facility was prime plus 3%. The promissory note under this agreement was
paid in full on October 16, 1998. During the first quarter of 1998, the Company
obtained a credit facility including a large sale financing option with IBM
Credit Corp., whereby the Company could finance directly with IBM Credit Corp.
large sales of hardware or software. As of December 31,1998, there were no
amounts outstanding on this credit facility and in February of 1999, the Company
terminated its arrangement under this credit facility. We no longer have any
available working capital borrowings or credit facility available for
borrowings.
On February 4, 1999, the Company entered into a financing agreement and
note purchase agreement with Hewlett-Packard pursuant to which Hewlett-Packard
purchased a $6.0 million secured subordinated promissory note. This note bears
interest at 11.5% per annum, with interest payments deferrable to
F-12
<PAGE> 50
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
maturity in February 2004. The Company received stockholders' approval at our
1999 annual meeting to exchange the original note for a subordinated secured
convertible promissory note, convertible into common stock at the option of
Hewlett-Packard beginning August 2000 at a conversion price of $1.75 per share.
The Company may demand conversion at maturity. The closing of the purchase of
the note occurred as of February 5, 1999. At December 31, 1999, contractual
interest of $621,945 for 1999 is included in the note payable balance as the
amounts become convertible with the note balance.
The Emerging Issues Task Force ("EITF") Issue 98-5 requires that beneficial
conversion features present in convertible securities should be recognized and
measured by allocating a portion of the proceeds equal to the value of that
feature to additional paid-in capital. The value of the beneficial conversion
feature in the note with Hewlett-Packard was approximately $20.0 million at the
commitment date. However, the value allocated to additional paid-in capital is
limited to the $6.0 million proceeds based on the prescribed accounting.
Accordingly, we have allocated the full amount of proceeds to the beneficial
conversion feature and recorded $6.0 million as additional paid-in capital at
the time of closing. This amount is being accreted by charges to interest
expense and corresponding increases in long-term debt during the period from
issuance of the note to August 2000 when the note becomes convertible. Non-cash
interest charges of $3.6 million were recognized in 1999, and the Company will
recognize approximately $1.0 million in non-cash interest expense, per quarter,
through August 2000.
The financial instruments included in long-term debt at December 31, 1999
are convertible into common shares at $1.75 per share. The estimated market
value of the shares of common stock which would be issued upon conversion of the
outstanding debt and accrued interest using the last reported sales price on
December 31, 1999 of $18.188 per share is approximately $68.8 million.
6. NOTES PAYABLE TO STOCKHOLDERS
In October 1998, the Company repaid all stockholder notes in the principal
amount of $482,830, plus accrued interest of $82,264. Notes payable to
stockholders at December 31, 1997 totaled $482,830 and included interest at
rates ranging from 8.5% to 11.5%.
Interest expense for 1997 and 1998 related to the notes payable to
stockholders was $46,473 and $38,293, respectively.
7. ALLIANCE AGREEMENTS
On May 3, 1999, the Company entered into an agreement with Ernst & Young
LLP, pursuant to which Ernst & Young will provide us with consulting and
integration services and sales and marketing support, to assist in the
development and market penetration of our viaLink services. In connection with
this agreement, we issued Ernst & Young a warrant to purchase up to 1,000,000
shares of our common stock at a price of $2.00 per share contingent upon our
ability to register the common stock underlying the warrant agreement.
Additionally, we have agreed to pay a royalty of 7.0% of our service revenues to
Ernst & Young for a period of two years and, in the event that at least ten
"significant clients" of Ernst & Young become subscribers to our services during
this two year period, we will be obligated to continue this royalty payment in
perpetuity. Ernst & Young will not receive any royalties for services we provide
to clients subject to the reporting requirements of the federal securities laws
for which it serves as the principal independent auditor. As of the date of the
issuance of the warrant, the warrant conversion price was below the fair value
of our stock. The issuance of this warrant has been recorded as an asset and an
increase in additional paid in capital of $1.9 million, representing the fair
value of the warrant issued. The fair value of the warrant at the measurement
date was determined using a Black-Scholes option pricing model with the
following assumptions: interest rate (zero-coupon U.S. government issued with a
remaining life equal to the expected term of the warrant) of 6.0%; a dividend
yield of 0%; volatility factor of the expected market price of the Company's
common stock of 100.4%; and weighted-average expected life of
F-13
<PAGE> 51
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
the warrant of 1.5 years. The asset will be amortized over the service period
and will result in non-cash charges to our statement of operations. On August 9,
1999, Ernst & Young exercised warrants to purchase 250,000 shares of common
stock resulting in gross proceeds received by us of $500,000. On November 10,
1999, Ernst & Young exercised warrants to purchase the remaining 750,000 shares
of common stock resulting in gross proceeds received by us of $1.5 million.
During 1999, royalties under this agreement totaled $19,700, and are included in
selling and marketing expense.
On October 12, 1999, The Company entered into a strategic relationship with
i2 Technologies, Inc. ("i2"), the primary focus of which is to integrate the
products and services of our two companies and to extend the solutions across
multiple industries. i2 will use our syncLink services to provide product, price
and promotion information to facilitate business processes between trading
partners using an Internet-accessible shared database. Our two companies will
also develop joint sales and marketing programs, and develop enhancements to the
viaLink services. Additionally, i2 invested $5.0 million in the Company in
exchange for 895,536 shares of viaLink common stock and a warrant to purchase up
to an additional 746,268 shares of common stock at $6.70 per share, representing
a twenty percent (20%) premium over the market price of the stock at the time of
the agreement. The initial term of the agreement will expire on December 31,
2003 and will automatically renew on a year-to-year basis thereafter unless
terminated by either party. The issuance of this warrant has been recorded as an
asset and an increase in additional paid-in capital for the fair value of the
warrant issued to i2 and will result in non-cash charges to our statement of
operations during the term of the agreement. The fair value of the warrant at
the measurement date was determined using a Black-Scholes option pricing model
with the following assumptions: interest rate (zero-coupon U.S. government
issued with a remaining life equal to the expected term of the warrant) of
5.91%; a dividend yield of 0%; volatility factor of the expected market price of
the Company's common stock of 101.6%; and weighted-average expected life of the
warrant of 2.0 years. Additionally we have agreed to pay i2 a royalty of five
percent (5%) of the syncLink and Chain Pricing subscription revenues during the
term of the agreement. We will also pay a royalty, in addition to the five
percent, based upon subscription revenues received from new customers with whom
i2 had "significant involvement" in the sales process. i2 has agreed to pay us a
royalty based upon revenues i2 receives from providing syncLink and Chain
Pricing services outside of the consumer packaged goods industry. During 1999,
royalties under this agreement totaled $21,800, and are included in selling and
marketing expense.
8. COMMON STOCK
On November 29, 1999, the Company's board of directors approved a
two-for-one stock split in the form of a dividend. The par value remained $0.001
per share. The stock split was effective December 21, 1999 and is reflected in
the per share data in the accompanying financial statements and notes to the
financial statements.
F-14
<PAGE> 52
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the numerator and the denominator used in the
calculation of earnings (loss) per share is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Basic:
Net income (loss).......................... $(1,860,818) $ 649,638 $(12,635,963)
Weighted average common shares
outstanding............................. 10,909,752 10,964,164 13,114,028
----------- ----------- ------------
Earnings (loss) per share............... $ (0.17) $ 0.06 $ (0.96)
=========== =========== ============
Diluted:
Net income (loss).......................... $(1,860,818) $ 649,638 $(12,635,963)
Weighted average common shares
outstanding............................. 10,909,752 10,964,164 13,114,028
Add: Net effect of dilutive potential
shares.................................. -- 1,445,608 --
----------- ----------- ------------
10,909,752 12,409,772 13,114,028
Earnings (loss) per share............... $ (0.17) $ 0.05 $ (0.96)
=========== =========== ============
</TABLE>
For the year ended December 31, 1999, options to purchase 10,439,692 shares
at a weighted average exercise price of $4.35 and warrants to purchase 47,000
and 746,268 shares of common stock at $1.50 and $6.70, respectively, and
3,688,000 shares of common stock to be issued upon the conversion of the note
issued to Hewlett-Packard, were outstanding, but were not included in the
computation of diluted earnings per share because the effect of these
outstanding options, warrants and stock issuable upon conversion of debt would
be antidilutive.
During 1998, options to purchase 1,440,000 and 120,000 shares of common
stock at $1.25 and $2.25 per share, respectively, and warrants to purchase
3,680,000 and 720,000 shares of common stock at $1.25 and $1.50, respectively,
were outstanding, but were not included in the computation of diluted EPS
because the exercise price of the options and warrants was greater than the
average market price of the common shares.
During 1997, options to purchase 2,332,312 shares at a weighted average
exercise price of $1.05 and warrants to purchase 3,680,000 and 720,000 shares of
common stock at $1.25 and $1.50, respectively, were outstanding, but were not
included in the computation of diluted EPS because the exercise price of the
options and warrants was greater than the average market price of the common
shares.
On June 29, 1999, the Securities and Exchange Commission declared effective
a post-effective amendment to our registration statement on Form SB-2 thereby
permitting holders of viaLink's 3,680,000 redeemable common stock purchase
warrants to voluntarily exercise the warrants, subject to specific state
approvals. Each warrant allowed the holder to purchase one share of viaLink
common stock at a price of $1.25 per share, on or before November 20, 1999. On
October 4, 1999, we issued a Notice of Redemption to holders of our redeemable
common stock purchase warrants and as of December 31, 1999, all 3,680,000
redeemable stock purchase warrants had been exercised. Warrant exercises
resulted in gross proceeds of $4.6 million to the Company during 1999.
9. STOCK OPTION AND STOCK PURCHASE PLANS
Stock Purchase Plan -- The Company established The viaLink Company Employee
Stock Purchase Plan on April 1, 1997. At the Company's 1999 annual meeting our
stockholders approved the adoption of the 1999 Employee Stock Purchase Plan
which replaced the predecessor Employee Stock Purchase Plan as of July 1, 1999.
The 1999 Stock Purchase Plan provides eligible employees of viaLink with the
opportunity to acquire a proprietary interest in viaLink through participation
in a payroll deduction based
F-15
<PAGE> 53
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
employee stock purchase plan designed to operate in compliance with Section 423
of the Internal Revenue Code. The price will be 85 percent of the per share fair
market value on either the granting date or the exercise date, whichever market
value is lower. The number of shares of common stock authorized and reserved for
issuance under the Plan is 800,000 shares. For the years ended December 31,
1997, 1998 and 1999, 10,260, 13,844 and 12,244 shares, respectively, of common
stock have been purchased under the stock purchase plan.
Stock Option and Grant Plans -- The Company adopted The viaLink Company
1995 Stock Option Plan in March 1995 and amended the 1995 Plan on April 30, 1996
and September 1, 1998. The 1995 Plan was replaced by The viaLink Company 1999
Stock Option/Stock Issuance Plan in May 1999. While the Company may no longer
grant options pursuant to the 1995 Plan, options granted under the 1995 Plan
remain outstanding. The 1995 Plan provided for the issuance of incentive stock
options and non-incentive stock options to attract, retain and motivate
management, directors, professional employees, professional non-employee service
providers and other individuals who have benefited or could benefit the Company.
The viaLink Company 1998 Non-Qualified Stock Option Plan was adopted on
February 9, 1998, and amended effective September 1, 1998. The Non-Qualified
Plan was replaced by the 1999 Stock Option/ Stock Issuance Plan in May 1999.
Although the Company may no longer grant options pursuant to the Non-Qualified
Plan, options granted under the Non-Qualified Plan remain outstanding.
On February 10, 1998, the board of directors of the Company adopted the
1998 Stock Grant Plan (the "Stock Grant Plan" or "Plan") to attract, retain and
motivate consultants, independent contractors and key employees of the Company
and its subsidiaries by way of granting shares of stock in the Company. The
sale, transfer or other disposal of shares of common stock received pursuant to
the Stock Grant Plan is restricted for a period of one year. During 1998, 20,132
shares of common stock were issued pursuant to the Plan at an average price of
$0.78. No shares were granted under this plan in 1999. We may no longer grant
shares pursuant to the Stock Grant Plan.
At the Company's 1999 annual meeting, the Company's stockholders approved
the adoption of The viaLink Company 1999 Stock Option/Stock Issuance Plan to
attract and retain the services of individuals essential to the Company's
long-term growth and financial success. The Company's officers and other key
employees, non-employee board members and consultants and other advisors are
eligible to receive option grants under the 1999 Plan.
The Company has reserved 15,000,000 shares of our common stock for issuance
over the ten year term of the 1999 Plan, including shares initially reserved
under the predecessor plans. This share reserve will automatically be increased
on the first trading day of each calendar year, beginning with the 2000 calendar
year, by an amount equal to 1% of the shares of common stock outstanding on the
last trading day of the immediately preceding calendar year, but in no event
will such annual increase exceed 200,000 shares. Options may be granted under
the 1999 Plan at an exercise price per share not less than the fair market value
per share of common stock on the option grant date.
The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its employee stock
options. APB No. 25 requires compensation expense be recorded for any excess of
the market value of the underlying stock over the option price on the
measurement date. During May 1999, the Company granted options for 2,540,000 and
360,000 shares at exercise prices per share of $3.61 and $3.13, respectively,
compared to the market price of $4.25 on the date of grant. The excess of the
market value over the exercise price is being amortized over the vesting period.
Stock compensation expense of $718,000 is included in the 1999 statement of
operations for these grants representing the portion of the service period in
1999. The exercise price equaled the market price at the date of grant for all
other option grants during 1997, 1998 and 1999 and no compensation expense has
been recognized for all other grants in 1997, 1998 and 1999.
F-16
<PAGE> 54
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Pro forma information regarding net income and earnings per share is
required by FAS No. 123 and has been determined as if the Company had accounted
for its stock options under the fair value method defined by SFAS No. 123. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for fiscal year 1997, 1998 and 1999, respectively: interest rates
(zero-coupon U.S. government issued with a remaining life equal to the expected
term of the options) of 6.47%, 4.52% and 5.56%; dividend yields of 0.0%;
volatility factors of expected market price of the Company's common stock of 65%
for 1997 and 1998 and 101% for 1999; and weighted-average expected life of the
options of 5.9, 6.7 and 2.5 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.
The Company's historical and pro forma information is as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1997 1998 1999
----------- --------- ------------
<S> <C> <C> <C>
Net income (loss), as reported................ $(1,860,818) $ 649,638 $(12,635,963)
Pro forma-diluted............................. $(2,530,746) $(176,182) $(16,563,728)
Earnings (loss) per share-diluted, as
reported.................................... $ (0.17) $ 0.05 $ (0.96)
Pro forma-diluted............................. $ (0.23) $ (0.01) $ (1.26)
</TABLE>
A summary of the Company's stock option activity and related information
follows for the years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
---------- --------------
<S> <C> <C>
Outstanding at December 31, 1996............................ 1,739,352 $1.08
Granted................................................... 670,000 0.94
Exercised................................................. (1,776) 0.16
Canceled.................................................. (76,744) 0.83
----------
Outstanding at December 31, 1997............................ 2,330,832 1.05
Granted................................................... 4,838,972 0.80
Exercised................................................. (354,440) 0.68
Canceled.................................................. (177,812) 0.86
----------
Outstanding at December 31, 1998............................ 6,637,552 0.89
Granted................................................... 6,120,000 6.88
Exercised................................................. (1,956,440) 0.92
Canceled.................................................. (361,420) 2.21
----------
Outstanding at December 31, 1999............................ 10,439,692 $4.35
==========
</TABLE>
F-17
<PAGE> 55
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF OUTSTANDING EXERCISE REMAINING AT EXERCISE
EXERCISE PRICE AT 12/31/99 PRICE LIFE 12/31/99 PRICE
- -------------- ----------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.15.......................... 4,836 $ 0.15 5.2 years 4,836 $0.15
$0.45.......................... 7,324 $ 0.45 6.2 years 7,324 $0.45
$0.75 to $0.83................. 3,876,620 $ 0.76 8.6 years 1,157,816 $0.76
$0.97.......................... 120,800 $ 0.97 5.9 years 115,600 $0.97
$1.25.......................... 360,000 $ 1.25 1.9 years 360,000 $1.25
$1.75.......................... 32,112 $ 1.75 9.0 years 32,112 $1.75
$2.25.......................... 60,000 $ 2.25 9.0 years 20,000 $2.25
$3.13.......................... 360,000 $ 3.13 9.4 years -- --
$3.60 to $3.82................. 3,316,000 $ 3.63 9.5 years -- --
$4.82.......................... 48,000 $ 4.82 9.4 years -- --
$6.00.......................... 650,000 $ 6.00 9.8 years -- --
$15.22......................... 1,604,000 $15.22 10.0 years -- --
---------- ---------
10,439,692 1,697,688 $0.91
========== ========= =====
</TABLE>
10. INCOME TAXES
The components of the provision (benefit) for income taxes for the years
ended December 31, 1997, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ---------- --------
<S> <C> <C> <C>
Current.......................................... $ -- $ -- $ --
Deferred......................................... (1,112,127) 1,049,440 --
----------- ---------- --------
Provision (benefit) for income taxes............. $(1,112,127) $1,049,440 $ --
=========== ========== ========
</TABLE>
The differences in federal income taxes at the statutory rate and the
provision for income taxes for the years ended December 31, 1997, 1998, and 1999
are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ---------- -----------
<S> <C> <C> <C>
Income tax expense (benefit) at federal
statutory
rate......................................... $(1,010,801) $ 577,687 $(4,296,227)
State income taxes............................. (118,918) 67,963 (505,439)
Reduction of valuation allowance credited to
additional paid-in capital................... -- -- 3,802,458
Benefit of net operating loss carryforwards not
recognized................................... -- 401,302 1,012,326
Other.......................................... 17,592 2,488 (13,118)
----------- ---------- -----------
Provision (benefit) for income taxes........... $(1,112,127) $1,049,440 $ --
=========== ========== ===========
</TABLE>
F-18
<PAGE> 56
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
--------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 2,980 $ 15,738
Compensated absences...................................... 17,583 31,277
Tax credit carryforwards.................................. 24,985 26,990
Unrealized loss on marketable securities.................. 119,956 --
Net operating loss carryforwards.......................... 781,387 6,878,587
--------- -----------
946,891 6,952,592
Deferred tax liabilities:
Deferred service fees..................................... -- (1,157,595)
Discount on long-term debt................................ -- (908,666)
Software development costs................................ (508,763) (578,963)
Depreciation and amortization............................. (36,826) (159,815)
--------- -----------
Net deferred tax asset, before valuation allowance.......... 401,302 4,147,553
Valuation allowance......................................... (401,302) (4,147,553)
--------- -----------
Net deferred tax asset...................................... $ -- $ --
========= ===========
</TABLE>
The discount recognized in 1999 for the value of the beneficial conversion
feature in the note payable to Hewlett-Packard, and the assets recognized in
1999 for the value of the warrants issued to Ernst & Young LLP and i2
Technologies, Inc. were not recognized for income tax purposes. Accordingly, the
Company established deferred tax liabilities totaling approximately $3.8 million
for these temporary differences by reducing the amount recorded as additional
paid in capital for the value of the beneficial conversion feature and the
warrants. These deferred tax liabilities have been used to support the
recoverability of an equivalent amount of deferred tax assets, thereby reducing
the amount of valuation allowance. The benefit of this reduction in the
valuation allowances has been recognized as additional paid-in capital.
The Company's tax deduction for stock-based compensation in 1999 exceeds
the cumulative expense for those options and warrants recognized for financial
reporting purposes by approximately $7.2 million. This excess deduction is a
component of the net operating loss carryforwards for which a deferred tax asset
and corresponding valuation allowance of approximately $2.7 million have been
recognized at December 31, 1999. When the net operating loss carryforwards are
utilized for financial reporting purposes, this portion of the benefit will be
credited directly to additional paid in capital.
At December 31, 1999, the Company had net operating loss ("NOL")
carryforwards for federal and state purposes of approximately $18,100,000 and
$18,500,000, respectively, and other carryforwards of approximately $71,000. The
Federal and State NOL carryforwards begin to expire in 2011.
SFAS 109 requires that the Company record a valuation allowance when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax asset depends on
the Company's ability to generate sufficient taxable income in the future. The
Company has recognized a full valuation allowance for the amount of net deferred
tax asset at December 31, 1998 and 1999 since the Company resembles a
development stage company and has no history of profitability without the
consulting assets that were sold in 1998.
F-19
<PAGE> 57
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The ability of the Company to utilize the NOL carryforward to reduce future
taxable income taxes may be limited upon occurrence of certain capital stock
transactions during any three-year period resulting in an aggregate ownership
change of more than 50%.
11. COMMITMENTS AND CONTINGENCIES
The Company leases its office and storage space under operating leases. The
terms range from month-to-month up to ten years and include options to renew.
The Company also leases office equipment under various noncancelable lease
agreements. Total rental expense in 1997, 1998 and 1999 for all leases was
$455,369, $410,669 and $460,279, respectively.
Future minimum lease payments under noncancelable leases at December 31,
1999 follows:
<TABLE>
<CAPTION>
OPERATING
LEASES
----------
<S> <C>
2000..................................................... $ 958,000
2001..................................................... 781,000
2002..................................................... 371,000
2003..................................................... 353,000
2004..................................................... 348,000
Thereafter............................................... 345,000
----------
Future minimum lease payments............................ $3,156,000
==========
</TABLE>
Future minimum lease payments have not been reduced by future minimum
sub-lease rentals of approximately $1.2 million under operating leases, with
terms through 2005.
In December 1997, the Company entered into an agreement with Investor
Awareness to provide investor relations services. Subject to certain criteria in
the agreement, Investor Awareness would be granted an option to purchase 40,000
shares of the Company's common stock at $1.5625 per share. The Company believes
the criteria were not met and that Investor Awareness did not earn the option to
purchase the 40,000 shares. Investor Awareness has filed a lawsuit alleging the
Company failed to issue the option under the terms of the agreement. Although
the outcome of any legal proceeding cannot be predicted with certainty, the
Company believes the ultimate outcome of this proceeding will not have a
material adverse effect on the Company's financial position but could be
material to the results of operations in any one accounting period.
12. RETIREMENT PLAN
The Company has a profit sharing plan (the "Plan") for certain eligible
employees who have attained the age of 18 and completed one year of service.
Under the Plan, employer contributions are made at management's discretion.
Participants may contribute up to 6% of earnings as eligible contributions and
up to 15% of earnings in total for any Plan year. The Company's discretionary
matching percentage is up to 100% of each participant's total eligible
contributions for a year. The Company made no contributions in 1997, 1998, or
1999.
13. SUBSEQUENT EVENT -- STOCK SPLIT
On March 1, 2000, the Company's board of directors approved a two-for-one
split of the common stock. Par value of the common stock will remain $.001 per
share. The stock split will be effective March 28, 2000.
F-20
<PAGE> 58
THE VIALINK COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The effect of the stock split has been recognized retroactively in the
stockholders' equity accounts in the balance sheet as of December 31, 1999, and
in all share and per share data in the accompanying financial statements, notes
to financial statements and supplemental financial data. Stockholders' equity
accounts have been restated to reflect the reclassification of an amount equal
to the par value of the increase in issued shares from additional paid-in
capital to the common stock account.
F-21
<PAGE> 59
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1** Agreement and Plan of Merger dated May 8, 1996 by and among
the Registrant, Vantage Capital Resources, Inc., John
Simonelli, Larry E. Howell, Robert L. Barcum, Robert N.
Baker and David B. North
2.2(1) Asset Purchase Agreement dated June 12, 1997 by and among
ijob, Inc., Human Technologies, Inc., David C. Mitchell and
Ron Beasley
2.3(2) Asset Acquisition Agreement dated August 31, 1998 by and
between the Registrant and The NetPlex Group, Inc.
2.4(2) First Amendment to Asset Acquisition Agreement dated
September 9, 1998 by and between Registrant and The NetPlex
Group, Inc.
2.5(2) Stock Purchase Agreement dated December 31, 1998 by and
among Registrant, DCM Company, Inc., David C. Mitchell and
ijob, Inc.
3.1(3) Form of Certificate of Incorporation
3.2(3) Form of Bylaws
4.1(4) Form of Certificate of Common Stock
4.2 See Exhibits 3.1 and 3.2 for provisions of the Registrant's
Certificate of Incorporation and Bylaws defining rights of
holders of common stock of the Registrant
4.3** Form of Underwriter's Warrant Agreement by and between
Barron Chase Securities Inc. and the Registrant
4.4(5) Shareholder Agreement dated as of February 4, 1999 by and
between Registrant and Hewlett-Packard Company
4.5(6) Stock Option Agreement dated as of December 18, 1998 by and
between Registrant and Brian Herman
4.6(7) Registration Rights Agreement dated May 3, 1999 by and
between Registrant and Ernst & Young LLP
4.7(8) Securities Purchase Agreement dated October 12, 1999, by and
between the Registrant and i2 Technologies, Inc.
4.8(8) Common Stock Purchase Warrant dated October 12, 1999, issued
by the Registrant to i2 Technologies, Inc.
4.9(8) Registration Rights Agreement dated October 12, 1999, by and
between the Registrant and i2 Technologies, Inc.
10.1(6) Note Purchase Agreement dated as of February 4, 1999 by and
between the Registrant and Hewlett-Packard Company
10.2** Lease dated October 3, 1994 by and between the Registrant
and Oklahoma Christian Investment Corporation
10.3(3) Form of Subordinated Secured Convertible Promissory Note
dated as of February 4, 1999 issued by the Registrant in
favor of Hewlett-Packard Company
10.4(6) Security Agreement dated as of February 4, 1999 by and
between the Registrant and Hewlett-Packard Company
10.5** Exchange Agreement dated October 14, 1996 by and among the
Registrant, Robert L. Barcum, Robert N. Baker, Russell L.
Reinhardt, David B. North, John Simonelli, and Larry E.
Howell
10.6(2) Earn-out Agreement dated September 30, 1998 by and between
the Registrant and The NetPlex Group, Inc.
10.7(9) Administrative Services Agreement dated August 31, 1998 by
and between the Registrant and The NetPlex Group, Inc
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.8(9) Sublease dated September 1, 1998 by and between Applied
Intelligence Group, Inc. and The NetPlex Group, Inc.
10.9(9) Software Remarketing and Reselling Agreement effective as of
September 1, 1998 by and between the Registrant and The
NetPlex Group, Inc.
10.10(3) Form of Indemnification Agreement dated February 9, 1998 by
and between the Registrant and the Registrant's executive
officers
10.11(3) Employment Agreement dated October 1, 1998 by and between
the Registrant and Lewis B. Kilbourne
10.12(3) Employment Agreement dated October 1, 1998 by and between
the Registrant and Robert N. Baker
10.13(10) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1995 Stock Option Plan, as amended and restated effective
September 1, 1998
10.14(11) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1998 Non-Qualified Stock Option Plan
10.15(12) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1998 Stock Grant Plan
10.16(13) The viaLink Company (f/k/a Applied Intelligence Group, Inc.)
1997 Employee Stock Purchase Plan
10.17(4) The viaLink Company 1999 Stock Option/Stock Issuance Plan
10.18(14) 1999 Stock Option/Stock Issuance Plan Form of Stock Option
Agreement
10.19(14) 1999 Stock Option/Stock Issuance Plan Form of Stock Issuance
Agreement
10.20(14) 1999 Stock Option/Stock Issuance Plan Form of Automatic
Stock Option Agreement
10.21(4) The viaLink Company 1999 Employee Stock Purchase Plan
10.22(7) Amended and Restated Alliance Agreement dated as of May 3,
1999 by and between the Registrant and Ernst & Young LLP
10.23(7) Master Services Agreement dated May 3, 1999 by and between
the Registrant and Ernst & Young LLP
10.24(8) Alliance and Marketing Agreement dated October 12, 1999, by
and between the Registrant and i2 Technologies, Inc.
10.25(8) Software License dated October 12, 1999, by and between the
Registrant and i2 Technologies, Inc.
10.26 Office Building Sublease effective as of December 16, 1999,
between Kerr-McGee Corporation and the Registrant
10.27 Employment Agreement made as of April 1, 1999, by and
between the Registrant and J. Andrew Kerner
10.28 Employment Agreement made as of April 9, 1999, by and
between the Registrant and David M. Lloyd
10.29 Employment Agreement made as of April 8, 1999, by and
between the Registrant and Robert I. Noe
10.30 Employment Agreement effective January 4, 2000 by and
between the Registrant and Patrick Fitzgerald.
10.31 Form of Addendum to Employment Agreement between the
Registrant and J. Andrew Kerner
10.32 Form of Addendum to Employment Agreement between the
Registrant and David M. Lloyd
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.33 Form of Addendum to Employment Agreement between the
Registrant and Robert I. Noe
21.1(3) Subsidiaries of Registrant
23.1 Consent of KPMG LLP
23.2 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
</TABLE>
- ---------------
** Incorporated herein by reference to the Registrant's Registration Statement
on Form SB-2 (Reg. No. 333-5038-D), as amended.
(1) Incorporated herein by reference to the Registrant's Annual Report on Form
10-KSB for the year ending December 31, 1997.
(2) Incorporated herein by reference to the Registrant's Definitive Information
Statement on Schedule 14-C filed October 15, 1998.
(3) Incorporated herein by reference to the Registrant's Definitive Proxy
Statement on Schedule 14A (File No. 000-21729) filed April 19, 1999.
(4) Incorporated herein by reference to the Registrant's Registration Statement
on Form 8-A/A (File No. 333-05038-D) filed under Section 12(g) of the
Exchange Act.
(5) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated February 4, 1999.
(6) Incorporated herein by reference to the Registrant's Annual Report on Form
10-KSB for the year ending December 31, 1998.
(7) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated May 3, 1999.
(8) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated October 12, 1999.
(9) Incorporated herein by reference to the Registrant's Current Report on Form
8-K dated October 27, 1998.
(10) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-69203).
(11) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-69319).
(12) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-47547).
(13) Incorporated herein by reference to the Registrant's Registration Statement
on Form S-8, as amended (Reg. No. 333-30073).
<PAGE> 62
EXHIBIT 10.26
OFFICE BUILDING SUBLEASE
THIS OFFICE BUILDING SUBLEASE (this "SUBLEASE") is dated effective as
of December 16, 1999, and is executed by KERR-McGEE CORPORATION, a Delaware
corporation ("SUBLESSOR"), and THE VIALINK COMPANY, a Delaware corporation
("SUBLESSEE").
1. RECITALS.
1.1. Three Galleria Tower Venture, a Texas general partnership
("MASTER LESSOR"), as landlord, and Sublessor's predecessor-in-interest, ORYX
ENERGY COMPANY ("ORYX"), as tenant, entered into a certain First Amended and
Restated Lease Agreement dated as of July 6, 1989, as amended by a First
Amendment to First Amended and Restated Lease Agreement dated as of September 9,
1991 (the "MASTER LEASE"). Oryx assigned all of its right, title and interest in
and to the Master Lease to Sublessor pursuant to an Assignment of Lease dated
February 26, 1999.
1.2. The premises covered by the Master Lease are more fully
identified in the Master Lease and consist of certain space located in the
office building commonly known as Oryx Energy Center, 13155 Noel Road, Dallas,
Texas (the "BUILDING"), which is located on the real property more particularly
described on EXHIBIT "A-1" attached to the Master Lease.
1.3. Sublessor desires to sublease to Sublessee, and Sublessee desires
to sublease from Sublessor, the premises identified in Paragraph 2.1, which
constitutes a portion of the "LEASED PREMISES" (as defined in the Master Lease)
covered by the Master Lease, all in accordance with the provisions of this
Sublease.
2. DEMISE; NET RENTABLE AREA; QUIET ENJOYMENT.
2.1. Demise. Sublessor subleases to Sublessee, and Sublessee subleases
from Sublessor, in accordance with the provisions of this Sublease, that portion
of the Leased Premises comprised of the entire eighth (8th) floor of the
Building and being stipulated to be 21,716 square feet of "NET RENTABLE AREA"
(as defined in the Master Lease) (the "SUBLEASED PREMISES"), which Subleased
Premises are more particularly described on the floor plans attached hereto as
EXHIBIT "A".
2.2. Net Rentable Area. Sublessor and Sublessee agree that the actual
number of square feet of Net Rentable Area in the Subleased Premises may be more
or less than the figure stated in Paragraph 2.1; however, for all purposes of
this Sublease, the figure stated in Paragraph 2.1 shall be conclusively deemed
to be the Net Rentable Area of the Subleased Premises.
2.3. Quiet Enjoyment. Sublessor covenants that Sublessee shall, and
may peacefully have, hold and enjoy the Subleased Premises against any person
whomsoever lawfully claiming the same or any part thereof by, through, or under
Sublessor, but not otherwise, subject to the other provisions
<PAGE> 63
hereof, provided that Sublessee pays the Rent (as hereinafter defined) and other
sums herein recited to be paid by Sublessee and performs all of Sublessee's
covenants and agreements herein contained.
3. TERM.
The term of this Sublease shall begin on the Commencement Date (as
defined below) and end at midnight on October 31, 2001 (the "EXPIRATION DATE").
The "COMMENCEMENT DATE" shall be the earlier of the date upon which Sublessee
first occupies the Subleased Premises or January 15, 2000. Prior to occupying
the Subleased Premises, Sublessee shall execute and deliver to Sublessor a
statement prepared by Sublessor confirming the Commencement Date.
4. BASE RENT; SECURITY DEPOSIT.
4.1. Base Rent. During each year of the term of this Sublease,
Sublessee shall pay to Sublessor annual base rent of $325,740.00 (i.e., $15.00
per square foot of Net Rentable Area in the Subleased Premises (the "BASE
RENT").
4.2. Payment of Base Rent. The annual Base Rent shall be payable in
equal monthly installments equal to 1/12th of the Base Rent. Each installment of
Base Rent shall be due on or before the first day of each month during the term
of this Sublease and shall be paid to Sublessor at its address as set forth in
Paragraph 22.4 (or as later changed pursuant thereto) without notice, demand,
abatement, deduction, diminution, or offset. Monthly installments of Base Rent
shall be prorated for any period during the term hereof which is less than a
full calendar month. The initial installment of Base Rent shall be paid upon the
execution of this Sublease.
4.3. Security Deposit. Upon the execution of this Sublease, Sublessee
shall deposit with Sublessor a security deposit in the amount of $27,145.00 as
security for the performance of the terms and provisions hereof by Sublessee
(the "SECURITY DEPOSIT"). The Security Deposit or any portion thereof may be
applied to the curing of any default by Sublessee under this Sublease, without
prejudice to any other remedy or remedies which Sublessor may have on account
thereof, and upon such application Sublessee shall pay Sublessor on demand the
amount so applied which shall be added to the Security Deposit. Provided
Sublessee is not then in default under this Sublease, any remaining balance of
the Security Deposit will be returned to Sublessee within thirty (30) days after
the expiration of the term of this Sublease; provided, however, Sublessor shall
have the right to retain and expend all or any portion of the Security Deposit
for cleaning and repairing the Subleased Premises to the extent Sublessee fails
to deliver the Subleased Premises at the termination of this Sublease in a neat
and clean condition and in as good a condition as existed at the date of
possession of same by Sublessee, except for ordinary wear and tear. If Sublessor
assigns its interest in the Subleased Premises during the term hereof, Sublessor
may assign the Security Deposit to the assignee, and thereafter Sublessor shall
have no further liability for the return of the Security Deposit, or any
interest thereon, and Sublessee agrees to look solely to the new sublessor for
the return of the Security Deposit.
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5. ADDITIONAL RENT.
5.1. Certain Definitions. For purposes hereof: "BASE YEAR" means the
calendar year 2000; "SUBLESSEE'S PERCENTAGE SHARE" means the proportion which
the Net Rentable Area in the Subleased Premises, from time to time, bears to the
total Net Rentable Area in the Leased Premises, from time to time; "TENANT'S
PERCENTAGE SHARE OF OPERATING EXPENSES" has the same meaning given to such term
in the Master Lease; "SUBLESSEE'S PERCENTAGE SHARE OF OPERATING EXPENSES" means
an amount equal to Tenant's Percentage Share of Operating Expenses attributable
to the Subleased Premises during any calendar year of the term of this Sublease;
"SUBLESSEE'S PERCENTAGE SHARE OF EXCESS OPERATING EXPENSES" means the difference
in any calendar year after the Base Year between Sublessee's Percentage Share of
Operating Expenses in that year and Sublessee's Percentage Share of Operating
Expenses in the Base Year.
5.2. Additional Rent. In addition to Base Rent, Sublessee shall also
pay to Sublessor, during the term of this Sublease, at the same time as Base
Rent is due, an amount equal to Sublessee's Percentage Share of Excess Operating
Expenses. The parties acknowledge that the Master Lease requires Sublessor to
pay on a monthly basis certain estimated costs in order to reimburse Master
Lessor, over the course of each year of the term of the Master Lease, for
Sublessor's share of "OPERATING EXPENSES" (as defined in the Master Lease)
incurred by Master Lessor in owning and operating the "PROJECT" (as defined in
the Master Lease). Sublessee agrees to pay on a monthly basis those estimated
Operating Expenses attributable to Sublessee's Percentage Share of Excess
Operating Expenses. Following the end of each calendar year, a reconciliation is
made against the actual Operating Expenses incurred. Sublessee's obligation to
pay Sublessee's Percentage Share of Excess Operating Expenses, as set forth
above in this Paragraph 5.2, shall be governed by the estimated amounts and
shall be subject to any reconciliation against actual amounts, of such costs and
expenses. Sublessor shall promptly deliver to Sublessee copies of all statements
and notices Sublessor receives from Master Lessor regarding such Operating
Expenses. Items that are specially billed by Master Lessor to Sublessor or
Sublessee, rather than charged generally to office tenants by Master Lessor,
shall be paid by the party requesting the specially billed item in the manner
required by the Master Lease. (The Base Rent together with Sublessee's
Percentage Share of Excess Operating Expenses are hereinafter collectively
referred to as "RENT").
6. SERVICES; REPAIRS.
6.1. Provisions of Services. Notwithstanding any other provisions of
this Sublease (including, without limitation, the quiet enjoyment covenant of
Paragraph 2.3), the only facilities, utilities or services (collectively
"SERVICES") to which Sublessee is entitled hereunder are those to which
Sublessor is entitled under the Master Lease. Sublessee shall look solely to
Master Lessor under the Master Lease for all such services, including, without
limitation, the services to be provided by Master Lessor under Section 3.1 of
the Master Lease. Notwithstanding the foregoing, Sublessor does hereby assign,
transfer and set over to Sublessee any and all rights it has or might have
against the Master Lessor under the Master Lease for all such services,
including, without limitation, the services to be provided by Master Lessor
under Section 3.1 of the Master Lease, to the extent that such services involved
are applicable to the Subleased Premises. Sublessee shall pursue any such rights
and remedies by virtue of such assignment at its own cost and expense and shall
indemnify and hold harmless
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<PAGE> 65
Sublessor from any loss, cost, claim, damages, expense, causes of action or
liability (including, without limitation, attorneys' fees and costs) asserted
against Sublessor by Master Lessor by reason of Sublessee's pursuit of such
rights and remedies. This assignment will terminate contemporaneously with the
termination of this Sublease.
6.2. No Abatement or Termination.
(a) If Master Lessor shall fail to perform its covenants or
furnish any of the services set forth in the Master Lease (including, without
limitation, the covenants and services set forth in Section 3.1 of the Master
Lease), then Sublessee shall promptly give written notice to Sublessor and to
Master Lessor, specifying in as much detail as possible such failure.
