<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1996
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PUMA TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 77-0349154
(State or other jurisdiction (Primary (I.R.S. Employer
of Standard Identification
incorporation or organization) Industrial Number)
Classification
Code Number)
</TABLE>
2940 NORTH FIRST STREET
SAN JOSE, CA 95134
(408) 321-7650
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
BRADLEY A. ROWE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PUMA TECHNOLOGY, INC.
2940 NORTH FIRST STREET
SAN JOSE, CA 95134
(408) 321-7650
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
ERIC J. LAPP, ESQ. MARK A. BERTELSEN, ESQ.
DENNIS C. SULLIVAN, ESQ. JOSE F. MACIAS, ESQ.
WILLIAM R. SCHREIBER, ESQ. DON S. WILLIAMS, ESQ.
GRAY CARY WARE & FREIDENRICH WILSON SONSINI GOODRICH & ROSATI
A Professional Corporation Professional Corporation
400 Hamilton Avenue 650 Page Mill Road
Palo Alto, CA 94301 Palo, Alto, CA 94304
(415) 328-6561 (415) 493-9300
</TABLE>
--------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- -------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- -------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value........... 3,450,000 $10.00 $34,500,000 $11,897
</TABLE>
(1) Includes 450,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purposes of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: (i) one to be
used in connection with an offering in the United States (the "U.S. Prospectus")
and (ii) the other to be used in connection with a concurrent offering outside
of the United States (the "International Prospectus"). The U.S. Prospectus and
the International Prospectus are identical in all respects except for the front
and back cover pages of the International Prospectus, which are included herein
are each labeled "Alternate Page for International Prospectus." Final forms of
each of the Prospectuses will be filed with the Securities and Exchange
Commission under Rule 424(b).
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
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 any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1996
[LOGO]
3,000,000 Shares
Common Stock
Of the 3,000,000 shares of Common Stock, $0.001 par value, being offered
hereby by Puma Technology, Inc. ("Puma" or the "Company"), 2,250,000 shares
are being offered initially in the United States (the "U.S. Offering") by the
U.S. Underwriters and 750,000 shares are being offered initially outside the
United States (the "International Offering" and together with the U.S.
Offering, the "Offering") by the International Underwriters (together with the
U.S. Underwriters, the "Underwriters"). See "Underwriting." Of the shares
offered hereby, 2,500,000 shares are being sold by Puma and 500,000 shares are
being sold by certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any of the proceeds from the sale
of shares by the Selling Stockholders. See "Principal and Selling
Stockholders."
Prior to the Offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
will be between $8.00 and $10.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have its Common Stock approved for
listing on the Nasdaq National Market under the symbol "PUMA."
For the information concerning certain risk factors which should be considered
by prospective investors, see "Risk Factors" commencing on page 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
PROCEEDS
PRICE UNDERWRITING PROCEEDS TO TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $700,000.
(3) Certain Selling Stockholders have granted to the Underwriters a 30-day
option to purchase up to an additional 450,000 shares of Common Stock to
cover over-allotments. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to the Selling Stockholders
will be $ , $ and $ , respectively. See "Underwriting."
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, and subject to
approval of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares
of Common Stock will be made in New York, New York against payment therefor on
or about , 1996.
<TABLE>
<S> <C>
DEUTSCHE MORGAN GRENFELL ALEX. BROWN & SONS
INCORPORATED
</TABLE>
The date of this Prospectus is , 1996.
<PAGE>
[Schematic drawing depicting the personal computer as the central device
connecting a variety of computing devices via Puma's advanced synchronization
and wireless infrared connectivity software.]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TRANXIT AND MAGIC XCHANGE ARE REGISTERED TRADEMARKS OF THE COMPANY.
CLIPMANAGER,
INTELLISYNC, PUMA TECHNOLOGY AND SYNCPRO ARE TRADEMARKS OF THE COMPANY. THIS
PROSPECTUS ALSO INCLUDES TRADE NAMES, TRADEMARKS AND SERVICE MARKS OF OTHER
COMPANIES.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS, AND UNLESS OTHERWISE INDICATED, THE
INFORMATION CONTAINED IN THIS PROSPECTUS: (I) GIVES EFFECT TO THE
REINCORPORATION OF THE COMPANY IN DELAWARE PRIOR TO THE EFFECTIVE DATE OF THIS
PROSPECTUS; (II) REFLECTS THE EXERCISE OR CONVERSION OF ALL OUTSTANDING
WARRANTS, DEBENTURES AND PREFERRED STOCK TO COMMON STOCK UPON THE CLOSING OF THE
OFFERING AND (III) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT
OPTION.
THE COMPANY
Puma Technology, Inc. develops, markets and supports mobile data exchange
("MDE") software which allows users to easily access, exchange and synchronize
information stored on a variety of different computing devices, including
notebook and handheld computers, personal electronic organizers, smart phones
and smart pagers. The Company's MDE software is designed to improve the
productivity of business professionals who are increasingly relying on mobile
computing devices to address their growing needs for accessible, up-to-date
information, whether in or out of the office. Puma's TranXit product family
("TranXit") is the industry's leading software solution for file transfer,
directory synchronization and wireless printing, specifically designed to
operate over convenient IR connections. Puma's IntelliSync product family allows
"content-aware" data synchronization among different computing devices and,
along with TranXit, offers solutions for convenient, reliable and cost-effective
mobile data exchange. Puma currently has OEM and marketing relationships with
more than 70 hardware and software vendors, including Compaq, Gateway 2000,
Geoworks, HP, IBM, Motorola, NEC, Seiko, Sharp, Toshiba and U.S. Robotics. For
example, Puma jointly markets the IntelliSync for Pilot product with the U.S.
Robotics Pilot, a popular handheld computer. Puma's customers include AST,
Compaq, Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi Electronic,
Motorola, NEC, Olivetti, Samsung, Seiko, Sharp, Texas Instruments and Toshiba.
THE OFFERING
<TABLE>
<S> <C>
U.S. Offering........................................... 2,250,000 shares
International Offering.................................. 750,000 shares
Total............................................... 3,000,000 shares (including 2,500,000 shares by the
Company and 500,000 shares by the Selling Stockholders)
Common Stock to be Outstanding after the Offering....... 11,828,352 shares(1)
Use of Proceeds......................................... The net proceeds are expected to be added to working
capital and used for general corporate purposes.
Proposed Nasdaq National Market Symbol.................. PUMA
</TABLE>
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(1) Excludes (i) 1,106,982 shares of Common Stock subject to outstanding
options at a weighted average price of $2.58 per share; (ii) 1,715,657
shares of Common Stock available for issuance under the Company's 1993
Stock Option Plan; (iii) 250,000 shares of Common Stock reserved but
unissued under the Company's 1996 Employee Stock Purchase Plan and (iv)
140,000 shares of Common Stock subject to an outstanding warrant at an
exercise price of $5.50 per share held by Intel Corporation (the "Intel
Warrant"). See "Management--Stock Plans" and Notes 6, 7 and 10 of Notes to
Consolidated Financial Statements.
3
<PAGE>
SUMMARY CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27, FISCAL YEAR ENDED QUARTER ENDED PRO FORMA
1993 ------------------------------------------ COMBINED
(INCEPTION) ------------------- APRIL FISCAL YEAR
TO JULY 31, JULY 31, JULY 31, OCT. 31, JAN. 31, 30, JULY 31, ENDED JULY
1994 1995 1996(1) 1995 1996 1996(1) 1996 31, 1996(2)
----------- -------- -------- -------- -------- -------- --------- ------------
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue......................... $ 70 $ 860 $ 7,716 $1,152 $1,752 $ 2,101 $ 2,711 $8,831
Gross profit.................... 70 783 7,043 1,047 1,637 1,959 2,400 7,672
Operating expenses:
Research and development...... 529 1,840 3,107 686 676 750 995 3,469
Sales and marketing........... 175 580 2,169 265 494 652 758 2,657
General and administrative.... 326 500 1,064 160 232 236 436 1,583
In-process research and
development................. -- -- 2,680 -- -- 2,680 -- --
Operating income (loss)......... (960) (2,137) (1,977) (64) 235 (2,359) 211 (37)
Net income (loss)............... $(954) $(2,146) $(2,401) $ (127) $ 129 $(2,492) $ 89 $ (610)
Pro forma net income (loss) per
share (3)...................... $ (0.25) $(0.01) $ 0.01 $ (0.26) $ 0.01 $(0.06)
Shares used in pro forma per
share calculation (3).......... 9,474 9,397 9,861 9,488 9,908 9,474
</TABLE>
<TABLE>
<CAPTION>
AT JULY 31, 1996
-----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(4) ADJUSTED(5)
--------- --------------- -------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments......................... $ 982 $ 2,987 $ 23,212
Total assets.............................................................. 4,004 6,009 26,234
Convertible debenture..................................................... 933 -- --
Stockholders' equity...................................................... 653 3,591 23,816
</TABLE>
- ------------
(1) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996 and
the fiscal year ended July 31, 1996 would have been $188,000 and $279,000,
respectively, and $0.02 per share and $0.03 per share, respectively.
(2) The pro forma combined statement of operations reflects the combined
operations of the Company and IntelliLink as if the acquisition, which was
completed on April 30, 1996, had been completed on August 1, 1995, excludes
the non-recurring charge of $2.7 million related to in-process research and
development resulting from the acquisition and includes an additional charge
for the amortization of goodwill and other intangible assets. See Unaudited
Pro Forma Combined Statement of Operations.