(b) Failure by Master Lessor to perform any covenant or
furnish any of the utilities or services set forth in the Master Lease
(including, without limitation, the failure to furnish any of the services
specified in Section 3.1 of the Master Lease) shall not render Sublessor liable
in any respect for damages to either person or property, nor be construed as an
eviction by Sublessor, nor entitle Sublessee to an abatement of Rent (except
that Sublessee may abate Rent and receive reimbursement of out-of-pocket
expenses incurred in temporarily relocating from the Subleased Premises to the
extent that Sublessor would have been entitled under Section 3.1 of the Master
Lease to rental abatement and reimbursement of out-of-pocket relocation expenses
on account of a services interruption to the Subleased Premises had Sublessor
occupied the Subleased Premises at the time of the services interruption), nor
entitle Sublessee to terminate this Sublease in whole or in part (except that
Sublessee may terminate this Sublease if [i] Sublessor has the right to
terminate the Master Lease on account of the services interruption to the
Subleased Premises, but fails to do so, or [ii] a Basic Services Failure [as
defined in the Master Lease] which is not the result of an Unavoidable
Interruption [as defined in the Master Lease] continues for one hundred eighty
(180) consecutive days or more, and such Basic Services Failure affects 25% or
more of the Subleased Premises and it becomes reasonably impracticable for
Sublessee to operate in the Subleased Premises such that Sublessee must relocate
to other premises), nor relieve Sublessee from fulfillment of any covenant or
agreement hereunder, and Sublessee shall have no claim of set-off or rebate of
Rent (except as expressly provided in this Paragraph 6.2) or damages on account
of any interruption in services occasioned thereby or resulting therefrom.
6.3. Repairs. Sublessee shall maintain the Subleased Premises in the
same or better condition than the condition in which the Subleased Premises
existed on the Commencement Date (reasonable wear and tear excluded).
Notwithstanding any other provisions of this Sublease (including, without
limitation, the quiet enjoyment covenant of Paragraph 2.3), the only repairs and
maintenance to which Sublessee is entitled hereunder are those to which
Sublessor is entitled under the Master Lease. Sublessee shall look solely to
Master Lessor under the Master Lease for all such repairs and maintenance,
including, without limitation, the repairs and maintenance to be provided by
Master Lessor under Section 5.4 of the Master Lease. Sublessor shall have no
obligation to perform or make any such repairs or maintenance with respect to
the Subleased Premises. Sublessee agrees, at its sole cost and expense, to
perform all repairs to and maintenance of the Subleased Premises required by
Sublessor as tenant under the Master Lease, including, without limitation, those
described in Section 5.5 of the Master Lease. Notwithstanding the foregoing,
Sublessor does hereby assign, transfer and set over to Sublessee any and all
rights it has or might have against the Master Lessor under the Master Lease for
all repairs
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<PAGE> 66
and maintenance to be provided by Master Lessor under Section 5.4 of the Master
Lease, to the extent that such repairs involved are applicable to the Subleased
Premises. Sublessee shall pursue any such rights and remedies by virtue of such
assignment at its own cost and expense and shall indemnify and hold harmless
Sublessor from any loss, cost, claim, damages, expense, cause of action or
liability (including, without limitation, attorneys' fees and costs) asserted
against Sublessor by Master Lessor by reason of Sublessee's pursuit of such
rights and remedies. This assignment will terminate contemporaneously with the
termination of this Sublease.
7. USE OF SUBLEASED PREMISES.
The Subleased Premises shall be used by Sublessee solely as business
offices.
8. INCORPORATION OF MASTER LEASE.
8.1. Compliance with Master Lease. Except (i) to the extent that the
provisions of the Master Lease are in clear conflict with the terms and
provisions of this Sublease, and (ii) as expressly otherwise provided in this
Sublease (including, without limitation, Paragraph 17 hereof), Sublessee shall
comply with all of the provisions of the Master Lease that are to be observed or
performed during the term hereof by Sublessor as tenant thereunder with respect
to the Subleased Premises. Notwithstanding any other provision of this Sublease,
Sublessee shall not, by any act or omission, cause Sublessor to be in violation
of or in default under the Master Lease.
8.2. Incorporation of Master Lease.
(a) Insofar as the provisions of the Master Lease pertaining
to the Subleased Premises do not conflict with specific provisions hereof or are
not specifically excluded by Paragraph 17 hereof, such provisions are
incorporated by this reference into this Sublease as fully as if completely
restated herein. Subject to the preceding sentence, Sublessee shall be bound by
all the provisions of the Master Lease pertaining to the Subleased Premises and
shall perform all of the obligations and responsibilities that Sublessor is
obligated to perform pursuant to the Master Lease pertaining to the Subleased
Premises. Therefore, for the purposes of this Sublease, wherever in the Master
Lease the word "LANDLORD" is used, it shall mean Sublessor and wherever in the
Master Lease the word "TENANT" is used, it shall mean Sublessee and wherever in
the Master Lease the word "LEASED PREMISES" or similar words are used, they
shall mean the Subleased Premises; all terms not specifically defined herein
shall have the same meanings designated thereto in the Master Lease provided
that the same is not in conflict with the terms and provisions of this Sublease.
(b) Notwithstanding Paragraph 8.2(a), this Sublease shall not
and does not create any rights in Master Lessor or any third parties.
8.3. Subleased Premises. The parties acknowledge and agree that
Sublessee's rights and obligations hereunder relate to only those portions of
the Leased Premises covered by the Master Lease that are a part of, or are
related or appurtenant to, the Subleased Premises.
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<PAGE> 67
8.4. Subject to Master Lease. This Sublease is expressly subject to
and inferior to the Master Lease, and no provision of this Sublease shall be
construed in a manner that would violate the terms of the Master Lease.
8.5. Approval of Master Lease. Sublessee represents that it has read,
is familiar with and approves all of the provisions of the Master Lease to the
extent that such provisions relate to the Subleased Premises.
9. LIMITATION OF LIABILITY AND INDEMNITY.
9.1. Condition of Property. Notwithstanding any provision of this
Sublease or the Master Lease to the contrary, Sublessor shall not be liable to
Sublessee or any of its officers, directors, shareholders, agents, employees,
servants, or invitees for any death or injury to any person or persons or for
damage to property due to the conduct of Sublessee's business in the Subleased
Premises, the condition or design of or any defect in the Subleased Premises,
the Building, the Project, or any part or component thereof (including, without
limitation, any mechanical, electrical, plumbing, heating, air conditioning or
other systems or equipment), which may exist or subsequently occur, except to
the extent of any gross negligence or willful misconduct of Sublessor or its
agents, employees, contractors, licensees or invitees, but such exception shall
be subject to the waiver of liability provisions and waiver of subrogation
provisions of Sections 6.6 and 6.7 of the Master Lease, which are incorporated
herein pursuant to Paragraph 8 hereof.
9.2. Default by Master Lessor. Sublessor shall not be responsible or
liable for any violation or default by Master Lessor under the Master Lease
(including, without limitation, the failure to provide services or repairs) or
for the acts or omissions of any tenant of the Building, the Project, or any
other third party.
10. CONDEMNATION; CASUALTY.
10.1. Condemnation. The provisions of Section 6.1 of the Master Lease
(regarding condemnation) are hereby modified only in that (i) Sublessor shall
have no obligation whatsoever to restore the Subleased Premises and no liability
in connection therewith, and (ii) Sublessor shall be entitled to all
condemnation proceeds except that Sublessee shall be entitled to receive any
condemnation proceeds to the extent expressly and directly awarded to Sublessee
by the condemning authority.
10.2. Casualty.
(a) In the event of a fire or other casualty in the Subleased
Premises, Sublessee shall immediately give written notice thereof to Sublessor
and to Master Lessor.
(b) If the Subleased Premises shall be partially destroyed by
fire or other casualty so as to render the Subleased Premises untenantable, in
whole or in part, and if the Master Lease is not terminated as therein provided,
then the Rent shall abate thereafter as to the portion of the Subleased Premises
rendered untenantable to the extent that the rent payable under the Master Lease
is abated as a result of such casualty, until such time as Master Lessor has
restored the Subleased Premises to permit
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<PAGE> 68
Sublessee's re-occupancy of the Subleased Premises. Sublessee shall pay all
costs with respect to any such restoration of the Subleased Premises that are
required to be paid by Sublessor to Master Lessor under the Master Lease.
(c) In the event of damage or destruction to the Subleased
Premises, the Leased Premises, the Building or the Project, or any portions
thereof, and the Master Lease is terminated as therein provided, then all
accrued and unpaid Rent for the period prior to such destruction shall be paid
by Sublessee and thenceforth this Sublease and the obligations of the parties
hereunder shall cease and come to an end, except for any continuing obligations
the parties may have to each other (including, without limitation, liability
under any indemnities provided for in this Sublease).
(d) The parties acknowledge and agree that Sublessor shall
have no obligation or liability in connection with any such damage or any
reconstruction of the Subleased Premises.
11. CURRENT LEASEHOLD IMPROVEMENTS; "AS-IS, WHERE-IS" CONDITION.
Sublessee accepts the Subleased Premises in their "AS-IS, WHERE-IS"
condition. The taking possession of the Subleased Premises by Sublessee shall be
conclusive evidence as against Sublessee that the Subleased Premises were in the
condition agreed upon between Sublessor and Sublessee. Sublessor and Sublessee
expressly agree that there are and shall be no implied or express warranties of
merchantability, habitability, suitability, fitness for a particular purpose or
any other kind arising out of this Sublease, and there are no warranties,
whether written, oral, express or implied, which extend beyond those expressly
set forth in this Sublease.
12. ALTERATIONS, ADDITIONS AND IMPROVEMENTS.
12.1. Consent. Sublessee shall not make any alterations, additions or
improvements to the Subleased Premises without first obtaining the written
consent of Sublessor (which consent shall not be unreasonably withheld) and the
consent of Master Lessor. Any alterations, additions and improvements will be of
a quality substantially equivalent to or better than the quality of improvements
within the Subleased Premises as of the Commencement Date. Sublessee shall
procure any and all insurance required by Sublessor and Master Lessor to be
maintained during the construction of the alterations, additions and
improvements. Construction of any alterations, additions or improvements shall
be performed by a general construction contractor approved by Master Lessor and
Sublessor. As between and among Master Lessor, Sublessor and Sublessee,
Sublessee hereby assumes any and all liability for any and all injuries to or
death of, any and all persons (including, without limitation, Sublessee's
contractors and subcontractors and employees), and any liability for any and all
damage to property caused by, or resulting from, or arising out of any act or
omission of Sublessee, Sublessee's contractors and their subcontractors or
employees in the performance of the alterations, additions and improvements.
Sublessee further agrees to defend, indemnify and save harmless Sublessor and
Master Lessor from and against all damages, costs, liability, losses and
expenses (including reasonable legal fees and expenses) that Sublessor or Master
Lessor may incur, suffer or pay as a result of claims or lawsuits due to,
because of, or arising out of any and all such injuries, death and/or damage,
except to the extent caused by the gross negligence or willful misconduct of
Sublessor or Master Lessor, as applicable, or their respective agents,
employees, contractors, licensees or invitees.
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<PAGE> 69
12.2. Sublessor's Property. All such alterations, additions,
improvements shall be made at Sublessee's expense and shall become Sublessor's
property, and shall remain on and be surrendered with the Subleased Premises at
the termination of this Sublease without disturbance, molestation, or injury.
All such work shall comply with all legal requirements and with the terms and
provisions of the Master Lease. Nothing contained in this Sublease shall prevent
Sublessee from removing all furniture, furnishings and trade fixtures owned by
Sublessee and used in its business, provided they can be removed without damage
to the Subleased Premises. Sublessee shall repair any damage to the Subleased
Premises and the Building caused by such removal.
13. INSURANCE.
Sublessor shall not be obligated to obtain or maintain any insurance
with respect to the Subleased Premises. Sublessee shall obtain and maintain in
force all insurance required under the Master Lease pertaining to the Subleased
Premises including, but not limited to, broad form commercial or comprehensive
general liability insurance including a cross-liability provision with limits,
as of the date of this Sublease, of not less than $2,000,000.00 for bodily
injury or damage to or destruction of property for any one occurrence (it being
acknowledged that the insurance limits are subject to change in accordance with
Section 6.5 of the Master Lease) with an insurance company or companies
authorized to do business in the State of Texas and with and A.M. Best Company,
Inc. rating of B+ or better. If such insurance is written on a claims-made form,
it must provide for (i) a retroactive date prior to, or coincident with, the
date of this Sublease, and (ii) a minimum extended claims reporting period of
one year. In addition, Sublessee shall name Sublessor and Master Lessor as
additional insured under any such insurance policy. Sublessee shall cause all
insurance policies to contain waiver of subrogation provisions acceptable to
Sublessor and Master Lessor. Sublessee agrees that certificates of insurance or
certified copies of such insurance policies will be delivered to Sublessor and
Master Lessor within ten (10) days following the execution of this Sublease. All
policies shall contain an endorsement requiring thirty (30) days prior written
notice from any insurer to Sublessor and Master Lessor before any change,
cancellation, termination, or reduction in or of such policies. All policies
shall acknowledge that they provide primary coverage with respect to the
additional insureds thereunder and that such policies as are separately
maintained by the additional insureds shall be excess insurance.
14. NO ASSIGNMENT OR SUB-SUBLEASE WITHOUT CONSENT.
Sublessee may not sell, assign, transfer, convey, or encumber this
Sublease or any part thereof or any interest therein or relet the Subleased
Premises, in whole or in part (hereinafter referred to as a "TRANSFER"), without
first obtaining the written consent of Sublessor. Any attempted Transfer in
violation hereof shall be null and void. Any Transfer by Sublessee shall not
relieve Sublessee from any liability or obligation created by this Sublease. If
Sublessor elects to consent to a Transfer (which consent may be granted or
withheld in Sublessor's sole and absolute discretion), and if the Rent due and
payable by a transferee under any such permitted Transfer (or a combination of
the Rent payable thereunder plus any bonus or other consideration therefor or
incident thereto) in respect of the interval in question exceeds the Rent due
under this Sublease allocable to the portion of the Subleased Premises covered
thereby for the same interval, such excess shall belong to Sublessor. Sublessee
shall hold all
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<PAGE> 70
amounts it receives which are payable to Sublessor in trust and shall deliver
such amounts to Sublessor within ten days after Sublessee's receipt thereof.
15. DEFAULT.
15.1. Default by Sublessee. Each of the following shall constitute an
"EVENT OF DEFAULT" by Sublessee under this Sublease: (i) if default shall be
made in the payment of any sum of Rent, or of any sum other than Rent, to be
paid by Sublessee to Sublessor under this Sublease and such failure to pay
continues for a period of five (5) days after written notice thereof has been
given by Sublessor to Sublessee (provided, however, Sublessor shall not be
required to provide such notice more than once in any twelve (12) month period,
the second such failure constituting an Event of Default without Sublessor
providing such notice); or (ii) if default shall be made in the performance of
any of the other covenants and conditions which Sublessee is required to observe
and perform under this Sublease and such default continues for a period of
thirty (30) days after written notice thereof has been given by Sublessor to
Sublessee; or (iii) if the interest of Sublessee under this Sublease shall be
levied on under execution or other legal process; or (iv) if any petition shall
be filed by or against Sublessee to declare Sublessee a bankrupt or to delay,
reduce or modify Sublessee's debts or obligations; or (v) if Sublessee is
declared insolvent according to law or if any assignment of Sublessee's property
shall be made for the benefit of creditors or if a receiver or trustee is
appointed for Sublessee or its property; or (vi) if Sublessee shall default
under any of the terms and provisions of the Master Lease which, by the terms of
this Sublease, are applicable hereto; then Sublessor may treat the occurrence of
any one or more of the foregoing events as a breach of this Sublease and
thereupon, at Sublessor's option, Sublessor shall have any one or more of the
following described remedies, in addition to all other rights and remedies
provided at law or in equity:
(a) Sublessor may terminate this Sublease and repossess the
Subleased Premises and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Subleased
Premises, (ii) the accrued and unpaid Rent at the time of termination,
plus interest thereon at the maximum lawful per annum rate under the
laws of the State of Texas from the due date, (iii) the present value
[discounted at the rate of eight percent per annum] of the balance of
all Rent for the remainder of the Sublease term less the present value
(discounted at the same rate) of the fair market rental value of the
Subleased Premises for the same period (but only to the extent the
remainder is a positive number) and (iv) any other sum of money and
damages including any attorney's fees and court costs owed by
Sublessee to Sublessor.
(b) Sublessor may terminate Sublessee's right of possession
(but not this Sublease) and may repossess the Subleased Premises by
forcible entry or detainer suit or otherwise, without demand or notice
of any kind to Sublessee and without terminating this Sublease, in
which event Sublessor may, but shall be under no obligation to do so,
relet the Subleased Premises for the account of Sublessee for such
Rent and upon such terms as shall be satisfactory to Sublessor. For
the purpose of such reletting, Sublessor is authorized to decorate
and/or to make any repairs, changes, alterations and/or additions in
or to the Subleased Premises that may be reasonably necessary to
restore the Subleased Premises to a "BUILDING STANDARD" (as defined in
the Master Lease) condition. In addition, (i) if Sublessor shall fail
to relet the Subleased Premises, then Sublessee shall pay to Sublessor
as damages a sum equal to the amount of all
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<PAGE> 71
accrued and unpaid Rent and other accrued and unpaid sums provided for
in this Sublease; or (ii) if the Subleased Premises are relet and a
sufficient sum shall not be realized from such reletting after paying
the accrued and unpaid Rent and other accrued and unpaid sums due
hereunder at the time of reletting, the cost of recovering possession
and of collecting rent accruing under such subletting, and all of the
costs and expenses reasonably incurred in making such decorations,
repairs, changes, alterations and/or additions necessary to relet the
Subleased Premises (plus interest on all of the same at the maximum
lawful contract rate), then Sublessee shall satisfy and pay any such
deficiency upon demand therefor from time to time. Sublessee agrees
that Sublessor may file suit to recover any sums falling due under the
terms of this Paragraph 15.1(b) from time to time, and that no delivery
to or recovery by Sublessor of any sum due Sublessor hereunder shall be
any defense in any action to recover any amount of money not
theretofore reduced to judgment in favor of Sublessor, nor shall such
reletting be construed as an election on the part of Sublessor to
terminate this Sublease unless a written notice of such intention is
given to Sublessee by Sublessor. Notwithstanding any such reletting
without termination, Sublessor may at any time thereafter elect to
terminate this Sublease for such previous breach.
(c) Sublessor may enter the Subleased Premises and cure at
Sublessee's expense any default.
(d) Sublessor may, but shall not be required to, use, apply or
retain all or any part of the Security Deposit for the payment of any
Rent or any other sum in default, or for the payment of any other
amount which Sublessor may spend or become obligated to spend by reason
of Sublessee's default, or to compensate Sublessor for any other loss
or damage which Sublessor may suffer by reason of Sublessee's default,
including, without limitation, costs and attorneys' fees incurred by
Sublessor to recover possession of the Subleased Premises. If any
portion of the Security Deposit is so used or applied, Sublessee shall,
upon demand, deposit cash with Sublessor in an amount sufficient to
restore the Security Deposit to its original amount, and Sublessee's
failure to do so shall constitute a default hereunder by Sublessee.
15.2. Limited Duty to Mitigate. If Sublessor expels or removes
Sublessee from the Subleased Premises without terminating or forfeiting this
Sublease or accepting surrender of the Subleased Premises, Sublessor must
attempt to mitigate its damages. In any situation in which Sublessor is
attempting to mitigate its damages, Sublessor will conclusively be deemed to
have done so if Sublessor lists the Subleased Premises with a real estate broker
or agent and considers all written proposals for such space made by such broker
or agent; provided, however, that in no event will Sublessor (a) be obligated to
travel outside a radius of thirty (30) miles from the Subleased Premises in
order to meet with a prospective tenant, (b) be obligated to expend monies for
finish-out requested by a prospective tenant unless Sublessor, in its sole
discretion, believes that the excess rent Sublessor will receive and the credit
of the prospective tenant supports such a decision, (c) be required to give
preference to the Subleased Premises over other spaces in the Leased Premises,
(d) be required to agree to allow an existing tenant of the Project or subtenant
of the Leased Premises to move from their existing space to all or any of the
Subleased Premises, or (e) be required to accept any lease proposal which it, in
its sole discretion, deems unacceptable.
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<PAGE> 72
15.3. Default by Sublessor. Except where the provisions of this
Sublease grant Sublessee an express, exclusive remedy, or deny Sublessee a
remedy, if Sublessor should fail to perform or observe any covenant, term,
provision or condition of this Sublease and such default should continue beyond
a period of thirty (30) days (or such longer period as is reasonably necessary
to remedy such default, provided Sublessor shall continuously and diligently
pursue such remedy at all times until such default is cured) following notice
thereof by Sublessee to Sublessor, then Sublessee shall have as its sole and
exclusive remedy the right to commence such actions at law or in equity to which
Sublessee may be entitled, including without limitation any action for specific
performance or damages but expressly excluding an action to declare a
termination of this Sublease. The rights of Sublessee pursuant to this Paragraph
15.3 shall be subject to any express provisions of this Sublease providing for
remedies different from, or in exclusion of, the remedies above-described. In no
event shall Sublessor be liable to Sublessee for consequential or special
damages by reason of a failure to perform (or default) by Sublessor or Master
Lessor hereunder or otherwise. Sublessee shall have the right, but not the
obligation to cure any default by Sublessor under the Master Lease and be
reimbursed by Sublessor for the actual amounts expended to cure any such default
upon demand from Sublessee.
15.4. Non-Waiver. Failure of either party to declare any default
immediately upon occurrence thereof, or delay in taking any action in connection
therewith, shall not waive such default or right to take such action, but such
party shall have the right to declare any such default or take such action at
any time. Sublessor's acceptance of partial payment of any sum owing hereunder
shall not constitute a waiver of or be deemed to constitute a waiver or estoppel
by Sublessor of the right to collect the full amount of any sum owing hereunder.
15.5. Cumulative Remedies. All rights and remedies of Sublessor
enumerated in this Sublease (including, without limitation, indemnification
rights) shall be cumulative and shall not exclude any other right or remedy
allowed by law or in equity. These rights and remedies may be exercised or
enforced concurrently and as often as necessary.
15.6. Sublessor's Default and Sublessee's Remedy. Sublessor shall be
deemed to be in default under this Sublease if Sublessor shall fail to comply
with any term, provision, or covenant of this Sublease and shall not cure such
failure within thirty (30) days after receipt of written notice thereof from
Sublessee, or in the event such failure to comply cannot reasonably be cured
within thirty (30) days, Sublessor fails to commence cure within thirty (30)
days and pursue to a diligent conclusion. In the event Sublessor is in default
under this Sublease, Sublessee may terminate this Sublease by giving Sublessor
written notice and this Sublease shall terminate and be void as of the date
given in such notice. In the event of such cancellation, this Sublease shall be
of no further force and effect, and neither party shall have any rights or
obligations hereunder.
16. EXCULPATION.
Sublessee shall maintain the Subleased Premises in the same or better
condition than the condition in which the Subleased Premises existed on the
Commencement Date (reasonable wear and tear excluded). Sublessee acknowledges
and agrees that Sublessor shall not be responsible for any maintenance,
services, or repairs to the Subleased Premises, to the Building, the Project, or
any part thereof, nor shall Sublessor be liable for any interruption in
utilities or services to the Subleased
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<PAGE> 73
Premises, nor for loss or damage to any person or any property of Sublessee or
its employees or invitees by theft or otherwise, nor shall Sublessor be liable
for any damage or disturbance caused by other tenants of the Building or the
Project. Any and all covenants, undertakings and agreements herein made on the
part of Sublessor are made and intended not as personal covenants,
understandings and agreements for the purpose of binding Sublessor personally or
the assets of Sublessor, except only Sublessor's interest in the leasehold under
the Master Lease; and Sublessee specifically agrees to look solely to
Sublessor's (or its successors') leasehold interest under the Master Lease for
the recovery of any judgment from Sublessor (or its successors) relating to this
Sublease, it being agreed that Sublessor and its successors (and their
directors, officers, employees and agents) shall never be personally liable for
any such judgment.
17. INAPPLICABILITY OF CERTAIN PROVISIONS OF MASTER LEASE.
The Master Lease contains certain provisions that are not applicable
to this Sublease. The parties agree that the following sections of the Master
Lease are not incorporated herein and do not form a part of this Sublease:
Any provisions that are superseded by or in direct conflict with the
provisions hereof; any provisions relating to Master Lessor's or
Sublessor's obligations regarding the initial construction of the
Building, the Project, or the Leased Premises by Master Lessor,
including any rights of Sublessor to approve matters in connection
therewith, the intent of this provision being to acknowledge that
construction of the Building, the Project and the Leased Premises
covered by the Master Lease are complete; Section 1.1 (Leased
Premises); Section 1.2 (Term); Section 1.3 (Base Building Design);
Section 1.4 (Use); Section 2.1 (Rental Payments); Section 2.2 (Base
Rental); Section 2.5 (Cash Inducements); Section 2.6 (Refurbishment
Allowance); Section 2.7 (Additional Inducements); Section 2.8
(Agreements Inducement); the provisions of Section 3.1 (Services) that
would otherwise require Sublessor to provide services as stated
therein (it being acknowledged that Sublessee agrees to look solely to
Master Lessor for any such services in accordance with Paragraph 6
hereof); the provisions of Section 3.2 (Keys and Locks) that would
require Sublessor to pay for any keys and/or access cards for
Sublessee; Section 3.3 (Graphics and Building Directory); Section 3.4
(Parking) (it being acknowledged that the parking provision set forth
in Paragraph 19 hereof shall govern this Sublease); Section 3.5
(Building Identity and Signs); Section 3.6 (Communications Equipment);
the provisions of Section 4.4 (Laws and Regulations; Rules of
Building) that would otherwise require Sublessor to act on behalf of
the Master Lessor; Section 5.1 (Base Building Improvements); Section
5.2 (Leasehold Improvements); Section 5.3 (Holdover and Related
Costs); the provisions of Section 5.4 (Repairs by Landlord) that would
otherwise require Sublessor to make any repairs or perform any
maintenance, repair, refurbishing or replacement (it being
acknowledged that Sublessee agrees to look solely to Master Lessor for
any such items in accordance with Paragraph 6 hereof); the provisions
of Section 5.7 (Management) that would otherwise give Sublessee the
right to approve or select the Project manager; the provisions of
Sections 6.1, 6.3, 6.4, and 6.5 (Condemnation, Casualty Clause,
Casualty Insurance, and Liability Insurance) that would otherwise
require Sublessor to provide and maintain insurance on the Subleased
Premises or to repair or restore the Subleased Premises in the event
of a casualty or a condemnation (it being acknowledged that Sublessee
agrees to look solely to
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<PAGE> 74
Master Lessor for such items in accordance with Paragraph 10 hereof);
Section 6.6 (Hold Harmless and Indemnity) (it being acknowledged that
the indemnity provisions set forth in Paragraph 9 hereof shall govern
this Sublease); Section 7.1 (Default and Remedies) (it being
acknowledged that the default provisions set forth in Paragraph 15
hereof shall govern this Sublease); Section 7.3 (Negation of Lien for
Rent); Section 7.7 (Holding Over); the provisions of Section 7.8
(Subordination) that would otherwise require Sublessor to act on
behalf of the Master Lessor with respect to any mortgage or deed of
trust placed on the Project; Section 7.10 (Vacating the Leased
Premises); Section 7.11 (Tenant Net Worth); Section 8.1 (Sublease or
Assignment by Tenant); Section 8.2 (Assignment by Landlord) (it being
acknowledged that Sublessor has unrestricted rights to assign its
interest in this Sublease); Section 8.5 (Memorandum of Lease); Section
8.6 (Consents); Section 8.7 (Publicity); Article IX (Options); Section
10.2 (Fair Market Rental); Section 11.1 (Notices) (it being
acknowledged that notices required under this Sublease shall be
delivered as set forth in Paragraph 22.4 hereof); Section II
(Brokers); the defined terms in Section 11.4 (Other Definitions) to
the extent they do not relate to Master Lease provisions which are
incorporated herein by reference; Section 11.8 (Extension of Lease I);
the exhibits attached to the Master Lease to the extent they do not
relate to Master Lease provisions which are incorporated herein by
reference. Except as provided in the following sentence, Section 2.3
of the Master Lease is incorporated herein by reference for all
purposes except for determining (i) the Base Year, and (ii) the
fraction used for calculating Sublessee's Percentage Share of
Operating Expenses, both of which shall be governed by Paragraph 5 of
this Sublease. For purposes of determining Sublessee's Percentage
Share of Operating Expenses, Sublessor shall be entitled to rely upon
any and all statements and certifications furnished to Sublessor by
Master Lessor and Master Lessor's accountants and representatives, and
Sublessor shall not be liable to Sublessee for any errors or
inconsistencies contained in any such statements or certifications.
Sublessee's obligations under Paragraph 8 hereof and elsewhere to
comply with or conform to the provisions of the Master Lease do not extend to
any provisions of the Master Lease that are not incorporated herein and do not
form a part of this Sublease as stated in this Paragraph 17, but nevertheless
Sublessee shall not by any act or failure to act cause any default to exist
under the Master Lease.
18. ACCEPTANCE OF BUILDING AND SUBLEASED PREMISES.
Sublessee, by taking possession of the Subleased Premises,
acknowledges and agrees that it: (a) accepts the Subleased Premises as suitable
for the purposes for which they are leased; (b) accepts the Subleased Premises
as being in a good and satisfactory condition; (c) accepts the Subleased
Premises subject to the Master Lease and all applicable laws, agreements,
covenants, restrictions and matters of record; and (d) waives any defects in the
Subleased Premises, except to the extent that Master Lessor is obligated to
maintain and/or repair the same pursuant to the Master Lease.
19. PARKING.
During the term of this Sublease, Sublessee shall have the right to
use three (3) parking spaces for every 1,000 square feet of Net Rentable Area in
the Subleased Premises, which parking spaces shall
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be located in the parking garages for Two Galleria Tower or Three Galleria Tower
(collectively, the "GALLERIA GARAGES"). The parking spaces shall be unreserved
spaces located in portions of the Galleria Garages designated by and under the
control of Master Lessor. Sublessee's use of the spaces in the Galleria Garages
are subject to all restrictions in the Master Lease. Sublessee understands that
any such spaces which are designated by Master Lessor in the Two Galleria Tower
garage after the commencement of the Sublease are subject to being transferred
by Master Lessor to the Three Galleria Tower garage upon seven (7) days notice
thereof to Sublessee. The parking spaces shall be provided to Sublessee at no
charge. Sublessee shall have no parking rights under this Sublease or the Master
Lease, except as expressly set forth herein.
20. HAZARDOUS MATERIALS.
Sublessee shall not cause or permit any Hazardous Materials (as such
term is defined in the Master Lease) to be used, stored, generated, released or
disposed of on or in the Subleased Premises, Building or Project by Sublessee,
Sublessee's agents, employees, contractors, or invitees except to the extent
consistent with customary and reasonable office business practices and provided
(a) such Hazardous Materials do not endanger the health of any person on or
about the Subleased Premises or the Project, and (b) Sublessee complies with all
Legal Requirements applicable to such Hazardous Materials. In the event of a
release of any Hazardous Material, Sublessee, in addition to complying with all
applicable law concerning such release, shall notify Sublessor immediately upon
becoming aware of the same and take such measures as required under all
applicable law and consistent with such law, including, for example, the removal
or causing the removal and appropriate disposition of such Hazardous Materials,
all at Sublessee's expense. If Sublessee breaches or violates any provision in
this Paragraph 20, or if the Subleased Premises, Building or Project becomes
contaminated in any manner by reason of the fault of Sublessee, its agents,
employees, contractors or invitees, Sublessee shall indemnify, defend and hold
Sublessor harmless from any and all claims, damages, fines, judgments,
penalties, costs, liabilities, or losses arising as a result thereof.
21. AMERICANS WITH DISABILITIES ACT.
Sublessee, at its sole expense, will be responsible for causing the
design and construction of any alterations and improvements hereafter made to
the Subleased Premises to be in compliance with the Americans with Disabilities
Act of 1990 (the "ADA"). Sublessee further agrees to be responsible for any ADA
mandated changes to pre-existing conditions in the Subleased Premises which are
required due to the fact that Sublessee is altering or improving the Subleased
Premises. Sublessee agrees to indemnify and hold harmless Sublessor for the
above described obligations.
22. LEASE OF EXISTING FURNITURE.
(a) Terms of Furniture Lease. In addition to the Subleased
Premises, Sublessor also hereby leases to Sublessee, and Sublessee hereby leases
from Sublessor, a portion of the furniture presently situated in the Subleased
Premises (the "EXISTING FURNITURE"). The exact description and quantities of the
Existing Furniture being leased will be determined in the manner described in
Paragraph 22(c) below. The Existing Furniture is hereby leased on the same terms
and conditions as
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<PAGE> 76
provided in this Sublease for the subleasing of the Subleased Premises, except
that: (a) on the Expiration Date, Sublessee shall return the Existing Furniture
to Sublessor in the same or better condition than the condition in which the
Existing Furniture existed on the date on which this Sublease was executed,
normal wear and tear excepted; and (b) the monthly rental for the Existing
Furniture shall be 1/12th of the product of the number of square feet of Net
Rentable Area in the Subleased Premises times $1.00 (i.e., $1,809.66) (the
"FURNITURE RENT").
(b) Payment of Furniture Rent. Each installment of
Furniture Rent shall be due on or before the first day of each month during the
term of this Sublease and shall be paid to Sublessor at its address as set forth
in Paragraph 23.4 (or as later changed pursuant thereto) without notice, demand,
abatement, deduction, diminution, or offset. Monthly installments of Furniture
Rent shall be prorated for any period during the term hereof which is less than
a full calendar month. The initial installment of Furniture Rent shall be paid
upon the Commencement Date.
(c) Furniture Inventory. On or before the Commencement
Date, Sublessor and Sublessee will prepare an inventory confirming the type,
amount and condition of the Existing Furniture. Sublessee acknowledges that it
will have thoroughly inspected the Existing Furniture as of the Commencement
Date, and that except as agreed by Sublessor and Sublessee in writing as an
attachment to the Existing Furniture inventory, the Existing Furniture will be
deemed to have been delivered to Sublessee in a good condition as of such date.
Sublessee shall also be entitled to use the Additional Furniture (herein so
called) more particularly described on EXHIBIT "C" attached hereto and made a
part hereof for all purposes; provided, however, Sublessee shall be responsible
for moving the Additional Furniture from its current location to the Subleased
Premises at Sublessee's sole cost and expense.
23. MISCELLANEOUS PROVISIONS.
23.1. Attorneys' Fees. If any action at law, in equity or in
arbitration, including an action for declaratory relief, is brought to enforce
or interpret the provisions of this Sublease, the prevailing party shall be
entitled to recover attorneys' fees and court (or arbitration) costs from the
other party.
23.2. Applicable Law. This Sublease shall be construed, enforced
and governed by the laws of the State of Texas. Venue for any action involving
this Sublease shall be in Dallas County, Texas.
23.3. Surrender of Premises and Keys. Sublessee shall, at the
expiration of this Sublease, quietly and peaceably surrender the Subleased
Premises without the requirement of notice to Sublessee, and Sublessee will
deliver to Sublessor all keys to the Subleased Premises. At the time of such
surrender, the Subleased Premises shall be in the same or better condition than
the condition in which the Subleased Premises existed on the Commencement Date
(reasonable wear and tear excluded).
23.4. Notices. Any notices, requests, instructions or other
communications to Sublessor or Sublessee required or permitted to be given under
this Sublease must be in writing and shall be deemed given if (a) personally
delivered to the address for Sublessor or Sublessee stated below, (b) sent by
United States Mail, prepaid, certified or registered, return receipt requested,
to such address, or (c) delivered by overnight express delivery service to such
address. Any notice which is delivered personally
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OFFICE BUILDING SUBLEASE -15-
<PAGE> 77
or sent by overnight express in the manner provided herein shall be deemed to
have been duly given to the party to whom it is directed upon actual receipt by
such party. Any notice addressed and mailed in the manner herein provided shall
be deemed to have been given to the party to whom it is addressed at the close
of business, local time, of the recipient on the third regular business day
following the date of deposit of such item in a depository of the United States
Postal Service.
The address for Sublessor shall be:
KERR-McGEE CORPORATION
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Attention: Manager, Real Estate Operations
The address for Sublessee shall be: [STAMP]
THE VIALINK COMPANY
13155 Noel Road, Suite 800
Dallas, Texas 75240-5090
Attention: David Lloyd
Vice President - Operations
Either party shall have the right to change its address to which notices shall
be sent by giving the other notice thereof as required by this Paragraph 23.4.
23.5. Rules and Regulations. Sublessee shall comply with all rules and
regulations now or hereafter promulgated by Master Lessor and/or Sublessor
pertaining to the Subleased Premises, the Building, the Project or the Parking
Facility. Attached hereto as EXHIBIT "B" are the current Building rules and
regulations promulgated by Sublessor. As used in EXHIBIT "B", the term "Lessor"
shall mean and refer to Master Lessor and/or Sublessor, and the term "Tenant"
shall mean and refer to Sublessee.
23.6. Financial Statements. Sublessee shall, no later than one hundred
twenty (120) days after the end of each fiscal year, deliver to Sublessor copies
of Sublessee's balance sheet and statement of profit and loss for the preceding
fiscal year, each prepared in accordance with generally accepted accounting
principles, such financial statements to be audited by a nationally or
regionally recognized accounting firm.
23.7. Authority. Sublessee hereby represents to Sublessor that the
person signing on behalf of Sublessee has the power and authority to bind
Sublessee to this Sublease; and Sublessor hereby represents to Sublessee that
the person signing on behalf of Sublessor has the power and authority to bind
Sublessor to this Sublease.
23.8. Paragraph Headings, Gender, etc. The paragraph headings in this
Sublease are not intended to be used in construing the substance of this
Sublease. Unless the context of this Sublease otherwise requires (a) words of
any gender are deemed to include the other gender, (b) words using the singular
or plural number also include the plural or singular number, respectively, (c)
the terms
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<PAGE> 78
"hereof", "herein", "hereby", "hereto", and derivative or similar words refer
to this entire Sublease, (d) the term "Section" or "Article" refers to the
specified section or article of the Master Lease, (e) the term "Paragraph"
refers to the specified Paragraph of this Sublease, and (f) all references to
"dollars" or "$" refer to currency of the United States of America.
23.9. Late Charge. If any installment of Rent or any other sum which
becomes owing by Sublessee to Sublessor under the provisions hereof is not
received by Sublessor by the due date therefor, Sublessee, to the extent
permitted by law, agrees to pay, in addition to such installment of Rent or such
other sum owed, interest on such installment of Rent or such other sums owed at
the rate of five percentage points over the Prime Rate (as defined in the Master
Lease) or the highest rate permitted by applicable law, whichever is lower,
until paid. It is understood that the late payment charge shall be for the
purpose of reimbursing Sublessor for the additional costs and expenses which
Sublessor presently expects to incur in connection with the handling and
processing of late installment payments of Rent and other sums owed. Any amounts
paid by Sublessor to cure any defaults of Sublessee hereunder, which Sublessor
shall have the right but not the obligation to so cure, shall, if not repaid by
Sublessee within five days of demand by Sublessor, thereafter bear interest at
the rate of five percentage points over the Prime Rate or the highest rate
permitted by applicable usury law, whichever is lower, until paid.
23.10. Consent of Master Lessor. If Sublessor determines that the
consent of Master Lessor is required for this Sublease, then this Sublease shall
not be effective unless and until such consent is obtained.
23.11. Obligations of Sublessor. It is understood and agreed that any
and all covenants or obligations of Sublessor contained in this Sublease shall
be binding upon Sublessor and its successors and assigns only with respect to
breaches occurring or accruing during its and their respective ownership of the
Sublessor's interest hereunder.
23.12. Rules of Construction. The terms and provisions of this
Sublease shall not be construed against or in favor of a party hereto merely
because such party is the "Sublessor" or the "Sublessee" hereunder or such party
or its counsel is the draftsman of this Sublease.
23.13. Confidentiality of Master Lease. Sublessee acknowledges and
agrees that the terms and provisions of the Master Lease are confidential, and
Sublessee agrees to not disclose the terms and provisions of the Master Lease to
any person other than Sublessee's affiliates, employees, partners, attorneys,
architects, or other consultants (and only to the foregoing persons on a "need
to know" basis).
23.14. Lien for Rent. To secure the payment of all Rent due and to
become due hereunder, and the faithful performance of all of the other covenants
of this Sublease required by Sublessee to be performed, Sublessee hereby gives
to Sublessor an express contractual lien on, and security interest in and to,
all property, chattels and merchandise owned by Sublessee which may be placed in
the Subleased Premises.
23.15. Holding Over. If Sublessee should remain in possession of the
Subleased Premises after the expiration or termination of this Sublease, without
the execution by Sublessor and Sublessee of a
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OFFICE BUILDING SUBLEASE -17-
<PAGE> 79
new sublease, then Sublessee shall be deemed to be occupying the Subleased
Premises as a tenant-at-sufferance subject to all the covenants and obligations
of this Sublease, and Sublessee shall pay as Rent per month for the entire
holdover period 150% the Rent payable hereunder for the month preceding the
commencement of such holding over, calculated on a daily basis. No holding over
by Sublessee after the term of this Sublease, either with or without the consent
and acquiescence of Sublessor, shall operate to extend the Sublease for a longer
period than one month, and any holding over with the consent of Sublessor in
writing shall thereafter constitute this Sublease a sublease from month to month
at a Rent rate as agreed to in writing by Sublessor and Sublessee.
23.16. Brokers. Sublessor and Sublessee warrant and represent to each
other that no real estate broker or salesman has been involved by either party
in this Sublease other than Sublessor's agent, The Staubach Company, and
Sublessee's agent, Kennedy Wilson Brokerage Services; and each party agrees
to indemnify and hold the other party harmless from and against any and all
claims of any other real estate broker or salesman due to acts of such party or
such party's representatives.
23.17. Prior Agreements Superseded. This Sublease constitutes the sole
agreement of the parties and supersedes any prior understandings or written or
oral agreement between the parties respecting the subject matter hereof.
23.18. Time of Essence. Time is of the essence in this Sublease.
23.19. Binding on Successors. Sublessor shall have the right to
transfer and assign, in whole or in part, all its rights and obligations
hereunder and in the Master Lease, and upon any such assignment, this Sublease
shall be binding upon and inure to the benefit of the successors and assigns of
Sublessor, and shall be binding upon and inure to the benefit of Sublessee, its
successors, and, to the extent assignment may be approved by Sublessor
hereunder, Sublessee's assigns.
23.20. Counterparts. This Sublease may be executed concurrently in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
23.21. Amendments. This Sublease may not be altered, changed or
amended, except by an instrument in writing executed by Sublessor and Sublessee.
23.22. Exhibits. The terms and provisions of any exhibits attached
hereto are hereby incorporated herein and made a part hereof for all purposes.
23.23. Invalid Provisions. If any term or provision of this Sublease,
or the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Sublease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Sublease shall be valid and shall be enforceable to the extent permitted by
law.
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OFFICE BUILDING SUBLEASE -18-
<PAGE> 80
EXECUTED by Sublessor on the ___ day of December, 1999 to be
effective as of the day and year first above written.
SUBLESSOR:
KERR-McGEE CORPORATION,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXECUTED by Sublessee on the ___ day of December, 1999, to be
effective as of the day and year first above written.
SUBLESSEE:
THE VIALINK COMPANY,
a Delaware corporation
By: /s/ J. ANDREW KERNER
----------------------------------------
Name: J. ANDREW KERNER
----------------------------------
Title: VP Finance
---------------------------------
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OFFICE BUILDING SUBLEASE -19-
<PAGE> 81
EXHIBIT "A"
FLOOR PLAN OF SUBLEASED PREMISES
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OFFICE BUILDING SUBLEASE -20-
<PAGE> 82
EXHIBIT "B"
SUBLESSOR RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways, and other similar
areas shall not be obstructed by Sublessee or used for any purpose
other than ingress and egress to and from the Subleased Premises and
for going from one part of the Building to another part of the
Building.
2. Plumbing fixtures and appliances shall be used only for the purpose for
which designated, and no sweeping, rubbish, rags or other unsuitable
material shall be thrown or placed therein. Damage resulting to any
fixtures or appliances from misuse by Sublessee shall be at its
expense, and Sublessor shall not in any case be responsible therefore.
3. No signs, advertisements, or notices shall be painted or affixed on or
to any window or doors or other part of the Building except of such
color, size, and style and in such places as shall be first approved in
writing by Sublessor. No nails, hooks or screws shall be driven or
inserted in any part of the Building except with the express consent of
Sublessor.
4. Sublessor will provide and maintain a directory for all sublessees to
be located in the lobby of the Building; no other directory shall be
permitted unless previously consented to by Sublessor in writing. All
directory listings will be at Sublessee's expense.
5. Sublessor shall provide, at Sublessee's expense, all locks for doors in
the Subleased Premises. Sublessee shall not place any additional lock
or locks on any door in its Subleased Premises without Sublessor's
written consent. All requests for duplicate keys shall be made to the
Property Manager and will be furnished at Sublessee's expense.
6. Proposed plans for alterations affecting floors, walls, woodwork, trim,
windows, ceilings, equipment, and/or any other physical portion of the
Building must be approved in writing by Sublessor. Sublessee will refer
all contractors, contractor's representatives and installation
technicians tendering any service to Sublessee to Sublessor for
Sublessor's supervision, approval and control before the performance of
any contractual services. This provision shall apply to all work
performed in the Building, including, but not limited to, installations
of telephones, telegraph equipment, electrical devices and attachments,
and any and all installations of every nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment and any other physical
portion of the Building.
7. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Sublessee of any bulky material, merchandise or
materials which requires use of elevators or stairways or movement
through the Building entrances or lobby shall be restricted to such
hours as Sublessor shall designate. All such movement shall be under
the supervision of Sublessor and in the manner agreed between Sublessee
and Sublessor by prearrangement before performance. Such prearrangement
initiated by Sublessee shall include determination by Sublessor, and
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OFFICE BUILDING SUBLEASE -21-
<PAGE> 83
subject to its decision and control, as to the time, method, and
routing of movement and as to limitations for safety or other concern
which may prohibit any article, equipment, or any other item from being
brought into the Building. Sublessee assumes all risks as to the damage
to articles moved and injury to persons or public engaged or not
engaged in such movement, including equipment, property, and personnel
of Sublessor if damaged or injured as a result of an act in connection
with carrying out this service for Sublessee; and Sublessor shall not
be liable for acts of any persons engaged in or any damage or loss to
any of said property or persons resulting from any act in connection
with such service performed for Sublessee.
8. Sublessor reserves the right in its sole discretion to prescribe the
weight and position of safes and other heavy equipment, which shall in
all cases stand on supporting devices approved by Sublessor. All
damages done to the Building by taking in or putting out any property
of Sublessee, or done by Sublessee's property while in the Building,
shall be repaired at the expense of Sublessee.
9. Sublessee shall notify the Property Manager when safes or other heavy
equipment are to be taken in or out of the Building, and the moving
shall be done under the supervision of the Property Manager, after
receiving written permission from Sublessor. Persons employed to move
such property must be acceptable to Sublessor.
10. Should Sublessee require telegraphic, telephonic, annunciator or other
communications service, Sublessor will direct electricians where and
how wires are to be introduced and placed and none shall be introduced
or placed except as Sublessor shall direct.
11. Corridor doors, when not in use, shall be kept closed. Stairwell doors
shall remain closed at all times.
12. Sublessee shall cooperate with Sublessor's employees in keeping its
Subleased Premises neat and clean. Unless Sublessee is responsible for
cleaning its own space pursuant to its Office Building Sublease,
Sublessee shall not employ any person for the purpose of such cleaning
other than the Building cleaning and maintenance personnel.
13. Sublessor shall be in no way responsible to Sublessee, its agents,
employees, or invitees for any loss of property from the Subleased
Premises or public areas or for any damages to any property thereon
from any cause whatsoever.
14. Sublessee shall not make or permit any improper noises in the Building
or otherwise interfere in any way with other tenants and subtenants or
persons having business with them.
15. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No birds or animals shall be brought into or kept
in, on or about the Subleased Premises (except for Seeing Eye dogs).
16. No vending machines of any type shall be allowed in the Subleased
Premises without the prior written consent of Sublessor.
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OFFICE BUILDING SUBLEASE -22-
<PAGE> 84
17. No machinery of any kind shall be operated by Sublessee in the
Subleased Premises without prior written consent of Sublessor, nor
shall Sublessee use, or keep, in the Building any flammable or
explosive fluid or substance.
18. No portion of the Subleased Premises shall at any time be used as
sleeping or lodging quarters.
19. Sublessee is requested to lock all doors leading to corridors and to
turn out all lights at the close of its working day.
20. Sublessor shall not be responsible for lost or stolen personal
property, money or jewelry from the Subleased Premises or public areas
regardless of whether such loss occurs when area is locked against
entry or not.
21. Sublessee shall not tamper with or attempt to adjust temperature
control thermostats in the Subleased Premises. Sublessor shall make, or
cause Master Lessor to make, adjustments in thermostats on call from
Sublessee.
22. Sublessee will comply with all requirements necessary for the security
of the Subleased Premises, including the use of service passes issued
by Sublessor or Master Lessor for after hours removal of office
furniture/packages, and use of security control cards for after hours
entry.
23. All window blinds are to remain down and tilted at a 45 degree angle
toward the street to help maintain comfortable room temperatures and to
conserve energy.
24. All routine deliveries to the Subleased Premises from 8:00 a.m. to 5:00
p.m. weekdays shall be made through the freight elevator. Advanced
arrangements should be made through the Management Office for large
deliveries and moves. Large deliveries need to be scheduled for between
3:00 p.m. and 5:00 p.m. weekdays. Move-in and move-outs need to be
scheduled for after 6:00 p.m. weekdays, and all day Saturdays and
Sundays. Passenger elevators are to be used only for the movement of
persons, unless an exception is approved by the Building Management
Office.
25. All requests for overtime air conditioning and/or heating must be
submitted to the Management Office in writing by 4:30 p.m.
26. All requests for keys, locks or graphics must be submitted in writing
to the Management Office.
27. Solicitation of any kind is strictly forbidden unless approved in
advance by the Management Office.
28. It is strongly recommended by the Dallas Fire Department that an A, B,
C Multi-Purpose type fire extinguisher be kept in the Subleased
Premises in an accessible location.
29. Sublessor reserves the right to rescind any of these rules and
regulations and to make such other and further rules and regulations as
in its judgment shall, from time to time, be needed for the
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OFFICE BUILDING SUBLEASE -23-
<PAGE> 85
safety, protection, care and cleanliness of the building, the operation
thereof, the preservation of good order therein and the protection and
comfort of the subtenants and tenants and their guests, employees and
invitees, which rules and regulations, when made and written notice
thereof is given to a subtenant or tenant; shall be binding upon it in
like manner as if originally herein prescribed.
30. A No Smoking Policy is in effect in Oryx Energy Center. Smoking is
prohibited in the common areas, restrooms, lobbies and elevators of the
Building. It shall be the responsibility of Sublessee to develop a
Smoking Policy within its Subleased Premises.
31. No firearms (hand guns, rifles, shot guns, etc.) or cases for carrying
firearms (regardless whether or not any such case actually contains a
firearm) shall be introduced to, or allowed in, the Subleased Premises,
the Building, the Project or the Parking Facility.
32. Parking regulations include a two hour visitor parking limitation with
temporary parking access cards available from security. All employees
must park in designated areas behind the gates.
33. City of Dallas recycling program must be followed by all tenants to
meet the City of Dallas regulations.
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<PAGE> 86
EXHIBIT "C"
INVENTORY OF ADDITIONAL FURNITURE
1. Four (4) work stations.
2. Thirteen (13) drafting tables.
3. Thirteen (13) chairs.
4. Five (5) file cabinets.
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OFFICE BUILDING SUBLEASE -25-
<PAGE> 87
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of this 1st day of
April 1999, by and between The viaLink Company, an Oklahoma corporation with its
principal place of business at 13800 Benson Road, Edmond, Oklahoma, 71034
("viaLink"), and J. Andrew Kerner ("Kerner"), 2924 Stanford Avenue, Dallas,
Texas 75225.
WHEREAS, viaLink desires to hire Kerner as its Vice President of
Finance and Chief Financial Officer, and
WHEREAS Kerner desires to become an employee of viaLink, and
WHEREAS, the parties hereto wish to set forth the terms and conditions
of Kerner's employment with viaLink.
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants hereinafter set forth, the parties hereto do agree as follows:
1. Employment. viaLink hereby employs Kerner, and Kerner hereby accepts
such employment, as Vice President of Finance and Chief Financial
Officer for viaLink upon the terms and subject to the conditions
contained herein.
2. Duties. Kerner shall perform all duties which are commensurate with his
position and any other duties which may be reasonably assigned to him
by viaLink's Chief Executive Officer ("CEO") from time to time during
the Term of this Agreement.
3. Covenants. In order to induce viaLink to enter into this Agreement,
Kerner hereby represents, covenants and agrees as follows:
3.1. Throughout his employment hereunder, Kerner shall devote his full
business time, attention, knowledge and skills during normal
business hours in furtherance of the business of viaLink and will
faithfully, diligently, and to the best of his ability, perform
such duties.
3.2. During the Term of this Agreement, Kerner shall not knowingly
engage in, and shall not knowingly solicit any employees of
viaLink or its subsidiaries or other affiliates to engage in any
commercial activities which are in any way in competition with
the activities of viaLink, or which in any way materially
interfere with the performance of such employee's duties or
responsibilities to viaLink.
3.3. Throughout his employment hereunder, Kerner shall at all times be
subject to, observe and carry out such rules, regulations,
policies, directions and restrictions as viaLink may from time to
time establish
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and those imposed by law, provided that the same are generally
applicable to all employees similarly situated to Kerner.
3.4. Confidential Information. "Confidential Information" means
proprietary business information, Trade Secrets and/or other
confidential information regarding viaLink or any of its
subsidiaries and/or clients which (i) has not otherwise become
public knowledge, (ii) was not already learned by Kerner from
independent and unrestricted sources prior to the Effective Date
of this Agreement (as hereinafter defined), and (iii) has not
been disclosed by viaLink to others without substantial
restriction on further disclosure. "Trade Secrets" means any
proprietary information not generally known in the industry in
which viaLink is engaged or may become engaged, including,
without limitation, information relating to viaLink's business
affairs, finances, properties, methods of operation, software
developed by viaLink, sources of and arrangements for hardware
supplied to clients of viaLink, submission and proposal
procedures of viaLink, viaLink's client or contact lists,
commercial information supplied to viaLink by viaLink's clients,
and other confidential information respecting or otherwise
relating to the business or affairs of viaLink. Kerner agrees and
acknowledges that any such Confidential Information or Trade
Secrets disclosed to Kerner at any time before, during or after
the Term of this Agreement shall be subject to the terms and
conditions of this Agreement.
3.5. Non-Disclosure. Kerner acknowledges and agrees that the business
and good will of viaLink depend upon its protection of such
Confidential Information. Except when directed to do otherwise by
viaLink's Chief Executive Officer, and except as may be required
by law, court order or subpoena, Kerner shall keep confidential
and shall not divulge to any other person or entity, during the
term of this Agreement or at any time thereafter, any of
viaLink's Confidential Information. In any case where Kerner is
compelled by law, court order or subpoena to disclose any
Confidential Information to any third person, Kerner shall advise
viaLink in advance of such required disclosure and shall permit
viaLink to object, contest, intervene or obtain appropriate
protection of such information prior to its disclosure to any
person.
3.6. Return of Property. Upon termination of this Agreement, Kerner
shall turn over to viaLink all documents, papers and other matter
in the possession of or under the control of Kerner that are or
relate to such Confidential Information or to viaLink's Work
Product.
3.7. Work Product. Kerner agrees that any and all inventions,
improvements, developments, discoveries, copyrightable works, or
contributions thereto, including, without limitation, any written
works, software products or code, images, designs, and/or
instructions,
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whether or not they are the subject of patent or copyright or
other proprietary rights protection under any federal, state,
local or foreign law(s), which are created in whole or part by
Kerner during the term of this Agreement or relating in any way
to the business of viaLink (hereinafter "Work Product") shall be
the sole and exclusive property of viaLink and shall belong to
viaLink free and clear from all right, title and interest of any
other person, including, without limiting the generality of the
foregoing, Kerner. It is specifically agreed and understood that
Kerner shall not retain any right, title, interest or any right
to use any of such Work Product. Kerner shall promptly and fully
disclose to viaLink all such Work Product. Kerner acknowledges
that all Work Product shall be a work for hire. Moreover, Kerner
conveys, transfers and assigns all rights, title and interest in
and to any Work Product to viaLink, and further agrees to execute
any written assignment or other agreement viaLink deems necessary
at any time to effect the foregoing and to obtain or uphold, for
viaLink's benefit, all copyright, patent, and/or other rights of
viaLink in such Work Product.
3.8. Misappropriation. Kerner shall not knowingly acquire, use, copy,
or misappropriate any trade secret or proprietary information
belonging to any other company or person and shall not cause,
encourage or induce viaLink to acquire, use, copy, or
misappropriate any trade secret or proprietary information
belonging to any other company or person.
3.9. Compliance. Kerner agrees:
3.9.1. Throughout the Term of this Agreement, that he is and
shall at all times remain in compliance with any and all
applicable federal and/or state laws, rules or
regulations regarding Kerner's eligibility for employment
and/or continued employment with viaLink; and
3.9.2. That by executing this Agreement he will not be in
violation of any agreement, term or condition of any
other agreement that he has with any third party; and
3.9.3. That the execution of this Agreement will not constitute
or nor otherwise cause a breach of any other agreement to
which Kerner is a party
3.10. Injunction. Kerner acknowledges that disclosure of any
Confidential Information or Work Product by Kerner will give rise
to irreparable injury, which is inadequately compensable in
damages, to viaLink and/or the owner of such Confidential
Information. Accordingly, viaLink or such other party, in
addition to any other remedies which are elsewhere granted in
this Agreement, may seek and obtain injunctive
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relief against the breach or threatened breach of (i) the
foregoing Sections 3.5, 3.6, 3.7 and/or 3.8 (ii) any infringement
upon any intellectual property rights of viaLink and/or (iii) any
other breach of any term, covenant, condition, warranty or
representation of this Agreement relating thereto.
3.11. Survival. Kerner's obligations in this Section 3 shall survive
the termination of this Agreement.
4. Compensation. As full compensation for Kerner's services hereunder and
in exchange for his promises contained herein, during the Term of this
Agreement, viaLink shall compensate Kerner in the manner set forth
below. The amounts set forth below shall be subject to any withholding
or other deductions required by law.
4.1. Kerner shall receive an annualized salary of two hundred and
twenty-five thousand dollars ($225,000) which shall be earned and
payable biweekly. viaLink may increase Kerner's salary during the
Term of this Agreement in viaLink's sole discretion. Kerner's
salary may not be decreased during the Term of this Agreement
without the prior consent of Kerner.
4.2. Subject to the terms of this Section 4.2, and beginning with the
beginning with the second quarter of 1999, Kerner shall also be
eligible to receive a total annual bonus which if completely
earned for a given calendar year would be equal to fifty percent
(50%) of his then current annual salary as of the beginning of
such calendar year ("Bonus") if Kerner satisfies the criteria
established by viaLink's CEO ("Criteria"). Such Criteria shall be
established by viaLink's CEO for each quarter in a given calendar
year and communicated to Kerner prior to the beginning of such
quarter. Said Bonus shall accrue quarterly and shall be
calculated and paid quarterly. Notwithstanding anything to the
contrary in this Section 4.2, in order to receive a Bonus due
hereunder, Kerner must be an employee of viaLink under this
Agreement at the end of a given quarter for which a bonus is
earned pursuant to this Section 4.2. Any payment due for a
quarter under this Section 4.2 shall be paid not later than the
next regular payroll after the sixtieth (60th) day following the
end of each quarter for which any Bonus amount is earned.
4.3. Kerner shall be vested with two (2) weeks vacation as of the
commencement of this Employment Agreement and shall also receive
two weeks vacation during each subsequent calendar year of the
Term of this Agreement.
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4.4. Kerner shall be eligible for viaLink's group benefits programs
which are in place from time to time to the extent that the same
are offered to all employees of viaLink ("Programs"); provided,
however, that such Programs may be amended by viaLink from time
to time in its sole and absolute discretion. Eligibility for each
of such Programs shall be subject to and administered according
to any applicable documents relating to such Programs.
4.5. Subject to the conditions and restrictions ("Conditions and
Restrictions") hereinafter set forth and subject to the terms,
covenants and conditions of viaLink's 1995 Stock Option Plan
("Plan"), viaLink shall grant to Kerner an option to purchase one
hundred twenty-five thousand (125,000) shares of viaLink common
stock at the grant price equal to eighty-five percent (85%) of
the closing price of the viaLink common stock on the date of the
actual grant of the options to Kerner by viaLink. For purposes of
this Section, the date of the grant shall be the date upon which
the shareholders approve the increase in the number of options
available under the Plan. Such Conditions and Restrictions are as
follows:
4.5.1. That Kerner is an employee of viaLink on the date of said
grant.
4.5.2. The approval by viaLink's shareholders of an increase in
the number of options available under viaLink's 1995
Stock Option Plan. viaLink agrees to use its best efforts
to obtain such approval. Kerner agrees and understands
that in the event that viaLink's shareholders fail at
their 1999 annual meeting to increase the number of
shares available under the Plan in an amount sufficient
to satisfy both the grant of options set forth herein
hereof as well as all other grants of options granted to
other persons which are subject to similar Conditions and
Restrictions, the grant of options hereunder is null and
void and of no further force and effect. Provided,
however, that in the event viaLink's shareholders fail at
their 1999 annual meeting to increase the number of
shares available under the Plan, Kerner, within
forty-five (45) days after such annual meeting, and
notwithstanding anything to the contrary in this
Agreement, may give viaLink notice of termination of this
Agreement. Such termination shall be effective as of the
latter of the following: (i) two (2) weeks from the day
such notice of termination is received by viaLink or (ii)
the end of such forty-five (45) day period. In the event
that Kerner elects to exercise such right to terminate
under this Section 4.5.2, viaLink, within five (5)
business days following the effective date of such
termination, shall pay Kerner a sum equal to 90/365ths of
his then current annualized salary (i.e. annual salary
divided by 365, times 90).
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4.5.3. The execution by Kerner of a Stock Option Agreement
generally used by viaLink for the granting of stock
options under said Plan. Such Stock Option Agreement
shall include, but not limited to, the following terms
and conditions:
4.5.3.1. The option rights shall vest in equal amounts over
a three year period during the Term of this
Agreement; and
4.5.3.2. If Kerner is terminated or this Agreement is not
renewed, whether with or without cause, or if this
Agreement otherwise expires, except as may
otherwise be provided in the change of control
provisions in the Plan under which any options
granted, Kerner shall not be entitled to exercise
any of such options which have not vested as of
the date of such termination, non-renewal or
earlier expiration of this Agreement.
4.5.3.3. The approval by viaLink's shareholders of an
increase in the number of options available under
via Link's 1995 Stock Option Plan. viaLink agrees
to use its best efforts to obtain such approval.
4.6. During the Term of this Agreement, Kerner shall have the use of
company car of his choice while an employee of viaLink on such
terms and conditions and subject to such policy(s) as may be
reasonably adopted by viaLink from time to time. The car shall be
of Kerner's choosing but shall not have a final sales price,
exclusive of tags, title and tax expenses, in excess of thirty
thousand dollars ($30,000.00). Alternatively, Kerner, in his sole
discretion, may, subject to the appropriate withholdings for
federal and/or state taxes, elect to receive a seven hundred
dollar ($700) per month car allowance in lieu of use of a company
car. Also, if Kerner elects to receive such allowance, viaLink,
subject to the appropriate withholdings for federal and/or state
taxes, will reimburse Kerner for expenses incurred in the
maintenance of his vehicle, but not for gas, and for the cost of
such insurance thereon as may be required by viaLink.
5. Non-competition.
5.1. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Kerner terminates this
Agreement for other than cause, for a period of two (2) years
after the termination of this Agreement, Kerner shall not,
directly or indirectly, alone, or as a partner, officer,
director, employee, stockholder, consultant or agent of any other
corporation, partnership or other business organization,
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knowingly solicit the employment of, or hire, any employee of
viaLink, or any viaLink subsidiary, or cause any such employee
to terminate such employee's relationship with viaLink or any
viaLink subsidiary, without the prior written approval of
viaLink. If viaLink terminates Kerner's employment without Cause,
the provisions of this section 5.1 of this Agreement shall be
enforceable against Kerner only as long as Kerner is receiving
the compensation set forth in Section 4.1 of this Agreement.
5.2. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Kerner terminates this
Agreement for other than cause, for a period of two (2) years
after the termination of this Agreement, Kerner shall not,
directly or indirectly, alone, or as a partner, officer,
director, employee, stockholder, consultant or agent of any other
corporation, partnership or other business organization,
knowingly solicit any of the accounts of viaLink which were
customers of viaLink unless such solicitation is undertaken on
behalf of a business venture or entity which does not compete
directly with the products or services owned, sold, manufactured,
marketed, provided or developed by viaLink during Kerner's
employment by viaLink. For the purposes of this subparagraph, a
business shall be deemed to be in competition with viaLink if the
products or services of such business are substantially similar
in purpose, function or capability to the products or services
then being developed, manufactured, marketed, provided or sold by
viaLink. If viaLink terminates Kerner's employment without Cause,
the provisions of this section 5.2 of this Agreement shall be
enforceable against Kerner only as long as Kerner is receiving
the compensation set forth in Section 4.1 of this Agreement.
6. Duration and Termination
6.1. Except as hereinafter set forth, the term ("Term") of this
Agreement shall commence on 5th day of April, 1999 ("Effective
Date") and shall continue through 4th day of April, 2000 and
shall be automatically renewed on a year to year basis thereafter
unless one party hereto notifies the other party hereto in
writing at least thirty (30) days prior to the end of the then
current Term that it will not renew this Agreement at the end of
such then current Term. Provided, however, and notwithstanding
anything to the contrary herein, this Agreement may also be
terminated by viaLink (i) at any time during its then current
Term pursuant to Sections 6.2, 6.3, or 6.4, or (ii) without cause
at any time during a then current Term upon thirty (30) days
written notice to the other party. In the event that viaLink
terminates this Agreement as of the end of a then current term by
delivering notice of non-renewal as required by the first
sentence of this Section 6.1 or at any time during a then current
term by giving the notice required by Section 6.1(ii) above,
Kerner shall be entitled to receive a one-time lump sum payment
in an
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amount equal to his then current annualized salary, payable upon
the effective date of such termination. Upon such payment, Kerner
shall not be entitled to any further compensation except to the
extent that it has otherwise accrued as of such date of
termination. For purposes of this Agreement, unless otherwise
specifically indicated, the word "Term" shall include both the
original one year period of this Agreement and any renewal period
thereof.
6.2. Notwithstanding anything to the contrary herein, this Agreement
shall immediately terminate, and all rights, benefits and
obligations hereunder shall cease, in the event of Kerner's
death, except such rights of Kerner which have accrued as of the
date of death.
6.3. Notwithstanding anything to the contrary herein, upon the
occurrence of the earlier of the following events, this Agreement
shall immediately terminate and all rights, benefits and
obligations hereunder shall cease, except such rights of Kerner
which have accrued as of the date of disability:
6.3.1. if a mutually acceptable physician determines that Kerner
is unable to substantially perform his usual and
customary duties under this Agreement for more than three
(3) months in any calendar year, or
6.3.2. if Kerner is eligible to begin receiving monthly benefits
under any current long-term disability insurance plan.
6.4. In addition to the other rights granted to viaLink under this
Agreement, viaLink shall have the right to terminate this
Agreement in any of the following events, each of which shall
constitute "Cause". Cause is defined as:
6.4.1. Any breach by Kerner's of his obligations under Sections
3.5, 3.6, 3.7 and/or 3.8 of this Agreement;
6.4.2. Kerner's breach of any of his other duties under this
Agreement if such breach continues unremedied for thirty
(30) days after written notice thereof to Kerner
specifying the acts constituting the breach and
requesting that they be remedied; or
6.4.3. a conviction, plea of nolo contendere, plea to a lesser
charge in lieu of a felony, of a felony, a crime
involving fraud or misrepresentation, or any other crime,
the effect of which is likely to materially adversely
affect viaLink; or
6.4.4. violation of any law which results in material liability
to viaLink.
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6.4.5. abuse of alcohol or other drugs, or the illegal use of
drugs, which materially interferes with the performance
by Kerner of his duties hereunder.
7. Successors and Assigns. The rights and obligations of viaLink hereunder
shall run in favor of and shall be binding upon viaLink, its
successors, assigns, nominees or other legal representatives. Kerner
may not assign his rights and obligations hereunder.
8. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given upon receipt if delivered by hand, sent by telecopier or courier,
or three (3) days after such communication is mailed within the
continental United States by first class certified mail, return receipt
requested, postage prepaid, to the other party, in each case addressed
as follows:
8.1. if to viaLink, The viaLink Company, 13800 Benson Road, Edmond,
Oklahoma 73034, Attention Chief Executive Officer; and
8.2. if to Kerner, 2924 Stanford Avenue, Dallas, Texas 75225
Addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
9. Severability. If any provision of this Agreement shall be adjudged by
any court of competent jurisdiction to be invalid or unenforceable for
any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.
10. Entire Understanding. This Agreement embodies the entire understanding
of the parties hereto, and supersedes all other oral or written
agreements or understandings between them regarding the subject matter.
No change, alteration or modification hereof may be made except in a
writing, signed by both parties hereto. Without limiting the generality
of the foregoing, but except as may be otherwise stated in this
Agreement, any prior oral or written offer(s) of employment to Kerner
by viaLink shall be null and void and of no further force and effect.
11. Headings. The headings in this Agreement are for convenience and
reference only and shall not be construed as part of this Agreement or
to limit or otherwise affect the meaning hereof.
12. Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
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13. Choice of Laws. Jurisdiction over disputes with regard to this
Agreement shall be exclusively in the courts of the State of Oklahoma,
and this Agreement shall be construed in accordance with and governed
by the laws of the state of Oklahoma without giving effect to
principles of conflicts of law hereunder.
14. Attorney Fees. In the event of any litigation between the parties
hereto, the prevailing shall be entitled to all of its costs incurred
in such litigation, including reasonable attorneys' fees.
15. Nonwaiver. The waiver of any violation or breach of this Agreement by
either party hereto shall not be deemed to be a waiver of any
continuing violation or breach or a waiver of any other violation or
breach of this Agreement.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or its breach, or its validity or interpretation,
except claims for injunctive relief and/or claims involving necessary
third parties who refuse to participate, shall be settled by binding
arbitration in accordance with the then current rules for arbitration
of the American Arbitration Association subject to the following:
16.1. The location for the arbitration shall be at such location as
agreed by the parties in Oklahoma County, Oklahoma or if the
parties cannot agree at such location in Dallas, Texas as
designated by the American Arbitration Association.
16.2. Such arbitration shall be heard and determined by a panel of
three (3) arbitrators in accordance with the then current rules
or regulations of the AAA relating to commercial disputes
("Rules").
16.3. All arbitrators shall be selected pursuant to the then current
Rules thereof within thirty (30) days after the filing of a
demand for arbitration. Each arbitrator shall be a person with
experience in handling disputes relating to the employment
contracts of corporate executives.
16.4. The hearing on the arbitration shall be heard not later than six
(6) months after the demand for arbitration has been made by a
party.
16.5. The arbitration award shall be binding on the parties and may be
enforced in any court of competent jurisdiction.
16.6. The prevailing party in the arbitration and/or in any court
action authorized by this Agreement shall be entitled to recover
its reasonable costs and attorney fees incurred by such
prevailing party, provided however, the parties will split the
cost of the arbitrators' fees regardless of who prevails in the
arbitration.
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16.7. The arbitrators will not have the authority to nor shall they
award punitive or exemplary damages. Each party hereby waives the
right to such damages.
16.8. In resolving all disputes between the parties, the arbitrators
will apply the laws of the State of Oklahoma and/or the
applicable federal law, as the case may be.
17. Residence. During the Term of this Agreement, it is agreed and
understood that Kerner, unless otherwise agreed by the parties, will be
allowed to live in Dallas, Texas and work at viaLink's Dallas, Texas
office.
18. Survival. In addition to any others Sections of this Agreement which
survive pursuant to their terms, Sections 3.4, 3.5, 3.6, 3.7, 3.8, 3.9,
3.10, 5.1, 5.2, 7-17 (inclusive) and this Section 18 shall survive the
termination or expiration of this Agreement.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
THE viaLink Company J. Andrew Kerner
By: /s/ LEWIS B. KILBOURNE /s/ J. ANDREW KERNER
---------------------------------- ------------------------------
Lewis B. Kilbourne J. Andrew Kerner
Its: Chief Executive Officer
Date: April 1, 1999 Date: 3/31/99
-------------------------------- -------------------------
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EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of this 9th day of
April, 1999, by and between The viaLink Company, an Oklahoma corporation with
its principal place of business at 13800 Benson Road, Edmond, Oklahoma, 71034
("viaLink"), and David M. Lloyd ("Lloyd"), 3106 Drexel Drive, Dallas, Texas
75205.
WHEREAS, viaLink desires to hire Lloyd as its Vice President of Human
Resources, and
WHEREAS Lloyd desires to become an employee of viaLink, and
WHEREAS, the parties hereto wish to set forth the terms and conditions
of Lloyd's employment with viaLink.
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants hereinafter set forth, the parties hereto do agree as follows:
1. Employment. viaLink hereby employs Lloyd, and Lloyd hereby accepts such
employment, as Vice President of Human Resources for viaLink upon the
terms and subject to the conditions contained herein.
2. Duties. Lloyd shall perform all duties which are commensurate with his
position and any other duties which may be reasonably assigned to him
by viaLink's Chief Executive Officer ("CEO") from time to time during
the Term of this Agreement.
3. Covenants. In order to induce viaLink to enter into this Agreement,
Lloyd hereby represents, covenants and agrees as follows:
3.1. Throughout his employment hereunder, Lloyd shall devote his full
business time, attention, knowledge and skills during normal
business hours in furtherance of the business of viaLink and will
faithfully, diligently, and to the best of his ability, perform
such duties.
3.2. During the Term of this Agreement, Lloyd shall not knowingly
engage in, and shall not knowingly solicit any employees of
viaLink or its subsidiaries or other affiliates to engage in any
commercial activities which are in any way in competition with
the activities of viaLink, or which in any way materially
interfere with the performance of such employee's duties or
responsibilities to viaLink.
3.3. Throughout his employment hereunder, Lloyd shall at all times be
subject to, observe and carry out such rules, regulations,
policies, directions and restrictions as viaLink may from time to
time establish
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and those imposed by law, provided that the same are generally
applicable to all employees similarly situated to Lloyd.
3.4. Confidential Information. "Confidential Information" means
proprietary business information, Trade Secrets and/or other
confidential information regarding viaLink or any of its
subsidiaries and/or clients which (i) has not otherwise become
public knowledge, (ii) was not already learned by Lloyd from
independent and unrestricted sources prior to the Effective Date
of this Agreement (as hereinafter defined), and (iii) has not
been disclosed by viaLink to others without substantial
restriction on further disclosure. "Trade Secrets" means any
proprietary information not generally known in the industry in
which viaLink is engaged or may become engaged, including,
without limitation, information relating to viaLink's business
affairs, finances, properties, methods of operation, software
developed by viaLink, sources of and arrangements for hardware
supplied to clients of viaLink, submission and proposal
procedures of viaLink, viaLink's client or contact lists,
commercial information supplied to viaLink by viaLink's clients,
and other confidential information respecting or otherwise
relating to the business or affairs of viaLink. Lloyd agrees and
acknowledges that any such Confidential Information or Trade
Secrets disclosed to Lloyd at any time before, during or after
the Term of this Agreement shall be subject to the terms and
conditions of this Agreement.
3.5. Non-Disclosure. Lloyd acknowledges and agrees that the business
and good will of viaLink depend upon its protection of such
Confidential Information. Except when directed to do otherwise by
viaLink's Chief Executive Officer, and except as may be required
by law, court order or subpoena, Lloyd shall keep confidential
and shall not divulge to any other person or entity, during the
term of this Agreement or at any time thereafter, any of
viaLink's Confidential Information. In any case where Lloyd is
compelled by law, court order or subpoena to disclose any
Confidential Information to any third person, Lloyd shall advise
viaLink in advance of such required disclosure and shall permit
viaLink to object, contest, intervene or obtain appropriate
protection of such information prior to its disclosure to any
person.
3.6. Return of Property. Upon termination of this Agreement, Lloyd
shall turn over to viaLink all documents, papers and other matter
in the possession of or under the control of Lloyd that are or
relate to such Confidential Information or to viaLink's Work
Product.
3.7. Work Product. Lloyd agrees that any and all inventions,
improvements, developments, discoveries, copyrightable works, or
contributions thereto, including, without limitation, any written
works, software products or code, images, designs, and/or
instructions, whether or not
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they are the subject of patent or copyright or other proprietary
rights protection under any federal, state, local or foreign
law(s), which are created in whole or part by Lloyd during the
term of this Agreement or relating in any way to the business of
viaLink (hereinafter "Work Product") shall be the sole and
exclusive property of viaLink and shall belong to viaLink free
and clear from all right, title and interest of any other person,
including, without limiting the generality of the foregoing,
Lloyd. It is specifically agreed and understood that Lloyd shall
not retain any right, title, interest or any right to use any of
such Work Product. Lloyd shall promptly and fully disclose to
viaLink all such Work Product. Lloyd acknowledges that all Work
Product shall be a work for hire. Moreover, Lloyd conveys,
transfers and assigns all rights, title and interest in and to
any Work Product to viaLink, and further agrees to execute any
written assignment or other agreement viaLink deems necessary at
any time to effect the foregoing and to obtain or uphold, for
viaLink's benefit, all copyright, patent, and/or other rights of
viaLink in such Work Product.
3.8. Misappropriation. Lloyd shall not knowingly acquire, use, copy,
or misappropriate any trade secret or proprietary information
belonging to any other company or person and shall not cause,
encourage or induce viaLink to acquire, use, copy, or
misappropriate any trade secret or proprietary information
belonging to any other company or person.