(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in the pro forma
per share calculation.
(4) The pro forma balance sheet data gives effect, prior to or upon the closing
of the Offering to: (i) the issuance in August 1996 of 285,715 shares of
Series C Preferred Stock for cash; (ii) the conversion of all outstanding
shares of Preferred Stock into 4,374,726 shares of Common Stock; (iii) the
issuance of 135,000 shares of Common Stock upon the full exercise of certain
outstanding warrants at a price per share of $3.00 and the receipt of net
proceeds therefrom; (iv) the issuance of 184,536 shares of Common Stock upon
the net exercise of certain outstanding warrants at an assumed public
offering price of $9.00 per share and (v) the issuance of approximately
337,000 shares of Common Stock of the Company upon the conversion of
principal and all accrued interest related to an outstanding 7.0%
Convertible Debenture which is convertible at approximately $2.77 per share
(the "Convertible Debenture").
(5) Adjusted to reflect the sale of the 2,500,000 shares of Common Stock offered
by the Company hereby (at an assumed initial public offering price of $9.00
per share and after deducting the estimated underwriting discount and
estimated offering expenses). See "Use of Proceeds" and "Capitalization."
4
<PAGE>
THE COMPANY
Puma Technology, Inc. ("Puma" or the "Company") develops, markets and
supports mobile data exchange ("MDE") software which allows users to easily
access, exchange and synchronize information stored on a variety of different
computing devices, including notebook and handheld computers, personal
electronic organizers, smart phones and smart pagers. The Company's MDE software
is designed to improve the productivity of business professionals who are
increasingly relying on mobile computing devices to address their growing needs
for accessible, up-to-date information, whether in or out of the office. Puma's
TranXit product family ("TranXit") is the industry's leading software solution
specifically designed to utilize wireless infrared ("IR") connectivity
technology for file exchange, synchronization and printing. Puma's lntelliSync
product family allows "content-aware" data synchronization among computing
devices and, along with TranXit, offers solutions for convenient, reliable and
cost-effective mobile data exchange.
Business professionals are continuously seeking ways to improve productivity
and, as a result, are increasingly using the growing number of new, innovative
mobile computing devices. In order to manage information effectively, these
users need convenient connectivity and synchronization solutions for the
specific combination of devices and applications that they use. MDE software
solutions allow users to synchronize information maintained separately on
multiple devices (e.g., contact databases maintained by a mobile professional
using a personal electronic organizer in the field and by a support colleague
using a desktop PC in the office). A software solution that links such different
devices must address multiple hardware architectures, operating systems,
communications architectures and application specific formats and structures.
Puma's products are designed to increase productivity for business professionals
by allowing users to easily access, exchange and synchronize information on a
variety of different computing devices.
Puma's IntelliSync product family provides content-aware data
synchronization, including complete conflict resolution, between a broad range
of PC-based personal information management software ("PIMs"), contact
management and scheduling applications and a number of mobile computing devices.
Based upon the Company's proprietary database synchronization technology,
IntelliSync allows users to automatically synchronize their mobile computing
device directly with various PC applications in a single step, eliminating the
need for intermediate conversions or translations. In addition, TranXit is the
industry's leading software solution for file transfer, directory
synchronization and wireless printing, specifically designed to operate over
convenient wireless IR connections. TranXit is currently shipped on the vast
majority of all IR-enabled notebook PCs shipped worldwide, and operates under
Windows for Workgroups, Windows 3.1 and Windows 95. TranXit for NT and TranXit
for DOS are expected to ship in October of 1996, and each new version of TranXit
is backward compatible with all previous versions.
The Company believes that strategic relationships with mobile computing
device manufacturers and software vendors are significant strengths of the
Company and key to future success. Puma currently has OEM and marketing
relationships with more than 70 hardware and software vendors, including Compaq,
Gateway 2000, Geoworks, HP, IBM, Motorola, NEC, Seiko, Sharp, Toshiba and U.S.
Robotics. For example, Puma jointly markets the IntelliSync for Pilot product
with the U.S. Robotics Pilot, a popular handheld computer. These relationships
generally enable Puma to receive prototypes from hardware manufacturers and
software vendors prior to their market introduction. Puma believes that it is
thereby in a strong position to launch complementary product offerings shortly
after the commercial release of these companies' new hardware and software
products. These relationships also enable the Company to offer solutions
simultaneously across numerous hardware devices, operating systems and
applications.
Puma licenses its software products to more than 50 OEM customers worldwide.
In addition, Puma distributes its retail products through several distribution
channels both domestically and internationally, including major distributors,
resellers, computer dealers, retailers and mail-order companies.
Internationally, the Company is represented by seven distributors and resellers
in Asia, Australia, Canada and Europe. Puma's customers include AST, Compaq,
Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi Electronic,
Motorola, NEC, Olivetti, Samsung, Seiko, Sharp, Texas Instruments and Toshiba.
The Company was incorporated in California in August 1993 and intends to be
reincorporated in Delaware prior to the closing of the Offering. References in
this Prospectus to "Puma" or the "Company" refer to Puma Technology, Inc., a
Delaware corporation and, where applicable, its predecessor corporation, Puma
Technology, Inc., a California corporation. The Company's subsidiaries are Puma
Ireland, Inc. and IntelliLink Corp. The Company's principal executive offices
are located at 2940 North First Street, San Jose, CA 95134 and its telephone
number at that location is (408) 321-7650.
5
<PAGE>
RISK FACTORS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION IN
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS. IN ADDITION TO THE OTHER INFORMATION IN
THIS PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING AN INVESTMENT IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
LIMITED HISTORY OF OPERATIONS AND PROFITABILITY. Puma was organized in
August 1993 and began shipping products in October 1994. Accordingly, the
Company has a limited operating history upon which an evaluation of the Company
and its prospects can be based. The Company's prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stages of development, particularly companies in a new
and evolving market such as the mobile data exchange software market. As of July
31, 1996, the Company had an accumulated deficit of $5.5 million. Although the
Company has experienced increased quarterly revenue over its last four fiscal
quarters ended July 31, 1996, such growth rates may not be sustainable and are
not indicative of future operating results. There can be no assurance that any
of the Company's business strategies will be successful or that the Company's
revenue growth or profitability will continue on a quarterly or annual basis.
See "Selected Consolidated and Pro Forma Combined Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company expects
that its future operating results will fluctuate significantly as a result of
numerous factors, including demand for the Company's products, the Company's
success in developing new products, the timing of new product introductions and
product enhancements by the Company and its competitors, market acceptance of
the Company's new and enhanced products, the emergence of new industry
standards, the timing of customer orders, the mix of products sold, competition,
the mix of distribution channels employed, the evolving and unpredictable nature
of the markets for the Company's products and mobile computing devices, and
general economic conditions. The Company's revenue is difficult to forecast in
part because the market for wireless infrared ("IR") connectivity and data
synchronization software is rapidly evolving. In addition, the Company typically
operates with a relatively small order backlog. As a result, quarterly sales and
operating results depend in part on the volume and timing of orders received
within the quarter, which are difficult to forecast. In addition, a significant
portion of the Company's expense levels is fixed in advance based in large part
on the Company's forecasts of future revenue. If revenue is below expectations
in any given quarter, the adverse impact of the shortfall on the Company's
operating results may be magnified by the Company's inability to adjust spending
to compensate for the shortfall. Therefore, a shortfall in actual revenue as
compared to estimated revenue would have an immediate adverse effect on the
Company's business, financial condition and operating results that could be
material. The Company historically has derived a substantial portion of its
revenue from OEMs. Due to the Company's planned expansion into retail and
reseller distribution channels, an increasing percentage of the Company's
licensing activity is expected to result from the sale of products through
distributors and other resellers, which sales are harder to predict and may have
lower margins than other channels. Sales through such channels may contribute to
increased fluctuations in operating results. A significant portion of the
Company's revenue in any quarter is typically derived from sales to a limited
number of customers. The Company has generally recognized a substantial portion
of its revenue in the last month of each quarter, when it typically receives
royalty reports from its OEM customers. Any significant deferral of purchases of
the Company's products by its customers could have a material adverse effect on
the Company's business, operating results and financial condition in any
particular quarter, and to the extent that significant sales occur earlier than
expected, operating results for subsequent quarters may be adversely affected.
The Company's gross margin on its service revenue is substantially lower than
its gross margin on license revenue. Any increase in service revenue would have
a corresponding increase in cost of revenue and may have an adverse effect on
the Company's
6
<PAGE>
gross margins. In addition, certain of the Company's retail products contain
hardware as well as software components. The Company's cost of revenue,
therefore, may be higher than those of other software companies. The Company may
also reduce prices or increase spending in response to competition or to pursue
new market opportunities. The Company has not experienced significant effects of
seasonality to date; however, the operating results of many software companies
reflect seasonal fluctuations, and there can be no assurance that the Company
will not experience such trends in the future. For example, sales in Europe and
certain other countries typically are adversely affected in the summer months
when business activities are reduced. Because of these factors, the Company
believes that period-to-period comparisons of its operating results are not
necessarily meaningful and that such comparisons should not be relied upon as
indications of future performance. As a result of the foregoing factors, the
Company's operating results and stock price may be subject to significant
volatility, particularly on a quarterly basis. Any shortfall in revenue or net
income from levels expected by securities analysts could have an immediate and
significant adverse effect on the trading price of the Company's Common Stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
PRODUCT CONCENTRATION; RISKS ASSOCIATED WITH NEW AND EVOLVING MARKETS. The
market for mobile data exchange software, including wireless IR connectivity and
advanced data synchronization software, is new and evolving. To date, Puma has
derived substantially all of its revenue from the licensing of its TranXit IR
connectivity software. Although additional products are currently being sold and
potential products are currently under development, the Company believes that
the TranXit product family will continue to account for a significant portion of
the Company's revenue for the foreseeable future. The life cycle of TranXit is
difficult to estimate because of, among other factors, the emerging nature of
the MDE software market and the possibility of future competition. As a result,
the Company's future operating results, particularly in the near term, are
dependent upon the continued market acceptance of TranXit. There can be no
assurance that TranXit will continue to meet with market acceptance or that the
Company will be successful in developing, introducing or marketing new or
enhanced products. A decline in the demand for TranXit, as a result of
competition, technological change or other factors, and the failure to
successfully develop, introduce or market new or enhanced products would have a
material adverse effect on the Company's business, financial condition and
results of operations.
The market for MDE software is still emerging, and there can be no assurance
that it will continue to grow or that, even if the market does grow, TranXit
will be adopted. Moreover, although demand for TranXit has grown in recent years
with the Company's OEM customers, the Company has no accurate method of
determining the extent that end-users utilize TranXit. The Company's success in
generating significant revenue in these evolving markets will depend, among
other things, on its ability to educate potential OEMs, retail partners and end
users about the benefits of the Company's IR technology, to maintain and enhance
its relationships with leading OEMs and to develop effective retail distribution
channels. The inability of the Company to continue to penetrate the existing
market for MDE products or the failure of current markets to grow or new markets
to develop or be receptive to the Company's products would have a material
adverse effect on the Company's business, operating results and financial
condition. The emergence of markets for the Company's MDE products will also be
affected by a variety of factors beyond the Company's control. In particular,
the Company's products are designed to conform to certain standard IR and data
communications specifications, many of which have not been adopted as industry
standards. There can be no assurance that these specifications will be widely
adopted or that competing specifications will not emerge which will be preferred
by OEMs. The emergence of markets for the Company's products is also critically
dependent upon continued expansion of the market for mobile computing devices
and the timely introduction and successful marketing and sale of notebook and
desktop personal computers ("PCs"), personal electronic organizers, smart phones
and pagers. In addition, there can be no assurance that IR technology itself
will be adopted as the standard or preferred technology for MDE or that
manufacturers of personal computers will elect to bundle IR technology in their
products. There can be no assurance that these or other factors beyond the
Company's control will not adversely affect the development of markets for the
Company's products.
7
<PAGE>
DEPENDENCE ON OEMS. Revenue from OEMs was 95% and 89% of revenue during
fiscal 1995 and fiscal 1996, respectively. In fiscal 1995, NEC, Toshiba and
Canon accounted for approximately 16%, 15% and 14% of the Company's revenue,
respectively. In fiscal 1996, Toshiba and NEC accounted for approximately 18%
and 13% of the Company's revenue, respectively. Although several OEMs are
subject to certain contractual minimum purchase obligations, there can be no
assurance that any particular OEM will satisfy the minimum obligations.
Weakening demand from any key OEM and the inability of the Company to replace
revenue provided by such OEM could have a material adverse effect on the
Company's business, operating results and financial condition. The Company
maintains individually significant receivable balances from major OEMs. If these
OEMs fail to meet their payment obligations, the Company's operating results
could be materially adversely affected. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of Notes
to Consolidated Financial Statements.
MANAGEMENT OF GROWTH. The Company is currently experiencing rapid growth
and expansion, which has placed, and will continue to place, a significant
strain on its administrative, operational and financial resources and increased
demands on its systems and controls. This growth has resulted in a continuing
increase in the level of responsibility for both existing and new management
personnel. The Company's Chief Financial Officer has recently joined the
Company, and the Company anticipates that its continued growth will require it
to recruit, hire, train and retain a substantial number of new engineering,
managerial, sales and marketing personnel. The Company's ability to manage its
growth successfully will also require the Company to continue to expand and
improve its operational, management and financial systems and controls on a
timely basis. For example, the Company is currently in the process of evaluating
a new management information system. There can be no assurance that the Company
will be able to purchase or successfully implement such a system on a timely
basis. If the Company's management is unable to manage growth effectively, the
Company's business, operating results and financial condition will be materially
adversely affected.
UNCERTAINTIES ASSOCIATED WITH THE INTEGRATION OF INTELLILINK. In April
1996, Puma acquired IntelliLink Corp. ("IntelliLink"), a provider of advanced
data synchronization software. As a result of the acquisition the Company
acquired two additional product families, as well as other technologies. In
addition, 25 new employees joined the Company. IntelliLink had incurred a
cumulative net loss through its acquisition by Puma on April 30, 1996 of
approximately $2.5 million. In connection with the acquisition, the Company's
personnel have dedicated and will continue to dedicate substantial resources in
order to achieve the anticipated technological benefits and operating
efficiencies from integrating the two companies. Difficulties encountered in
integrating the two companies' technologies and operations could adversely
affect the Company's business, operating results and financial condition. In
addition, there can be no assurance that the Company will be able to develop
products utilizing IntelliLink technology, that anticipated research and
development costs will be sufficient to develop any such products or that any
such products will achieve market acceptance and generate significant revenue.
Accordingly, the increased operating expenses associated with IntelliLink's
business could have a material adverse effect on the Company's business,
operating results and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT AND TIMELY INTRODUCTION OF NEW
AND ENHANCED PRODUCTS. The markets for Puma's products are characterized by
rapidly changing technologies, evolving industry standards, frequent new product
introductions and short product life cycles. The Company first introduced its
TranXit products in October 1994. As its product families mature, the Company
expects that their gross margins may decline. The Company's future success will
depend to a substantial degree upon its ability to enhance its existing products
and to develop and introduce, on a timely and cost-effective basis, new products
and features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets amounts to expend for research and
development based on planned product introductions and enhancements; however,
actual expenditures may significantly differ from budgeted expenditures.
Inherent in the product development process are a number of risks. The
development of new, technologically advanced software products is a
8
<PAGE>
complex and uncertain process requiring high levels of innovation, as well as
the accurate anticipation of technological and market trends. The introduction
of new or enhanced products also requires the Company to manage the transition
from older products in order to minimize disruption in customer ordering
patterns, avoid excessive levels of older product inventories and ensure that
adequate supplies of new products can be delivered to meet customer demand.
There can be no assurance that the Company will successfully develop, introduce
or manage the transition to new products. The Company has in the past, and may
in the future, experience delays in the introduction of its products, due to
factors internal and external to the Company. Any future delays in the
introduction or shipment of new or enhanced products, the inability of such
products to gain market acceptance or problems associated with new product
transitions could adversely affect the Company's operating results, particularly
on a quarterly basis. See "Business--Research and Development."
DEPENDENCE ON STRATEGIC BUSINESS RELATIONSHIPS; RISKS ASSOCIATED WITH
THIRD-PARTY SERVICES. Puma believes that its success is largely dependent on
its strategic relationships with key participants in the PC and mobile computing
device industries, including Compaq, IBM, Intel, Microsoft, NEC, Sharp, Texas
Instruments, Toshiba and U.S. Robotics. These relationships generally enable
Puma to receive prototypes from hardware manufacturers and software vendors
prior to their market introduction. Puma is thereby in a stronger position to
launch complementary product offerings shortly after the commercial release of
these companies' new hardware and software products. The loss of any of these
strategic relationships or any other significant partner could materially
adversely affect the Company's product development efforts, its business,
operating results and financial condition and its ability to realize its
strategic objective to be the technological leader in its industry. In addition,
the Company relies significantly on third-party services. In particular, a
third-party service translates the Company's products into 13 different native
languages. The Company has generally been able to obtain translated, functional
versions of its products in a timely manner. However, any significant delays by
such third parties could delay new or existing shipments of products and have a
material adverse effect on the Company's business, operating results and
financial condition.
RISKS ASSOCIATED WITH DEVELOPMENT OF RETAIL DISTRIBUTION CHANNEL. The
Company intends to distribute its products increasingly through distributors,
major computer and software retailing organizations, consumer electronics
stores, discount warehouse stores and other specialty retailers. The Company
often sells on a purchase order basis, and there are often no minimum purchase
obligations on behalf of any principal distributor or retailer. Distribution and
retailing companies in the computer industry have from time to time experienced
significant fluctuations in their businesses, and there have been a number of
business failures among these entities. The insolvency or business failure of
any significant distributor or retailer of the Company's products could have a
material adverse effect on the Company's business, operating results and
financial condition. Further, certain mass market retailers have established
exclusive relationships under which such retailers will buy customer software
only from one or two intermediaries. In such instances, the price or other terms
on which the Company sells to such retailers may be materially adversely
affected by the terms imposed by such intermediaries, or the Company may be
unable to sell to such retailers on the terms which the Company deems
acceptable.
Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among consumer
software producers for adequate levels of shelf space and promotional support
from retailers. The Company expects that, as the number of consumer multimedia
and software products and computer platforms increases, this competition for
shelf space will intensify. Due to increased competition for limited shelf
space, retailers and distributors are increasingly in a better position to
negotiate favorable terms of sale, including price discounts, price protection
and product return policies. Retailers often require software publishers to pay
fees or provide other accommodations in exchange for shelf space. The Company's
products constitute a relatively small percentage of each retailer's sales
volume, and there can be no assurance that retailers will continue to purchase
the Company's products or provide the Company's products with adequate shelf
space and promotional support. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Sales and
Marketing."
9
<PAGE>
COMPETITION. The Company expects the market for MDE software, including
data synchronization and IR connectivity software, to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including Traveling Software. In addition to direct competition, the
Company faces indirect competition from existing and potential customers that
provide internally developed solutions. As a result, the Company must educate
prospective customers as to the advantage of the Company's products versus
internally developed solutions. The Company currently faces limited direct
competition from major applications and operating systems software vendors who
may choose to incorporate data synchronization and IR connectivity functionality
into their software, thereby potentially reducing the need for OEMs to include
Puma's products in their notebook and desktop PCs. For example, Microsoft's
inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the Company
competes or may in the future compete, including internal software development
groups of its current and potential customers, have substantially greater
financial, marketing, sales and support resources and may have more "brand-name"
recognition than the Company. There can be no assurance that the Company will be
able either to develop software comparable or superior to software offered by
its current or future competitors or to adapt to new technologies, evolving
industry standards and changes in customer requirements. In addition, the PC and
mobile computing device markets experience intense price competition, and the
Company expects that, in order to remain competitive, it may have to decrease
its unit royalties on certain products. See "Business--Competition."
DEPENDENCE ON KEY PERSONNEL. Puma's success depends to a significant degree
upon the continuing contributions of its engineering, management, sales and
marketing personnel. The Company has few employment contracts with its key
personnel and does not maintain any key person life insurance policies. The loss
of key management or technical personnel could adversely affect the Company. The
Company believes that its future success will depend in large part upon its
ability to attract and retain highly-skilled engineering, management, sales and
marketing personnel. In particular, the Company is currently attempting to
recruit new engineering personnel; however, there can be no assurance that the
Company will be successful at hiring or retaining these personnel. Failure to
recruit, hire, train and retain key personnel could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Management."
PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE. Puma
relies on a combination of patent, copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements and name recognition are essential to establishing and maintaining
a technology leadership position. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company currently has one issued
United States patent that expires in 2012 and has three patent applications
pending. In addition, the Company has corresponding international patent
applications pending under the Patent Cooperation Treaty in countries to be
designated at a later date. There can be no assurance that the Company's patent
will not be invalidated, circumvented or challenged, that the rights granted
thereunder will provide competitive advantages to the Company or that any of the
Company's pending or future patent applications, whether or not being currently
challenged by applicable governmental patent examiners, will be issued with the
scope of the claims sought by the Company, if at all. Furthermore, there can be
no assurance that others will not develop technologies that are similar or
superior to the Company's technology or design around the patents owned by the
Company. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's products is difficult, and while the Company
is unable to determine the extent to which piracy of its software products
exists, software piracy can be expected to be a persistent
10
<PAGE>
problem. In addition, the laws of some foreign countries do not ensure that the
Company's means of protecting its proprietary rights in the United States or
abroad will be adequate or that competition will not independently develop
similar technology. The Company has entered into source code escrow agreements
with a limited number of its customers requiring release of source code in
certain circumstances. Such agreements generally provide that such parties will
have a limited, non-exclusive right to use such code in the event that there is
a bankruptcy proceeding by or against the Company, if the Company ceases to do
business or if the Company fails to meet its support obligations. The Company
also provides its source code to foreign language translation service providers
and consultants to the Company in limited circumstances. The provision of source
code may increase the likelihood of misappropriation by third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. The
Company expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the Company's
industry segment grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be
time-consuming to defend, result in costly litigation, divert management's
attention and resources or cause product shipment delays. In addition, such
claims could require the Company to discontinue the use of certain software
codes or processes, to cease the manufacture, use and sale of infringing
products, to incur significant litigation costs and expenses and to develop non-
infringing technology or to obtain licenses to the alleged infringing
technology. There can be no assurance that the Company would be able to develop
alternative technologies or to obtain such licenses or, if a license were
obtainable, that the terms would be commercially acceptable to the Company. In
the event of a successful claim of product infringement against the Company and
failure or inability of the Company to license the infringed or similar
technology, the Company's business, operating results and financial condition
would be materially adversely affected. See "Business--Proprietary Rights."
DEPENDENCE ON LICENSED TECHNOLOGY. Puma licenses technology on a
non-exclusive basis from several companies for use with its products and
anticipates that it will continue to do so in the future. The inability of the
Company to continue to license this technology or to license other necessary
technology for use with its products or substantial increases in royalty
payments under third-party licenses could have a material adverse effect on its
business, operating results and financial condition. In addition, the effective
implementation of the Company's products depends upon the successful operation
of these licenses in conjunction with the Company's products, and therefore any
undetected errors in products resulting from such licenses may prevent the
implementation or impair the functionality of the Company's products, delay new
product introductions and injure the Company's reputation. Such problems could
have a material adverse effect on the Company's business, operating results and
financial condition.
PRODUCT ERRORS; PRODUCT LIABILITY. Software products as complex as those
offered by Puma typically contain undetected errors or failures when first
introduced or as new versions are released. Testing of the Company's products is
particularly challenging because it is difficult to simulate the wide variety of
computing environments in which the Company's customers may deploy these
products. Accordingly, there can be no assurance that, despite testing by the
Company and by current and potential customers, errors will not be found after
commencement of commercial shipments, resulting in loss of or delay in market
acceptance, any of which could have a material adverse effect upon the Company's
business, operating results and financial condition. Further, the Company's
license agreements with its customers typically contain provisions designed to
limit the Company's exposure to potential product liability claims. Although the
Company has not experienced any product liability claims, the sale and support
of products by the Company entails the risk of such claims. The Company does not
currently maintain product liability insurance. A successful product liability
claim brought against the Company could have a material adverse effect upon the
Company's business, operating results and financial condition.
11
<PAGE>
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. International revenue
accounted for approximately 71% and 67% of Puma's revenue in fiscal 1995 and
fiscal 1996, respectively, and the Company expects that international revenue
will continue to account for a significant portion of its future revenue.
Revenue from the Company's international operations is subject to certain
inherent risks, including unexpected changes in regulatory requirements and
tariffs, difficulties in staffing and managing foreign operations, longer
payment cycles, problems in collecting accounts receivable and potentially
adverse tax consequences. In addition, sales in Europe and certain other parts
of the world typically are adversely affected in the summer months of each year
when many customers and users reduce their business activities. These seasonal
factors may have a material adverse effect on the Company's business, operating
results and financial condition. Although the Company's revenue is currently
denominated in U.S. dollars, fluctuations in currency exchange rates could cause
the Company's products to become relatively more expensive to customers in a
particular country, leading to a reduction in sales or profitability in that
country. Furthermore, future international activity may result in foreign
currency denominated sales, particularly if international revenue from
distributors increases. Consequently, gains and losses on the conversion to U.S.
dollars of accounts receivable and accounts payable arising from international
operations may contribute to fluctuations in the Company's operating results.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business-- Sales and Marketing."
NO PRIOR TRADING MARKET FOR COMMON STOCK; POTENTIAL VOLATILITY OF STOCK
PRICE. Prior to the Offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained after the Offering. The initial public offering price
will be determined through negotiations among the Company, the Selling
Stockholders and the Representatives of the Underwriters and may not be
indicative of the market price of the Common Stock after the Offering. The
trading price of the Common Stock is likely to be highly volatile and may be
significantly affected by factors such as actual or anticipated fluctuations in
the Company's operating results, announcements of technological innovations, new
products or new contracts by the Company or its competitors, developments with
respect to patents, copyrights or proprietary rights, conditions and trends in
the software and other technology industries, adoption of new accounting
standards affecting the software industry, changes in financial estimates by
securities analysts, general market conditions and other factors. In addition,
the stock market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market prices for the common
stocks of technology companies. These broad market fluctuations may materially
adversely affect the market price of the Company's Common Stock. See
"Underwriting."
CONTROL BY EXISTING STOCKHOLDERS; CERTAIN CHARTER, BYLAW AND OTHER
PROVISIONS. The Company's officers, directors, holders of 5% or more of the
Company's Common Stock and their affiliates will, in the aggregate, beneficially
own approximately 51% of the Company's outstanding shares after the Offering. As
a result, these stockholders, acting together, would be able to control most
matters requiring approval by the stockholders of the Company, including the
election of directors. In addition, the Company's Bylaws and indemnity
agreements provide that the Company will indemnify officers and directors
against losses they may incur in legal proceedings resulting from their service
to the Company. Certain provisions of the Company's Certificate of Incorporation
and Bylaws and certain other contractual provisions could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, control of the Company. Such provisions
could limit the price that certain investors might be willing to pay in the
future for shares of the Company's Common Stock. Certain of these provisions
allow the Company to issue Preferred Stock with rights senior to those of the
Common Stock without any further vote or action by the stockholders, eliminate
the right of stockholders to act by written consent, eliminate cumulative voting
and impose various super-majority voting requirements and other procedures and
requirements which could make it more difficult for stockholders to affect
certain corporate actions. These provisions could also have the effect of
delaying or preventing a change in control of the Company. See "Description of
Capital Stock-- Preferred Stock" and "Description of Capital Stock--Delaware Law
and Certain Charter Provisions."