3.9. Compliance. Lloyd agrees:
3.9.1. Throughout the Term of this Agreement, that he is and
shall at all times remain in compliance with any and all
applicable federal and/or state laws, rules or
regulations regarding Lloyd's eligibility for employment
and/or continued employment with viaLink; and
3.9.2. That by executing this Agreement he will not be in
violation of any agreement, term or condition of any
other agreement that he has with any third party; and
3.9.3. That the execution of this Agreement will not constitute
or nor otherwise cause a breach of any other agreement to
which Lloyd is a party
3.10. Injunction. Lloyd acknowledges that disclosure of any
Confidential Information or Work Product by Lloyd will give rise
to irreparable injury, which is inadequately compensable in
damages, to viaLink and/or the owner of such Confidential
Information. Accordingly, viaLink or such other party, in
addition to any other remedies which are elsewhere granted in
this Agreement, may seek and obtain injunctive relief against the
breach or threatened breach of (i) the foregoing Sections 3.5,
3.6,
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3.7 and/or 3.8 (ii) any infringement upon any intellectual
property rights of viaLink and/or (iii) any other breach of any
term, covenant, condition, warranty or representation of this
Agreement relating thereto.
3.11. Survival. Lloyd's obligations in this Section 3 shall survive the
termination of this Agreement.
4. Compensation. As full compensation for Lloyd's services hereunder and
in exchange for his promises contained herein, during the Term of this
Agreement, viaLink shall compensate Lloyd in the manner set forth
below. The amounts set forth below shall be subject to any withholding
or other deductions required by law.
4.1. Lloyd shall receive an annualized salary of one hundred and
ninety thousand dollars ($190,000) which shall be earned and
payable biweekly. viaLink may increase Lloyd's salary during the
Term of this Agreement in viaLink's sole discretion. Lloyd's
salary may not be decreased during the Term of this Agreement
without the prior consent of Lloyd.
4.2. During the Term of this Agreement, commencing with the second
quarter of 1999, Lloyd shall also be eligible to receive
quarterly bonuses, which if completely earned for each quarter of
a given calendar year, would equal thirty-three percent (33%) of
his annualized salary as of the beginning of such calendar year
("Applicable Annualized Salary"); except that such bonuses for
1999, if fully earned, would equal forty-seven thousand
twenty-five dollars ($47,025.00). The bonuses shall accrue and be
calculated quarterly. The criteria which Lloyd must meet to earn
a bonus for a given quarter shall be established by viaLink's CEO
and communicated to Lloyd prior to the beginning of such quarter;
except that the criteria for the second quarter of 1999 shall be
established by viaLink's CEO and communicated to Lloyd within ten
days of the commencement of Lloyd's employment with viaLink
pursuant to this Agreement. The amount of each such quarterly
bonus, if the criteria to earn such bonus for a given quarter is
met, shall be an amount equal to eight and one-quarter percent
(8.25%) of Lloyd's Applicable Annualized Salary. If such criteria
is not met for a given quarter, no bonus shall be earned for that
quarter. Notwithstanding anything to the contrary in this Section
4.2, in order to receive a bonus hereunder, Lloyd must be an
employee of viaLink under this Agreement at the end of the
quarter for which such bonus is earned pursuant to this Section
4.2. Any payment due for a quarterly bonus under this Section 4.2
shall be paid not later than the next regular payroll after the
sixtieth (60th) day following the end of each quarter for which
any Bonus amount is earned.
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4.3. Lloyd shall be vested with two (2) weeks vacation as of the
commencement of this Employment Agreement and shall also receive
two weeks vacation during each subsequent calendar year of the
Term of this Agreement.
4.4. Lloyd shall be eligible for viaLink's group benefits programs
which are in place from time to time to the extent that the same
are offered to all employees of viaLink ("Programs"); provided,
however, that such Programs may be amended by viaLink from time
to time in its sole and absolute discretion. Eligibility for each
of such Programs shall be subject to and administered according
to any applicable documents relating to such Programs.
4.5. Subject to the conditions and restrictions ("Conditions and
Restrictions") hereinafter set forth and subject to the terms,
covenants and conditions of viaLink's 1995 Stock Option Plan
("Plan"), viaLink shall grant to Lloyd an option to purchase one
hundred thousand (100,000) shares of viaLink common stock at the
grant price equal to eighty-five percent (85%) of the closing
price of the viaLink common stock on the date of the actual grant
of the options to Lloyd by viaLink. For purposes of this Section,
the date of the grant shall be the date upon which the
shareholders approve the increase in the number of options
available under the Plan. Such Conditions and Restrictions are as
follows:
4.5.1. That Lloyd is an employee of viaLink on the date of said
grant.
4.5.2. The approval by viaLink's shareholders of an increase in
the number of options available under viaLink's 1995
Stock Option Plan. viaLink agrees to use its best efforts
to obtain such approval. Lloyd agrees and understands
that in the event that viaLink's shareholders fail at
their 1999 annual meeting to increase the number of
shares available under the Plan in an amount sufficient
to satisfy both the grant of options set forth herein
hereof as well as all other grants of options granted to
other persons which are subject to similar Conditions and
Restrictions, the grant of options hereunder is null and
void and of no further force and effect. Provided,
however, that in the event viaLink's shareholders fail at
their 1999 annual meeting to increase the number of
shares available under the Plan as above set forth,
Lloyd, within forty-five (45) days after such annual
meeting, and notwithstanding anything to the contrary in
this Agreement, may give viaLink notice of termination of
this Agreement. Such termination shall be effective as of
the latter of the following: (i) two (2) weeks from the
day such notice of termination is received by viaLink or
(ii) the end of such forty-five (45) day period. In the
event that Lloyd elects to exercise such
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right to terminate under this Section 4.5.2, viaLink,
within five (5) business days following the effective
date of such termination, shall pay Lloyd a sum equal to
90/365ths of his then current annualized salary (i.e.
annual salary divided by 365, times 90).
4.5.3. The execution by Lloyd of a Stock Option Agreement
generally used by viaLink for the granting of stock
options under said Plan. Such Stock Option Agreement
shall include, but not limited to, the following terms
and conditions:
4.5.3.1. The option rights shall vest in equal amounts over
a three year period during the Term of this
Agreement; and
4.5.3.2. If Lloyd is terminated or this Agreement is not
renewed, whether with or without cause, or if this
Agreement otherwise expires, except as may
otherwise be provided in the change of control
provisions in the Plan under which any options
granted, Lloyd shall not be entitled to exercise
any of such options which have not vested as of
the date of such termination, non-renewal or
earlier expiration of this Agreement.
4.5.3.3. The approval by viaLink's shareholders of an
increase in the number of options available under
viaLink's 1995 Stock Option Plan. viaLink agrees
to use its best efforts to obtain such approval.
4.6. During the term of this Agreement, Lloyd shall have the use of a
company car of his choice while an employee of viaLink on such
terms and conditions and subject to such policy(s) as may be
reasonably adopted by viaLink from time to time. The car shall be
of Lloyd's choosing but shall not have a final sales price,
exclusive of tags, title and tax expenses, in excess of thirty
thousand dollars ($30,000.00). Alternatively, Lloyd, in his sole
discretion, may, subject to the appropriate withholdings for
federal and/or state taxes, elect to receive a seven hundred
dollar ($700) per month car allowance in lieu of use of a company
car. Also, if Lloyd elects to receive such allowance, viaLink,
subject to the appropriate withholdings for federal and/or state
taxes, will reimburse Lloyd for expenses incurred in the
maintenance of his vehicle, but not for gas, and for the cost of
such insurance thereon as may be required by viaLink.
5. Non-competition.
5.1. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Lloyd terminates this
Agreement for other than
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cause, for a period of two (2) years after the termination of
this Agreement, Lloyd shall not, directly or indirectly, alone,
or as a partner, officer, director, employee, stockholder,
consultant or agent of any other corporation, partnership or
other business organization, knowingly solicit the employment of,
or hire, any employee of viaLink, or any viaLink subsidiary, or
cause any such employee to terminate such employee's relationship
with viaLink or any viaLink subsidiary, without the prior written
approval of viaLink. If viaLink terminates Lloyd's employment
without Cause, the provisions of this section 5.1 of this
Agreement shall be enforceable against Lloyd only as long as
Lloyd is receiving the compensation set forth in Section 4.1 of
this Agreement.
5.2. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Lloyd terminates this
Agreement for other than cause, for a period of two (2) years
after the termination of this Agreement, Lloyd shall not,
directly or indirectly, alone, or as a partner, officer,
director, employee, stockholder, consultant or agent of any other
corporation, partnership or other business organization,
knowingly solicit any of the accounts of viaLink which were
customers of viaLink unless such solicitation is undertaken on
behalf of a business venture or entity which does not compete
directly with the products or services owned, sold, manufactured,
marketed, provided or developed by viaLink during Lloyd's
employment by viaLink. For the purposes of this subparagraph, a
business shall be deemed to be in competition with viaLink if the
products or services of such business are substantially similar
in purpose, function or capability to the products or services
then being developed, manufactured, marketed, provided or sold by
viaLink. If viaLink terminates Lloyd's employment without Cause,
the provisions of this section 5.2 of this Agreement shall be
enforceable against Lloyd only as long as Lloyd is receiving the
compensation set forth in Section 4.1 of this Agreement.
6. Duration and Termination.
6.1. Except as hereinafter set forth, the term ("Term") of this
Agreement shall commence on the Ninth day of April, 1999
("Effective Date") and shall continue through the Ninth day of
April, 2000 and shall be automatically renewed on a year to year
basis thereafter unless one party hereto notifies the other party
hereto in writing at least thirty (30) days prior to the end of
the then current Term that it will not renew this Agreement at
the end of such then current Term. Provided, however, and
notwithstanding anything to the contrary herein, this Agreement
may also be terminated by viaLink (i) at any time during its then
current Term pursuant to Sections 6.2, 6.3, or 6.4, or (ii)
without cause at any time during a then current Term upon thirty
(30) days written notice to the other party. In the event that
viaLink terminates this Agreement
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without cause either as of the end of a then current term or at
any time during a then current term, Lloyd shall be entitled to
receive all compensation earned by Lloyd hereunder to the date of
termination but then unpaid, plus an additional amount equal to
the entirety of his then full current annual salary (i.e., in the
original term of this Agreement, $190,000), all of which will be
paid to Lloyd on the effective date of such termination. Upon
such payment, Lloyd shall not be entitled to any further
compensation. For purposes of this Agreement, unless otherwise
specifically indicated, the word "Term" shall include both the
original one year period of this Agreement and any renewal period
thereof.
6.2. Notwithstanding anything to the contrary herein, this Agreement
shall immediately terminate, and all rights, benefits and
obligations hereunder shall cease, in the event of Lloyd's death,
except such rights of Lloyd which have accrued as of the date of
death.
6.3. Notwithstanding anything to the contrary herein, upon the
occurrence of the earlier of the following events, this
Agreement shall immediately terminate and all rights, benefits
and obligations hereunder shall cease, except such rights of
Lloyd which have accrued as of the date of disability:
6.3.1. if a mutually acceptable physician determines that Lloyd
is unable to substantially perform his usual and
customary duties under this Agreement for more than three
(3) months in any calendar year, or
6.3.2. if Lloyd is eligible to begin receiving monthly benefits
under any current long-term disability insurance plan.
6.4. In addition to the other rights granted to viaLink under this
Agreement, viaLink shall have the right to terminate this
Agreement in any of the following events, each of which shall
constitute "Cause". Cause is defined as:
6.4.1. Any breach by Lloyd's of his obligations under Sections
3.5, 3.6, 3.7 and/or 3.8 of this Agreement;
6.4.2. Lloyd's breach of any of his other duties under this
Agreement if such breach continues unremedied for thirty
(30) days after written notice thereof to Lloyd
specifying the acts constituting the breach and
requesting that they be remedied; or
6.4.3. a conviction, plea of nolo contendere, plea to a lesser
charge in lieu of a felony, of a felony, a crime
involving fraud or
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misrepresentation, or any other crime, the effect of
which is likely to materially adversely affect viaLink;
or
6.4.4. violation of any law which results in material liability
to viaLink.
6.4.5. abuse of alcohol or other drugs, or the illegal use of
drugs, which materially interferes with the performance
by Lloyd of his duties hereunder.
7. Successors and Assigns. The rights and obligations of viaLink hereunder
shall run in favor of and shall be binding upon viaLink, its
successors, assigns, nominees or other legal representatives. Lloyd may
not assign his rights and obligations hereunder.
8. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given upon receipt if delivered by hand, sent by telecopier or courier,
or three (3) days after such communication is mailed within the
continental United States by first class certified mail, return receipt
requested, postage prepaid, to the other party, in each case addressed
as follows:
8.1. if to viaLink, The viaLink Company, 13800 Benson Road,
Edmond, Oklahoma 73034, Attention Chief Executive
Officer; and
8.2. if to Lloyd, 3106 Drexel Drive, Dallas, Texas 75205
Addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
9. Severability. If any provision of this Agreement shall be adjudged by
any court of competent jurisdiction to be invalid or unenforceable for
any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.
10. Entire Understanding. This Agreement embodies the entire understanding
of the parties hereto, and supersedes all other oral or written
agreements or understandings between them regarding the subject matter.
No change, alteration or modification hereof may be made except in a
writing, signed by both parties hereto. Without limiting the generality
of the foregoing, but except as may be otherwise stated in this
Agreement, any prior oral or written offer(s) of employment to Lloyd by
viaLink shall be null and void and of no further force and effect.
11. Headings. The headings in this Agreement are for convenience and
reference only and shall not be construed as part of this Agreement or
to limit or otherwise affect the meaning hereof.
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12. Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
13. Choice of Laws. Jurisdiction over disputes with regard to this
Agreement shall be exclusively in the courts of the State of Oklahoma,
and this Agreement shall be construed in accordance with and governed
by the laws of the state of Oklahoma without giving effect to
principles of conflicts of law hereunder.
14. Attorney Fees. In the event of any litigation between the parties
hereto, the prevailing shall be entitled to all of its costs incurred
in such litigation, including reasonable attorneys' fees.
15. Nonwaiver. The waiver of any violation or breach of this Agreement by
either party hereto shall not be deemed to be a waiver of any
continuing violation or breach or a waiver of any other violation or
breach of this Agreement.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or its breach, or its validity or interpretation,
except claims for injunctive relief and/or claims involving necessary
third parties who refuse to participate, shall be settled by binding
arbitration in accordance with the then current rules for arbitration
of the American Arbitration Association subject to the following:
16.1. The location for the arbitration shall be at such location as
agreed by the parties in Oklahoma County, Oklahoma or if the
parties cannot agree at such location in Oklahoma County,
Oklahoma as designated by the American Arbitration Association.
16.2. Such arbitration shall be heard and determined by a panel of
three (3) arbitrators in accordance with the then current rules
or regulations of the AAA relating to commercial disputes
("Rules").
16.3. All arbitrators shall be selected pursuant to the then current
Rules thereof within thirty (30) days after the filing of a
demand for arbitration. Each arbitrator shall be a person with
experience in handling disputes relating to the employment
contracts of corporate executives.
16.4. The hearing on the arbitration shall be heard not later than six
(6) months after the demand for arbitration has been made by a
party.
16.5. The arbitration award shall be binding on the parties and may be
enforced in any court of competent jurisdiction.
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16.6. The prevailing party in the arbitration and/or in any court
action authorized by this Agreement shall be entitled to recover
its reasonable costs and attorney fees incurred by such
prevailing party, provided however, the parties will split the
cost of the arbitrators' fees regardless of who prevails in the
arbitration.
16.7. The arbitrators will not have the authority to nor shall they
award punitive or exemplary damages. Each party hereby waives the
right to such damages.
16.8. In resolving all disputes between the parties, the arbitrators
will apply the laws of the State of Oklahoma and/or the
applicable federal law, as the case may be
17. Survival. In addition to any others Sections of this Agreement which
survive pursuant to their terms, Sections 3.4, 3.5, 3.6, 3.7, 3.8, 3.9,
3.10, 5.1, 5.2, 7-16 (inclusive) and this Section 17 shall survive the
termination or expiration of this Agreement.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
THE viaLink Company David M. Lloyd
By: /s/ LEWIS B. KILBOURNE /s/ DAVID M. LLOYD
------------------------------------ -----------------------------------
Lewis B. Kilbourne David M. Lloyd
Its: Chief Executive Officer
Date: 4/8/99 Date: 4/9/99
---------------------------------- ------------------------------
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EXHIBIT 10.29
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") made as of this 8th day of
April, 1999, by and between The viaLink Company, an Oklahoma corporation with
its principal place of business at 13800 Benson Road, Edmond, Oklahoma, 71034
("viaLink"), and Robert I. Noe ("Noe"), 2301 Eldger Drive, PIano, Texas 75025.
WHEREAS, viaLink desires to hire Noe as its Executive Vice President of
Business Development, and
WHEREAS Noe desires to become an employee of viaLink, and
WHEREAS, the parties hereto wish to set forth the terms and conditions
of Noe's employment with viaLink.
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants hereinafter set forth, the parties hereto do agree as follows:
1. Employment. viaLink hereby employs Noe, and Noe hereby accepts such
employment, as Executive Vice President of Business Development for
viaLink upon the terms and subject to the conditions contained herein.
2. Duties. Noe shall perform all duties which are commensurate with his
position and any other duties which may be reasonably assigned to him
by viaLink's Chief Executive Officer ("CEO") from time to time during
the Term of this Agreement.
3. Covenants. In order to induce viaLink to enter into this Agreement, Noe
hereby represents, covenants and agrees as follows:
3.1. Throughout his employment hereunder, Noe shall devote his full
business time, attention, knowledge and skills during normal
business hours in furtherance of the business of viaLink and will
faithfully, diligently, and to the best of his ability, perform
such duties.
3.2. During the Term of this Agreement, Noe shall not knowingly engage
in, and shall not knowingly solicit any employees of viaLink or
its subsidiaries or other affiliates to engage in any commercial
activities which are in any way in competition with the
activities of viaLink, or which in any way materially interfere
with the performance of such employee's duties or
responsibilities to viaLink.
3.3. Throughout his employment hereunder, Noe shall at all times be
subject to, observe and carry out such rules, regulations,
policies, directions and restrictions as viaLink may from time to
time establish
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and those imposed by law, provided that the same are generally
applicable to all employees similarly situated to Noe.
3.4. Confidential Information. "Confidential Information" means
proprietary business information, Trade Secrets and/or other
confidential information regarding viaLink or any of its
subsidiaries and/or clients which (i) has not otherwise become
public knowledge, (ii) was not already learned by Noe from
independent and unrestricted sources prior to the Effective Date
of this Agreement (as hereinafter defined), and (iii) has not
been disclosed by viaLink to others without substantial
restriction on further disclosure. "Trade Secrets" means any
proprietary information not generally known in the industry in
which viaLink is engaged or may become engaged, including,
without limitation, information relating to viaLink's business
affairs, finances, properties, methods of operation, software
developed by viaLink, sources of and arrangements for hardware
supplied to clients of viaLink, submission and proposal
procedures of viaLink, viaLink's client or contact lists,
commercial information supplied to viaLink by viaLink's clients,
and other confidential information respecting or otherwise
relating to the business or affairs of viaLink. Noe agrees and
acknowledges that any such Confidential Information or Trade
Secrets disclosed to Noe at any time before, during or after the
Term of this Agreement shall be subject to the terms and
conditions of this Agreement.
3.5. Non-Disclosure. Noe acknowledges and agrees that the business and
good will of viaLink depend upon its protection of such
Confidential Information. Except when directed to do otherwise by
viaLink's Chief Executive Officer, and except as may be required
by law, court order or subpoena, Noe shall keep confidential and
shall not divulge to any other person or entity, during the term
of this Agreement or at any time thereafter, any of viaLink's
Confidential Information. In any case where Noe is compelled by
law, court order or subpoena to disclose any Confidential
Information to any third person, Noe shall advise viaLink in
advance of such required disclosure and shall permit viaLink to
object, contest, intervene or obtain appropriate protection of
such information prior to its disclosure to any person.
3.6. Return of Property. Upon termination of this Agreement, Noe shall
turn over to viaLink all documents, papers and other matter in
the possession of or under the control of Noe that are or relate
to such Confidential Information or to viaLink's Work Product.
3.7. Work Product. Noe agrees that any and all inventions,
improvements, developments, discoveries, copyrightable works, or
contributions thereto, including, without limitation, any written
works, software products or code, images, designs, and/or
instructions, whether or not
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they are the subject of patent or copyright or other proprietary
rights protection under any federal, state, local or foreign
law(s), which are created in whole or part by Noe during the term
of this Agreement or relating in any way to the business of
viaLink (hereinafter "Work Product") shall be the sole and
exclusive property of viaLink and shall belong to viaLink free
and clear from all right, title and interest of any other person,
including, without limiting the generality of the foregoing, Noe.
It is specifically agreed and understood that Noe shall not
retain any right, title, interest or any right to use any of such
Work Product. Noe shall promptly and fully disclose to viaLink
all such Work Product. Noe acknowledges that all Work Product
shall be a work for hire. Moreover, Noe conveys, transfers and
assigns all rights, title and interest in and to any Work Product
to viaLink, and further agrees to execute any written assignment
or other agreement viaLink deems necessary at any time to effect
the foregoing and to obtain or uphold, for viaLink's benefit, all
copyright, patent, and/or other rights of viaLink in such Work
Product.
3.8. Misappropriation. Noe shall not knowingly acquire, use, copy, or
misappropriate any trade secret or proprietary information
belonging to any other company or person and shall not cause,
encourage or induce viaLink to acquire, use, copy, or
misappropriate any trade secret or proprietary information
belonging to any other company or person.
3.9. Compliance. Noe agrees:
3.9.1. Throughout the Term of this Agreement, that he is and
shall at all times remain in compliance with any and all
applicable federal and/or state laws, rules or
regulations regarding Noe's eligibility for employment
and/or continued employment with viaLink; and
3.9.2. That by executing this Agreement he will not be in
violation of any agreement, term or condition of any
other agreement that he has with any third party; and
3.9.3. That the execution of this Agreement will not constitute
or nor otherwise cause a breach of any other agreement to
which Noe is a party
3.10. Injunction. Noe acknowledges that disclosure of any Confidential
Information or Work Product by Noe will give rise to irreparable
injury, which is inadequately compensable in damages, to viaLink
and/or the owner of such Confidential Information. Accordingly,
viaLink or such other party, in addition to any other remedies
which are elsewhere granted in this Agreement, may seek and
obtain injunctive relief against the breach or threatened breach
of (i) the foregoing Sections 3.5, 3.6,
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3.7 and/or 3.8 (ii) any infringement upon any intellectual
property rights of viaLink and/or (iii) any other breach of any
term, covenant, condition, warranty or representation of this
Agreement relating thereto.
3.11. Survival. Noe's obligations in this Section 3 shall survive the
termination of this Agreement.
4. Compensation. As full compensation for Noe's services hereunder and in
exchange for his promises contained herein, during the Term of this
Agreement, viaLink shall compensate Noe in the manner set forth below.
The amounts set forth below shall be subject to any withholding or
other deductions required by law.
4.1. Noe shall receive an annualized salary of two hundred and fifty
thousand dollars ($250,000) which shall be earned and payable
biweekly. viaLink may increase Noe's salary during the Term of
this Agreement in viaLink's sole discretion. Noe's salary may not
be decreased during the Term of this Agreement without the prior
consent of Noe.
4.2. During the Term of this Agreement, commencing with the second
quarter of 1999, Noe shall also be eligible to receive quarterly
bonuses, which if completely earned for each quarter of a given
calendar year, would equal fifty percent (50%) of his annualized
salary as of the beginning of such calendar year ("Applicable
Annualized Salary"); except that such bonuses for 1999, if fully
earned, would equal ninety three thousand seven hundred fifty
dollars ($93,750.00). The bonuses shall accrue and be calculated
quarterly. The criteria which Noe must meet to earn a bonus for a
given quarter shall be established by viaLink's CEO and
communicated to Noe prior to the beginning of such quarter;
except that the criteria for the second quarter of 1999 shall be
established by viaLink's CEO and communicated to Noe within ten
days of the commencement of Noe's employment with viaLink
pursuant to this Agreement. The amount of each such quarterly
bonus, if the criteria to earn such bonus for a given quarter is
met, shall be an amount equal to twelve and one-half percent
(12.50%) of Noe's Applicable Annualized Salary. If such criteria
is not met for a given quarter, no bonus shall be earned for that
quarter. Notwithstanding anything to the contrary in this Section
4.2, in order to receive a bonus hereunder, Noe must be an
employee of viaLink under this Agreement at the end of the
quarter for which such bonus is earned pursuant to this Section
4.2. Any payment due for a quarterly bonus under this Section 4.2
shall be paid not later than the next regular payroll after the
sixtieth (60th) day following the end of each quarter for which
any Bonus amount is earned.
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4.3. Noe shall be vested with four (4) weeks vacation as of the
commencement of this Agreement and shall also receive four (4)
weeks vacation during each subsequent calendar year of the Term
of this Agreement.
4.4. Noe shall be eligible for viaLink's group benefits programs which
are in place from time to time to the extent that the same are
offered to all employees of viaLink ("Programs"); provided,
however, that such Programs may be amended by viaLink from time
to time in its sole and absolute discretion. Eligibility for each
of such Programs shall be subject to and administered according
to any applicable documents relating to such Programs.
Notwithstanding the foregoing, viaLink shall maintain during the
Term of this Agreement either a group or an individual long term
disability insurance policy, at viaLink's option, providing
coverage, subject to the terms and limitations of such policy,
for Noe, with coverage amounts not less than those currently
provided to viaLink's employees under viaLink's group long term
disability policy in place as of the execution date of this
Agreement.
4.5. Subject to the conditions and restrictions ("Conditions and
Restrictions") hereinafter set forth and subject to the terms,
covenants and conditions of viaLink's 1995 Stock Option Plan
("Plan"), viaLink shall grant to Noe an option to purchase one
hundred fifty thousand (150,000) shares of viaLink common stock
at the grant price equal to eighty-five percent (85%) of the
closing price of the viaLink common stock on the date of the
actual grant of the options to Noe by viaLink. For purposes of
this Section, the date of the grant shall be the date upon which
the shareholders approve the increase in the number of options
available under the Plan. Such Conditions and Restrictions are as
follows:
4.5.1. That Noe is an employee of viaLink on the date of said
grant.
4.5.2. The approval by viaLink's shareholders of an increase in
the number of options available under viaLink's 1995
Stock Option Plan. viaLink agrees to use its best efforts
to obtain such approval. Noe agrees and understands that
in the event that viaLink's shareholders fail at their
1999 annual meeting to increase the number of shares
available under the Plan in an amount sufficient to
satisfy both the grant of options set forth herein hereof
as well as all other grants of options granted to other
persons which are subject to similar Conditions and
Restrictions, the grant of options hereunder is null and
void and of no further force and effect. Provided,
however, that in the event viaLink's shareholders fail at
their 1999 annual meeting to increase the number of
shares available under the Plan, Noe, within forty-five
(45) days after such annual meeting, and
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notwithstanding anything to the contrary in this
Agreement, may give viaLink notice of termination of this
Agreement. Such termination shall be effective as of the
latter of the following: (i) two (2) weeks from the day
such notice of termination is received by viaLink or (ii)
the end of such forty-five (45) day period. In the event
that Noe elects to exercise such right to terminate under
this Section 4.5.2, viaLink, within five (5) business
days following the effective date of such termination,
shall pay Noe a sum equal to 90/365ths of his then
current annualized salary (i.e. annual salary divided by
365, times 90).
4.5.3. The execution by Noe of a Stock Option Agreement
generally used by viaLink for the granting of stock
options under said Plan. Such Stock Option Agreement
shall include, but not limited to, the following terms
and conditions:
4.5.3.1. The option rights shall vest in equal amounts over
a three year period during the Term of this
Agreement; and
4.5.3.2. If Noe is terminated or this Agreement is not
renewed, whether with or without cause, or if this
Agreement otherwise expires, except as may
otherwise be provided in the change of control
provisions in the Plan under which any options
granted, Noe shall not be entitled to exercise any
of such options which have not vested as of the
date of such termination, non-renewal or earlier
expiration of this Agreement.
4.5.3.3. The approval by viaLink's shareholders of an
increase in the number of options available under
viaLink's 1995 Stock Option Plan. viaLink agrees
to use its best efforts to obtain such approval.
4.6. During the Term of this Agreement, Noe shall have the use of
company car of his choice while an employee of viaLink on such
terms and conditions and subject to such policy(s) as may be
reasonably adopted by viaLink from time to time. The car shall be
of Noe's choosing but shall not have a final sales price,
exclusive of tags, title and tax expenses, in excess of forty
thousand dollars ($40,000.00). Alternatively, Noe, in his sole
discretion, may, subject to the appropriate withholdings for
federal and/or state taxes, elect to receive a seven hundred
dollar ($700) per month car allowance in lieu of use of a company
car. Also, if Noe elects to receive such allowance, viaLink,
subject to the appropriate withholdings for federal and/or state
taxes, will reimburse Noe for expenses incurred in the
maintenance of his
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vehicle, but not for gas, and for the cost of such insurance
thereon as may be required by viaLink.
5. Non-competition.
5.1. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Noe terminates this Agreement
for other than cause, for a period of two (2) years after the
termination of this Agreement, Noe shall not, directly or
indirectly, alone, or as a partner, officer, director, employee,
stockholder, consultant or agent of any other corporation,
partnership or other business organization, knowingly solicit the
employment of, or hire, any employee of viaLink, or any viaLink
subsidiary, or cause any such employee to terminate such
employee's relationship with viaLink or any viaLink subsidiary,
without the prior written approval of viaLink. If viaLink
terminates Noe's employment without Cause, the provisions of this
section 5.1 of this Agreement shall be enforceable against Noe
only as long as Noe is receiving the compensation set forth in
Section 4.1 of this Agreement.
5.2. If viaLink terminates this Agreement for cause (as defined in
Section 6 of this Agreement) or if Noe terminates this Agreement
for other than cause, for a period of two (2) year after the
termination of this Agreement, Noe shall not, directly or
indirectly, alone, or as a partner, officer, director, employee,
stockholder, consultant or agent of any other corporation,
partnership or other business organization, knowingly solicit any
of the accounts of viaLink which were customers of viaLink during
the Term of this Agreement unless such solicitation is undertaken
on behalf of a business venture or entity which does not compete
with viaLink in the shared database electronic commerce services
industry for supply chain management in consumer package goods.
For the purposes of this subparagraph, a business shall be deemed
to be in competition with viaLink if the products or services of
such business are substantially similar in purpose, function or
capability to the products or services then being developed,
manufactured, marketed, provided or sold by viaLink. If viaLink
terminates Noe's employment without Cause, the provisions of this
section 5.2 of this Agreement shall be enforceable against Noe
only as long as Noe is receiving the compensation set forth in
Section 4.1 of this Agreement.
6. Duration and Termination.
6.1. Except as hereinafter set forth, the term ("Term") of this
Agreement shall commence on or before the 30th day of April, 1999
("Effective Date") and shall continue for one year from the
Effective Date, and shall be automatically renewed on a year to
year basis thereafter unless one party hereto notifies the other
party hereto in writing at least thirty (30)
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days prior to the end of the then current Term that it will not
renew this Agreement at the end of such then current Term.
Provided, however, and notwithstanding anything to the contrary
herein, this Agreement may also be terminated by viaLink (i) at
any time during its then current Term pursuant to Sections 6.2,
6.3, or 6.4, or (ii) without cause at any time during a then
current Term upon thirty (30) days written notice to the other
party. In the event that viaLink terminates this Agreement
without cause either as of the end of a then current term or at
any time during a then current term, Noe shall be entitled to
receive an amount equal to his then current annualized salary,
payable upon the effective date of such termination. Upon such
payment, Noe shall not be entitled to any further compensation.
For purposes of this Agreement, unless otherwise specifically
indicated, the word "Term" shall include both the original one
year period of this Agreement and any renewal period thereof.
6.2. Notwithstanding anything to the contrary herein, this Agreement
shall immediately terminate, and all rights, benefits and
obligations hereunder shall cease, in the event of Noe's death,
except such rights of Noe which have accrued as of the date of
death.
6.3. Notwithstanding anything to the contrary herein, this Agreement
shall immediately terminate and all rights and benefits hereunder
shall cease thirty (30) days after Noe is eligible to begin
receiving monthly benefits under any then current long-term
disability insurance plan maintained by viaLink pursuant to this
Agreement, except to the extent that any such rights or benefits
have already accrued to Noe as of such date. Notwithstanding the
foregoing, the parties agree and understand that viaLink, at its
option, may waive this termination provision.
6.4. In addition to the other rights granted to viaLink under this
Agreement, viaLink shall have the right to terminate this
Agreement in any of the following events, each of which shall
constitute "Cause". Cause is defined as:
6.4.1. Any breach by Noe's of his obligations under Sections
3.5, 3.6, 3.7 and/or 3.8 of this Agreement;
6.4.2. Noe's breach of any of his other duties under this
Agreement if such breach continues unremedied for thirty
(30) days after written notice thereof to Noe specifying
the acts constituting the breach and requesting that they
be remedied; or
6.4.3. a conviction, plea of nolo contendere, plea to a lesser
charge in lieu of a felony, of a felony, a crime
involving fraud or
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misrepresentation, or any other crime, the effect of
which is likely to materially adversely affect viaLink;
or
6.4.4. violation of any law which results in material liability
to viaLink.
6.4.5. abuse of alcohol or other drugs, or the illegal use of
drugs, which materially interferes with the performance
by Noe of his duties hereunder.
7. Successors and Assigns. The rights and obligations of viaLink hereunder
shall run in favor of and shall be binding upon viaLink, its
successors, assigns, nominees or other legal representatives. Noe may
not assign his rights and obligations hereunder.
8. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly
given upon receipt if delivered by hand, sent by telecopier or courier,
or three (3) days after such communication is mailed within the
continental United States by first class certified mail, return receipt
requested, postage prepaid, to the other party, in each case addressed
as follows:
8.1. if to viaLink, The viaLink Company, 13800 Benson Road, Edmond,
Oklahoma 73034, Attention Chief Executive Officer; and
8.2. if to Noe, 2301 Eldger Drive, Plano, Texas 75025
Addresses may be changed by written notice sent to the other party at
the last recorded address of that party.
9. Severability. If any provision of this Agreement shall be adjudged by
any court of competent jurisdiction to be invalid or unenforceable for
any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.
10. Entire Understanding. This Agreement embodies the entire understanding
of the parties hereto, and supersedes all other oral or written
agreements or understandings between them regarding the subject matter.
No change, alteration or modification hereof may be made except in a
writing, signed by both parties hereto. Without limiting the generality
of the foregoing, but except as may be otherwise stated in this
Agreement, any prior oral or written offer(s) of employment to Noe by
viaLink shall be null and void and of no further force and effect.
11. Headings. The headings in this Agreement are for convenience and
reference only and shall not be construed as part of this Agreement or
to limit or otherwise affect the meaning hereof.
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12. Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
13. Choice of Laws. Jurisdiction over disputes with regard to this
Agreement shall be exclusively in the courts of the State of Oklahoma,
and this Agreement shall be construed in accordance with and governed
by the laws of the state of Oklahoma without giving effect to
principles of conflicts of law hereunder.
14. Attorney Fees. In the event of any litigation between the parties
hereto, the prevailing shall be entitled to all of its costs incurred
in such litigation, including reasonable attorneys' fees.
15. Nonwaiver. The waiver of any violation or breach of this Agreement by
either party hereto shall not be deemed to be a waiver of any
continuing violation or breach or a waiver of any other violation or
breach of this Agreement.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or its breach, or its validity or interpretation,
except claims for injunctive relief and/or claims involving necessary
third parties who refuse to participate, shall be settled by binding
arbitration in accordance with the then current rules for arbitration
of the American Arbitration Association subject to the following:
16.1. The location for the arbitration shall be at such location as
agreed by the parties in Oklahoma County, Oklahoma or if the
parties cannot agree at such location in Oklahoma County,
Oklahoma as designated by the American Arbitration Association.
16.2. Such arbitration shall be heard and determined by a panel of
three (3) arbitrators in accordance with the then current rules
or regulations of the AAA relating to commercial disputes
("Rules").
16.3. All arbitrators shall be selected pursuant to the then current
Rules thereof within thirty (30) days after the filing of a
demand for arbitration. Each arbitrator shall be a person with
experience in handling disputes relating to the employment
contracts of corporate executives.
16.4. The hearing on the arbitration shall be heard not later than six
(6) months after the demand for arbitration has been made by a
party.
16.5. The arbitration award shall be binding on the parties and may be
enforced in any court of competent jurisdiction.
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16.6. The prevailing party in the arbitration and/or in any court
action authorized by this Agreement shall be entitled to recover
its reasonable costs and attorney fees incurred by such
prevailing party, provided however, the parties will split the
cost of the arbitrators' fees regardless of who prevails in the
arbitration.
16.7. The arbitrators will not have the authority to nor shall they
award punitive or exemplary damages. Each party hereby waives the
right to such damages.
16.8. In resolving all disputes between the parties, the arbitrators
will apply the laws of the State of Oklahoma and/or the
applicable federal law, as the case may be.
17. Residence. During the Term of this Agreement, it is agreed and
understood that Noe, unless otherwise agreed by the parties, will be
allowed to live in Dallas, Texas and work at viaLink's Dallas, Texas
office.
18. Survival. In addition to any others Sections of this Agreement which
survive pursuant to their terms, Sections 3.4, 3.5, 3.6, 3.7, 3.8, 3.9,
3.10, 5.1, 5.2, 7-17 (inclusive) and this Section 18 shall survive the
termination or expiration of this Agreement.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
The viaLink Company Robert I. Noe
By: /s/ LEWIS B. KILBOURNE /s/ ROBERT I. NOE
-------------------------------- -----------------------------------
Lewis B. Kilbourne Robert I. Noe
Its: Chief Executive Officer
Date: 4/9/99 Date: 4/8/99
-------------------------------- -----------------------------------
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EXHIBIT 10.30
*Personal and Confidential*
EMPLOYMENT AGREEMENT
between THE viaLINK COMPANY, an Oklahoma corporation
("viaLink")
and
PATRICK FITZGERALD, an individual
("Employee").
A. Employee hereby accepts employment with viaLink for the position described on
the attached Compensation Plan. The commencement date of the employment shall
be January 17, 2000. This Employment Agreement shall also be subject to the
Terms and Conditions of Employment attached hereto. Employee agrees that
disputes arising from the employment will be subject to binding arbitration
according to Section 7 of the Terms and Conditions. Employee acknowledges
that Employee understands and agrees to said Terms and Conditions.
B. Employee's annualized salary as set forth on the Compensation Plan shall be
earned and payable bi-weekly, and subject to withholdings or other deductions
required by law or otherwise authorized.
C. Employee agrees and acknowledges that, notwithstanding anything in this
Employment Agreement, the Compensation Plan, the Terms and Conditions, or in
any other document, policy or practice of viaLink, Employee's employment is
and shall remain AT WILL, and the employment may be terminated with or
without cause at any time, for any reason or for no reason. No change in such
AT WILL status shall be effective unless such change is in writing and
executed by an authorized officer of viaLink.
D. This Employment Agreement, the Compensation Plan, the Terms and Conditions of
Employment and any other documents, if any, attached hereto constitute the
entire agreement of the parties and supersedes all oral or written agreements
or understandings between them regarding the subject matter hereof. No
change, alteration or modification hereof may be made except in a writing
signed by both parties to this Employment Agreement.