12
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of the
Company's Common Stock in the public market after the offering could adversely
affect prevailing market prices for the Common Stock. The 3,000,000 shares of
Common Stock offered hereby will be freely tradeable without restriction in the
public market. Taking into account restrictions imposed by the Securities Act of
1933, as amended (the "Securities Act"), rules promulgated by the Securities and
Exchange Commission thereunder and lock-up agreements between certain
stockholders and the Company or Deutsche Morgan Grenfell/C.J. Lawrence Inc., the
number of additional shares that will be available for sale in the public
market, subject in some cases to the volume and other restrictions of Rule 144
under the Securities Act, will be as follows: (i) 57,529 additional shares will
be eligible for immediate sale as of the date of this Prospectus and (ii)
approximately 6,552,251 additional shares will be eligible for sale beginning
180 days after the date of this Prospectus. Approximately 2,218,572 remaining
shares will not be eligible for sale pursuant to Rule 144 until the expiration
of their two-year holding periods, which will expire between October 1997 and
August 1998. Deutsche Morgan Grenfell/C.J. Lawrence Inc. may, in its sole
discretion and at any time without notice, release all or any portion of the
shares subject to such lock-up agreements. Upon the closing of the offering,
holders of 3,874,726 shares of Common Stock are entitled to certain rights with
respect to the registration of such shares under the Securities Act. In
addition, the Company intends to file a registration statement on Form S-8 under
the Securities Act approximately 180 days after the date of this Prospectus to
register 2,822,639 shares of Common Stock issued or reserved for issuance under
its 1993 Stock Option Plan and its 1996 Employee Stock Purchase Plan. As of July
31, 1996, options were outstanding to purchase 1,106,982 shares at a weighted
average exercise price per share of $2.58. See "Description of Capital
Stock--Registration Rights" and "Shares Eligible for Future Sale."
DILUTION. Purchasers of the Common Stock offered hereby will suffer
immediate and substantial dilution in the net tangible book value of the Common
Stock from the initial public offering price. To the extent outstanding options
to purchase the Company's Common Stock or the Intel Warrant are exercised, there
will be further dilution. See "Dilution."
13
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by the Company hereby are estimated to be $20.2 million
assuming the shares offered hereby are sold at a public offering price of $9.00
per share and after deducting the estimated underwriting discount and estimated
offering expenses. The Company will not receive any of the proceeds from the
sale of the shares of Common Stock offered by Selling Stockholders. The
principal purposes of this initial public offering are to obtain additional
working capital, to create a public market for the Company's Common Stock, to
facilitate future access by the Company to public capital markets and to enhance
the Company's ability to use its Common Stock as consideration for acquisitions
and as a means of attracting and retaining key employees. The Company expects to
use the net proceeds of the Offering for general corporate purposes including
product development, sales and marketing and working capital. The Company may
use a portion of the net proceeds to acquire businesses, technologies or
products complementary to the Company's business. Although the Company has from
time to time engaged in discussions with respect to possible acquisitions, it
has no present understandings, commitments or agreements, nor is it currently
engaged in any discussions or negotiations with respect to any such transaction.
Pending such uses, the Company intends to invest the net proceeds from the
Offering in investment-grade, interest-bearing instruments.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its stock. The
Company currently anticipates that it will retain all future earnings for use in
the operation and expansion of its business and does not anticipate paying any
cash dividends in the foreseeable future.
14
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of July
31, 1996, (i) on an actual basis, (ii) on a pro forma basis after giving effect
to the issuance in August 1996 of 285,715 shares of Series C Preferred Stock for
$1.6 million cash, the conversion of all outstanding shares of Preferred Stock
into 4,374,726 shares of Common Stock, the issuance of 135,000 shares of Common
Stock upon the full exercise of certain outstanding warrants at an exercise
price per share of $3.00 (and the receipt of net proceeds therefrom), the
issuance of 184,536 shares of Common Stock upon the net exercise of certain
outstanding warrants at an assumed public offering price of $9.00 per share and
the conversion of principal and all accrued interest related to the Convertible
Debenture into approximately 337,000 shares of Common Stock of the Company and
(iii) on a pro forma as adjusted basis to reflect the sale of 2,500,000 shares
of Common Stock offered by the Company hereby (at an assumed public offering
price of $9.00 per share) and the application of the estimated net proceeds
therefrom. The information set forth below should be read in conjunction with
the consolidated financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JULY 31, 1996(1)
--------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
--------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Capital lease obligations, net of current portion......................... $ 28 $ 28 $ 28
Convertible debenture..................................................... 933 -- --
--------- ----------- --------------
961 28 28
--------- ----------- --------------
Stockholders' equity:
Preferred stock; $0.001 par value; 3,500,000 shares authorized actual;
2,000,000 shares authorized, none issued and outstanding pro forma and
pro forma as adjusted................................................. -- -- --
Series A convertible preferred stock, $0.001 par value; 2,000,000
shares designated, 1,468,977 shares issued and outstanding actual;
none designated, issued and outstanding pro forma and pro forma as
adjusted............................................................ 2 -- --
Series B convertible preferred stock, $0.001 par value; 1,500,000
shares designated, 1,151,057 shares issued and outstanding actual;
none designated, issued and outstanding pro forma and pro forma as
adjusted............................................................ 1 -- --
Common stock, $0.001 par value; 20,000,000 shares authorized, 4,297,090
shares issued and outstanding actual; 40,000,000
shares authorized pro forma and pro forma as adjusted; 9,328,352
shares issued and outstanding pro forma, and 11,828,352 shares issued
and outstanding pro forma as adjusted................................. 4 9 12
Additional paid-in capital.............................................. 6,686 9,622 29,844
Notes receivable from stockholders...................................... (431) (431) (431)
Deferred stock compensation............................................. (108) (108) (108)
Accumulated deficit..................................................... (5,501) (5,501) (5,501)
--------- ----------- --------------
Total stockholders' equity............................................ 653 3,591 23,816
--------- ----------- --------------
Total capitalization................................................ $ 1,614 $ 3,619 $ 23,844
--------- ----------- --------------
--------- ----------- --------------
</TABLE>
- ---------
(1) EXCLUDES (I) 1,106,982 SHARES OF COMMON STOCK SUBJECT TO OUTSTANDING OPTIONS
AT A WEIGHTED AVERAGE EXERCISE PRICE OF $2.58 PER SHARE; (II) 1,715,657
SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE COMPANY'S 1993 STOCK
OPTION PLAN; (III) 250,000 SHARES OF COMMON STOCK RESERVED BUT UNISSUED
UNDER THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN AND (IV) 140,000
SHARES OF COMMON STOCK SUBJECT TO THE INTEL WARRANT AT AN EXERCISE PRICE OF
$5.50 PER SHARE. SEE "MANAGEMENT--STOCK PLANS" AND NOTES 6, 7 AND 10 OF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
15
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of July 31, 1996,
was $3.2 million, or $0.34 per share of Common Stock. Pro forma net tangible
book value per share represents the amount of total tangible assets of the
Company reduced by the amount of its total liabilities and divided by the total
number of shares of Common Stock outstanding after giving effect to the issuance
in August 1996 of 285,715 Series C Preferred Stock, the conversion of all
outstanding shares of the Company's Preferred Stock into 4,374,726 shares of
Common Stock upon completion of the Offering, the issuance of 135,000 shares of
Common Stock upon the full exercise of certain outstanding warrants (at an
exercise price of $3.00 per share), the issuance of 184,536 shares of Common
Stock upon the net exercise of certain outstanding warrants (at an assumed
public offering price of $9.00 per share) and the conversion of principal and
all accrued interest related to the Convertible Debenture into approximately
337,000 shares of Common Stock of the Company. After giving effect to the sale
by the Company of 2,500,000 shares offered hereby (at an assumed initial public
offering price of $9.00 per share and after deducting the estimated underwriting
discount and estimated offering expenses), the adjusted pro forma net tangible
book value of the Company as of July 31, 1996, would have been approximately
$23.4 million, or $1.98 per share. This represents an immediate increase in such
net tangible book value of $1.64 per share to existing stockholders and an
immediate dilution of $7.02 per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $ 9.00
Pro forma net tangible book value per share before the Offering............ $ 0.34
Increase per share attributable to new investors........................... 1.64
---------
Pro forma net tangible book value per share after the Offering............... 1.98
---------
Net tangible book value dilution per share to new investors.................. $ 7.02
---------
---------
</TABLE>
The following table sets forth as of July 31, 1996, on a pro forma basis to
reflect the adjustments described above, the differences between the existing
stockholders and the new investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid to the
Company (assuming an initial public offering price of $9.00 per share before
deducting the estimated underwriting discount and estimated offering expenses)
and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- --------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................. 9,328,352 78.9% $ 9,578,000 29.9% $ 1.03
New investors (1)................................. 2,500,000 21.1 22,500,000 70.1 9.00
------------- ----- -------------- -----
Total......................................... 11,828,352 100.0% $ 32,078,000 100.0%
------------- ----- -------------- -----
------------- ----- -------------- -----
</TABLE>
- ---------
(1) Sales by the Selling Stockholders in the Offering will reduce the number of
shares held by existing stockholders to 8,828,352 or 74.6% of the total
number of shares of Common Stock outstanding after the Offering, and will
increase the number of shares to be purchased by the new public investors to
3,000,000 or 25.4% of the total number of shares of Common Stock outstanding
after the Offering. See "Principal and Selling Stockholders."
The foregoing tables assume no exercise of stock options or the Intel
Warrant after July 31, 1996. As of July 31, 1996, there were outstanding options
to purchase an aggregate of 1,106,982 shares of Common Stock at a weighted
average exercise price of $2.58 per share. To the extent these securities are
exercised, there will be further dilution to the new public investors. See
"Capitalization," "Management--Stock Plans," "Description of Capital
Stock--Warrants," and Notes 6 and 7 of Notes to Consolidated Financial
Statements.
16
<PAGE>
SELECTED CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL INFORMATION
The following selected consolidated and pro forma combined financial data
should be read in conjunction with the Consolidated Financial Statements and
notes thereto, Unaudited Pro Forma Combined Statement of Operations and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus. The consolidated statement
of operations data for the period from August 27, 1993 (inception) to July 31,
1994 and the two years ended July 31, 1995 and 1996, and the consolidated
balance sheet data as of July 31, 1995 and 1996 are derived from consolidated
financial statements of the Company that have been audited by Price Waterhouse
LLP, independent accountants, and are included elsewhere in this Prospectus. The
consolidated balance sheet data as of July 31, 1994 are derived from audited
financial statements not included in this Prospectus. The consolidated statement
of operations data for the four quarters in the year ended July 31, 1996 are
derived from unaudited consolidated financial statements of the Company that
have been prepared on the same basis as the audited consolidated financial
statements and, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of such information in accordance with
generally accepted accounting principles. The historical results are not
necessarily indicative of the results to be expected for any future period.
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27, FISCAL YEAR ENDED QUARTER ENDED PRO FORMA
1993 ------------------------------------------ COMBINED
(INCEPTION) ------------------- APRIL FISCAL YEAR
TO JULY 31, JULY 31, JULY 31, OCT. 31, JAN. 31, 30, JULY 31, ENDED JULY
1994 1995 1996(1) 1995 1996 1996(1) 1996 31, 1996(2)
----------- -------- -------- -------- -------- -------- --------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue......................... $ 70 $ 860 $ 7,716 $1,152 $1,752 $ 2,101 $ 2,711 $8,831
Cost of revenue................. -- 77 673 105 115 142 311 1,159
----------- -------- -------- -------- -------- -------- --------- ------------
Gross profit.................... 70 783 7,043 1,047 1,637 1,959 2,400 7,672
----------- -------- -------- -------- -------- -------- --------- ------------
Operating expenses:
Research and development...... 529 1,840 3,107 686 676 750 995 3,469
Sales and marketing........... 175 580 2,169 265 494 652 758 2,657
General and administrative.... 326 500 1,064 160 232 236 436 1,583
In-process research and
development................. -- -- 2,680 -- -- 2,680 -- --
----------- -------- -------- -------- -------- -------- --------- ------------
Total operating expense..... 1,030 2,920 9,020 1,111 1,402 4,318 2,189 7,709
----------- -------- -------- -------- -------- -------- --------- ------------
Operating income (loss)......... (960) (2,137) (1,977) (64) 235 (2,359) 211 (37)
Interest income (expense),
net............................ 6 71 85 25 31 18 11 (64)
----------- -------- -------- -------- -------- -------- --------- ------------
Income (loss) before provision
for income taxes............... (954) (2,066) (1,892) (39) 266 (2,341) 222 (101)
Provision for income taxes...... -- (80) (509) (88) (137) (151) (133) (509)
----------- -------- -------- -------- -------- -------- --------- ------------
Net income (loss)............... $(954) $(2,146) $(2,401) $ (127) $ 129 $(2,492) $ 89 $ (610)
----------- -------- -------- -------- -------- -------- --------- ------------
----------- -------- -------- -------- -------- -------- --------- ------------
Pro forma net income (loss) per
share (3)...................... $ (0.25) $(0.01) $ 0.01 $ (0.26) $ 0.01 $(0.06)
Shares used in pro forma per
share calculation (3).......... 9,474 9,397 9,861 9,488 9,908 9,474
<CAPTION>
PRO FORMA
JULY 31, JULY 31, JULY 31, JULY 31,
1994 1995 1996 1996(4)
-------- -------- --------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............................. $ 406 $ 2,500 $ 982 $2,987
Total assets.................................................................. 561 2,948 4,004 6,009
Convertible debenture......................................................... -- -- 933 --
Total stockholders' equity.................................................... 287 1,886 653 3,591
</TABLE>
17
<PAGE>
- ------------
(1) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996 and
the fiscal year ended July 31, 1996 would have been $188,000 and $279,000,
respectively, and $0.02 per share and $0.03 per share, respectively.
(2) The pro forma combined statement of operations data reflects the combined
operations of the Company and IntelliLink as if the acquisition, which was
completed on April 30, 1996, had been completed on August 1, 1995, excludes
the non-recurring charge of $2.7 million related to in-process research and
development resulting from the acquisition and includes an additional
charge for the amortization of goodwill and other intangible assets. The
unaudited pro forma combined statement of operations are not necessarily
indicative of the future results of operations of the Company or the
results of operations which would have resulted had the Company and
IntelliLink been combined during the period presented. See Unaudited Pro
Forma Combined Statement of Operations.
(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in the pro forma
per share calculation.
(4) The pro forma consolidated balance sheet data gives effect to, prior to or
upon the closing of the Offering: (i) the issuance in August 1996 of
285,715 shares of Series C Preferred stock for $1.6 million cash; (ii) the
conversion of all outstanding shares of Preferred Stock into 4,374,726
shares of Common Stock; (iii) the issuance of 135,000 shares of Common
Stock upon the full exercise of certain outstanding warrants at a price per
share of $3.00 and the receipt of net proceeds therefrom; (iv) the issuance
of 184,536 shares of Common Stock upon the net exercise of certain
outstanding warrants at an assumed public offering price of $9.00 per
share; and (v) the issuance of approximately 337,000 shares of Common Stock
of the Company upon the conversion of principal and all accrued interest
related to the Convertible Debenture.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Puma develops, markets and supports mobile data exchange ("MDE") software,
including wireless infrared ("IR") connectivity and advanced data
synchronization software. The Company was primarily engaged in research and
development from inception until it began commercial shipments of its first
version of TranXit in October 1994. The Company began commercial shipments of
TranXit 2.0 and TranXit 3.0 in July 1995 and June 1996, respectively. To date,
Puma has derived substantially all of its revenue from the licensing of its
TranXit software, and the Company expects that its TranXit software will
continue to account for a significant portion of the Company's revenue for the
foreseeable future. See "Risk Factors--Product Concentration; Risks Associated
with New and Evolving Markets."
The Company's revenue is derived primarily from license revenue and service
revenue. License revenue is derived from the sale of software products and
royalty agreements with OEMs. Service revenue is derived from customer funded
engineering services. In fiscal 1995 and fiscal 1996, service revenue was less
than 10% of revenue. However, the Company expects this percentage to fluctuate
in the future. For all periods presented, the Company has recognized revenue in
accordance with the provisions of American Institute of Certified Public
Accountants Statement of Position No. 91-1 entitled "Software Revenue
Recognition." License revenue is recognized upon shipment of software if no
significant obligation remains and collection of the resulting receivable is
deemed probable. Revenue from OEMs under minimum guaranteed royalty
arrangements, which are not subject to significant future obligations, is
recognized when such royalties are earned and become payable. Royalty revenue
that is subject to significant future obligations is recognized when such
obligations are fulfilled. Royalty revenue that exceeds minimum guarantees is
recognized in the period earned. Payments from customers received before revenue
recognition criteria have been met are recorded as deferred revenue. At July 31,
1996, the Company had $1.0 million of deferred revenue. The Company cannot
predict when such revenue will be recognized or the extent to which new
agreements, which may provide for additional contract advances or minimum
royalty payments, will be executed. The Company also provides a limited amount
of telephone technical support to its customers. These activities are generally
considered insignificant post-contract customer support obligations and related
costs are accrued upon recognition of the license revenue. See Note 1 of Notes
to Consolidated Financial Statements.
The Company's current customer base consists principally of large OEMs in
the PC market. Revenue from OEMs was 95% and 89% of revenue during fiscal 1995
and fiscal 1996, respectively. In fiscal 1995, NEC, Toshiba and Canon accounted
for approximately 16%, 15% and 14% of the Company's revenue, respectively. In
fiscal 1996, Toshiba and NEC accounted for approximately 18% and 13% of the
Company's revenue, respectively. Although several OEMs are subject to certain
contractual minimum purchase obligations, there can be no assurance that any
particular OEM will satisfy the minimum obligations. Accordingly, the Company
recognizes revenue from minimum guaranteed royalties when such royalties are
earned and become payable. Weakening demand from any key OEM and the inability
of the Company to replace revenue provided by such OEM could have a material
adverse effect on the Company's business, operating results and financial
condition. The Company maintains individually significant receivable balances
from major OEMs. If these OEMs fail to meet their payment obligations, the
Company's operating results could be materially adversely affected. See "Risk
Factors--Dependence on OEMs" and Note 1 of Notes to Consolidated Financial
Statements.