E. viaLink's offer of employment as contained in this Employment Agreement
expires and shall be deemed cancelled and revoked if not accepted by
Employee, through Employee's signature hereon, by January 10, 2000. This
Employment Agreement shall only be effective if signed by both parties
hereto.
The viaLink Company Employee
By: /s/ JAMES DAVIDSON /s/ PAT FITZGERALD
--------------------------- -------------------
Its: Director of HR & Training Date: 1/3/00
-------------------------- --------------
Date: 1/4/00
-------------------------
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*Personal and Confidential*
THE viaLINK COMPANY
TERMS AND CONDITIONS OF EMPLOYMENT
1. BENEFITS.
1.1. VACATION. Employee shall accrue vacation at the rate set forth in the
then current policy of viaLink relating thereto.
1.2. PROGRAMS. Employee shall be eligible for viaLink's group benefits
programs currently in place which are offered to all employees of
viaLink ("Programs"); provided, however, that such Programs may be
amended by viaLink from time to time in its sole and absolute
discretion. Eligibility for each of such Programs shall be subject to
and administered according to any applicable documents relating to
such Programs.
2. EMPLOYEE DUTIES. Employee shall (i) perform all duties which are assigned to
Employee by viaLink from time to time, (ii) devote his full time, attention,
knowledge and skills during the normal business hours of vialink, as they may
be established from time to time, in furtherance of the business of viaLink,
and (iii) faithfully, diligently, and to the best of his ability, perform the
duties described above and further viaLink's best interests.
3. EMPLOYEE'S OBLIGATIONS, COVENANTS AND RESTRICTIONS.
3.1. RULES AND POLICIES. During the employment, Employee shall at all times
be subject to, observe and carry out such reasonable rules,
regulations, polices, directions and restrictions as viaLink may from
time to time establish, and those imposed by law.
3.2. COMPANY PROPERTY. All papers, books and records of every kind and
description relating to the business and affairs of viaLink, whether
or not prepared by the Employee, shall be the sole and exclusive
property of viaLink, and the Employee shall surrender them to viaLink
at any time upon request. This section shall survive the termination
of the employment.
3.3. NON-COMPETITION. During the employment, Employee shall not knowingly
engage, and shall not knowingly solicit any employees of viaLink or
its subsidiaries or other affiliates to engage in any commercial
activities which are in any way in competition with the activities of
viaLink, or which in any way materially interfere with the performance
of Employee's duties or responsibilities to viaLink.
3.4. CONFLICTS OF INTEREST. During the employment, Employee shall not,
directly or indirectly, alone or as a partner, officer, director,
employee, shareholder, consultant or agent of any other corporation,
partnership or other business organization, be actively engaged in or
concerned with any
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<PAGE> 122
*Personal and Confidential*
other duties or pursuits which materially interfere with the
performance of his duties as an Employee of viaLink. Without limiting
the generality of the foregoing, Employee shall comply with any other
conflict of interest policies which may be adopted by viaLink from
time to time.
3.5. MISAPPROPRIATION. Employee shall not knowingly acquire, use, copy, or
misappropriate any trade secret or proprietary information belonging
to any other company or person and shall not cause, encourage or
induce viaLink to acquire, use, copy, or misappropriate any trade
secret or proprietary information belonging to any other company or
person.
3.6. COMPLIANCE. Employee represents and warrants that Employee is and
shall at all times during the employment remain in compliance with any
and all applicable federal and/or state laws, rules or regulations
regarding Employee's eligibility for employment and/or continued
employment with viaLink.
3.7. NON-BREACH. Employee represents that by entering into the employment,
Employee is not in violation of any agreement, term or condition of
any other agreement Employee has had with any third party, nor does
the execution of the Employment Agreement constitute a breach of any
other agreement to which Employee is a party.
4. WORK PRODUCT.
4.1. Employee agrees that any and all inventions, improvements,
developments, discoveries, copyrightable works, or contributions
thereto, including, without limitation, any written works, software
products or code, images, designs, and/or instructions, whether or not
they are the subject of patent or copyright or other proprietary
rights protection under any federal, state, local or foreign law(s),
created in whole or part by Employee during the term of this Agreement
or relating in any way to the business of viaLink (hereinafter "Work
Product") shall be the sole and exclusive property of viaLink and
shall belong to viaLink free and clear from all right, title and
interest of any other person, including, without limiting the
generality of the foregoing, Employee. It is specifically agreed and
understood that Employee shall not retain any right, title, interest
or any right to use any of such Work Product. Employee shall promptly
and fully disclose to viaLink all such Work Product. Employee
acknowledges that all Work Product shall be a work for hire.
4.2. Employee conveys, transfers and assigns all rights, title and interest
in and to any Work Product to viaLink, and further agrees to execute
any written assignment or other agreement viaLink deems necessary at
any time to effect the foregoing and to obtain or uphold, for
viaLink's benefit, all copyright, patent and/or other rights of
viaLink in such Work Product.
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Initials: P.F.
<PAGE> 123
*Personal and Confidential*
4.3. Employee's obligations in this Section 4 shall survive the termination
of this Agreement.
5. TRADE SECRETS AND CONFIDENTIALITY.
5.1. CONFIDENTIAL INFORMATION. "Confidential Information" means proprietary
business information, Trade Secrets and/or other confidential
information regarding viaLink or any of its subsidiaries which (i)
have not otherwise become public knowledge, (ii) were not already
known to Employee or learned by Employee from independent and
unrestricted sources prior to the Effective Date, and (iii) have not
been disclosed by viaLink to others without substantial restriction on
further disclosure. "Trade Secrets" means any proprietary information
not generally known in the industry in which viaLink is engaged or may
become engaged, including, without limitation, information relating to
viaLink's business affairs, finances, properties, methods of
operation, software developed by viaLink, sources of and arrangements
for hardware supplied to clients of viaLink, submission and proposal
procedures of viaLink, viaLink's client or contact lists, commercial
information supplied to viaLink by viaLink's clients, and other
confidential information respecting the business or affairs of
viaLink. Employee acknowledges and agrees that the business and good
will of viaLink depend upon its keeping such Confidential Information
confidential.
5.2. NON-DISCLOSURE. Except when directed to do otherwise by the President
or Chief Executive Officer of viaLink, or any successor to either of
them, and except as required by law, court order or subpoena, Employee
shall keep confidential and shall not divulge to any other person or
entity, during the term of this Agreement or at any time thereafter,
any of viaLink's Confidential Information. In any case where Employee
is compelled by law, court order or subpoena to disclose any
Confidential Information to any third person, Employee shall advise
viaLink in advance of such requirement and shall permit viaLink to
object, contest, intervene or obtain appropriate protection of such
information prior to its disclosure to any person.
5.3. RETURN OF PROPERTY. Upon termination of this Agreement, Employee and
Employee's Personnel will turn over to viaLink all documents, papers
and other matter in the possession of or under the control of Employee
or Employee's Personnel that are or relate to Confidential Information
or Work Product.
5.4. INJUNCTIVE RELIEF. Employee acknowledges that disclosure of any
Confidential Information or Work Product by Employee will give rise to
irreparable injury, which is inadequately compensable in damages, to
viaLink or the owner of such Confidential Information. Accordingly,
viaLink or such other party, in addition to any other remedies which
are
3
Initials: P.F.
<PAGE> 124
*Personal and Confidential*
elsewhere granted in this Agreement or which may be otherwise
available at law or in equity, may seek and obtain injunctive relief
against the breach or threatened breach of the foregoing Section 5.2,
any infringement upon any intellectual property rights of viaLink, or
any other breach of any term, covenant, condition, warranty or
representation of this Agreement.
5.5. All obligations under this Section 5 shall survive the termination of
this Agreement.
6. EMPLOYEE'S OBLIGATIONS AFTER EMPLOYMENT ENDS. Employee acknowledges and
agrees that the obligations contained in this Section shall begin upon
termination of employment.
6.1. For a period of two (2) years after cessation of Employee's employment
with viaLink for any reason (including termination of employment by
viaLink), Employee shall not, directly or indirectly, alone, or as a
partner, officer, director, employee, shareholder, consultant or agent
of any other corporation, partnership or other business organization,
knowingly solicit the employment of, or hire, any employee of viaLink,
or any viaLink subsidiary, or cause any such employee to terminate the
employee's relationship with viaLink or any viaLink subsidiary,
without the prior written approval of viaLink.
6.2. For a period of two (2) years after cessation of Employee's employment
with viaLink for any reason (including termination of employment by
viaLink), Employee shall not, directly or indirectly, alone, or as a
partner, officer, director, employee, shareholder, consultant or agent
of any other corporation, partnership or other business organization,
knowingly solicit any of the accounts of viaLink which were directly
or indirectly serviced by the Employee unless such solicitation is
undertaken on behalf of a business venture which does not compete,
directly or indirectly, with the products or services owned, sold,
manufactured, marketed, provided or developed by viaLink and its
subsidiaries during Employee's employment by viaLink. For the purposes
of this section, a business shall be deemed to be in competition with
viaLink and its subsidiaries if the products or services of such
business are substantially similar in purpose, function or capability
to the products or services then being developed, manufactured,
marketed, provided or sold by viaLink or a viaLink subsidiary.
6.3. The parties agree that the any breach or threatened breach of the
provisions of this Section 6 will cause irreparable injury to viaLink
and that money damages will not provide an adequate remedy.
Accordingly, viaLink shall, in addition to other remedies provided by
law, be entitled to such equitable and injunctive relief as may be
necessary to enforce the provisions of these Terms and Conditions
against the Employee or any person or entity participating in such
breach or threatened breach.
4
Initials: P.F.
<PAGE> 125
*Personal and Confidential*
Nothing contained herein shall be construed as prohibiting viaLink
from pursuing any other and additional remedies available to it, at
law or in equity, for such breach or threatened breach, including any
recovery of damages from the Employee and the immediate termination of
the employment.
7. RESOLUTION OF DISPUTES. Any controversy or claim arising out of or relating
to the employment or termination thereof (including, without limitation,
claims under Title VII of the Civil Rights Act of 1964, as amended, the
Americans with Disabilities Act, and any other federal and/or state
employment rights laws), and/or arising out of a controversy or claim
regarding the Employment Agreement, these Terms and Conditions, the Programs,
or any breach of any of the foregoing, and except for any claims for
injunctive relief permitted by these Terms and Conditions, shall be settled
by arbitration pursuant to the then current National Rules for the Resolution
of Employment Disputes ("Rules") of the American Arbitration Association
("AAA"), subject to the following:
7.1. Within 15 days after the commencement of arbitration, each party shall
select one person to act as an arbitrator and the two selected persons
shall select a third arbitrator within 10 days of their appointment.
If the arbitrators selected by the parties are unable or fail to agree
upon the third arbitrator, the third arbitrator shall be selected by
the American Arbitration Association. All arbitrators selected shall
be persons having experience with and knowledge of the resolution of
employment-related disputes in the area in which the claim or
controversy arises.
7.2. The arbitration shall be conducted at the offices of viaLink or such
other location at which Employee is then or was most recently employed
by viaLink.
7.3. The arbitration shall be completed within six months of the filing of
the notice of intention to arbitrate (demand), and the arbitrators
shall agree to comply with this schedule before accepting appointment.
However, this time limit may be extended by agreement of the parties.
7.4. Any arbitration award made shall not exceed the amount that would have
been available to the parties had the matter been determined by
litigation in a court of law.
7.5. The prevailing party shall be entitled to an award of all of its
reasonable costs incurred, including, without limitation, reasonable
attorneys' fees.
7.6. Except as may be required by law, neither a party nor an arbitrator
may disclose the existence, content, or results of any arbitration
hereunder without the prior written consent of both parties.
7.7. Judgment upon any award rendered by the arbitrators may be entered by
any court having jurisdiction thereof.
5
Initials: P.F.
<PAGE> 126
*Personal and Confidential*
8. SUCCESSORS AND ASSIGNS. The rights and obligations of viaLink hereunder
shall run in favor of and shall be binding upon viaLink, its successors,
assigns, nominees or other legal representatives. Employee acknowledges that
viaLink may assign its rights and obligations under the Employment Agreement
without the consent of Employee. Employee may not assign his rights and
obligations under the Employment Agreement.
9. NOTICES. All notices, requests, demands and other communications hereunder
must be in writing and shall be deemed to have been duly given upon receipt
if delivered by hand, sent by telecopier or by courier, or three (3) days
after such communication is mailed within the continental United States by
first class certified mail, return receipt requested, postage prepaid, to
the other party, in each case addressed as follows: (i) if to viaLink, to
Human Resources, The viaLink Company, 13800 Benson Road Suite 100, Edmond,
Oklahoma 73013 and (ii) if to the Employee, to the last address shown for
the Employee in the personnel records of viaLink. Addresses may be changed
by written notice sent to the other party at the last recorded address of
that party.
10. SEVERABILITY. If any provision of the Employment shall be adjudged by any
court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder
of said terms and provisions.
11. HEADINGS. The captions and headings in these Terms and Conditions are for
convenience and reference only and shall not be construed as part of these
Terms and Conditions or to limit or otherwise affect the meaning hereof.
12. GOVERNING LAW. Jurisdiction over disputes with regard to the Employment
Agreement and/or these Terms and Conditions shall be exclusively in the
courts of the State of Oklahoma, and shall be construed in accordance with
and governed by the laws of the state of Oklahoma.
13. NONWAIVER. The waiver of any violation or breach of these Terms and
Conditions by either party hereto shall not be deemed to be a waiver of any
continuing violation or breach or a waiver of any other violation or breach
of these Terms and Conditions.
6
Initials: P.F.
<PAGE> 127
*Personal and Confidential*
THE viaLINK COMPANY
COMPENSATION PLAN
FOR:
PATRICK FITZGERALD
"Employee"
Salary: The Annual Salary is earned and payable bi-weekly.
<TABLE>
- --------------------------------------------------------------------------------
Employee's Position: Annual Salary:
- --------------------------------------------------------------------------------
<S> <C>
Senior Vice President of Sales $ 190,000.000*
- --------------------------------------------------------------------------------
</TABLE>
EMPLOYEE IS ELIGIBLE FOR THE ADDITIONAL COMPENSATION PROVISIONS BELOW.
[ ] Performance Bonus:
Employee shall be eligible for a potential bonus of $150,000.00, payable in
accordance with the following schedule:
o $60,000.00 for the first target account signed (must be retailer),
o $40,000.00 for the second target account signed (must be retailer),
o $20,000.00 for the third target account signed (can be either retailer or
supplier),
o $20,000.00 for the fourth targeted account (can be either retailer or
supplier), and
o $10,000.00 for the fifth target account (can be either retailer or
supplier).
A list of target accounts shall be supplied (see attachment "A").
Notwithstanding anything to the contrary in this Bonus provision, in order to
receive a Bonus due hereunder, Employee must be an employee of viaLink under
this Agreement at the time target account is signed.
- --------------------------------------------------------------------------------
[ ] Severance:
In the event that viaLink terminates the employment without cause at any time,
Employee shall be entitled to severance compensation in an amount equal to six
months of salary at Employee's salary rate at date of hire, payable over 12
months.
- --------------------------------------------------------------------------------
7
Initials: P.F.
-----
<PAGE> 128
*Personal and Confidential*
[ ] Relocation:
Employee shall be eligible for relocation reimbursement pursuant to the attached
policy of viaLink regarding relocation expenses.
Current lease shall be indemnified up to $7,000.00 per month for one year. If
taxes are paid on lease by Employee, viaLink will not gross up Employee to cover
amount.
- --------------------------------------------------------------------------------
[ ] Hiring Bonus
Following acceptance of Employment Agreement, Employee shall receive a
$10,000.00 hiring bonus which shall be payable on the first payroll following
date of employment.
- --------------------------------------------------------------------------------
[ ] Stock Options:
Subject to the conditions and restrictions ("Conditions and Restrictions")
hereinafter set forth and subject to the terms, covenants and conditions of
viaLink's 1999 Stock Option Plan ("Plan"), viaLink shall grant to Employee an
option to purchase 100,000 shares of viaLink common stock at the grant price
equal to the closing price of the viaLink common stock on the date of the
actual grant of the options to Employee by viaLink. Such Conditions and
Restrictions are as follows:
o Employee must be an employee of viaLink on the actual date of said grant.
o Employee must execute a Stock Option Agreement generally used by viaLink for
the granting of stock options under said Plan. Such Stock Option Agreement
shall include, but not limited to, the following terms and conditions:
o 50,000 option rights shall vest over two years (25,000 each year) and
50,000 shall vest in accordance with the following schedule:
o 5,000 when first target account is signed, (can be either retailer
or supplier);
o 5,000 when the second target account is signed,
o 10,000 when each of the third and fourth target accounts are signed,
and
o 20,000 when the fifth target account is signed.
o If Employee is terminated or the Employment Agreement is not renewed, whether
with or without cause, or if said Agreement otherwise expires, except as may
otherwise be provided in the change of control provisions in the Plan under
which any options granted, Employee shall not be entitled to exercise any of
such options which have not vested as of the date of such termination,
non-renewal or earlier expiration of the Employment Agreement
8
Initials: P.F.
-----
<PAGE> 129
ATTACHMENT A
The viaLink Company
Relocation Reimbursement Agreement
I hereby acknowledge that I have received and read a summary regarding benefits
available to me under the Company relocation policy. I understand the benefits
available and agree to the following:
1. Any expenses that deviate from the policy must be approved in advance by the
Vice President of Human Resources or his/her designee. If I should incur
such an expense without prior approval, the Company may refuse to provide
reimbursement, even though past practice has implied that the expense
would/should have been reimbursed.
2. Tax assistance will be paid on certain allowable items, which the Company
believes are nondeductible (excluding the Relocation Allowance).
3. The payment of my relocation expenses by the Company is conditional on my
remaining in the employ of the Company for twelve (12) consecutive months
after my effective start date with the Company, or my effective date of
transfer into my new position (whichever may apply). If I should voluntarily
resign from the Company or should my employment with the Company be
terminated for cause prior to the completion of twelve (12) consecutive
months after such date, I will repay to the Company all relocation
reimbursement payments made to me or on my behalf, in accordance with the
following schedule:
<TABLE>
<CAPTION>
TERMINATION WITHIN REPAYMENT
------------------ ---------
<S> <C> <C>
1-3 months 100%
4-6 months 75%
7-9 mouths 50%
10-12 months 25%
After 1 year 0
</TABLE>
4. Any repayment required under this agreement would be due and payable to the
Company on the final working day of employment.
5. If required, I authorize deductions to be withheld from my wages, salary,
bonus, or other sums due me for any reason for any relocation expense
amounts due the Company in accordance with the above schedule.
6. Reimbursement or repayment of relocation expenses by the Company does not
constitute a commitment by the Company with respect to the duration of
employment.
/s/ PAT FITZGERALD Pat Fitzgerald
- ------------------- -------------------------------
Name (Signature) Name (Print)
Date: 1/3/00
-------------
<PAGE> 130
EXHIBIT 10.31
ADDENDUM TO EMPLOYMENT AGREEMENT
The Employment Agreement between The viaLink Company ("viaLink") and
J. Andrew Kerner dated the 1st day of April, 1999 is amended as follows:
1. Effective as of the tenth day of March, 2000, J. Andrew Kerner's title
shall be changed to Senior Vice President of Finance and Chief Financial
Officer.
2. Effective as of the tenth day of March, 2000, the annualized salary set
forth in Section 4.1 of said Employment Agreement shall be increased to
two hundred thirty eight thousand five hundred dollars ($238,500).
3. The first sentence of Section 6.1 shall be deleted and replaced with the
following sentence: "Except as hereinafter set forth, the term ("Term) of
this Agreement shall commence on the 9th day of April, 1999 ("Effective
Date and shall continue through the 25th day of May, 2001 and shall be
automatically renewed on a year to year basis thereafter unless one party
hereto notifies the other party hereto in writing at least thirty (30)
days prior to the end of the then current Term that it will not renew this
Agreement at the end of such then current Term."
4. Except as amended herein, no further changes are made to the Employment
Agreement and the same remains in full force and effect.
The viaLink Company J. Andrew Kerner
By:
------------------------- ------------------------------
Lewis B. Kilbourne J. Andrew Kerner
Its: Chief Executive Officer
Date: Date:
------------------------- -------------------------
<PAGE> 131
EXHIBIT 10.32
ADDENDUM TO EMPLOYMENT AGREEMENT
The Employment Agreement between The viaLink Company ("viaLink") and
David Lloyd dated the 9th day of April, 1999 is amended as follows:
1. Effective as of the tenth day of March, 2000, David Lloyd's title shall be
changed to Senior Vice President of Operations.
2. Effective as of the tenth day of March, 2000, the annualized salary set
forth in Section 4.1 of said Employment Agreement shall be increased to
two hundred and twelve thousand dollars ($212,000).
3. The first sentence of Section 6.1 shall be deleted and replaced with the
following sentence: "Except as hereinafter set forth, the term ("Term) of
this Agreement shall commence on the 9th day of April, 1999 ("Effective
Date and shall continue through the 25th day of May, 2001 and shall be
automatically renewed on a year to year basis thereafter unless one party
hereto notifies the other party hereto in writing at least thirty (30)
days prior to the end of the then current Term that it will not renew this
Agreement at the end of such then current Term."
4. Except as amended herein, no further changes are made to the Employment
Agreement and the same remains in full force and effect.
The viaLink Company David Lloyd
By:
------------------------- -------------------------
Lewis B. Kilbourne David Lloyd
Its: Chief Executive Officer
Date: Date:
------------------------- --------------------
<PAGE> 132
EXHIBIT 10.33
ADDENDUM TO EMPLOYMENT AGREEMENT
The Employment Agreement between The viaLink Company ("viaLink") and Robert I.
Noe dated the 8th day of April, 1999 is amended as follows:
1. The first sentence of Section 6.1 shall be deleted and replaced with the
following sentence: "Except as hereinafter set forth, the term ("Term) of
this Agreement shall commence on or before the 30th day of April, 1999 and
shall continue until the 25th day of May, 2001, and shall be automatically
renewed on a year to year basis thereafter unless one party hereto
notifies the other party hereto in writing at least thirty (30) days prior
to the end of the then current Term that it will not renew this Agreement
at the end of such then current Term."
2. Except as amended herein, no further changes are made to the Employment
Agreement and the same remains in full force and effect.
The viaLink Company Robert I. Noe.
By:
------------------------- -------------------------
Lewis B. Kilbourne Robert I. Noe
Its: Chief Executive Officer
Date: Date:
----------------------- --------------------
<PAGE> 133
EXHIBIT 23.1
Independent Auditors' Consent
The Board of Directors
The viaLink Company:
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
KPMG LLP
Dallas, Texas
March 21, 2000
<PAGE> 134
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated February 22, 1999, except as to the stock splits described in Note
8 and Note 13 relating to the 1997 and 1998 share and per share data, which is
as of March 14, 2000, relating to the financial statements of The viaLink
Company, which appears in such Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma
March 21, 2000
<PAGE> 135
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 22, 2000
------------------------------
THE VIALINK COMPANY
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
- --------------------------------------------------------------------------------
(State of Other Jurisdiction of Incorporation)
000-21729 73-1247666
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer
Identification No.)
13800 Benson Road, Suite 100, Edmond, Oklahoma 73013
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(405) 936-2500
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 136
ITEM 5. OTHER EVENTS.
On March 22, 2000, we entered into a Securities Purchase Agreement
pursuant to which i2 Technologies, Inc., Hewlett-Packard Company and Millennium
Partners, L.P., paid us an aggregate of $6.0 million in consideration for (1)
100,200 shares of our common stock and (2) warrants to purchase 15,030 shares of
our common stock at exercise price of $83.83 per share. The warrants can be
exercised at any time on or before March 24, 2003. The purchasers will receive
the benefit of the proposed stock split of our common stock to be effected as of
March 28, 2000 in the form of a stock dividend paid to the stockholders of
record on March 17, 2000.
We also amended our Shareholder Agreement with Hewlett-Packard dated
February 4, 1999 to provide certain demand and piggyback registration rights
with respect to the shares of common stock purchased by them and the shares of
common stock issuable upon exercise of the warrants issued to them in connection
with the Securities Purchase Agreement.
In addition, we amended our Registration Rights Agreement with i2
Technologies dated October 12, 1999 to provide certain demand and piggyback
registration rights with respect to the shares of common stock purchased by them
and the shares of common stock issuable upon exercise of the warrants issued to
them in connection with the Securities Purchase Agreement.
In connection with the Securities Purchase Agreement, we also granted
Millennium Partners certain automatic and piggyback registration rights pursuant
to a Registration Rights Agreement.
Copies of the Securities Purchase Agreement, the Common Stock Purchase
Warrants issued to each of Hewlett-Packard, i2 Technologies and Millennium
Partners, Amendment No. 1 to Shareholder Agreement with Hewlett-Packard,
Amendment No. 1 to Registration Rights Agreement with i2 Technologies and the
Registration Rights Agreement with Millennium Partners are attached hereto as
Exhibits 4.1, 4.2, 4.3. 4.4, 4.5 and 4.6, respectively. The Shareholder
Agreement with Hewlett-Packard is incorporated herein by reference to our
Current Report on Form 8-K dated February 4, 1999. The Registration Rights
Agreement with i2 Technologies is incorporated herein by reference to our
Current Report on Form 8-K dated October 12, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
4.1 Securities Purchase Agreement dated as of March 22, 2000,
by and among The viaLink Company and the Purchasers listed
on Schedule I thereto.
4.2 Common Stock Purchase Warrant dated March 24, 2000 by The
viaLink Company in favor of Hewlett-Packard Company.
4.3 Common Stock Purchase Warrant dated March 24, 2000 by The
viaLink Company in favor of i2 Technologies, Inc.
<PAGE> 137
4.4 Common Stock Purchase Warrant dated March 24, 2000 by
The viaLink Company in favor of Millennium Partners,
L.P.
4.5 Amendment No. 1 to Shareholder Agreement dated as of
March 22, 2000 by and among The viaLink Company and
Hewlett-Packard Company.
4.6 Amendment No. 1 to Registration Rights Agreement dated
as of March 22, 2000 by and among The viaLink Company
and i2 Technologies, Inc.
4.7 Registration Rights Agreement dated as of March 22, 2000
by and between The viaLink Company and Millennium
Partners, L.P.
4.8(1) Shareholder Agreement dated as of February 4, 1999, by
and between The viaLink Company and Hewlett-Packard
Company. 4.9(2) Registration Rights Agreement dated
October 12, 1999 by and between The viaLink Company and
i2 Technologies, Inc.
4.9(2) Registration Rights Agreement dated October 12, 1999 by
and between The viaLink Company and i2 Technologies,
Inc.
- ---------------
(1) Incorporated herein by reference to our Current Report on Form 8-K dated
February 4, 1999.
(2) Incorporated herein by reference to our Current Report on Form 8-K dated
October 12, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE VIALINK COMPANY
Dated: March 28, 2000 By: /s/ J. ANDREW KERNER
------------------------
J. Andrew Kerner
Chief Financial Officer
2
<PAGE> 138
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
<S> <C>
4.1 Securities Purchase Agreement dated as of March 22,
2000, by and among The viaLink Company and the
Purchasers listed on Schedule I thereto.
4.2 Common Stock Purchase Warrant dated March 24, 2000 by
The viaLink Company in favor of Hewlett-Packard
Company.
4.3 Common Stock Purchase Warrant dated March 24, 2000 by
The viaLink Company in favor of i2 Technologies, Inc.
4.4 Common Stock Purchase Warrant dated March 24, 2000 by
The viaLink Company in favor of Millennium Partners,
L.P.
4.5 Amendment No. 1 to Shareholder Agreement dated as of
March 22, 2000 by and among The viaLink Company and
Hewlett-Packard Company.
4.6 Amendment No. 1 to Registration Rights Agreement
dated as of March 22, 2000 by and among The viaLink
Company and i2 Technologies, Inc.
4.7 Registration Rights Agreement dated as of March 22,
2000 by and between The viaLink Company and
Millennium Partners, L.P.
4.8(1) Shareholder Agreement dated as of February 4, 1999,
by and between The viaLink Company and
Hewlett-Packard Company.
4.9(2) Registration Rights Agreement dated October 12, 1999
by and between The viaLink Company and i2
Technologies, Inc.
</TABLE>
- ---------------
(1) Incorporated herein by reference to our Current Report on Form 8-K dated
February 4, 1999.
(2) Incorporated herein by reference to our Current Report on Form 8-K dated
October 12, 1999.
<PAGE> 139
EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
AMONG
THE VIALINK COMPANY
AND
THE PURCHASERS LISTED ON
SCHEDULE I TO THIS AGREEMENT
<PAGE> 140
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I PURCHASE AND SALE OF SECURITIES.....................................2
1.1 Purchase and Sale of Securities..................................2
1.2 Separate Sales...................................................2
ARTICLE II CLOSING............................................................2
2.1 The Closing......................................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................2
3.1 Organization, Standing and Power.................................2
3.2 Capital Structure................................................3
3.3 Authority........................................................4
3.4 SEC Documents; Financial Statements..............................4
3.5 Absence of Undisclosed Liabilities...............................5
3.6 Broker's and Finders' Fees.......................................5
3.7 Board Approval...................................................5
3.8 No Material Adverse Change.......................................5
3.9 Litigation.......................................................5
3.10 Representations Complete.........................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS.......................6
4.1 Corporate Organization...........................................6
4.2 Authorization....................................................6
4.3 No Violation.....................................................6
4.4 Brokers and Finders..............................................7
4.5 Corporate Approval...............................................7
4.6 Investment Intent................................................7
4.7 Access to Information............................................7
4.8 Accredited Investor..............................................7
4.9 Restricted Securities............................................7
4.10 Further Limitations on Disposition...............................7
ARTICLE V COVENANTS 8
5.1 Further Assurances...............................................8
5.2 Market Stand-Off.................................................8
5.3 Registration Rights Agreements...................................8
5.4 Listing of Common Stock..........................................9
5.5 Issuance of Certificates.........................................9
ARTICLE VI DELIVERIES AT CLOSING..............................................9
6.1 Warrant .........................................................9
</TABLE>
i
<PAGE> 141
<TABLE>
<S> <C>
6.2 Lock-Up Agreements...............................................9
6.3 Registration Rights Agreement....................................9
6.4 Legal Opinion....................................................9
6.5 Payment of Consideration........................................11
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION......11
7.1 Survival of Representations.....................................11
7.2 Statements as Representations...................................11
7.3 Indemnification by the Company..................................11
7.4 Indemnification by Purchasers...................................11
7.5 Limitation of Liability.........................................12
ARTICLE VIII MISCELLANEOUS PROVISIONS........................................12
8.1 Amendment and Modifications.....................................12
8.2 Waiver of Compliance............................................12
8.3 Expenses........................................................12
8.4 Remedies Waiver.................................................12
8.5 Notices.........................................................13
8.6 Assignment......................................................13
8.7 Publicity.......................................................13
8.8 Severability....................................................14
8.9 Arbitration of Disputes.........................................14
8.10 Governing Law...................................................14
8.11 Counterparts....................................................14
8.12 Headings........................................................14
8.13 Third Parties...................................................14
8.14 Further Assurances..............................................15
8.15 Schedules.......................................................15
8.16 Entire Agreement................................................15
</TABLE>
LIST OF SCHEDULES
Schedule I
Company Disclosure Schedule
LIST OF EXHIBITS
Exhibit A - Form of Common Stock Purchase Warrant
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Lock-Up Agreement
Exhibit D - Form of i2 Amendment No. 1
Exhibit E - Form of Hewlett-Packard Amendment No.1
ii
<PAGE> 142
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("AGREEMENT") is made and entered
into as of March 22, 2000, by and among THE VIALINK COMPANY, a Delaware
corporation (the "COMPANY"), and the persons listed on SCHEDULE I attached
hereto (individually, a "PURCHASER," and collectively, "PURCHASERS").
RECITALS:
WHEREAS, the Company is authorized to issue shares of the Company's
$0.001 par value common stock ("COMMON Stock") and the warrant to purchase
shares of Common Stock described herein; and
WHEREAS, in connection with and in consideration for the payment by the
Purchasers to the Company of a total aggregate consideration of $6,000,000 at
Closing (as hereinafter defined), the Company shall issue to Purchasers that
number of shares (the "SHARES") of Common Stock that shall equal $6,000,000
divided by 80% of the average closing bid price of the Common Stock on the
Nasdaq SmallCap Market for the five consecutive trading days ending one day
prior to the date on which the Company files its registration statement on Form
SB-2 (the "FORM SB-2") in connection with the Company's anticipated underwritten
public offering (the "PURCHASE PRICE PER SHARE"). Each individual Purchaser
shall receive its pro-rata portion of the Shares, which portion shall be
determined in accordance with such Purchaser's allocated percentage set forth
opposite such Purchaser's name on SCHEDULE I, attached hereto. Purchasers shall
also receive warrants (individually, a "WARRANT" and collectively, the
"WARRANTS") to purchase, in the aggregate, that number of shares (the "WARRANT
SHARES") that shall equal fifteen percent (15%) of the total number of Shares
acquired, in the aggregate, by Purchasers at the Closing. The exercise price of
the Warrants shall be equal to 140% of the Purchase Price Per Share. Each
individual Purchaser shall receive its pro-rata portion of the Warrants, which
such portion shall be determined in accordance with such Purchaser's allocated
percentage set forth opposite such Purchaser's name on SCHEDULE I, attached
hereto. The Warrants shall be in the form attached hereto as Exhibit A.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and agreements herein contained, on the Closing Date, the Company
shall issue to Purchasers, and Purchasers shall acquire from the Company, the
Shares and the Warrants free and clear of all liens, security interests,
options, rights, mortgages, pledges, restrictions on transferability of any type
(other than (i) restrictions on transferability as may be applicable under
federal and state securities laws, (ii) as set forth herein or therein and/or
(iii) those created by Purchasers) and Purchasers shall pay on the Closing Date
to the Company an aggregate amount of $6,000,000 (the "CASH CONSIDERATION") by
wire transfer to such account as is designated by the Company to Purchasers in
writing.
1.2 Separate Sales. The Company's agreement with each
Purchaser is a separate agreement, and the sale of Shares and Warrants to each
Purchaser is a separate sale.
ARTICLE II
CLOSING
2.1 The Closing. The consummation of the sale and purchase of
the Shares and the Warrants referred to in Section 1.1 (the "CLOSING") shall
take place on the first business day following the business day on which the
Company files the Form SB-2, but in no event shall the Closing take place later
than the third business day after the date of this Agreement. The Closing shall
take place at the offices of Brobeck, Phleger & Harrison LLP, 301 Congress Ave.,
Suite 1200, Austin, Texas 78701, or at such other date, time or place as the
parties hereto mutually agree, either verbally or in writing. Such date is
referred to herein as the "CLOSING DATE," and the Closing shall be deemed to be
effective as of 9:00 a.m., Central Time, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document of even date herewith and delivered
by the Company to Purchasers prior to the execution and delivery of this
Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company represents and
warrants to Purchasers as follows:
3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. The Company has the corporate power to own,
lease and operate its properties and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the failure to be so
qualified and in
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good standing would have a material adverse effect on the Company. The Company
is not in violation of any of the provisions of its Certificate of Incorporation
or Bylaws.
3.2 Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, par value $0.001 per share, of which there were issued and
outstanding as of the close of business on March 3, 2000, 19,735,416 shares of
Common Stock and no shares of preferred stock. All outstanding shares of Common
Stock have been duly authorized, validly issued, fully paid and are
nonassessable and free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof and have been issued
in compliance with all federal and state securities laws. The Company has no
subsidiaries. Except as set forth in Section 3.2 of the Company Disclosure
Schedule, there are no (a) options, warrants, stock appreciation rights or other
similar rights, agreements, arrangements or commitments of any character
obligating the Company to issue or sell shares of its capital stock, (b) notes,
bonds, debentures or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which the shareholders of the Company may vote or (c)
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Common Stock or any other capital stock of, or
any equity interest in, the Company. The Shares, the Warrants and the Warrant
Shares (collectively, the "SECURITIES") have been duly authorized for issuance
and sale to the Purchasers pursuant to this Agreement and are validly issued.
The Shares are, and, when issued pursuant to the terms and conditions set forth
in the Warrant, the Warrant Shares will be, fully paid and non-assessable, and
no holder of Securities is or will be subject to personal liability with respect
to the obligations of the Company by reason of being such a holder. Other than
as set forth in Section 3.2(d) of the Company Disclosure Schedule, the Shares
and the Warrants are, and the Warrant Shares, when issued, shall be, free of
preemptive rights or rights of first refusal created by statute, the Company's
Certificate of Incorporation or Bylaws or any agreement to which the Company is
a party or by which it is bound and, based on the representations of Purchasers
contained in Sections 4.6, 4.7 and 4.8 of this Agreement, are and shall be
issued in compliance with all federal and state securities laws. Except for Form
D filings required to perfect exemptions under applicable federal and/or state
securities laws and the filing of an application to list additional shares of
Common Stock with the Nasdaq SmallCap Market, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign is necessary or
required in connection with the due authorization, execution and delivery of the
Operative Agreements (as hereinafter defined) or for the offering, issuance or
sale of the Securities. The form of certificate that will be used to evidence
the Shares will comply in all material respects with all applicable statutory
requirements, with any applicable requirements of the Certificate of
Incorporation and Bylaws of the Company and with the requirements of the Nasdaq
SmallCap Market.
On March 1, 2000, the Company declared a two-for-one stock
split of its Common Stock payable on March 27, 2000 in the form of a dividend of
one share of Common Stock to each holder of record at the close of business on
March 17, 2000. Effective as of the payment with respect to such stock split,
all outstanding share and per share amounts, and the number and Purchase Price
per share of the Shares and Warrants, shall be deemed to give effect to such
split.
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3.3 Authority. The Company has corporate power and authority
to enter into and perform its obligations under this Agreement, the Registration
Rights Agreement, dated March 22, 2000, between the Company and Millennium
Partners, L.P. in the form attached hereto as Exhibit B (the "REGISTRATION
RIGHTS AGREEMENT"), i2 Amendment No. 1 (defined below), the Hewlett-Packard
Amendment No. 1 (defined below) and the Warrants (collectively, the "OPERATIVE
AGREEMENTS") and to consummate the transactions contemplated by the Operative
Agreements. The Company has taken all action required by law, its Certificate of
Incorporation and Bylaws or otherwise to authorize the execution and delivery of
this Agreement and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby. The Operative Agreements have been
duly executed and delivered by the Company. The Operative Agreements are valid
and binding agreements of the Company enforceable in accordance with their
terms, except that: (a) the enforceability of the Operative Agreements may be
subject to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law; (b) the
enforceability of the Operative Agreements is subject to and may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium, and other
similar laws relating to or affecting the rights of creditors generally; and (c)
any rights to indemnification and contribution may be limited by federal or
state securities laws and public policy considerations. The execution and
delivery of the Operative Agreements does not, and the consummation of the
transactions contemplated hereby and thereby (including the issuance and sale of
the Securities) and compliance by the Company with its obligations under the
Operative Agreements (a) shall not, with or without notice or lapse of time, or
both, conflict with or constitute a breach of, or default or acceleration event
under or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to (i) any provision of the
Certificate of Incorporation or Bylaws of the Company or (ii) any material
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or its properties or
assets. Assuming the accuracy of the representations and warranties of
Purchasers in Sections 4.6, 4.7 and 4.8 of this Agreement and except as
expressly contemplated by this Agreement or the agreements, instruments and
documents contemplated hereby, no consent, approval order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority (each a "GOVERNMENTAL ENTITY"), is
required by or with respect to the Company or in connection with the execution
and delivery of the Operative Agreements or the consummation by the Company of
the transactions contemplated hereby or thereby, and (b) will not result in any
violation of any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its properties,
assets or operations.