International revenue accounted for approximately 71% and 67% of Puma's
revenue in fiscal 1995 and fiscal 1996, respectively, and the Company expects
that international revenue will continue to account for a significant portion of
its future revenue. Revenue from the Company's international operations is
subject to certain inherent risks, including unexpected changes in regulatory
requirements and tariffs, difficulties in staffing and managing foreign
operations, longer payment cycles, problems in collecting accounts receivable
and potentially adverse tax consequences. In addition, revenue from sales in
Europe and certain other parts of the world typically is adversely affected in
the summer months of each year when many customers and users reduce their
business activities. These seasonal factors
19
<PAGE>
may have a material adverse effect on the Company's business, operating results
and financial condition. Although the Company's revenue is currently denominated
in U.S. dollars, fluctuations in currency exchange rates could cause the
Company's products to become relatively more expensive to customers in a
particular country, leading to a reduction in revenue or profitability in that
country. Furthermore, future international activity may result in foreign
currency denominated sales, particularly if international revenue from
distributors increase. Consequently, gains and losses on the conversion to U.S.
dollars of accounts receivable and accounts payable arising from international
operations may contribute to fluctuations in the Company's operating results.
See "Risk Factors--Risks Associated with International Operations."
The Company intends to distribute its products increasingly through
distributors, major computer and software retailing organizations, consumer
electronics stores, discount warehouse stores, and other specialty retailers.
Distribution and retailing companies in the computer industry have from time to
time experienced significant fluctuations in their businesses, and there have
been a number of business failures among these entities. Revenue from retail
sales is subject to several additional risks, including industry practices of
significant price discounts, price protection and product return rights and
limited shelf space. In addition, the Company's products constitute a relatively
small percentage of each retailer's sales volume, and there can be no assurance
that retailers will continue to purchase the Company's products or provide the
Company's products with adequate shelf space and promotional support. See "Risk
Factors--Risks Associated with Development of Retail Distribution Channel."
INTELLILINK ACQUISITION
On April 30, 1996, the Company completed its acquisition of IntelliLink
Corp. ("IntelliLink"), a provider of advanced data synchronization software. The
consolidated financial statements for the quarter ended July 31, 1996 include
the results of IntelliLink from the date of acquisition. The total purchase
price of $3.5 million (including $1.2 million for liabilities assumed) was
determined based on an independent appraisal. The purchase price was assigned,
based on an independent appraisal, to the fair value of the assets acquired
including $327,000 to tangible assets acquired, $2.7 million to in-process
research and development, $120,000 to identified intangible assets and the
remaining $356,000 to goodwill. The goodwill and other intangible assets were
capitalized and are being amortized over periods ranging from two to three
years. In connection with the IntelliLink acquisition, the former IntelliLink
stockholders and optionholders exchanged their stock and stock option rights for
shares of common stock and common stock options of Puma. See "Risk
Factors--Uncertainties Associated with the Integration of IntelliLink" and Note
2 of Notes to Consolidated Financial Statements.
As a result of the acquisition the Company acquired the IntelliLink product
families, as well as other technologies. In addition, 25 IntelliLink employees
joined the Company. IntelliLink had incurred a cumulative net loss through its
acquisition by Puma on April 30, 1996 of approximately $2.5 million. In
connection with the acquisition, the Company's personnel have dedicated and will
continue to dedicate substantial resources in order to achieve the anticipated
technological benefits and operating efficiencies from integrating the two
companies. Difficulties encountered in integrating the two companies'
technologies and operations could adversely affect the Company's business,
operating results and financial condition. In addition, there can be no
assurance that the Company will be able to develop products utilizing
IntelliLink technology, that anticipated research and development efforts be
sufficient to develop any such products or that any such products will achieve
market acceptance and generate significant revenue. Accordingly, the increased
operating expenses associated with IntelliLink's business could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Risk Factors--Uncertainties Associated with the Integration of
IntelliLink."
QUARTERLY RESULTS OF OPERATIONS
Because of the significantly different levels of operations during fiscal
1994, fiscal 1995 and fiscal 1996, the Company believes that year-to-year
comparisons are not meaningful. The following tables present unaudited quarterly
consolidated statement of operations data for each quarter of fiscal 1996, as
well as such data expressed as a percentage of the Company's revenue for the
periods indicated. This data has been derived from unaudited consolidated
financial statements that have been prepared on the
20
<PAGE>
same basis as the audited consolidated financial statements and include all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of such information. In view of the
Company's recent growth and other factors, the Company believes that
quarter-to-quarter comparisons of its financial results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
In addition, the Company's operating results may fluctuate from quarter to
quarter in the future.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------
OCT. 31, JAN. 31, APRIL 30, JULY 31,
1995 1996 1996 (1) 1996
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue................................................................ $ 1,152 $ 1,752 $ 2,101 $ 2,711
Cost of revenue........................................................ 105 115 142 311
--------- --------- --------- ---------
Gross profit........................................................... 1,047 1,637 1,959 2,400
--------- --------- --------- ---------
Operating expenses:
Research and development............................................. 686 676 750 995
Sales and marketing.................................................. 265 494 652 758
General and administrative........................................... 160 232 236 436
In-process research and development.................................. -- -- 2,680 --
--------- --------- --------- ---------
Total operating expenses........................................... 1,111 1,402 4,318 2,189
--------- --------- --------- ---------
Operating income (loss)................................................ (64) 235 (2,359) 211
Interest income, net................................................... 25 31 18 11
--------- --------- --------- ---------
Income (loss) before provision for income taxes........................ (39) 266 (2,341) 222
Provision for income taxes............................................. (88) (137) (151) (133)
--------- --------- --------- ---------
Net income (loss)...................................................... $ (127) $ 129 $ (2,492) $ 89
--------- --------- --------- ---------
--------- --------- --------- ---------
Pro forma net income (loss) per share.................................. $ (0.01) $ 0.01 $ (0.26) $ 0.01
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in pro forma per share calculation......................... 9,397 9,861 9,488 9,908
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
AS A PERCENTAGE OF REVENUE
---------------------------------------------
<S> <C> <C> <C> <C>
Revenue................................................................ 100.0% 100.0% 100.0% 100.0%
Cost of revenue........................................................ 9.1 6.6 6.8 11.5
--------- --------- --------- ---------
Gross profit........................................................... 90.9 93.4 93.2 88.5
--------- --------- --------- ---------
Operating expenses:
Research and development............................................. 59.5 38.6 35.7 36.7
Sales and marketing.................................................. 23.0 28.2 31.0 27.9
General and administrative........................................... 13.9 13.2 11.2 16.1
In-process research and development.................................. -- 127.6 --
---
--------- --------- ---------
---------
Total operating expenses........................................... 96.4 80.0 205.5 80.7
--------- --------- --------- ---------
Operating income (loss)................................................ (5.5) 13.4 (112.3) 7.8
Interest income, net................................................... 2.2 1.8 0.9 0.4
--------- --------- --------- ---------
Income (loss) before provision for income taxes........................ (3.3) 15.2 (111.4) 8.2
Provision for income taxes............................................. (7.6) (7.8) (7.2) (4.9)
--------- --------- --------- ---------
Net income (loss)...................................................... (10.9)% 7.4% (118.6)% 3.3%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- ------------
(1) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996
would have been $188,000 and $0.02 per share, respectively.
21
<PAGE>
REVENUE
The Company's revenue increased by 52.1%, 19.9% and 29.0% from the first to
second, second to third and third to fourth quarter, respectively, of fiscal
1996. The increases in revenue were primarily due to royalties from increased
unit shipments from the continuing market acceptance of the Company's products.
In addition, revenue from the sale of IntelliLink products contributed
approximately $539,000 to the growth in revenue during the fourth quarter of
fiscal 1996. The fourth quarter is the first quarter to include IntelliLink's
results of operations following the acquisition on April 30, 1996. Excluding the
impact of revenue relating to Intellilink's products, revenue for the quarter
ended July 31, 1996 was relatively flat as compared to the quarter ended April
30, 1996 because of timing of execution of certain contracts which were delayed
to future periods. Introduction of new products and enhancements of existing
products can have a significant impact on the Company's revenue. Any delays in
the scheduled release of major new products and enhancements can have a material
adverse impact on the Company's business, operating results and financial
condition. The Company commenced shipping its IntelliSync product in August 1996
and plans to introduce new versions of TranXit and several new products at
various times during fiscal 1997. Any delays in introduction of these products
or failure of these products to achieve anticipated levels of market acceptance
will have an adverse impact on the Company's business, operating results and
financial condition.