3.4 SEC Documents; Financial Statements. The Company has made
available to Purchasers each statement, report, registration statement (with
each prospectus in the form filed pursuant to Rule 424(b) of the Securities Act
of 1933, as amended (the "SECURITIES ACT")), definitive proxy statement, and
other filing filed with the Securities and Exchange Commission ("SEC") by the
Company since December 31, 1998 (collectively, the "COMPANY SEC DOCUMENTS"). In
addition, the Company has made available to Purchasers all exhibits to the
Company SEC
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Documents filed prior to the date hereof. Other than as set forth in Section 3.4
to the Company Disclosure Schedule, as of their respective filing dates, the
Company SEC Documents were filed on a timely basis and complied in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the Securities Act, and none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading except to the extent corrected by a subsequently filed Company
SEC Document. The financial statements of the Company, including the notes
thereto, included in the Company SEC Documents (the "COMPANY FINANCIAL
STATEMENTS") (i) have been prepared in accordance with the published regulations
of the SEC and in accordance with generally accepted accounting principles
("GAAP") (except to the extent as may be indicated in the notes thereto and with
respect to interim Company Financial Statements included in Quarterly Reports on
Form 10-QSB (promulgated under the Exchange Act), as required by Form 10-QSB)
and (ii) fairly present the financial position of the Company as of the
respective dates thereof and the results of its operations and cash flows for
the periods indicated (including, in the case of any unaudited interim financial
statements, reasonable estimates of normal and recurring year-end adjustments).
Except for the disclosure of the Company's proposed follow-on offering pursuant
to Form SB-2, the Company has not disclosed to Millennium any material
non-public information.
3.5 Absence of Undisclosed Liabilities. The Company has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1999 (the "COMPANY BALANCE SHEET"), (ii) those incurred
in the ordinary course of business and not required to be set forth in the
Company Balance Sheet under generally accepted accounting principles, and (iii)
those incurred in the ordinary course of business since the Company Balance
Sheet Date and consistent with past practice.
3.6 Broker's and Finders' Fees. Other than as set forth in
Section 3.6 of the Company Disclosure Schedule, the Company has not incurred,
nor shall it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.7 Board Approval. The Board of Directors of the Company has
approved this Agreement and the transactions contemplated hereby. No vote or
consent of the Company's stockholders is required for the consummation of the
transactions contemplated hereby.
3.8 No Material Adverse Change. Since the date of the Company
Balance Sheet, the Company has conducted its business in the ordinary course and
there has not occurred: (a) any material adverse change in the financial
condition, liabilities, assets or business of the Company other than continuing
operating losses and fluctuating stock price; (b) any amendment or change in the
Certificate of Incorporation or Bylaws of the Company; or (c) any damage to,
destruction or loss of any assets of the Company, (whether or not covered by
insurance) that materially and adversely affects the financial condition or
business of the Company.
3.9 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which the Company has received
any notice of assertion against
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the Company which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement.
3.10 Representations Complete. None of the representations or
warranties made by the Company herein or in any Schedule hereto, including the
Company Disclosure Schedule, or certificate furnished by the Company pursuant to
this Agreement, or the Company SEC Documents, when all such documents are read
together in their entirety, contains or shall contain at the Closing any untrue
statement of a material fact, or omits or shall omit at the Closing to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser severally, and not jointly, represents and warrants to
the Company as follows:
4.1 Corporate Organization. Such Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its jurisdictions of incorporation or organization. Such Purchaser has
full corporate power and authority to carry on its business as it is now being
conducted.
4.2 Authorization. Such Purchaser has full corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Such Purchaser has taken all action required by law, its
Certificates of Incorporation and Bylaws or otherwise to authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement is a valid and binding agreement of such
Purchaser enforceable in accordance with its terms, except that: (a) the
enforceability of this Agreement may be subject to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and (b) the enforceability of this Agreement may be subject to
or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium,
or other similar laws relating to or affecting the rights of creditors
generally.
4.3 No Violation. The execution and delivery of this Agreement
and, with respect to Millennium, the Registration Rights Agreement, does not,
and the consummation of the transactions contemplated hereby shall not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (i) any provision of
the Certificates of Incorporation or Bylaws of such Purchaser or (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Purchaser or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to such Purchaser or in connection with the execution and delivery of
this Agreement and, with respect to Millennium, the Registration Rights
Agreement, by such Purchaser or the consummation by such Purchaser of the
transactions contemplated hereby.
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4.4 Brokers and Finders. Other than as set forth in Section
3.6 of the Company Disclosure Schedule, such Purchaser has not incurred, nor
shall it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby and any
fees or commissions owing to A.G. Edwards & Sons, Inc. by Millennium, shall, if
due and payable, be paid by the Company pursuant to the Letter Agreement
referred to in Section 3.6 of the Company Disclosure Schedule.
4.5 Corporate Approval. All necessary corporate actions have
been taken by such Purchaser for the approval of such Purchaser to enter this
Agreement and, with respect to Millennium, the Registration Rights Agreement,
and the transactions contemplated hereby.
4.6 Investment Intent. Such Purchaser is purchasing the Shares
and Warrants for its own account and not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and such Purchaser has
no present intention of selling, granting any participation in, or otherwise
distributing the same, and does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of such securities.
4.7 Access to Information. Such Purchaser has received or has
had full access to all the information it considers necessary or appropriate to
make an informed investment decision with respect to the Securities. Such
Purchaser has had an opportunity to ask questions of and receive answers from
the Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to such Purchaser or to
which the Company has access.
4.8 Accredited Investor. Such Purchaser is an "accredited
investors" within the meaning of SEC Rule 501 of Regulation D, as presently in
effect. The principal places of business and the principal offices of the
Purchasers are located in Texas in the case of i2 Technologies, Inc., California
in the case of Hewlett-Packard Company and New York in the case of Millennium.
4.9 Restricted Securities. Such Purchaser understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in
transactions not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
4.10 Further Limitations on Disposition. Such Purchaser agrees
not to offer, sell, exchange, transfer, pledge or otherwise dispose of any of
the Securities unless at that time either:
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(a) such transaction is permitted pursuant to the provisions
of Rule 144 under the Securities Act or another exemption from
registration under the Securities Act and all applicable state
securities laws;
(b) a registration statement under the Securities Act (a
"REGISTRATION STATEMENT") covering such securities proposed to be sold,
transferred or otherwise disposed of, describing the manner and terms
of the proposed sale, transfer or other disposition, and containing a
current prospectus, is filed with the SEC and all applicable state
securities law agencies and made effective under the Securities Act and
all applicable state securities laws; or
(c) an authorized representative of the SEC and all applicable
state securities law agencies shall have rendered written advice to
such Purchaser (with a copy thereof and of all other related
communications delivered to the Company) to the effect that the SEC
and/or such state securities law agencies will take no action, or that
the staff of the SEC and/or such state securities law agencies will
recommend that the SEC and/or such state securities law agencies, as
applicable, take no action, with respect to the proposed offer, sale,
exchange, transfer, pledge or other disposition if consummated.
All certificates representing the Securities deliverable to such
Purchaser and any certificates subsequently issued with respect thereto or in
substitution therefor shall bear a legend that such Securities may only be sold
or disposed of in accordance with (i) the provisions of the Securities Act, the
rules and regulations thereunder and any applicable state securities laws, (ii)
pursuant to an effective registration statement or (iii) pursuant to an
exemption from the registration/qualification requirements of the Securities Act
and any applicable state securities laws. The Company, at its reasonable
discretion, may cause stop transfer orders to be placed with its transfer agent
with respect to the certificates for such securities but not as to the
certificates for any part of such securities as to which said legend is no
longer required.
ARTICLE V
COVENANTS
5.1 Further Assurances. Upon the terms and subject to the
conditions hereof, each of the parties hereto agrees to use commercially
reasonable efforts to take or cause to be taken all actions and to do or cause
to be done all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and shall use commercially
reasonable efforts to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings to be obtained in connection
with the transactions contemplated by this Agreement.
5.2 Market Stand-Off. At the Closing, i2 and Hewlett-Packard
will execute a 120-day underwriter's lock-up agreement in the form attached
hereto as Exhibit C (the "LOCK-UP AGREEMENT").
5.3 Registration Rights Agreements. At the Closing, i2
Technologies, Inc. and the Company shall execute Amendment No. 1 to the
Registration Rights Agreement, dated
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October 12, 1999, in the form attached hereto as Exhibit D ("i2 AMENDMENT NO.
1"); Hewlett-Packard Company and the Company shall execute Amendment No. 1 to
the Shareholders Agreement, dated February 4, 1999, in the form attached hereto
as Exhibit E ("HEWLETT-PACKARD AMENDMENT NO. 1"); and Millennium and the Company
shall execute the Registration Rights Agreement.
5.4 Listing of Common Stock. As soon as reasonably practicable
following the Closing Date, the Company will use its best efforts to cause the
Shares and Warrant Shares to be listed for trading on the Nasdaq SmallCap
Market.
5.5 Issuance of Certificates. Promptly following the Closing,
the Company shall cause its transfer agents to issue and deliver to each
Purchaser certificates representing the Shares purchased by such Purchaser.
ARTICLE VI
DELIVERIES AT CLOSING
6.1 Warrant. The Company shall execute and deliver to each
Purchaser the Warrants issuable to each Purchaser.
6.2 Lock-Up Agreements. The Company shall have no obligation
to enter into the transactions contemplated by this Agreement with i2 and
Hewlett-Packard until i2 and Hewlett-Packard shall have executed and delivered
to the Company their respective Lock-Up Agreement.
6.3 Registration Rights Agreement. The Company shall have no
obligation to enter into the transactions contemplated by this Agreement with
respect to each Purchaser, respectively, until: (i) i2 Technologies, Inc. shall
have executed the i2 Amendment No. 1; (ii) Hewlett-Packard Company shall have
executed the Hewlett-Packard Amendment No. 1; and (iii) Millennium shall have
executed the Registration Rights Agreement.
6.4 Legal Opinion. Counsel for the Company shall deliver, to
the Purchasers, a legal opinion to the effect set forth below:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Company SEC Documents and to enter into and perform
its obligations under each of the Operative Agreements.
(b) The Securities have been duly authorized for issuance and
sale to the Purchasers pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of
the consideration set forth herein or in the Warrants, as the case may
be, will be validly issued and fully paid and non-assessable, and no
holder of Securities is or will be subject to personal liability with
respect to the
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obligations of the Company by reason of being such a holder. Other than
as set forth in Section 3.2(d) of the Company Disclosure Schedule, the
issuance of the Securities is not subject to preemptive or other
similar rights of any securityholder of the Company created by statute,
under the Certificate of Incorporation or Bylaws of the Company or
under any documents or agreements filed or incorporated by reference by
the Company with the SEC as exhibits to its registration statement on
Form SB-2 (Reg. No 333-83315) including all amendments thereto (the
"SEC EXHIBITS").
(c) The Operative Agreements have been duly authorized,
executed and delivered by the Company. The Operative Agreements
constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, except as may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent
transfer and other similar laws affecting the rights of creditors
generally and (ii) general equitable principles (whether relief is
sought at law or in equity), including concepts of materiality,
reasonableness, good faith and fair dealing; and except as any rights
to indemnification and contribution may be limited by federal or state
securities laws and public policy considerations.
(d) Except for Form D filings required to perfect exemptions
under applicable federal and/or state securities laws and the filing of
an application to list additional shares of Common Stock with the
Nasdaq SmallCap Market, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign is
necessary or required in connection with the due authorization,
execution and delivery of the Operative Agreements or for the offering,
issuance or sale of the Securities.
(e) The execution, delivery and performance of the Operative
Agreements and the consummation of the transactions contemplated in the
Operative Agreements (including the issuance and sale of the
Securities) and compliance by the Company with its obligations under
the Operative Agreements do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or acceleration event under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to any SEC Exhibit
to which the Company is a party or by which it may be bound (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a material adverse effect on the Company), nor will
such action result in any violation of the provisions of the
Certificate of Incorporation or Bylaws of the Company, or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to such counsel, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any of its properties, assets or operations.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
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legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
6.5 Payment of Consideration. Purchasers shall deliver the
Cash Consideration specified in Section 1.1.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations. All representations and
warranties of the parties as contained in this Agreement (including the
Disclosure Schedules) shall survive the Closing and shall terminate on the date
that is one year after the Closing; provided that there shall be no limitation
period for matters involving fraud or intentional misrepresentation nor for
covenants and agreements of the parties.
7.2 Statements as Representations. All statements contained in
the Company Disclosure Schedule and any certificate delivered pursuant to this
Agreement shall be deemed representations and warranties within the meaning of
Section 7.1 hereof.
7.3 Indemnification by the Company. Subject to the limitations
set forth in this Article VII, the Company hereby agrees to indemnify, defend
and hold harmless Purchasers, any subsidiary, director, officer, employee,
partner, agent or representative of any Purchaser (individually, a "PURCHASER
INDEMNITEE" and collectively, "PURCHASER INDEMNITEES") from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties, attorneys' fees and expenses (collectively, "DAMAGES") asserted
against, resulting from, imposed upon or incurred by the Purchaser Indemnitees
or any Purchaser Indemnitee, resulting from, or arising out of any breach of any
representation, warranty or agreement of the Company, contained in or made
pursuant to this Agreement. Exercise of the foregoing indemnification rights
shall be the sole remedy of any Purchaser Indemnitee with respect to any breach
by the Company of its representations or warranties contained in this Agreement.
The maximum aggregate liability of the Company pursuant to this Section 7.3 with
respect to any breach by the Company of such representations or warranties will
be limited to an aggregate of Six Million and 00/100 Dollars ($6,000,000.00),
and $2,000,000 per Purchaser, plus any amounts paid by such Purchaser to
exercise the Warrants, whether such liability is asserted in an action brought
in contract, in tort or pursuant to some other theory and whether the
possibility of such liability was made known to or was foreseeable by the
Company. Accordingly, the Purchasers agree to assume the responsibility for
insuring against or otherwise bearing the risk of greater damages.
7.4 Indemnification by Purchasers. Subject to the limitations
set forth in this Article VII, each Purchaser, severally and not jointly, agrees
to indemnify, defend and hold harmless the Company, any subsidiary, director,
officer, employee, agent or representative of the Company (individually, an
"COMPANY INDEMNITEE" and collectively, "COMPANY INDEMNITEES") from and against
all Damages asserted against, resulting from, imposed upon or incurred by the
Company Indemnitees or any Company Indemnitee, resulting from, or arising
11
<PAGE> 153
out of any breach of any representation, warranty or agreement of such Purchaser
contained in or made pursuant to this Agreement. Exercise of the foregoing
indemnification rights shall be the sole remedy of any Company Indemnitee with
respect to any breach by a Purchaser of its representations, warranties or
agreements contained in this Agreement. The maximum liability of each individual
Purchaser pursuant to this Section 7.4 with respect to any breach by such
Purchaser of its representation and warranties will be limited to Two Million
and 00/100 Dollars ($2,000,000) per Purchaser, and Six Million and 00/100
Dollars ($6,000,000) in the Aggregate, plus any amounts paid by such Purchaser
to exercise the Warrants, whether such liability is asserted in an action
brought in contract, in tort or pursuant to some other theory and whether the
possibility of such liability was make known to or was foreseeable by the
Company.
7.5 Limitation of Liability. NO PARTY SHALL HAVE ANY LIABILITY
WITH RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR
CONSEQUENTIAL, EXEMPLARY, INCIDENTAL OR PUNITIVE DAMAGES EVEN IF IT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE FOREGOING LIMITATION OF LIABILITY IS AN EXPRESSLY BARGAINED FOR
PORTION OF THE CONSIDERATION FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Amendment and Modifications. This Agreement may be
amended, modified and supplemented only by written agreement between the parties
hereto which states that it is intended to be a modification of this Agreement.
8.2 Waiver of Compliance. Any failure of the Company or
Purchasers to comply with any obligation, covenant, agreement or condition
herein may be expressly waived in writing by the other party, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
8.3 Expenses. Unless otherwise agreed to in writing or as set
forth in Schedule 3.6 of the Company Disclosure Schedule, the parties agree that
all fees and expenses incurred by them in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such fees
and expenses, including, without limitation, all fees of counsel, actuaries and
accountants.
8.4 Remedies Waiver. All rights and remedies existing under
this Agreement are cumulative to and not exclusive of, any rights or remedies
otherwise available under applicable law. No failure on the part of any party to
exercise or delay in exercising any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right. No right or remedy of a party shall be
deemed waived unless expressly made a term, covenant or condition in this
Agreement.
12
<PAGE> 154
8.5 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or by commercial delivery
service, sent by facsimile transmission with confirmation of receipt, or mailed
by certified or registered mail (return receipt requested) with postage prepaid,
to the parties at the following address (or such other address for a party as
shall be specified by like notice):
if to the Company, to:
The viaLink Company
13155 Noel Road, Suite 800
Dallas, TX 75240
Attn: J. Andrew Kerner
Fax: (972) 934-5555
with a copy (which shall not constitute notice) to:
Richard M. Klinge & Associates, P.C.
510 E. Memorial Road, Suite C-1
Oklahoma City, Oklahoma 73114
Attention: Richard M. Klinge, Esq.
Fax: (405) 775-9003
if to a Purchaser, at the addresses set forth opposite each
Purchaser's name on SCHEDULE I, attached hereto.
with a copy (which shall not constitute notice) in
the case of i2 to:
Brobeck, Phleger & Harrison LLP
301 Congress Avenue, Suite 1200
Austin, Texas 78701
Attention: Ronald G. Skloss, Esq.
Fax: (512) 477-5813
8.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned or
delegated by any of the parties hereto without the prior written consent of the
other party. Notwithstanding the foregoing, Millennium may assign its rights
hereunder, in whole or in part, in connection with any private resale of Common
Stock or Warrants purchased hereunder.
8.7 Publicity. Neither the Company nor any Purchaser shall
make or issue, or cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public without the prior consent of the other
party. This provision shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any federal or state
13
<PAGE> 155
governmental agency or by obligations pursuant to any listing agreement with any
national securities exchange or with the National Association of Securities
Dealers, Inc., except that the party required to make such announcement shall,
whenever practicable, consult with the other party concerning the timing and
content of such announcement before such announcement is made. The Company
agrees to issue a press release announcing the transactions contemplated by this
Agreement promptly following the Closing.
8.8 Severability. If any portion of this Agreement shall be
deemed illegal, void or unenforceable by a court of competent jurisdiction, the
remaining portions will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto.
8.9 Arbitration of Disputes. The parties agree that any
controversy or claim (whether such controversy or claim is based upon or sounds
in statute, contract, tort or otherwise) arising out of or relating to this
Agreement, any performance or dealings between the parties with respect to this
Agreement, or any dispute arising out of the interpretation or application of
this Agreement, which the parties are not able to resolve, shall be settled
exclusively by arbitration in Dallas, Texas by a single arbitrator pursuant to
the American Arbitration Association's Commercial Arbitration Rules then in
effect and judgment upon the award rendered by the arbitrator shall be entered
in any court having jurisdiction thereof and such arbitrator shall have the
authority to grant injunctive relief in a form similar to that which a court of
law would otherwise grant. The arbitrator shall be chosen from a panel of
licensed attorneys having at least fifteen (15) years of professional experience
who are familiar with the subject matter of this Agreement. The arbitrator shall
be appointed within thirty (30) days of the date the demand for arbitration was
sent to the other party. Discovery shall be permitted in accordance with the
Federal Rules of Civil Procedure. If an arbitration proceeding is brought
pursuant to this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and necessary disbursements incurred in
addition to any other relief to which such party may be entitled.
8.10 Governing Law. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of Texas (excluding its choice of laws rules).
8.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.12 Headings. The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
8.13 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
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<PAGE> 156
8.14 Further Assurances. Each of the parties hereto agrees
that from time to time, at the request of any of the other parties hereto and
without further consideration, it will execute and deliver such other documents
and take such other action as such other party may reasonably request in order
to consummate more effectively the transactions contemplated hereby.
8.15 Schedules. The Schedules to this Agreement are deemed
incorporated in this Agreement and may contain information that is not expressly
required to be disclosed by this Agreement.
8.16 Entire Agreement. This Agreement, including the Schedules
hereto, the other documents and the certificates delivered pursuant to the terms
hereof, sets forth the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto. This Agreement has been negotiated by the
parties and their respective counsel and will be interpreted fairly and in
accordance with its terms and without strict construction in favor of or against
either party.
[Signature page follows.]
15
<PAGE> 157
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereto duly
authorized, all as of the day and year first above written.
THE VIALINK COMPANY
By: /s/ J. Andrew Kerner
----------------------------
J. Andrew Kerner
Chief Financial Officer
PURCHASERS:
i2 TECHNOLOGIES, INC.
By: /s/ Robert C. Donohoo
-----------------------------
Name: Robert C. Donohoo
Title: Corporate Counsel
HEWLETT-PACKARD COMPANY
By: /s/ Craig White
-----------------------------
Name: Craig White
Title: Vice President
MILLENNIUM PARTNERS, L.P.
By: Millennium Management L.L.C.
General Partner
By: /s/ Terry Feeney
--------------------------
Name: Terry Feeney
Title: CAO
<PAGE> 158
SCHEDULE I
<TABLE>
<CAPTION>
ALLOCATION CASH
PURCHASER PERCENTAGE CONSIDERATION
<S> <C> <C> <C>
i2 Technologies, Inc. 33 1/3% $2,000,000
1 i2 Place
11701 Luna Road
Dallas, Texas 75234
Hewlett-Packard Company 33 1/3% $2,000,000
[Address]
Millennium Partners, L.P. 33 1/3% $2,000,000
c/o Millennium Management L.L.C.
666 Fifth Avenue
New York, New York 10103
---- ----------
Total 100% $6,000,000
</TABLE>
<PAGE> 159
EXHIBIT A
FORM OF WARRANT
<PAGE> 160
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
<PAGE> 161
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
<PAGE> 162
EXHIBIT D
i2 AMENDMENT NO. 1
<PAGE> 163
EXHIBIT E
HEWLETT-PACKARD AMENDMENT NO. 1
<PAGE> 164
EXHIBIT 4.2
NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
DISPOSED OF WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
No. HP 1 Right to Purchase
Shares of Common Stock
of The viaLink Company
THE VIALINK COMPANY
COMMON STOCK PURCHASE WARRANT
March 24, 2000
The viaLink Company, a Delaware corporation (the "Company"), hereby
certifies that, for value received, Hewlett-Packard Company, a Delaware
corporation ("HP"), or its permitted assigns, is entitled, subject to the terms
set forth below, to purchase from the Company at any time or from time to time
before 5:00 p.m. (Dallas, Texas time), on March 24, 2003, up to that number of
fully paid and nonassessable shares (the "Warrant Shares") of the Company's
Common Stock, $0.001 par value that shall equal 5,010. The purchase price per
share of the Warrant Shares shall be equal to $83.83 (such purchase price per
share as adjusted from time to time as herein provided is referred to herein as
the "Purchase Price"). The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Business Day" means any day except a Saturday or
a Sunday or other day on which the National Market (as hereinafter
defined), or any national securities exchange on which the Common Stock
(as hereinafter defined) is traded or admitted for unlisted trading
privileges, is closed for trading.
(b) The term "Company" shall include The viaLink Company, and
any corporation which shall succeed to, or assume the obligations of,
The viaLink Company hereunder.
The term "Common Stock" includes the Company's common stock,
$0.001 par value, as authorized on March 24, 2000, and/or any Other
Securities into which or for which the Warrant Shares may be converted
or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(d) The term "Fair Market Value" per share of Common Stock
means:
(1) If the Common Stock is traded on a national
securities exchange or admitted to unlisted
trading privileges on such an exchange, or
is listed on the National Market (the
"National Market") of the National
Association of Securities Dealers Automated
Quotations System (the "NASDAQ"), the
<PAGE> 165
Fair Market Value shall be the average of
the last reported sale prices of the Common
Stock on such exchange or on the National
Market over the five consecutive Business
Days immediately preceding the date of
determination or, if the last reported sale
price information is not available for such
days, the average of the mean of the closing
bid and asked prices for such days on such
exchange or on the National Market;
(2) If the Common Stock is not so listed or
admitted to unlisted trading privileges, the
Fair Market Value shall be the average of
the mean of the last bid and asked prices
reported over the five consecutive Business
Days immediately preceding the date of
determination (A) by the NASDAQ or (B) if
reports are unavailable under clause (A)
above, by the National Quotation Bureau
Incorporated; and
(3) If the Common Stock is not so listed or
admitted to unlisted trading privileges and
bid and ask prices are not reported, the
Fair Market Value shall be the price per
share which the Company could obtain from a
willing buyer for shares of Common Stock, as
such price shall be determined by mutual
agreement of the Company and the holders of
rights to purchase a majority of the shares
of Common Stock purchasable under all
warrants then outstanding and issued
(directly or indirectly) from those certain
Common Stock Purchase Warrants, dated March
24, 2000, issued by the Company to [i2
Technologies, Inc. ("i2")/HP and Millennium
Partners, L.P. ("Millennium")], which
originally granted to each of i2, HP and
Millennium the right to purchase 5,010
shares of Common Stock. If such holders and
the Company are unable to agree on such Fair
Market Value, the Company shall select a
pool of three independent and
nationally-recognized investment banking
firms from which such holders (by a majority
vote) shall select one such firm to appraise
the fair market value of the Warrant and to
perform the computations involved. The
determination of such investment banking
firm shall be binding upon the Company and
such holders in connection with any
transaction occurring at the time of such
determination. All expenses of such
investment banking firm shall be borne by
the Company. In all cases, the determination
of fair market value shall be made without
consideration of the lack of a liquid public
market for the Common Stock and without
consideration of any "control premium" or
any discount for holding less than a
majority or controlling interest of the
outstanding Common Stock.
(e) The term "Other Securities" refers to any stock (other
than Common Stock) or other securities of the Company or any other
person (corporate or otherwise) (i) which the holder of this Warrant at
any time shall be entitled to receive, or shall have received, on the
exercise of this Warrant, in lieu of or in addition to shares of the
Company's common stock, $.001 par value per share, as authorized on
March 24, 2000, or (ii) which at any time shall be issuable or shall
have been issued in exchange for or in replacement of shares of the
Company's common stock, $.001 par value per share, as authorized on
March 24, 2000, or Other Securities pursuant to Section 4 or otherwise.
2
<PAGE> 166
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time after the
date hereof during normal business hours before its expiration in full by the
holder hereof by surrender of this Warrant, with the form of subscription at the
end hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash, by bank cashier's check payable to the order of
the Company or by wire transfer, in the amount obtained by multiplying the
number of shares of Common Stock and/or Other Securities for which this Warrant
is then exercisable by the Purchase Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time during
normal business hours after the date hereof before its expiration in part by
surrender of this Warrant and payment of the Purchase Price then in effect in
the manner and at the place provided in subsection 1.1, except that the amount
payable by the holder on such partial exercise shall be the amount obtained by
multiplying (a) the number of shares of Common Stock and/or Other Securities
designated by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect. On any such partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, filling in the aggregate on the face or faces thereof the number of
shares of Common Stock and/or Other Securities for which such Warrant or
Warrants may still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of any
exercise of this Warrant, upon the written request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such written request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the holder of this Warrant
pursuant to subsection 4.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant hereto and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
3
<PAGE> 167
1.5 Net Issue.
(a) Election. The holder hereof may elect to receive, without
the payment by the holder of any additional consideration, Warrant
Shares equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net
issue election notice attached hereto, duly executed, at the office of
the Company. Thereupon, the Company shall issue to the holder hereof
such number of fully paid and nonassessable shares of Common Stock as
is computed using the following formula:
X=Y(A-B)
------
A
where X= the number of shares to be issued to the holder hereof
pursuant to this Section 1.5.
Y= the number of shares covered by this Warrant in respect of which the
net issue election is made pursuant to this Section 1.5.
A= the Fair Market Value of one share of Common Stock as of the time
the net issue election is made pursuant to this Section 1.5.
B= the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 1.5.
2. Delivery of Stock Certificates, Etc. on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof, or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) to
which such holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current Fair Market Value of one full
share, together with any other property (including cash, where applicable) to
which such holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or, to the extent not constituting Common Stock, Other Securities)
in their capacity as such shall have received, or (on or after the record date
fixed for the determination of shareholders eligible to receive) shall have
become entitled to receive, without payment therefor,
(f) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(g) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
4
<PAGE> 168
(h) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of capital stock issued as a stock dividend or in a
stock split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise hereof as
provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subdivisions (b) and (c) of this Section 3) determined by multiplying (i) the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section) which such holder would
hold on the date of such exercise, if on the record date with respect to or the
date of the issuance of the stock, securities, property and cash referred to in
subdivisions (a), (b) or (c) of this Section 3, as applicable, it had been the
holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) receivable by
it as aforesaid during such period, giving effect to all adjustments called for
during such period by Section 4 and Section 5 by (ii) the percentage of this
Warrant then being exercised.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a reorganization,
reclassification or recapitalization (b) consolidate with or merge into any
other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, reclassification, recapitalization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or, to the extent not
constituting Common Stock, Other Securities) issuable on such exercise prior to
such consummation or such effective date, the amount of stock and other
securities and property (including cash) determined by multiplying (i) the
amount of the stock and other securities and property (including cash) to which
such holder would have been entitled upon such consummation or in connection
with such event, as the case may be, if such holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment thereafter
as provided in Sections 3 and 5 by (ii) the percentage of this Warrant then
being exercised.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the Other Securities and property (including cash, where
applicable) receivable by the holders of this Warrant after the effective date
of such dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in Dallas, Texas, as trustee for the holder of this
Warrant.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 4, this Warrant shall continue in full force and
effect, subject to expiration in accordance with Section 17 hereof, and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any such
Other
5
<PAGE> 169
Securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the Company,
whether or not such person shall have expressly assumed the terms of this
Warrant as provided in Section 6.
5. Anti-Dilution Adjustments.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment of the Purchase
Price, the holder of this Warrant shall thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares obtained
by multiplying the Purchase Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting from
such adjustment.
5.2 Purchase Price Adjustments.
(a) If and whenever after the date hereof the Company shall
issue or sell any shares of its capital stock (except as set forth
below in subparagraph 5.2(b)), for a consideration per share less than
the Purchase Price in effect immediately prior to the time of such
issue or sale, the Purchase Price shall be reduced to the price
(calculated to the nearest $0.01) obtained by dividing (i) an amount
equal to the sum of (A) the number of shares of capital stock
outstanding, or deemed to be outstanding, immediately prior to such
issue or sale multiplied by the Purchase Price prevailing immediately
prior to such issue or sale plus (B) the consideration, if any,
received by the Company upon such issue or sale, by (ii) the total
number of shares of capital stock outstanding, or deemed to be
outstanding, immediately after such issue or sale. Notwithstanding the
foregoing, no adjustment of the Purchase Price shall be made in an
amount less than $0.01 per share, but any such lesser adjustment shall
be carried forward and shall be made at the time of and together with
the next subsequent adjustment which together with any adjustments so
carried forward shall amount to $0.01 per share or more.
(b) The following issuance of the Company's securities shall
not result in an adjustment in the Purchase Price: (i) stock issued
pursuant to a bona fide, public offering of shares of Common Stock,
registered under the Securities Act, pursuant to a registration
statement; (ii) stock issued pursuant to the conversion or exercise of
convertible or exercisable securities outstanding as of the date
hereof; (iii) stock issued pursuant to or in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise;
(iv) stock issued upon the exercise of any warrants issued as of the
date hereof (which do not have as their purpose an equity financing
element) approved by the Board; (v) stock issued upon the exercise of
one or more of the Warrants; or (vi) stock issued pursuant to options,
warrants, rights or similar commitments obligating the Company to issue
shares of its capital stock which are in existence as of the date
hereof.
5.3 Option Grants. Except as precluded in subsection 5.2(b), in
the event that at any time after March 22, 2000 the Company shall in any manner
grant (directly, by assumption in a merger or otherwise) any rights to subscribe
for or to purchase, or any options for the purchase of, capital stock or any
securities convertible into or exchangeable for its capital stock (such rights
or options being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
capital stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
6
<PAGE> 170
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus, in the case of any such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total number of shares of capital stock issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Purchase Price in effect immediately prior to the time of the granting
of such Options, then the total number of shares of capital stock issuable upon
the exercise of such Options or upon conversion or exchange of the total amount
of such Convertible Securities issuable upon the exercise of such Options shall
(as of the date of granting such Options) be deemed to be outstanding and to
have been issued for such price per share. Except as otherwise provided in
subsection 5.5, no further adjustment of the Purchase Price shall be made upon
the actual issue of such capital stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such capital stock upon
conversion or exchange of such Convertible Securities.
5.4 Convertible Security Grants. Except as precluded in
subsection 5.2(b), in the event that the Company shall in any manner issue
(directly, by assumption in a merger or otherwise) or sell any Convertible
Securities (other than pursuant to the exercise of Options to purchase such
Convertible Securities covered by subsection 5.3), whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which capital stock is issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of capital stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Purchase
Price in effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of capital stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the issue
or sale of such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share, provided that, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase Price shall be
made upon the actual issue of such capital stock upon conversion or exchange of
such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security Terms.
In connection with any change in, or the expiration or termination of, the
purchase rights under any Option or the conversion or exchange rights under any
Convertible Securities, the following provisions shall apply:
(a) If the purchase price provided for in any Option referred
to in subsection 5.3, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred
to in subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 are convertible into or
exchangeable for capital stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to
protect against dilution), then the Purchase Price in effect at the
time of such change shall forthwith be increased or decreased to the
Purchase Price which would be in effect immediately after such change
had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or
sold.
(b) On the partial or complete expiration of any Options or
termination of any right to convert or exchange Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith be
increased or decreased to the Purchase Price which would be in effect
at the time of
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<PAGE> 171
such expiration or termination had such Options or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
5.6 Dividends of Capital Stock, Options or Convertible
Securities. In the event that the Company shall declare a dividend or make any
other distribution upon any stock of the Company payable in capital stock,
Options or Convertible Securities, then any capital stock, Options or
Convertible Securities, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration unless such dividend or distribution is subject to Section 3
hereof.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall become subject to
issue upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any other issuer of Other Securities or any other person referred to
in Section 4) or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or person), for a
consideration per share such as to dilute the purchase rights evidenced by this
Warrant, the computations, adjustments and readjustments provided for in this
Section 5 with respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable on the exercise of this Warrant, so as
to protect the holders of this Warrant against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Purchase Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Warrant
Shares purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely, in the event
that the outstanding shares of Common Stock shall at any time be combined into a
smaller number of shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
purchasable upon the exercise of this Warrant immediately prior to such
combination shall be proportionately reduced. Except as provided in this
subsection 5.8, no adjustment in the Purchase Price and no change in the number
of Warrant Shares purchasable shall be made under this Section 5 as a result of
or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of this
Section 5, the amount of consideration received by the Company in connection
with the issuance or sale of capital stock, Options or Convertible Securities
shall be determined in accordance with the following:
(c) In the event that shares of capital stock, Options or
Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount
payable to the Company therefor, without deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith.
(d) In the event that any shares of capital stock, Options or
Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash
payable to the Company shall be deemed to be the fair value of such
consideration as reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith.
In the event that any shares of capital stock, Options or
Convertible Securities shall be issued in connection with any merger in
which the Company is the surviving corporation,
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<PAGE> 172
the amount of consideration therefor shall be deemed to be the fair
value as reasonably determined by the Board of Directors of the Company
of such portion of the assets and business of the non-surviving
corporation as such Board shall determine to be attributable to such
capital stock, Options or Convertible Securities, as the case may be.
In the event that any capital stock, Options and/or
Convertible Securities shall be issued in connection with the issue and
sale of other securities or property of the Company, together
comprising one integral transaction in which no specific consideration
is allocated to such capital stock, Options or Convertible Securities
by the parties thereto, such capital stock, Options and/or Convertible
Securities shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Company.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them (i) to receive a dividend or other distribution
payable in capital stock, Options or Convertible Securities, or (ii) to
subscribe for or purchase capital stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of capital stock, Options or Convertible Securities deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be; provided, nothing contained herein will be deemed
to require the Company to issue or deliver such capital stock, Options or
Convertible Securities until the capital stock, Options or Convertible
Securities which are the subject of any such dividend, distribution or
subscription right are issued or delivered to the holders of Common Stock.
5.11 Treasury Stock. The number of shares of capital stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares (other than
their cancellation without reissuance) shall be considered an issue or sale of
capital stock for the purposes of this Section 5.
5.12 Certain Issues of Capital Stock Excepted. Anything herein to
the contrary notwithstanding, the Company shall not be required to make any
adjustment to the Purchase Price in the case of the issuance from time to time
after the date hereof of shares of capital stock reserved by the Company for the
grant and exercise of (a) options to purchase capital stock or (b) rights under
the Company's current employee stock purchase plan, in each case, granted to
directors, officers, employees, or consultants of the Company pursuant to
arrangements, plans or contracts approved by the Board of Directors of the
Company.
6. No Dilution or Impairment. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holders of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value or
stated value of any shares of stock receivable on the exercise of this Warrant
above the amount payable therefor on such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on the exercise
of this Warrant, and (c) will not transfer all or substantially all of its
properties and assets to any other person (corporate or otherwise), or
consolidate with or merge into any other person or permit any such person to
consolidate with or merge into
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<PAGE> 173
the Company (if the Company is not the surviving person), unless such other
person shall expressly assume in writing and become bound by all the terms of
this Warrant.
7. Certificate as to Adjustments. In each case of any adjustment
or readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of this Warrant, the Company at its expense will promptly cause its
chief financial officer to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
capital stock (or, to the extent not constituting Common Stock, Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number
of shares of each class or series of capital stock outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common Stock
(and, to the extent not constituting Common Stock, Other Securities) to be
received upon exercise of this Warrant, in effect immediately prior to such
issue or sale and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the holder of
this Warrant, and will, on the written request at any time of the holder of this
Warrant, furnish to such holder a like certificate setting forth the Purchase
Price at the time in effect and showing how it was calculated.
8. Registration Rights. The holder(s) of this Warrant and any
other Warrants issued pursuant to the terms hereof from time to time shall be
entitled (i) with respect to i2, to the registration rights in respect thereof
as provided in the Registration Rights Agreement between the Company and i2,
dated October 12, 1999, as amended on March 22, 2000, in accordance with the
terms thereof, (ii) with respect to HP, to the registration rights in respect
thereof as provided in the Shareholder Agreement between the Company and HP,
dated February 4, 1999, as amended on March 22, 2000, in accordance with the
terms thereof, and (iii) with respect to Millennium, to the registration rights
in respect thereof as provided in the Registration Rights Agreement between the
Company and Millennium, dated March 22, 2000, in accordance with the terms
thereof. Any holder not a party to either of the two agreements described in
this Section 8 shall not be entitled to registration rights.
9. Notices of Record Date, etc. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) shall
be entitled to exchange their shares of Common Stock (or, to the extent not
constituting Common
10
<PAGE> 174
Stock, Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least ten Business Days
prior to the date specified in such notice on which any such action is to be
taken.
10. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock (or, to
the extent not constituting Common Stock, Other Securities) from time to time
issuable upon the exercise of this Warrant.
11. Exchange of Warrants. On surrender for exchange of this
Warrant, properly endorsed, to the Company, the Company at its expense will
issue and deliver to or on the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (on payment
by such holder of any applicable transfer taxes) may direct, filling in the
aggregate on the face or faces thereof the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered; provided,
however, that in no event will the Company be obligated to recognize or permit
any transfer of this Warrant that would result in the assignor or any assignee
receiving a Warrant exercisable with respect to 25,000 or fewer shares of Common
Stock.
12. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Remedies. [Deleted.]
14. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each holder or owner hereof by the taking hereof consents
and agrees, subject to the limitation on transfer set forth in Section 11:
(a) title to this Warrant may be transferred by endorsement
(by the holder hereof executing the form of assignment at the end
hereof) and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery; and
(b) any person in possession of this Warrant properly endorsed
for transfer to such person (including endorsed in blank) is authorized
to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a
bona fide purchaser hereof for value; each prior taker or owner waives
and renounces all of his equities or rights in this Warrant in favor of
each such bona fide purchaser, and each such bona fide purchaser shall
acquire absolute title hereto and to all rights represented hereby.
Nothing in this paragraph (b) shall create any liability on the part of
the Company beyond any liability or responsibility it has under law.
15. Notices, etc. All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid at such address as may have been furnished to
the Company in writing by such holder or, until any such holder
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<PAGE> 175
furnishes to the Company an address, then to, and at the address of, the last
holder of this Warrant who has so furnished an address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Texas, without regard to the conflicts of law principles thereof and, to the
maximum extent practicable, will be deemed to call for performance in Dallas
County, Texas. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision.
17. Expiration. The right to exercise this Warrant shall expire
at 5:00 p.m. (Dallas, Texas time), March 24, 2003.
18. Warrant Holders Not Deemed Shareholders. No holder of this
Warrant shall, as such, be entitled to vote or to receive dividends or be deemed
the holder of Common Stock or, to the extent not constituting Common Stock,
Other Securities that may at any time be issuable upon exercise of this Warrant
for any purpose whatsoever, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such holder shall have exercised this Warrant and
been issued Common Stock or, to the extent not constituting Common Stock, Other
Securities in accordance with the provisions hereof.
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<PAGE> 176
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
THE VIALINK COMPANY
By: /s/ J. Andrew Kerner
-------------------------------
Name: J. Andrew Kerner
Title: Chief Financial Officer
[SIGNATURE PAGE TO WARRANT]
<PAGE> 177
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
THE VIALINK COMPANY
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _____________
shares (the "Shares") of Common Stock of The viaLink Company and herewith makes
payment of $________ therefor, and requests that the certificate for such Shares
be issued in the name of, and delivered to ______________________________,
federal taxpayer identification number ______________________, whose address is
_____________________________________________________________.
In connection with the exercise of this Warrant, the undersigned
represents and warrants as follows:
(a) The undersigned is purchasing the Shares for the account
of the undersigned and not as a nominee or agent, and the undersigned
has no present intention of granting any participation in the same, and
does not have any contract, undertaking, agreement or arrangement with
any person to grant participation to such person or to any third
person, with respect to any of such Shares;.
(b) The undersigned has received or has had full access to all
the information it considers necessary or appropriate to make an
informed investment decision with respect to the Shares. The
undersigned has had an opportunity to ask questions of and receive
answers from the Company and to obtain additional information (to the
extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any
information furnished to undersigned or to which the Company has
access.
(c) The undersigned understands that the Shares are
characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the
"Securities Act") only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with
Securities and Exchange Commission ("SEC") Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by
the Securities Act.
(d) The undersigned is an "accredited investor" within the
meaning of SEC Rule 501 of Regulation D, as presently in effect.
(e) The undersigned agrees not to offer, sell, exchange,
transfer, pledge or otherwise dispose of any of the Shares unless at
that time either:
(1) such transaction is permitted pursuant to the
provisions of Rule 144 under the Securities Act or another
exemption from registration under the Securities Act and all
applicable state securities laws;
(2) a registration statement under the Securities Act
and all applicable state securities laws covering such
securities proposed to be sold, transferred or otherwise
disposed of, describing the manner and terms of the proposed
<PAGE> 178
sale, transfer or other disposition, and containing a current
prospectus, is filed with the SEC and all applicable state
securities law agencies and made effective under the
Securities Act and all applicable state securities laws; or
(3) an authorized representative of the SEC and all
applicable state securities agencies shall have rendered
written advice to undersigned (with a copy thereof and of all
other related communications delivered to the Company) to the
effect that the SEC and/or such state securities agencies will
take no action, or that the staff of the SEC and/or such state
securities agencies will recommend that the SEC and such state
securities agencies, as applicable, take no action, with
respect to the proposed offer, sale, exchange, transfer,
pledge or other disposition if consummated.
(f) All certificates representing the Shares and any
certificates subsequently issued with respect thereto or in
substitution therefor shall bear a legend that such securities may only
be sold or disposed of in accordance with (i) the provisions of the
Securities Act, the rules and regulations thereunder and any applicable
state securities laws, (ii) pursuant to an effective registration
statement or (iii) pursuant to an exemption from the
registration/qualification requirements of the Securities Act and any
applicable state securities laws. The Company, at its reasonable
discretion, may cause stop transfer orders to be placed with its
transfer agent with respect to the certificates for the Shares but not
as to the certificates for any part of such Shares as to which said
legend is no longer required.
Dated:
--------------------- -----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
-----------------------------------------
(Address)
Signed in the presence of:
- ---------------------
---------------------------
2
<PAGE> 179
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto _____________ _________________________, federal taxpayer
identification number ___________, whose address is
___________________________________________________, the right represented by
the within Warrant to purchase ___________ shares of Common Stock of The viaLink
Company to which the within Warrant relates, and appoints
___________________________ Attorney to transfer such right on the books of The
viaLink Company with full power of substitution in the premises.
Dated:
--------------------- -----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
-----------------------------------------
(Address)
Signed in the presence of:
- -----------------------
<PAGE> 180
NET ISSUE ELECTION NOTICE
TO: THE VIALINK COMPANY Date:
------------------------
The undersigned hereby elects under Section 1.5 of the Warrant to
surrender the right to purchase _______ shares of Common Stock pursuant to this
Warrant. The certificate(s) for the shares issuable upon such net issue election
shall be issued in the name of:
------------------------------------
------------------------------------
(Please Print Name, Address and Taxpayer Identification No.)
------------------------------------
Name of holder of this Warrant or Assignee:
------------------------------------
(Please Print)
Address:
---------------------------------
Signature:
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
<PAGE> 181
EXHIBIT 4.3
NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
DISPOSED OF WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
No. i2 1 Right to Purchase
Shares of Common Stock
of The viaLink Company
THE VIALINK COMPANY
COMMON STOCK PURCHASE WARRANT
March 24, 2000
The viaLink Company, a Delaware corporation (the "Company"), hereby
certifies that, for value received, i2 Technologies, Inc., a Delaware
corporation ("i2"), or its permitted assigns, is entitled, subject to the terms
set forth below, to purchase from the Company at any time or from time to time
before 5:00 p.m. (Dallas, Texas time), on March 24, 2003, up to that number of
fully paid and nonassessable shares (the "Warrant Shares") of the Company's
Common Stock, $0.001 par value that shall equal 5,010. The purchase price per
share of the Warrant Shares shall be equal to $83.83 (such purchase price per
share as adjusted from time to time as herein provided is referred to herein as
the "Purchase Price"). The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Business Day" means any day except a Saturday or a
Sunday or other day on which the National Market (as hereinafter defined),
or any national securities exchange on which the Common Stock (as
hereinafter defined) is traded or admitted for unlisted trading privileges,
is closed for trading.
(b) The term "Company" shall include The viaLink Company, and any
corporation which shall succeed to, or assume the obligations of, The
viaLink Company hereunder.
(c) The term "Common Stock" includes the Company's common stock,
$0.001 par value, as authorized on March 24, 2000, and/or any Other
Securities into which or for which the Warrant Shares may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.
(d) The term "Fair Market Value" per share of Common Stock means:
(1) If the Common Stock is traded on a national securities
exchange or admitted to unlisted trading privileges on such
an exchange, or is listed on the National Market (the
"National Market") of the National Association of Securities
Dealers Automated Quotations System (the "NASDAQ"), the
<PAGE> 182
Fair Market Value shall be the average of the last reported
sale prices of the Common Stock on such exchange or on the
National Market over the five consecutive Business Days
immediately preceding the date of determination or, if the
last reported sale price information is not available for
such days, the average of the mean of the closing bid and
asked prices for such days on such exchange or on the
National Market;
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the Fair Market Value shall be the
average of the mean of the last bid and asked prices
reported over the five consecutive Business Days immediately
preceding the date of determination (A) by the NASDAQ or (B)
if reports are unavailable under clause (A) above, by the
National Quotation Bureau Incorporated; and
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not reported,
the Fair Market Value shall be the price per share which the
Company could obtain from a willing buyer for shares of
Common Stock, as such price shall be determined by mutual
agreement of the Company and the holders of rights to
purchase a majority of the shares of Common Stock
purchasable under all warrants then outstanding and issued
(directly or indirectly) from those certain Common Stock
Purchase Warrants, dated March 24, 2000, issued by the
Company to [i2/Hewlett-Packard Company ("HP") and Millennium
Partners, L.P. ("Millennium")], which originally granted to
each of i2, HP and Millennium the right to purchase 5,010
shares of Common Stock. If such holders and the Company are
unable to agree on such Fair Market Value, the Company shall
select a pool of three independent and nationally-recognized
investment banking firms from which such holders (by a
majority vote) shall select one such firm to appraise the
fair market value of the Warrant and to perform the
computations involved. The determination of such investment
banking firm shall be binding upon the Company and such
holders in connection with any transaction occurring at the
time of such determination. All expenses of such investment
banking firm shall be borne by the Company. In all cases,
the determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
(e) The term "Other Securities" refers to any stock (other than Common
Stock) or other securities of the Company or any other person (corporate or
otherwise) (i) which the holder of this Warrant at any time shall be
entitled to receive, or shall have received, on the exercise of this
Warrant, in lieu of or in addition to shares of the Company's common stock,
$.001 par value per share, as authorized on March 24, 2000, or (ii) which
at any time shall be issuable or shall have been issued in exchange for or
in replacement of shares of the Company's common stock, $.001 par value per
share, as authorized on March 24, 2000, or Other Securities pursuant to
Section 4 or otherwise.
2
<PAGE> 183
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time after the
date hereof during normal business hours before its expiration in full by the
holder hereof by surrender of this Warrant, with the form of subscription at the
end hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash, by bank cashier's check payable to the order of
the Company or by wire transfer, in the amount obtained by multiplying the
number of shares of Common Stock and/or Other Securities for which this Warrant
is then exercisable by the Purchase Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time during
normal business hours after the date hereof before its expiration in part by
surrender of this Warrant and payment of the Purchase Price then in effect in
the manner and at the place provided in subsection 1.1, except that the amount
payable by the holder on such partial exercise shall be the amount obtained by
multiplying (a) the number of shares of Common Stock and/or Other Securities
designated by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect. On any such partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, filling in the aggregate on the face or faces thereof the number of
shares of Common Stock and/or Other Securities for which such Warrant or
Warrants may still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of any
exercise of this Warrant, upon the written request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such written request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the holder of this Warrant
pursuant to subsection 4.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant hereto and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
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1.5 Net Issue.
(a) Election. The holder hereof may elect to receive, without the
payment by the holder of any additional consideration, Warrant Shares
equal to the value of this Warrant or any portion hereof by the surrender
of this Warrant or such portion to the Company, with the net issue
election notice attached hereto, duly executed, at the office of the
Company. Thereupon, the Company shall issue to the holder hereof such
number of fully paid and nonassessable shares of Common Stock as is
computed using the following formula:
X = Y(A-B)
------
A
where X = the number of shares to be issued to the holder hereof pursuant
to this Section 1.5.
Y = the number of shares covered by this Warrant in respect of which the
net issue election is made pursuant to this Section 1.5.
A = the Fair Market Value of one share of Common Stock as of the time the
net issue election is made pursuant to this Section 1.5.
B = the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 1.5.
2. Delivery of Stock Certificates, Etc. on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof, or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) to
which such holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current Fair Market Value of one full
share, together with any other property (including cash, where applicable) to
which such holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or, to the extent not constituting Common Stock, Other Securities)
in their capacity as such shall have received, or (on or after the record date
fixed for the determination of shareholders eligible to receive) shall have
become entitled to receive, without payment therefor,
(f) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(g) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
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(h) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of capital stock issued as a stock dividend or in a
stock split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise hereof as
provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subdivisions (b) and (c) of this Section 3) determined by multiplying (i) the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section) which such holder would
hold on the date of such exercise, if on the record date with respect to or the
date of the issuance of the stock, securities, property and cash referred to in
subdivisions (a), (b) or (c) of this Section 3, as applicable, it had been the
holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) receivable by
it as aforesaid during such period, giving effect to all adjustments called for
during such period by Section 4 and Section 5 by (ii) the percentage of this
Warrant then being exercised.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any time or
from time to time, the Company shall (a) effect a reorganization,
reclassification or recapitalization (b) consolidate with or merge into any
other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, reclassification, recapitalization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or, to the extent not
constituting Common Stock, Other Securities) issuable on such exercise prior to
such consummation or such effective date, the amount of stock and other
securities and property (including cash) determined by multiplying (i) the
amount of the stock and other securities and property (including cash) to which
such holder would have been entitled upon such consummation or in connection
with such event, as the case may be, if such holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment thereafter
as provided in Sections 3 and 5 by (ii) the percentage of this Warrant then
being exercised.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the Other Securities and property (including cash, where
applicable) receivable by the holders of this Warrant after the effective date
of such dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in Dallas, Texas, as trustee for the holder of this
Warrant.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect, subject to
expiration in accordance with Section 17 hereof, and the terms hereof shall be
applicable to the Other Securities and property receivable on the exercise of
this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such Other
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Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustments.
5.1 General. The Purchase Price shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of the Purchase
Price, the holder of this Warrant shall thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares obtained
by multiplying the Purchase Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting from
such adjustment.
5.2 Purchase Price Adjustments.
(a) If and whenever after the date hereof the Company shall issue
or sell any shares of its capital stock (except as set forth below in
subparagraph 5.2(b)), for a consideration per share less than the
Purchase Price in effect immediately prior to the time of such issue or
sale, the Purchase Price shall be reduced to the price (calculated to the
nearest $0.01) obtained by dividing (i) an amount equal to the sum of (A)
the number of shares of capital stock outstanding, or deemed to be
outstanding, immediately prior to such issue or sale multiplied by the
Purchase Price prevailing immediately prior to such issue or sale plus
(B) the consideration, if any, received by the Company upon such issue or
sale, by (ii) the total number of shares of capital stock outstanding, or
deemed to be outstanding, immediately after such issue or sale.
Notwithstanding the foregoing, no adjustment of the Purchase Price shall
be made in an amount less than $0.01 per share, but any such lesser
adjustment shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $0.01 per share or more.
(b) The following issuance of the Company's securities shall not
result in an adjustment in the Purchase Price: (i) stock issued pursuant
to a bona fide, public offering of shares of Common Stock, registered
under the Securities Act, pursuant to a registration statement; (ii)
stock issued pursuant to the conversion or exercise of convertible or
exercisable securities outstanding as of the date hereof; (iii) stock
issued pursuant to or in connection with a bona fide business acquisition
of or by the Company, whether by merger, consolidation, sale of assets,
sale or exchange of stock or otherwise; (iv) stock issued upon the
exercise of any warrants issued as of the date hereof (which do not have
as their purpose an equity financing element) approved by the Board; (v)
stock issued upon the exercise of one or more of the Warrants; or (vi)
stock issued pursuant to options, warrants, rights or similar commitments
obligating the Company to issue shares of its capital stock which are in
existence as of the date hereof.
5.3 Option Grants. Except as precluded in subsection 5.2(b), in the
event that at any time after March 22, 2000 the Company shall in any manner
grant (directly, by assumption in a merger or otherwise) any rights to subscribe
for or to purchase, or any options for the purchase of, capital stock or any
securities convertible into or exchangeable for its capital stock (such rights
or options being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
capital stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
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<PAGE> 187
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus, in the case of any such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total number of shares of capital stock issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Purchase Price in effect immediately prior to the time of the granting
of such Options, then the total number of shares of capital stock issuable upon
the exercise of such Options or upon conversion or exchange of the total amount
of such Convertible Securities issuable upon the exercise of such Options shall
(as of the date of granting such Options) be deemed to be outstanding and to
have been issued for such price per share. Except as otherwise provided in
subsection 5.5, no further adjustment of the Purchase Price shall be made upon
the actual issue of such capital stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such capital stock upon
conversion or exchange of such Convertible Securities.
5.4 Convertible Security Grants. Except as precluded in subsection
5.2(b), in the event that the Company shall in any manner issue (directly, by
assumption in a merger or otherwise) or sell any Convertible Securities (other
than pursuant to the exercise of Options to purchase such Convertible Securities
covered by subsection 5.3), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
capital stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of capital stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Purchase Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of capital stock issuable upon conversion or exchange of all
such Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued for
such price per share, provided that, except as otherwise provided in subsection
5.5, no further adjustment of the Purchase Price shall be made upon the actual
issue of such capital stock upon conversion or exchange of such Convertible
Securities.
5.5 Effect of Alteration to Option or Convertible Security Terms. In
connection with any change in, or the expiration or termination of, the purchase
rights under any Option or the conversion or exchange rights under any
Convertible Securities, the following provisions shall apply:
(a) If the purchase price provided for in any Option referred to in
subsection 5.3, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible Securities
referred to in subsection 5.3 or 5.4 are convertible into or exchangeable
for capital stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), then the Purchase Price in effect at the time of such change
shall forthwith be increased or decreased to the Purchase Price which would
be in effect immediately after such change had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold.
(b) On the partial or complete expiration of any Options or
termination of any right to convert or exchange Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be increased or
decreased to the Purchase Price which would be in effect at the time of
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such expiration or termination had such Options or Convertible Securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued.
5.6 Dividends of Capital Stock, Options or Convertible Securities. In
the event that the Company shall declare a dividend or make any other
distribution upon any stock of the Company payable in capital stock, Options or
Convertible Securities, then any capital stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration
unless such dividend or distribution is subject to Section 3 hereof.
5.7 Dilution in Case of Other Securities. In case any Other Securities
shall be issued or sold by the Company, or shall become subject to issue upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any other issuer of Other Securities or any other person referred to in Section
4) or to subscription, purchase or other acquisition pursuant to any rights or
options granted by the Company (or such other issuer or person), for a
consideration per share such as to dilute the purchase rights evidenced by this
Warrant, the computations, adjustments and readjustments provided for in this
Section 5 with respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable on the exercise of this Warrant, so as
to protect the holders of this Warrant against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this subsection 5.8, no
adjustment in the Purchase Price and no change in the number of Warrant Shares
purchasable shall be made under this Section 5 as a result of or by reason of
any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of this
Section 5, the amount of consideration received by the Company in connection
with the issuance or sale of capital stock, Options or Convertible Securities
shall be determined in accordance with the following:
(a) In the event that shares of capital stock, Options or Convertible
Securities shall be issued or sold for cash, the consideration received
therefor shall be deemed to be the amount payable to the Company therefor,
without deduction of any expenses incurred or any underwriting commissions
or concessions paid or allowed by the Company in connection therewith.
(b) In the event that any shares of capital stock, Options or
Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash payable to the
Company shall be deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the Company, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith.
In the event that any shares of capital stock, Options or Convertible
Securities shall be issued in connection with any merger in which the
Company is the surviving corporation, the
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amount of consideration therefor shall be deemed to be the fair value as
reasonably determined by the Board of Directors of the Company of such
portion of the assets and business of the non-surviving corporation as such
Board shall determine to be attributable to such capital stock, Options or
Convertible Securities, as the case may be.
In the event that any capital stock, Options and/or Convertible
Securities shall be issued in connection with the issue and sale of other
securities or property of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such capital
stock, Options or Convertible Securities by the parties thereto, such
capital stock, Options and/or Convertible Securities shall be deemed to
have been issued for such consideration as determined in good faith by the
Board of Directors of the Company.
5.10 Record Date as Date of Issue or Sale. In the event that at any
time the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (i) to receive a dividend or other distribution
payable in capital stock, Options or Convertible Securities, or (ii) to
subscribe for or purchase capital stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of capital stock, Options or Convertible Securities deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be; provided, nothing contained herein will be deemed
to require the Company to issue or deliver such capital stock, Options or
Convertible Securities until the capital stock, Options or Convertible
Securities which are the subject of any such dividend, distribution or
subscription right are issued or delivered to the holders of Common Stock.
5.11 Treasury Stock. The number of shares of capital stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares (other than their
cancellation without reissuance) shall be considered an issue or sale of capital
stock for the purposes of this Section 5.
5.12 Certain Issues of Capital Stock Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment to the Purchase Price in the case of the issuance from time to time
after the date hereof of shares of capital stock reserved by the Company for the
grant and exercise of (a) options to purchase capital stock or (b) rights under
the Company's current employee stock purchase plan, in each case, granted to
directors, officers, employees, or consultants of the Company pursuant to
arrangements, plans or contracts approved by the Board of Directors of the
Company.
6. No Dilution or Impairment. The Company will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holders of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value or
stated value of any shares of stock receivable on the exercise of this Warrant
above the amount payable therefor on such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on the exercise
of this Warrant, and (c) will not transfer all or substantially all of its
properties and assets to any other person (corporate or otherwise), or
consolidate with or merge into any other person or permit any such person to
consolidate with or merge into
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the Company (if the Company is not the surviving person), unless such other
person shall expressly assume in writing and become bound by all the terms of
this Warrant.
7. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
chief financial officer to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
capital stock (or, to the extent not constituting Common Stock, Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number
of shares of each class or series of capital stock outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common Stock
(and, to the extent not constituting Common Stock, Other Securities) to be
received upon exercise of this Warrant, in effect immediately prior to such
issue or sale and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the holder of
this Warrant, and will, on the written request at any time of the holder of this
Warrant, furnish to such holder a like certificate setting forth the Purchase
Price at the time in effect and showing how it was calculated.
8. Registration Rights. The holder(s) of this Warrant and any other
Warrants issued pursuant to the terms hereof from time to time shall be entitled
(i) with respect to i2, to the registration rights in respect thereof as
provided in the Registration Rights Agreement between the Company and i2, dated
October 12, 1999, as amended on March 22, 2000, in accordance with the terms
thereof, (ii) with respect to HP, to the registration rights in respect thereof
as provided in the Shareholder Agreement between the Company and HP, dated
February 4, 1999, as amended on March 22, 2000, in accordance with the terms
thereof, and (iii) with respect to Millennium, to the registration rights in
respect thereof as provided in the Registration Rights Agreement between the
Company and Millennium, dated March 22, 2000, in accordance with the terms
thereof. Any holder not a party to either of the two agreements described in
this Section 8 shall not be entitled to registration rights.
9. Notices of Record Date, etc. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all
or substantially all the assets of the Company to or consolidation or
merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) shall
be entitled to exchange their shares of Common Stock (or, to the extent not
constituting Common
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Stock, Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least ten Business Days
prior to the date specified in such notice on which any such action is to be
taken.
10. Reservation of Stock, etc. Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock (or, to the
extent not constituting Common Stock, Other Securities) from time to time
issuable upon the exercise of this Warrant.
11. Exchange of Warrants. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, filling in the aggregate on
the face or faces thereof the number of shares of Common Stock called for on the
face or faces of the Warrant so surrendered; provided, however, that in no event
will the Company be obligated to recognize or permit any transfer of this
Warrant that would result in the assignor or any assignee receiving a Warrant
exercisable with respect to 25,000 or fewer shares of Common Stock.
12. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Remedies. [Deleted.]
14. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each holder or owner hereof by the taking hereof consents
and agrees, subject to the limitation on transfer set forth in Section 11:
(a) title to this Warrant may be transferred by endorsement (by the
holder hereof executing the form of assignment at the end hereof) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
(b) any person in possession of this Warrant properly endorsed for
transfer to such person (including endorsed in blank) is authorized to
represent himself as absolute owner hereof and is empowered to transfer
absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces
all of his equities or rights in this Warrant in favor of each such bona
fide purchaser, and each such bona fide purchaser shall acquire absolute
title hereto and to all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the Company beyond
any liability or responsibility it has under law.
15. Notices, etc. All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid at such address as may have been furnished to
the Company in writing by such holder or, until any such holder
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furnishes to the Company an address, then to, and at the address of, the last
holder of this Warrant who has so furnished an address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal substantive laws of the State of Texas, without regard
to the conflicts of law principles thereof and, to the maximum extent
practicable, will be deemed to call for performance in Dallas County, Texas. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
17. Expiration. The right to exercise this Warrant shall expire at
5:00 p.m. (Dallas, Texas time), March 24, 2003.
18. Warrant Holders Not Deemed Shareholders. No holder of this Warrant
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock or, to the extent not constituting Common Stock, Other
Securities that may at any time be issuable upon exercise of this Warrant for
any purpose whatsoever, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such holder shall have exercised this Warrant and
been issued Common Stock or, to the extent not constituting Common Stock, Other
Securities in accordance with the provisions hereof.
12
<PAGE> 193
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
THE VIALINK COMPANY
By: /s/ J. Andrew Kerner
--------------------------------------------
Name: J. Andrew Kerner
Title: Chief Financial Officer
[SIGNATURE PAGE TO WARRANT]
<PAGE> 194
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
THE VIALINK COMPANY
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ___________
shares (the "Shares") of Common Stock of The viaLink Company and herewith makes
payment of $________ therefor, and requests that the certificate for such Shares
be issued in the name of, and delivered to ___________________, federal taxpayer
identification number _______________, whose address is _________________.
In connection with the exercise of this Warrant, the undersigned represents
and warrants as follows:
(a) The undersigned is purchasing the Shares for the account of the
undersigned and not as a nominee or agent, and the undersigned has no
present intention of granting any participation in the same, and does not
have any contract, undertaking, agreement or arrangement with any person to
grant participation to such person or to any third person, with respect to
any of such Shares;.
(b) The undersigned has received or has had full access to all the
information it considers necessary or appropriate to make an informed
investment decision with respect to the Shares. The undersigned has had an
opportunity to ask questions of and receive answers from the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to undersigned or to which
the Company has access.
(c) The undersigned understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act of
1933, as amended (the "Securities Act") only in certain limited
circumstances. In this connection, the undersigned represents that it is
familiar with Securities and Exchange Commission ("SEC") Rule 144, as
presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(d) The undersigned is an "accredited investor" within the meaning of
SEC Rule 501 of Regulation D, as presently in effect.
(e) The undersigned agrees not to offer, sell, exchange, transfer,
pledge or otherwise dispose of any of the Shares unless at that time
either:
(1) such transaction is permitted pursuant to the provisions of
Rule 144 under the Securities Act or another exemption from
registration under the Securities Act and all applicable
state securities laws;
(2) a registration statement under the Securities Act and all
applicable state securities laws covering such securities
proposed to be sold, transferred or otherwise disposed of,
describing the manner and terms of the proposed
<PAGE> 195
sale, transfer or other disposition, and containing a
current prospectus, is filed with the SEC and all applicable
state securities law agencies and made effective under the
Securities Act and all applicable state securities laws; or
(3) an authorized representative of the SEC and all applicable
state securities agencies shall have rendered written advice
to undersigned (with a copy thereof and of all other related
communications delivered to the Company) to the effect that
the SEC and/or such state securities agencies will take no
action, or that the staff of the SEC and/or such state
securities agencies will recommend that the SEC and such
state securities agencies, as applicable, take no action,
with respect to the proposed offer, sale, exchange,
transfer, pledge or other disposition if consummated.
(f) All certificates representing the Shares and any certificates
subsequently issued with respect thereto or in substitution therefor shall
bear a legend that such securities may only be sold or disposed of in
accordance with (i) the provisions of the Securities Act, the rules and
regulations thereunder and any applicable state securities laws, (ii)
pursuant to an effective registration statement or (iii) pursuant to an
exemption from the registration/qualification requirements of the
Securities Act and any applicable state securities laws. The Company, at
its reasonable discretion, may cause stop transfer orders to be placed with
its transfer agent with respect to the certificates for the Shares but not
as to the certificates for any part of such Shares as to which said legend
is no longer required.
Dated:________ ____________________________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
____________________________________________________
(Address)
Signed in the presence of:
- ---------------------
---------------------------
2
<PAGE> 196
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ____________________________, federal taxpayer identification number
___________, whose address is ____________________________________, the right
represented by the within Warrant to purchase ___________ shares of Common Stock
of The viaLink Company to which the within Warrant relates, and appoints
___________________ Attorney to transfer such right on the books of The viaLink
Company with full power of substitution in the premises.
Dated:_________________ __________________________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
__________________________________________________
(Address)
Signed in the presence of:
- -----------------------
<PAGE> 197
NET ISSUE ELECTION NOTICE
TO: THE VIALINK COMPANY Date:___________________________
The undersigned hereby elects under Section 1.5 of the Warrant to surrender
the right to purchase _______ shares of Common Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of:
------------------------------------------------------------
------------------------------------------------------------
(Please Print Name, Address and Taxpayer Identification No.)
----------
Name of holder of this Warrant or Assignee:
-------------------------------
(Please Print)
Address:
---------------
Signature:
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
<PAGE> 198
EXHIBIT 4.4
NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
DISPOSED OF WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
No. MLP 1 Right to Purchase
Shares of Common Stock
of The viaLink Company
THE VIALINK COMPANY
COMMON STOCK PURCHASE WARRANT
March 24, 2000
The viaLink Company, a Delaware corporation (the "Company"), hereby
certifies that, for value received, Millennium Partners, L.P., a Cayman Islands
limited partnership ("Millennium"), or its permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company at any time
or from time to time before 5:00 p.m. (Dallas, Texas time), on March 24, 2003,
up to that number of fully paid and nonassessable shares (the "Warrant Shares")
of the Company's Common Stock, $0.001 par value that shall equal 5,010. The
purchase price per share of the Warrant Shares shall be equal to $83.83 (such
purchase price per share as adjusted from time to time as herein provided is
referred to herein as the "Purchase Price"). The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Business Day" means any day except a Saturday or a
Sunday or other day on which the National Market (as hereinafter defined),
or any national securities exchange on which the Common Stock (as
hereinafter defined) is traded or admitted for unlisted trading privileges,
is closed for trading.
(b) The term "Company" shall include The viaLink Company, and any
corporation which shall succeed to, or assume the obligations of, The
viaLink Company hereunder.
(c) The term "Common Stock" includes the Company's common stock,
$0.001 par value, as authorized on March 24, 2000, and/or any Other
Securities into which or for which the Warrant Shares may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.
(d) The term "Fair Market Value" per share of Common Stock means:
(1) If the Common Stock is traded on a national securities
exchange or admitted to unlisted trading privileges on such
an exchange, or is listed on the National Market (the
"National Market") of the National Association of Securities
Dealers Automated Quotations System (the "NASDAQ"), the
<PAGE> 199
Fair Market Value shall be the average of the last reported
sale prices of the Common Stock on such exchange or on the
National Market over the five consecutive Business Days
immediately preceding the date of determination or, if the
last reported sale price information is not available for
such days, the average of the mean of the closing bid and
asked prices for such days on such exchange or on the
National Market;
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the Fair Market Value shall be the
average of the mean of the last bid and asked prices reported
over the five consecutive Business Days immediately preceding
the date of determination (A) by the NASDAQ or (B) if reports
are unavailable under clause (A) above, by the National
Quotation Bureau Incorporated; and
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not reported,
the Fair Market Value shall be the price per share which the
Company could obtain from a willing buyer for shares of
Common Stock, as such price shall be determined by mutual
agreement of the Company and the holders of rights to
purchase a majority of the shares of Common Stock purchasable
under all warrants then outstanding and issued (directly or
indirectly) from those certain Common Stock Purchase
Warrants, dated March 24, 2000, issued by the Company to [i2
Technologies, Inc. ("i2")/Hewlett-Packard Company ("HP") and
Millennium, which originally granted to each of i2, HP and
Millennium the right to purchase 5,010 shares of Common
Stock. If such holders and the Company are unable to agree on
such Fair Market Value, the Company shall select a pool of
three independent and nationally-recognized investment
banking firms from which such holders (by a majority vote)
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved. The
determination of such investment banking firm shall be
binding upon the Company and such holders in connection with
any transaction occurring at the time of such determination.
All expenses of such investment banking firm shall be borne
by the Company. In all cases, the determination of fair
market value shall be made without consideration of the lack
of a liquid public market for the Common Stock and without
consideration of any "control premium" or any discount for
holding less than a majority or controlling interest of the
outstanding Common Stock.
(e) The term "Other Securities" refers to any stock (other than Common
Stock) or other securities of the Company or any other person (corporate or
otherwise) (i) which the holder of this Warrant at any time shall be
entitled to receive, or shall have received, on the exercise of this
Warrant, in lieu of or in addition to shares of the Company's common stock,
$.001 par value per share, as authorized on March 24, 2000, or (ii) which
at any time shall be issuable or shall have been issued in exchange for or
in replacement of shares of the Company's common stock, $.001 par value per
share, as authorized on March 24, 2000, or Other Securities pursuant to
Section 4 or otherwise.
2
<PAGE> 200
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time after the
date hereof during normal business hours before its expiration in full by the
holder hereof by surrender of this Warrant, with the form of subscription at the
end hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash, by bank cashier's check payable to the order of
the Company or by wire transfer, in the amount obtained by multiplying the
number of shares of Common Stock and/or Other Securities for which this Warrant
is then exercisable by the Purchase Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time during
normal business hours after the date hereof before its expiration in part by
surrender of this Warrant and payment of the Purchase Price then in effect in
the manner and at the place provided in subsection 1.1, except that the amount
payable by the holder on such partial exercise shall be the amount obtained by
multiplying (a) the number of shares of Common Stock and/or Other Securities
designated by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect. On any such partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, filling in the aggregate on the face or faces thereof the number of
shares of Common Stock and/or Other Securities for which such Warrant or
Warrants may still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of any
exercise of this Warrant, upon the written request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such written request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the holder of this Warrant
pursuant to subsection 4.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant hereto and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
3
<PAGE> 201
1.5 Net Issue.
(a) Election. The holder hereof may elect to receive, without the
payment by the holder of any additional consideration, Warrant Shares equal
to the value of this Warrant or any portion hereof by the surrender of this
Warrant or such portion to the Company, with the net issue election notice
attached hereto, duly executed, at the office of the Company. Thereupon,
the Company shall issue to the holder hereof such number of fully paid and
nonassessable shares of Common Stock as is computed using the following
formula:
X=Y(A-B)
------
A
where X= the number of shares to be issued to the holder hereof pursuant to
this Section 1.5.
Y= the number of shares covered by this Warrant in respect of which the net
issue election is made pursuant to this Section 1.5.
A= the Fair Market Value of one share of Common Stock as of the time the
net issue election is made pursuant to this Section 1.5.
B= the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 1.5.
2. Delivery of Stock Certificates, Etc. on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof, or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) to
which such holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current Fair Market Value of one full
share, together with any other property (including cash, where applicable) to
which such holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or, to the extent not constituting Common Stock, Other Securities)
in their capacity as such shall have received, or (on or after the record date
fixed for the determination of shareholders eligible to receive) shall have
become entitled to receive, without payment therefor,
(f) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(g) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
4
<PAGE> 202
(h) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of capital stock issued as a stock dividend or in a
stock split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise hereof as
provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subdivisions (b) and (c) of this Section 3) determined by multiplying (i) the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section) which such holder would
hold on the date of such exercise, if on the record date with respect to or the
date of the issuance of the stock, securities, property and cash referred to in
subdivisions (a), (b) or (c) of this Section 3, as applicable, it had been the
holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) receivable by
it as aforesaid during such period, giving effect to all adjustments called for
during such period by Section 4 and Section 5 by (ii) the percentage of this
Warrant then being exercised.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any time or
from time to time, the Company shall (a) effect a reorganization,
reclassification or recapitalization (b) consolidate with or merge into any
other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, reclassification, recapitalization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or, to the extent not
constituting Common Stock, Other Securities) issuable on such exercise prior to
such consummation or such effective date, the amount of stock and other
securities and property (including cash) determined by multiplying (i) the
amount of the stock and other securities and property (including cash) to which
such holder would have been entitled upon such consummation or in connection
with such event, as the case may be, if such holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment thereafter
as provided in Sections 3 and 5 by (ii) the percentage of this Warrant then
being exercised.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the Other Securities and property (including cash, where
applicable) receivable by the holders of this Warrant after the effective date
of such dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in Dallas, Texas, as trustee for the holder of this
Warrant.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect, subject to
expiration in accordance with Section 17 hereof, and the terms hereof shall be
applicable to the Other Securities and property receivable on the exercise of
this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such Other
5
<PAGE> 203
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustments.
5.1 General. The Purchase Price shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of the Purchase
Price, the holder of this Warrant shall thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares obtained
by multiplying the Purchase Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting from
such adjustment.
5.2 Purchase Price Adjustments.
(a) If and whenever after the date hereof the Company shall issue
or sell any shares of its capital stock (except as set forth below in
subparagraph 5.2(b)), for a consideration per share less than the Purchase
Price in effect immediately prior to the time of such issue or sale, the
Purchase Price shall be reduced to the price (calculated to the nearest
$0.01) obtained by dividing (i) an amount equal to the sum of (A) the
number of shares of capital stock outstanding, or deemed to be outstanding,
immediately prior to such issue or sale multiplied by the Purchase Price
prevailing immediately prior to such issue or sale plus (B) the
consideration, if any, received by the Company upon such issue or sale, by
(ii) the total number of shares of capital stock outstanding, or deemed to
be outstanding, immediately after such issue or sale. Notwithstanding the
foregoing, no adjustment of the Purchase Price shall be made in an amount
less than $0.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment which together with any adjustments so carried
forward shall amount to $0.01 per share or more.
(b) The following issuance of the Company's securities shall not
result in an adjustment in the Purchase Price: (i) stock issued pursuant to
a bona fide, public offering of shares of Common Stock, registered under
the Securities Act, pursuant to a registration statement; (ii) stock issued
pursuant to the conversion or exercise of convertible or exercisable
securities outstanding as of the date hereof; (iii) stock issued pursuant
to or in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange
of stock or otherwise; (iv) stock issued upon the exercise of any warrants
issued as of the date hereof (which do not have as their purpose an equity
financing element) approved by the Board; (v) stock issued upon the
exercise of one or more of the Warrants; or (vi) stock issued pursuant to
options, warrants, rights or similar commitments obligating the Company to
issue shares of its capital stock which are in existence as of the date
hereof.
5.3 Option Grants. Except as precluded in subsection 5.2(b), in the
event that at any time after March 22, 2000 the Company shall in any manner
grant (directly, by assumption in a merger or otherwise) any rights to subscribe
for or to purchase, or any options for the purchase of, capital stock or any
securities convertible into or exchangeable for its capital stock (such rights
or options being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
capital stock is issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
6
<PAGE> 204
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus, in the case of any such Options which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total number of shares of capital stock issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Purchase Price in effect immediately prior to the time of the granting
of such Options, then the total number of shares of capital stock issuable upon
the exercise of such Options or upon conversion or exchange of the total amount
of such Convertible Securities issuable upon the exercise of such Options shall
(as of the date of granting such Options) be deemed to be outstanding and to
have been issued for such price per share. Except as otherwise provided in
subsection 5.5, no further adjustment of the Purchase Price shall be made upon
the actual issue of such capital stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such capital stock upon
conversion or exchange of such Convertible Securities.
5.4 Convertible Security Grants. Except as precluded in subsection
5.2(b), in the event that the Company shall in any manner issue (directly, by
assumption in a merger or otherwise) or sell any Convertible Securities (other
than pursuant to the exercise of Options to purchase such Convertible Securities
covered by subsection 5.3), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
capital stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of capital stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Purchase Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of capital stock issuable upon conversion or exchange of all
such Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued for
such price per share, provided that, except as otherwise provided in subsection
5.5, no further adjustment of the Purchase Price shall be made upon the actual
issue of such capital stock upon conversion or exchange of such Convertible
Securities.
5.5 Effect of Alteration to Option or Convertible Security Terms. In
connection with any change in, or the expiration or termination of, the purchase
rights under any Option or the conversion or exchange rights under any
Convertible Securities, the following provisions shall apply:
(a) If the purchase price provided for in any Option referred to in
subsection 5.3, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible Securities
referred to in subsection 5.3 or 5.4 are convertible into or exchangeable
for capital stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), then the Purchase Price in effect at the time of such change
shall forthwith be increased or decreased to the Purchase Price which would
be in effect immediately after such change had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold.
(b) On the partial or complete expiration of any Options or
termination of any right to convert or exchange Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be increased or
decreased to the Purchase Price which would be in effect at the time of
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<PAGE> 205
such expiration or termination had such Options or Convertible Securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued.
5.6 Dividends of Capital Stock, Options or Convertible Securities. In
the event that the Company shall declare a dividend or make any other
distribution upon any stock of the Company payable in capital stock, Options or
Convertible Securities, then any capital stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration
unless such dividend or distribution is subject to Section 3 hereof.
5.7 Dilution in Case of Other Securities. In case any Other Securities
shall be issued or sold by the Company, or shall become subject to issue upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any other issuer of Other Securities or any other person referred to in Section
4) or to subscription, purchase or other acquisition pursuant to any rights or
options granted by the Company (or such other issuer or person), for a
consideration per share such as to dilute the purchase rights evidenced by this
Warrant, the computations, adjustments and readjustments provided for in this
Section 5 with respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable on the exercise of this Warrant, so as
to protect the holders of this Warrant against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this subsection 5.8, no
adjustment in the Purchase Price and no change in the number of Warrant Shares
purchasable shall be made under this Section 5 as a result of or by reason of
any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of this
Section 5, the amount of consideration received by the Company in connection
with the issuance or sale of capital stock, Options or Convertible Securities
shall be determined in accordance with the following:
(a) In the event that shares of capital stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount payable to the Company
therefor, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith.
(b) In the event that any shares of capital stock, Options or
Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash payable to the
Company shall be deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the Company, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection therewith.
In the event that any shares of capital stock, Options or
Convertible Securities shall be issued in connection with any merger in
which the Company is the surviving corporation, the
8
<PAGE> 206
amount of consideration therefor shall be deemed to be the fair value as
reasonably determined by the Board of Directors of the Company of such
portion of the assets and business of the non-surviving corporation as such
Board shall determine to be attributable to such capital stock, Options or
Convertible Securities, as the case may be.
In the event that any capital stock, Options and/or Convertible
Securities shall be issued in connection with the issue and sale of other
securities or property of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such capital
stock, Options or Convertible Securities by the parties thereto, such
capital stock, Options and/or Convertible Securities shall be deemed to
have been issued for such consideration as determined in good faith by the
Board of Directors of the Company.
5.10 Record Date as Date of Issue or Sale. In the event that at any
time the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (i) to receive a dividend or other distribution
payable in capital stock, Options or Convertible Securities, or (ii) to
subscribe for or purchase capital stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of capital stock, Options or Convertible Securities deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be; provided, nothing contained herein will be deemed
to require the Company to issue or deliver such capital stock, Options or
Convertible Securities until the capital stock, Options or Convertible
Securities which are the subject of any such dividend, distribution or
subscription right are issued or delivered to the holders of Common Stock.
5.11 Treasury Stock. The number of shares of capital stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares (other than their
cancellation without reissuance) shall be considered an issue or sale of capital
stock for the purposes of this Section 5.
5.12 Certain Issues of Capital Stock Excepted. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment to the Purchase Price in the case of the issuance from time to time
after the date hereof of shares of capital stock reserved by the Company for the
grant and exercise of (a) options to purchase capital stock or (b) rights under
the Company's current employee stock purchase plan, in each case, granted to
directors, officers, employees, or consultants of the Company pursuant to
arrangements, plans or contracts approved by the Board of Directors of the
Company.
6. No Dilution or Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of this
Warrant against dilution or other impairment. Without limiting the generality of
the foregoing, the Company (a) will not increase the par value or stated value
of any shares of stock receivable on the exercise of this Warrant above the
amount payable therefor on such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of this
Warrant, and (c) will not transfer all or substantially all of its properties
and assets to any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to consolidate with or
merge into
9
<PAGE> 207
the Company (if the Company is not the surviving person), unless such other
person shall expressly assume in writing and become bound by all the terms of
this Warrant.
7. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
chief financial officer to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
capital stock (or, to the extent not constituting Common Stock, Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number
of shares of each class or series of capital stock outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common Stock
(and, to the extent not constituting Common Stock, Other Securities) to be
received upon exercise of this Warrant, in effect immediately prior to such
issue or sale and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the holder of
this Warrant, and will, on the written request at any time of the holder of this
Warrant, furnish to such holder a like certificate setting forth the Purchase
Price at the time in effect and showing how it was calculated.
8. Registration Rights. The holder(s) of this Warrant and any other
Warrants issued pursuant to the terms hereof from time to time shall be entitled
(i) with respect to i2, to the registration rights in respect thereof as
provided in the Registration Rights Agreement between the Company and i2, dated
October 12, 1999, as amended on March 22, 2000, in accordance with the terms
thereof, (ii) with respect to HP, to the registration rights in respect thereof
as provided in the Shareholder Agreement between the Company and HP, dated
February 4, 1999, as amended on March 22, 2000, in accordance with the terms
thereof, and (iii) with respect to Millennium, to the registration rights in
respect thereof as provided in the Registration Rights Agreement between the
Company and Millennium, dated March 22, 2000, in accordance with the terms
thereof. Any holder not a party to either of the two agreements described in
this Section 8 shall not be entitled to registration rights.
9. Notices of Record Date, etc. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of
all or substantially all the assets of the Company to or consolidation or
merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or, to the extent not constituting Common Stock, Other Securities) shall
be entitled to exchange their shares of Common Stock (or, to the extent not
constituting Common
10
<PAGE> 208
Stock, Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least ten Business Days
prior to the date specified in such notice on which any such action is to be
taken.
10. Reservation of Stock, etc. Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock (or, to the
extent not constituting Common Stock, Other Securities) from time to time
issuable upon the exercise of this Warrant.
11. Exchange of Warrants. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, filling in the aggregate on
the face or faces thereof the number of shares of Common Stock called for on the
face or faces of the Warrant so surrendered; provided, however, that in no event
will the Company be obligated to recognize or permit any transfer of this
Warrant that would result in the assignor or any assignee receiving a Warrant
exercisable with respect to 25,000 or fewer shares of Common Stock.
12. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Remedies. [Deleted.]
14. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each holder or owner hereof by the taking hereof consents
and agrees, subject to the limitation on transfer set forth in Section 11:
(a) title to this Warrant may be transferred by endorsement (by the
holder hereof executing the form of assignment at the end hereof) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
(b) any person in possession of this Warrant properly endorsed for
transfer to such person (including endorsed in blank) is authorized to
represent himself as absolute owner hereof and is empowered to transfer
absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces
all of his equities or rights in this Warrant in favor of each such bona
fide purchaser, and each such bona fide purchaser shall acquire absolute
title hereto and to all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the Company beyond
any liability or responsibility it has under law.
15. Notices, etc. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid at such address as may have been furnished to
the Company in writing by such holder or, until any such holder
11
<PAGE> 209
furnishes to the Company an address, then to, and at the address of, the last
holder of this Warrant who has so furnished an address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal substantive laws of the State of Texas, without regard
to the conflicts of law principles thereof and, to the maximum extent
practicable, will be deemed to call for performance in Dallas County, Texas. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
17. Expiration. The right to exercise this Warrant shall expire at 5:00
p.m. (Dallas, Texas time), March 24, 2003.
18. Warrant Holders Not Deemed Shareholders. No holder of this Warrant
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock or, to the extent not constituting Common Stock, Other
Securities that may at any time be issuable upon exercise of this Warrant for
any purpose whatsoever, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such holder shall have exercised this Warrant and
been issued Common Stock or, to the extent not constituting Common Stock, Other
Securities in accordance with the provisions hereof.
12
<PAGE> 210
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
THE VIALINK COMPANY
By: /s/ J. Andrew Kerner
------------------------------------
Name: J. Andrew Kerner
Title: Chief Financial Officer
[SIGNATURE PAGE TO WARRANT]
<PAGE> 211
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
THE VIALINK COMPANY
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _____________
shares (the "Shares") of Common Stock of The viaLink Company and herewith makes
payment of $________ therefor, and requests that the certificate for such Shares
be issued in the name of, and delivered to ______________________________,
federal taxpayer identification number ______________________, whose address is
________________________________________.
In connection with the exercise of this Warrant, the undersigned represents
and warrants as follows:
(a) The undersigned is purchasing the Shares for the account of the
undersigned and not as a nominee or agent, and the undersigned has no
present intention of granting any participation in the same, and does not
have any contract, undertaking, agreement or arrangement with any person to
grant participation to such person or to any third person, with respect to
any of such Shares;.
(b) The undersigned has received or has had full access to all the
information it considers necessary or appropriate to make an informed
investment decision with respect to the Shares. The undersigned has had an
opportunity to ask questions of and receive answers from the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to undersigned or to which
the Company has access.
(c) The undersigned understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act of
1933, as amended (the "Securities Act") only in certain limited
circumstances. In this connection, the undersigned represents that it is
familiar with Securities and Exchange Commission ("SEC") Rule 144, as
presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(d) The undersigned is an "accredited investor" within the meaning of
SEC Rule 501 of Regulation D, as presently in effect.
(e) The undersigned agrees not to offer, sell, exchange, transfer,
pledge or otherwise dispose of any of the Shares unless at that time
either:
(1) such transaction is permitted pursuant to the provisions of
Rule 144 under the Securities Act or another exemption from
registration under the Securities Act and all applicable
state securities laws;
(2) a registration statement under the Securities Act and all
applicable state securities laws covering such securities
proposed to be sold, transferred or otherwise disposed of,
describing the manner and terms of the proposed
<PAGE> 212
sale, transfer or other disposition, and containing a
current prospectus, is filed with the SEC and all applicable
state securities law agencies and made effective under the
Securities Act and all applicable state securities laws; or
(3) an authorized representative of the SEC and all applicable
state securities agencies shall have rendered written advice
to undersigned (with a copy thereof and of all other related
communications delivered to the Company) to the effect that
the SEC and/or such state securities agencies will take no
action, or that the staff of the SEC and/or such state
securities agencies will recommend that the SEC and such
state securities agencies, as applicable, take no action,
with respect to the proposed offer, sale, exchange,
transfer, pledge or other disposition if consummated.
(f) All certificates representing the Shares and any certificates
subsequently issued with respect thereto or in substitution therefor shall
bear a legend that such securities may only be sold or disposed of in
accordance with (i) the provisions of the Securities Act, the rules and
regulations thereunder and any applicable state securities laws, (ii)
pursuant to an effective registration statement or (iii) pursuant to an
exemption from the registration/qualification requirements of the
Securities Act and any applicable state securities laws. The Company, at
its reasonable discretion, may cause stop transfer orders to be placed with
its transfer agent with respect to the certificates for the Shares but not
as to the certificates for any part of such Shares as to which said legend
is no longer required.
Dated:
-------------------- --------------------------------------
(Signature must conform to name of
holder as specified on the face of
the Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- --------------------------
2
<PAGE> 213
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto _________________________, federal taxpayer identification number
___________, whose address is _________________________________________________,
the right represented by the within Warrant to purchase ___________ shares of
Common Stock of The viaLink Company to which the within Warrant relates, and
appoints ______________________ Attorney to transfer such right on the books of
The viaLink Company with full power of substitution in the premises.
Dated:
-------------------- --------------------------------------
(Signature must conform to name of
holder as specified on the face of
the Warrant)
--------------------------------------
(Address)
Signed in the presence of:
- --------------------------
<PAGE> 214
NET ISSUE ELECTION NOTICE
TO: THE VIALINK COMPANY Date:
-------------------------------
The undersigned hereby elects under Section 1.5 of the Warrant to surrender
the right to purchase _______ shares of Common Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of:
-------------------------------
-------------------------------
(Please Print Name, Address and
Taxpayer Identification No.)
Name of holder of this Warrant or Assignee:
-------------------------------------
(Please Print)
Address:
--------------------------------
Signature:
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
<PAGE> 215
EXHIBIT 4.5
AMENDMENT NO. 1
TO
SHAREHOLDER AGREEMENT
THIS AMENDMENT No. 1 TO SHAREHOLDER AGREEMENT (the
"Amendment") dated as of March 22, 2000, is entered into by and among viaLink
Company, a Delaware corporation (the "Company"), and Hewlett-Packard Company, a
Delaware corporation ("Hewlett-Packard"). Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in that certain
Shareholder Agreement dated February 4, 1999 (the "Shareholder Agreement").
I N T R O D U C T I O N
WHEREAS, the Company and Hewlett-Packard are parties to the
Shareholder Agreement and desire to amend such agreement to provide that any
shares of the capital stock of the Company acquired by Hewlett-Packard
subsequent to the execution date of the Shareholder Agreement shall become
subject to the Shareholder Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing premises and
for certain other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Amendment to Shareholder Agreement. The Shareholder
Agreement shall be amended by replacing in its entirety Paragraph 9 (iii) with
the following:
"Registrable Securities" means, with respect to Holder, (i)
the Company's Common Stock issued to Holder pursuant to any subsequent
Securities Purchase Agreement, including, but not limited to, those
shares of the Company's Common Stock issued pursuant to that certain
Securities Purchase Agreement, dated March 22, 2000 (the "Securities
Purchase Agreement"), and those shares of the Company's Common Stock
issuable upon the exercise of the Warrants purchased by Holder pursuant
to the Securities Purchase Agreement, (ii) the Company's Common Stock
issued to Holder upon conversion of the Convertible Note, and (iii) any
Common Stock or other equity securities issued or issuable with respect
to the securities referred to in clause (ii) by way of a stock dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to
any particular Registrable Securities, such securities will cease to be
Registrable Securities (A) when they have been distributed to the
public pursuant to an offering registered under the Securities Act or
(B) after the Registrable Securities held by Holder may be sold in
90-day period pursuant to Rule 144 under the Securities Act (or any
similar rule then in effect).
<PAGE> 216
2. Counterparts. This Amendment may be executed in multiple
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts together shall constitute one and the same
instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE> 217
IN WITNESS WHEREOF, this Amendment No. 1 to the Shareholder
Agreement has been executed by the parties hereof.
VIALINK COMPANY
By: /s/ J. Andrew Kerner
--------------------
J. Andrew Kerner
Chief Financial
Officer
HEWLETT-PACKARD COMPANY
By: /s/ Craig White
--------------------
Name: Craig White
Title: Vice President
<PAGE> 218
EXHIBIT 4.6
AMENDMENT NO. 1
TO
REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT No. 1 TO REGISTRATION RIGHTS AGREEMENT (the
"Amendment") dated as of March 22, 2000, is entered into by and among viaLink
Company, a Delaware corporation (the "Company"), and i2 Technologies, Inc., a
Delaware corporation ("i2"). Capitalized terms used but not defined herein shall
have the respective meanings assigned to them in that certain Registration
Rights Agreement dated October 12, 1999 (the "Registration Rights Agreement").
I N T R O D U C T I O N
WHEREAS, the Company and i2 are parties to the Registration
Rights Agreement and desire to amend such agreement to provide that any shares
of the capital stock of the Company acquired by i2 subsequent to the execution
date of the Registration Rights Agreement shall become subject to the
Registration Rights Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing premises and
for certain other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Amendment to Registration Rights Agreement. The
Registration Rights Agreement shall be amended by replacing in its entirety
Recital (A) with the following:
A. The Company and the Holders are parties to a Securities
Purchase Agreement, dated October 12, 1999 (the "Purchase Agreement")
and a Securities Purchase Agreement, dated March 22, 2000 (the
"Subsequent Purchase Agreement"). The Purchase Agreement and the
Subsequent Purchase Agreement provide, among other things, for the
Holders' acquisition of shares of Common Stock, par value $0.001 per
share ("Shares") and warrants to purchase shares of Common Stock of the
Company (each a "Warrant" and collectively, the "Warrants"). Any
reference herein to an individual Warrant shall encompass all Warrants.
2. Counterparts. This Amendment may be executed in multiple
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts together shall constitute one and the same
instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE> 219
IN WITNESS WHEREOF, this Amendment No. 1 to the Registration
Rights Agreement has been executed by the parties hereof.
VIALINK COMPANY
By: /s/ J. Andrew Kerner
-----------------------
J. Andrew Kerner
Chief Financial Officer
i2 TECHNOLOGIES, INC.
By: /s/ Robert C. Donohoo
-----------------------
Name: Robert C. Donohoo
Title: Corporate Counsel
<PAGE> 220
EXHIBIT 4.7
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
THE VIALINK COMPANY
AND
MILLENNIUM PARTNERS, L.P.
<PAGE> 221
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS...................................................1
ARTICLE 2 REGISTRATION RIGHTS...........................................3
2.1 Demand Registration Rights............................3
2.2 Piggyback Registrations...............................3
1.3 Registration Procedures...............................4
2.4 Payment of Expenses...................................7
2.5 Participation in Underwritten Registrations...........7
2.6 Information of the Holder.............................8
2.7 Rule 144 Information..................................8
2.8 Delay in Demand Registration..........................8
ARTICLE 3 INDEMNIFICATION...............................................8
3.1 Indemnification by the Company........................8
3.2 Indemnification by Holder.............................8
3.3 Notice: Defense of Claims.............................9
3.4 Contribution..........................................9
3.5 Survival.............................................10
ARTICLE 4 MISCELLANEOUS................................................10
4.1 Notices..............................................10
4.2 Interpretation.......................................11
4.3 Counterparts.........................................11
4.4 Entire Agreement.....................................11
4.5 Amendments and Waivers...............................11
4.6 Successors and Assigns...............................11
4.7 Severability.........................................11
4.8 Remedies Cumulative..................................11
4.9 Governing Law........................................12
4.10 Rules of Construction................................12
4.11 Currency.............................................12
</TABLE>
i
<PAGE> 222
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of March 22, 2000, by and between The viaLink Company, a
Delaware corporation (together with any successor entity, the "Company"), and
Millennium Partners, L.P. (the "Holder").
R E C I T A L S:
A. The Company and the Holder are parties to a Securities Purchase
Agreement, dated March 22, 2000 (the "Purchase Agreement"), providing, among
other things, for the Holder's acquisition of shares of Common Stock, par value
$0.001 per share, of the Company ("Shares") and a warrant to purchase shares of
Common Stock of the Company (the "Warrant").
B. The execution and delivery of this Agreement by the Company and the
Holder is required in connection with the transactions contemplated by the
Purchase Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings indicated:
"Closing" means the closing of the transactions contemplated by the
Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the Company's common stock, par value $0.001 per
share.
"Demand Registration" means the registration provided for in Section
2.1 hereof.
"1933 Act" means the United States Securities Act of 1933, as amended.
"Other Securities" means any stock (other than Common Stock) or other
securities of the Company or any other person (corporate or otherwise) (i) which
the holder of this Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
shares of Common Stock, or (ii) which at any time shall be issuable or shall
have been issued in exchange for or in replacement of shares of Common Stock.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock
<PAGE> 223
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
"Piggyback Registration" means the registration provided for in Section
2.2 hereof.
"Potential Material Event" means any of the following: (a) the
possession by the Company of material non-public information required to be
disclosed in a Company registration statement and the determination in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement at that time would be detrimental to
the business and affairs of the Company; or (b) any material engagement or
activity by the Company that would, in the good faith determination of the Board
of Directors of the Company, if disclosed in the registration statement at such
time, be materially and adversely affected, which determination shall be
accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Article 2 hereof, including all registration,
Commission filing fees, fees of the National Association of Securities Dealers
or the Nasdaq SmallCap Market, all fees and expenses of complying with
securities or blue sky laws, printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance, and, in the case of a Piggyback Registration pursuant to Section
2.2 hereof that is a firm commitment underwritten public offering, the
reasonable fees and expenses (not to exceed $15,000) of one counsel to all
selling Holders; provided, however, that Registration Expenses shall exclude,
and the sellers of the Registrable Stock being registered shall pay, any
underwriting discounts, commissions and transfer taxes in respect of the
Registrable Stock being registered.
"Registrable Stock" means (a) all Shares; (b) all shares of Common
Stock or Other Securities issued or issuable upon exercise of the Warrant; and
(c) any securities issued or issuable with respect to such shares of Common
Stock or Other Securities described in (a) or (b) above by way of a stock
dividend or stock split or in connection with a combination or reclassification
of shares, recapitalization, merger, consolidation or other reorganization or
otherwise; provided, however, that any particular Registrable Stock shall cease
to be Registrable Stock when (x) a registration statement with respect to the
sale of such stock shall become effective under the 1933 Act and such stock
shall have been disposed of in accordance with such registration statement, or
(y) such stock shall have been sold pursuant to Rule 144; and provided further,
only securities issued by the Company will be deemed to be Registrable Stock.
"Rule 144" means Rule 144 (or any successor provision) under the 1933
Act.
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ARTICLE 2
REGISTRATION RIGHTS
2.1 Demand Registration Rights. The Company shall file with the
Commission a registration statement on Form S-3, if available, or such other
short form of registration statement which the Company is eligible to use and
which is appropriate for the contemplated transaction, covering such shares of
Registrable Stock as the Holder(s) of not less than 50% of the Registrable Stock
may designate, and the Company shall cause such Demand Registration to become or
be declared effective within 120 days after the Closing, but in no event shall
such Demand Registration occur within 30 days after the Commission has declared
effective a registration statement filed by the Company with respect to the
Company's Common Stock. The Company shall keep such Demand Registration
continuously effective, supplemented and amended pursuant to the provisions of
Section 2.3 hereof until the earlier of (i) the sale by the Holders of all
shares of Registrable Stock registered in such registration or (ii) the date
that is 180 days subsequent to the effective date of such registration. The
Holder(s) of Registrable Stock shall be entitled to one Demand Registration
under this Section 2.1. The Company may decline (for a period not to exceed 60
days) to effect a Demand Registration if a Potential Material Event exists at
the time a Demand Registration is requested; provided, that all time periods set
forth in this Section 2.1 shall be tolled during such period.
2.2 Piggyback Registrations.
(a) Right to Piggyback. If subsequent to the 90th day after the
Closing and prior to the third anniversary of the Closing the Company
proposes to register any offering of its securities under the
Securities Act, whether or not for sale for its own account (other than
on Form S-4, Form S-8 or any successor form), and the registration form
to be used permits the registration of an offering of Registrable Stock
by a Holder (a "Piggyback Registration"), then the Company will give
prompt notice to the Holder(s) of Registrable Stock of its intention to
effect such a registration (each a "Piggyback Notice"). Subject to
Section 2.2(b) below, the Company will include in such registration all
shares of Registrable Stock that the Holder(s) thereof have requested
the Company to include in such registration by notice to the Company
within 20 days after the date of receipt of the Company's notice.
Notwithstanding any other provisions of this Agreement (including
Section 2.3), the process (including timing) of causing a Piggyback
Registration to become effective and any decision to terminate a
Piggyback Registration will be within the sole discretion of the
Company.
(b) Priority on Registrations. If any Piggyback Registration
shall be an underwritten offering, the right of any Holder's
Registrable Stock to be included in such Piggyback Registration shall
be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Stock in the
underwriting to the extent provided herein Notwithstanding any other
provision of this Agreement, if the managing underwriter determines in
good faith that marketing factors require a limitation of the number of
shares to be underwritten,
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then the managing underwriter may exclude shares (including Registrable
Stock) from the registration and the underwriting, and the number of
shares that may be included in the registration and the underwriting
will be allocated: (i) in the case of a registration initiated by the
Company for the purpose of registering securities to be sold by the
Company, first, to the Company, second, to any party which as of the
date hereof has a contractual right to participate in such registration
to the extent such party's currently existing contractual arrangements
prohibit the Company from allowing the Holders of Registrable Stock to
participate pro rata with such party in such registration, third to the
Holders of Registrable Stock, and fourth, to all other persons
requesting that securities be included in such registration; and (ii)
in the case of a registration initiated by the Company for the purpose
of registering securities to be sold by security holders of the
Company, first, to any party which has exercised its contractual right
to require that the Company initiate such registration, second, to any
party which as of the date hereof has a contractual right to
participate in such registration to the extent such party's currently
existing contractual arrangements prohibit the Company from allowing
the Holders of Registrable Stock to participate pro rata with such
party in such registration, third to the Holders of Registrable Stock,
and fourth, to all other persons requesting that securities be included
in such registration. Within the category for the allocation of
securities to be included in the registration/underwriting to which
Holders of Registrable Stock are assigned, such Holders will
participate pro rata on the basis of the number of shares that such
Holders have requested (consistent with their contractual rights) to be
included in the registration. If a Holder disapproves of the terms of
any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any
Registrable Stock excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
2.3 Registration Procedures. In connection with any registration
hereunder, the Company will use its best efforts to, as soon as practicable,
effect the registration and the sale of such Registrable Stock in accordance
with the intended method of distribution thereof and will:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to
cause such registration statement to become effective; provided,
however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the
counsel, if any, selected by the Holder copies of all such documents
proposed to be filed, which documents will be subject to the reasonable
comments of such counsel;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for such period as shall be required for the
disposition pursuant to the terms of such registration of all
Registrable Stock covered thereby (but not to exceed, in the case of
the Demand Registration, the date which is 180 days subsequent to the
effective
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date of such registration), and in each such case comply with the
provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement during such period
in accordance with the intended methods of distribution by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Stock such reasonable
number of copies of such registration statement, each amendment and
supplement thereto, in each case including all exhibits, the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Stock then held, owned and being registered by such
seller;
(d) use its best efforts to register or qualify such Registrable
Stock under such other securities or blue sky laws of such
jurisdictions within the United States as any seller reasonably
requests to keep such registration or qualification in effect for as
long as the relevant registration statement is in effect and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Stock then held, owned and being
registered by such seller; provided, however, that the Company will
not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subsection (d), (ii) to subject itself to taxation in any
such jurisdiction or (iii) to consent to general service of process in
any such jurisdiction;
(e) notify each seller of such Registrable Stock, at any time
when a prospectus relating thereto is required to be delivered under
the 1933 Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading and, at the request of any such
seller, the Company will promptly prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Stock, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to
make the statements therein, in light of the circumstances under which
such statements are made, not misleading;
(f) cause all such Registrable Stock to be listed on each
securities exchange on which similar securities issued by the Company
are then listed and to be qualified for trading on each system on
which similar securities issued by the Company are from time to time
qualified;
(g) provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date of such
registration statement and thereafter maintain such a transfer agent
and registrar;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters,
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if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Stock;
(i) make available for inspection, subject to execution and
delivery of customary non-disclosure and non-use agreements, by any
underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent
retained by any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent
accountants to supply, subject to execution and delivery of customary
non-disclosure and non-use agreements, all information reasonably
requested by any such underwriter, attorney, accountant or agent in
connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months beginning with the
first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 thereunder;
(k) if such registration relates to an underwritten offering,
furnish to each seller of Registrable Stock a signed counterpart of
(x) an opinion of counsel for the Company, which may be the
head in-house counsel for the Company, and
(y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included or incorporated by reference in such registration
statement,
in each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters to be delivered to the underwriters in
underwritten public offerings of securities (and dated the dates such
opinions and comfort letters are customarily dated) and, in the case
of the accountants' comfort letter, such other financial matters;
(l) permit any Holder of Registrable Stock which might be deemed,
in the reasonable judgment of such Holder, to be an underwriter or a
controlling person of the Company, to participate in the preparation
of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing,
which in the reasonable judgment of such Holder and its counsel, if
any, should be included;
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(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending
or preventing the use of any related prospectus or suspending the
qualification of any Registrable Stock included in such registration
statement for sale in any jurisdiction, the Company will promptly
notify each seller of Registrable Stock thereof and will use its best
efforts promptly to obtain the withdrawal of such order; and
(n) in connection with any underwritten offering, the Company
shall have the right to designate the underwriter(s) to manage such
offering, subject (in the case of a Demand Registration) to the
approval of the Holder(s) of a majority of the Registrable Stock to be
included therein, which approval will not be unreasonably withheld,
conditioned or delayed.
Each Holder agrees that if the Company has delivered preliminary or final
prospectuses to such Holder and after having done so the Company shall give
notice to such Holder that (A) the prospectus needs to be amended or
supplemented to comply with the requirements of the 1933 Act, (B) a stop order
suspending the effectiveness of the registration statement is issued by the
Commission or (C) a Potential Material Event shall exist, then such Holder shall
immediately cease making offers and sales of Registrable Stock and return all
remaining prospectuses to the Company if requested by the Company in such
notice; provided such cessation of making offers and sales of Registrable Stock
shall not exceed an aggregate of sixty (60) days in the case of the Demand
Registration. Following such amendment or supplement, the lifting of any stop
order or such time as the Potential Material Event shall no longer exist, the
Company shall promptly provide to such Holder notice that offers and sales may
be resumed and, to the extent appropriate, revised prospectuses, and such Holder
shall then be free to resume making offers of the Registrable Stock, or any
portion thereof, and the Company's obligation to maintain the effectiveness of
the registration statement, if any, shall be extended by an equal amount of
time.
2.4 Payment of Expenses. The Company shall pay all Registration
Expenses in connection with the Demand Registration and any Piggyback
Registration. All fees and disbursements of counsel (except to the extent
comprising "Registration Expenses" pursuant to Article 1 hereof), accountants
and other experts retained by the Holder shall be borne by the Holder.
2.5 Participation in Underwritten Registrations. The Holder may not
participate in any registration hereunder which is underwritten unless the
Holder (a) agrees to sell the Holder's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements; and (b) completes and executes all questionnaires,
powers of attorney, indemnities, standstill or holdback agreements, underwriting
agreements and other documents required under the terms of such underwriting
arrangements, provided that if the Holder's Registrable Stock is included in any
underwritten registration, the Holder shall not be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding the Holder and the Holder's intended
method of distribution.
2.6 Information of the Holder. As a condition to participation in any
registration hereunder, the Holder shall furnish to the Company such information
regarding the
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Holder and the distribution proposed by the Holder as the Company may reasonably
request and as shall be required in connection with any registration,
qualification or compliance contemplated by this Agreement.
2.7 Rule 144 Information. From and after the date hereof and for so
long as necessary in order to permit the Holders to sell the Registrable Stock
pursuant to Rule 144 under the 1933 Act, the Company will file on a timely basis
all reports required to be filed by it pursuant to Section 13 or 15(d) of the
United States Securities Exchange Act of 1934 and referred to in paragraph
(c)(1) of Rule 144 (or, if applicable, the Company will make publicly available
the information regarding itself referred to in paragraph (c)(2) of Rule 144),
in order to permit the Holders to sell the Registrable Stock, pursuant to the
terms and conditions of the applicable provisions of Rule 144.
2.8 Delay in Demand Registration. The Company shall not be obligated to
effect any Demand Registration within 90 days of a previous registration in
which Holders of Registrable Stock were afforded piggyback registration rights
pursuant to this Agreement.
ARTICLE 3
INDEMNIFICATION
3.1 Indemnification by the Company. The Company agrees to indemnify, to
the extent permitted by law, the Holder, its officers and directors and each
Person who controls a Holder (within the meaning of the 1933 Act) against all
losses, claims, damages, liabilities and expenses which arise out of or are
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder, its officers
and directors or any Person who controls such Holder expressly for use therein.
In connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the 1933 Act) to the same extent as provided
above with respect to the indemnification of a Holder.
3.2 Indemnification by Holder. In connection with any registration
statement in which a Holder is participating, each such Holder, severally and
not jointly, will, to the extent permitted by law, indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expenses which arise out of or are based upon any untrue or alleged untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such Holder expressly for use therein) and
any failure by each such Holder to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto; provided, however, that
the obligation to indemnify will be individual to each Holder and
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will be limited to the net amount of proceeds received by such Holder from the
sale of Registrable Stock pursuant to such registration statement.
3.3 Notice: Defense of Claims. Any Person entitled to indemnification
hereunder will (a) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (b) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Agreement except to the extent
the indemnifying party is materially prejudiced by such failure. If such defense
is assumed, the indemnified party may participate in such defense at its own
expense and the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld, conditioned or delayed). An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel (in
addition to local counsel) for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim. No
indemnified party shall consent to entry of any judgment or settle any claim or
litigation without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld, conditioned or delayed. Each
indemnified party, as a condition to its right to indemnification, will
reasonably cooperate with the indemnifying party (at the expense of the
indemnifying party) in the defense of such claim.
3.4 Contribution. If the indemnification provided for in this Article 3
is unavailable or insufficient to hold harmless an indemnified party under
Section 3.1 or 3.2, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as the result of the losses, claims,
damages or liabilities referred to above in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other in connection with the statements and omissions
that resulted in such losses, claims, damages or liabilities. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact related to information supplied by the indemnifying
party or information supplied by the indemnified party, and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this Section 3.4 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim that is the subject of
this section. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation of a Holder to provide contribution will be individual to such Holder
and will be limited to the net amount of proceeds received by such Holder from
the sale of Registrable Stock that is the subject of any claim. No party shall
be liable for contribution with respect to any action, suit, proceeding or claim
settled without its written consent, which consent
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shall not be unreasonably withheld, conditioned or delayed. The contribution
obligation of any Holder will be limited to the net amount of proceeds received
by such Holder from the sale of the Registrable Stock pursuant to such
Registration Statement.
3.5 Survival. The indemnification and contribution provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities.
ARTICLE 4
MISCELLANEOUS
4.1 Notices. All notices and other communications hereunder shall be in
writing and shall be delivered personally or by commercial delivery service, or
mailed by registered or certified mail (return receipt requested) or sent via
facsimile (with confirmation of receipt) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Company, to:
The viaLink Company
13155 Noel Road, Suite 800
Dallas, Texas 75240
Attention: J. Andrew Kerner
Fax: (972) 934-5555
with a copy (which shall not constitute notice) to:
Richard M. Klinge & Associates, P.C.
510 E. Memorial Road, Suite C-1
Oklahoma City, Oklahoma 73114
Attention: Richard M. Klinge, Esq.
Fax: (405) 775-9003
if to the Holder, at the address set forth opposite Holder's
name on Schedule I to the Purchase Agreement.
Notice given by personal delivery or commercial delivery service shall be
effective upon actual receipt. Notice given by mail shall be effective three
business days after deposit in the mails or upon actual receipt if sooner.
Notice given by facsimile shall be confirmed by appropriate answer back and
shall be effective upon actual receipt if received during the recipient's normal
business hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours.
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4.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
without limitation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
4.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
4.4 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
4.5 Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or cancellation of this Agreement shall be
effective as to (a) the Company, unless made in writing signed by the Company or
(b) the Holder, unless made in writing signed by the Holder.
4.6 Successors and Assigns. This Agreement, and the rights and
obligations of a Holder hereunder, may be assigned by such Holder to any Person
to which Registrable Stock is transferred by such Holder and who agrees to be
bound by the terms of this Agreement. Any such transferee shall be deemed a
"Holder" for purposes of this Agreement; provided, that no transferee will be
deemed to be a Holder unless such transferee is the holder of not less than
50,000 shares of Registrable Stock.
4.7 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
4.8 Remedies Cumulative. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy. Each party hereto agrees to indemnify the
other against any and all loss, liability, expenses, damages, and/or fees
(including reasonable attorneys fees) arising out of such party's breach or
non-performance of any provision of this Agreement, and/or arising out of the
enforcement of this indemnity. In addition, the Company acknowledges that each
Holder shall have the right to have the provisions of this Agreement
specifically enforced, since there may not be an adequate remedy at law for
non-performance.
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4.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the conflicts of law
principles thereof) and shall, to the maximum extent practicable, be deemed to
call for performance in Dallas County, Texas.
4.10 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
4.11 Currency. All references to "$" or "dollars" herein shall be to
the lawful currency of United States dollars.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company and the Holder have executed this
Registration Rights Agreement as of the date first written above.
COMPANY:
THE VIALINK COMPANY
By: /s/ J. Andrew Kerner
------------------------
J. Andrew Kerner
Chief Financial Officer
HOLDER:
MILLENNIUM PARTNERS, L.P.
Millennium Management L.L.C.
General Partner
By: /s/ Terry Feeney
------------------------
Name: Terry Feeney
Title: CAO
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[VIALINK LOGO]
FOR IMMEDIATE RELEASE
INVESTOR RELATIONS CONTACTS:
<TABLE>
<S> <C>
Andy Kerner Julie Crandall/E.E. Wang
Chief Financial Officer Pondel/Wilkinson Group
The viaLink Company (310) 207-9300
(972) 934-5504 [email protected]
[email protected]
</TABLE>
VIALINK FILES REGISTRATION STATEMENT FOR FOLLOW-ON OFFERING
EDMOND, OKLAHOMA -- MARCH 22, 2000 -- The viaLink Company (Nasdaq: IQIQ)
today announced that it has filed a registration statement with the Securities
and Exchange Commission for the offering of approximately $120 million of its
common stock.
In addition, approximately $18 million of common stock may be sold by
existing stockholders if the underwriters elect to exercise their over-allotment
option. The company will not receive any proceeds from the sale of shares of
common stock by the selling stockholders.
The managing underwriters for the offering are Wit SoundView, ING Barings,
A.G. Edwards & Sons, Inc. and Stephens Inc.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission, but has not yet become effective. The
securities may not be sold, nor may offers to buy be accepted, prior to the time
the registration statement becomes effective. This announcement is neither an
offer to sell or a solicitation of an offer to buy, nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
such state. The offer will be made only by means of a prospectus, written copies
of which may be obtained, when available, by contacting Wit SoundView, 22
Gatehouse Road, Stanford, Connecticut 06902, (203) 962-7200.
ABOUT THE VIALINK COMPANY
The viaLink Company (Nasdaq: IQIQ) is a leading provider of subscription-based,
business-to-business electronic commerce services that enable consumer packaged
goods (CPG) and grocery industry participants to efficiently manage their highly
complex supply chain information. viaLink's services allow manufacturers,
wholesalers, distributors and retailers to communicate and synchronize item,
price and promotion information in a more cost-effective and accessible way than
has been possible using traditional electronic and paper-based methods.
For more information, visit viaLink's website at: www.vialink.com.