COST OF REVENUE
Cost of revenue consists primarily of product media and duplication,
manuals, packaging supplies, shipping expenses and costs incurred under customer
funded software development agreements and also includes hardware components for
certain retail products. Cost of revenue as a percentage of revenue was 9.1%,
6.6%, 6.8% and 11.5% during the first, second, third and fourth quarters of
fiscal 1996, respectively. The cost of revenue is significantly affected by many
factors, including the mix between OEM and retail distribution channels. Revenue
from OEMs generally has higher gross margins than revenue from distributors or
direct sales. Furthermore, during the first quarter, the Company provided
certain OEMs with kits for bundling with products. Commencing with the second
quarter, most of these OEMs started manufacturing these kits at their own
expense and, as a result, cost of revenue as a percentage of revenue decreased
from the first quarter to the second quarter. However, cost of revenue as a
percentage of revenue increased significantly during the fourth quarter as the
Company included IntelliLink's operating results in its operating results. A
majority of IntelliLink's revenue is derived from direct sales or through sales
to retailers and as a result generally carry lower gross margins. Additionally,
IntelliLink derives a portion of its revenue from customer-funded engineering
contracts and the sales of certain hardware components, both of which carry
lower gross margins. Cost of revenue as a percentage of revenue for IntelliLink
for the quarter ended July 31, 1996 was approximately 39.9%. The Company has
historically derived the vast majority of its revenue from OEM royalty and
license agreements. The Company plans to increase its sales to distributors and
retailers and as a result anticipates that, in the future, its gross margins may
decrease. The Company also anticipates its gross margin will fluctuate from
quarter to quarter depending upon the mix of revenue.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and other related expenses for research and development
personnel, fees to outside contractors, the cost of facilities and depreciation
of capital equipment. Research and development expenses as a percentage of
revenue were 59.5%, 38.6%, 35.7% and 36.7% during the first, second, third and
fourth quarters of fiscal year 1996, respectively. Research and development
expenses increased from $686,000 in the quarter ended October 31, 1995 to
$995,000 in the quarter ended July 31, 1996 as the Company increased its efforts
to develop enhanced versions of TranXit and to introduce other new products in
the market. A significant portion of the Company's research and development
expenses are comprised of fees paid to outside contractors which are engaged by
the Company on a project-by-project basis. Research and development expenses for
the first quarter were impacted by contractor expenses related to translation of
the Company's products to foreign language versions. In addition, approximately
$212,000 of the increase in research and development expenses during the fourth
22
<PAGE>
quarter was due to inclusion of IntelliLink's results of operations. The Company
anticipates that research and development expenses will increase in absolute
dollars as the Company continues to invest in product development. However, such
expenses may fluctuate from quarter to quarter both in absolute dollars as well
as a percentage of revenue, depending upon the status of various development
projects.
Research and development expenses generally have been expensed as incurred.
Statement of Financial Accounting Standards No. 86 requires capitalization of
certain software development costs once technological feasibility is
established. The Company defines establishment of technological feasibility as
the completion of a working model. Software development costs incurred
subsequent to the establishment of technological feasibility through the period
of general market availability of the product are capitalized, if material. To
date, all software development costs have been insignificant and expensed as
incurred.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and promotional expenses and other related expenses of
sales and marketing personnel. Sales and marketing expenses as a percentage of
revenue were 23.0%, 28.2%, 31.0% and 27.9% during the first, second, third and
fourth quarters of fiscal 1996, respectively. Sales and marketing expenses
increased from $265,000 in the quarter ended October 31, 1995 to $758,000 in the
quarter ended July 31, 1996. Sales and marketing expenses increased in absolute
dollars primarily due to the expansion of the Company's sales force, related
travel and entertainment expenses and increased marketing activities in an
effort to expand its customer base. In addition, approximately $154,000 of the
increase in sales and marketing expenses during the fourth quarter was due to
the inclusion of IntelliLink's results of operations. The Company intends to
continue expanding its sales and marketing organization to promote new products
and increase its presence in the distribution and retail channel. Accordingly,
the Company anticipates that sales and marketing expenses will continue to
increase in absolute dollars.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and other related expenses of administrative, executive
and financial personnel and other outside professional fees. General and
administrative expenses as a percentage of revenue were 13.9%, 13.2%, 11.2% and
16.1% during the first, second, third and fourth quarters of fiscal 1996,
respectively. General and administrative expenses increased from $160,000 in the
quarter ended October 31, 1995 to $436,000 in the quarter ended July 31, 1996.
General and administrative expenses increased in absolute dollars during each
quarter in fiscal 1996 primarily due to increased headcount. General and
administrative expenses increased during the first quarter due to the Company's
move to larger facilities to support the need for growing infrastructure.
Approximately $157,000 of the change in general and administrative expenses
during the fourth quarter was due to the inclusion of IntelliLink's results of
operations. The Company anticipates that its general and administrative expenses
will increase in absolute dollars in the future as the Company expands its
administrative staff, management information systems and other items related to
infrastructure, amortizes goodwill and other intangible assets acquired in
connection with the acquisition of IntelliLink and assumes additional
responsibilities associated with being a public company.
IN-PROCESS RESEARCH AND DEVELOPMENT. During the quarter ended April 30,
1996, the Company recorded a charge of $2.7 million for in-process research and
development associated with the acquisition of IntelliLink. See Note 2 of Notes
to Consolidated Financial Statements.
OPERATING INCOME (LOSS)
Operating income (loss) fluctuated from quarter to quarter during fiscal
1996, as generally increasing operating income from the Company's core business
was affected by the charge for in-process research and development in the third
quarter of 1996 due to the acquisition of IntelliLink, and due to the
incorporation of IntelliLink results in the third quarter of 1996. Excluding the
charge for in-process research and development, the operating income for the
quarter ended April 30, 1996 would have been approximately $321,000. Excluding
IntelliLink's results of operations, the Company's operating income for the
quarter ended July 31, 1996 would have been approximately $410,000.
23
<PAGE>
INTEREST INCOME, NET
Interest income, net, represents interest earned by the Company on its cash
and short-term investments offset by interest expense on long-term debt and
capitalized leases.
PROVISION FOR INCOME TAXES
The provision for income taxes for each of the four quarters in the year
ended July 31, 1996 represents foreign withholding taxes. The foreign
withholding taxes are a function of royalties earned by the Company from certain
foreign customers.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company expects that its future operating results will fluctuate
significantly as a result of numerous factors, including demand for the
Company's products, the Company's success in developing new products, the timing
of new product introductions by the Company and its competitors, market
acceptance of the Company's new and enhanced products, the emergence of new
industry standards, the timing of customer orders, the mix of products sold,
competition, the mix of distribution channels employed, the evolving and
unpredictable nature of the markets for the Company's products and mobile
computing devices generally, and general economic conditions. The Company's
revenue is difficult to forecast in part because the market for wireless IR
connectivity and data synchronization software is rapidly evolving. In addition,
the Company typically operates with a relatively small order backlog. As a
result, quarterly sales and operating results depend in part on the volume and
timing of orders received within the quarter, which are difficult to forecast.
In addition, a significant portion of the Company's expense levels is fixed in
advance based in large part on the Company's forecasts of future revenue. If
revenue is below expectations in any given quarter, the adverse impact of the
shortfall on the Company's operating results may be magnified by the Company's
inability to adjust spending to compensate for the shortfall. Therefore, a
shortfall in actual revenue as compared to estimated revenue would have an
immediate adverse effect on the Company's business, financial condition and
operating results that could be material. The Company historically has derived a
substantial portion of its revenue from OEMs. Due to the Company's planned
expansion into retail and reseller distribution channels, an increasing
percentage of the Company's licensing activity is expected to result from the
sale of products through distributors and other resellers, which sales are
harder to predict and may have lower margins than other channels. Sales through
such channels may contribute to increased fluctuation of operating results. A
significant portion of the Company's revenue in any quarter is typically derived
from sales to a limited number of customers. The Company has generally
recognized a substantial portion of its revenue in the last month of each
quarter, when it typically receives royalty reports from its OEM customers. Any
significant deferral of purchases of the Company's products by its customers
could have a material adverse effect on the Company's business, operating
results and financial condition in any particular quarter, and to the extent
that significant sales occur earlier than expected, operating results for
subsequent quarters may be adversely affected. The Company's gross margin on its
service revenue is substantially lower than its gross margin on license revenue.
Any increase in service revenue would have a corresponding increase in cost of
revenue and may have an adverse effect on the Company's gross margins. In
addition, certain of the Company's retail products contain hardware as well as
software components. The Company's expense levels, therefore, may be higher than
those of other software companies. In addition, a significant portion of the
Company's expense levels is fixed in advance based in large part on the
Company's forecasts of future sales. If sales are below expectations in any
given quarter, the adverse impact of the shortfall on the Company's operating
results may be magnified by the Company's inability to adjust spending to
compensate for the shortfall. The Company may also reduce prices or increase
spending in response to competition or to pursue new market opportunities. The
Company has not experienced seasonality to date; however, the operating results
of many software companies reflect seasonal fluctuations, and there can be no
assurance that the Company will not experience such fluctuations in the future.
For example, sales in Europe and certain other countries typically are adversely
affected in the summer months when business activities are reduced. Because of
these factors, the Company believes that period-to-period comparisons of its
operating
24
<PAGE>
results are not necessarily meaningful and that such comparisons should not be
relied upon as indications of future performance. As a result of the foregoing
factors, the Company's operating results and stock price may be subject to
significant volatility, particularly on a quarterly basis. Any shortfall in
revenue or net income from levels expected by securities analysts could have an
immediate and significant adverse affect on the trading price of the Company's
Common Stock. See "Risk Factors-- Potential Fluctuations in Quarterly Operating
Results."
FISCAL YEARS ENDED JULY 31, 1994, 1995 AND 1996
REVENUE
Revenue was $70,000, $860,000 and $7.7 million during the period from August
27, 1993 (inception) to July 31,1994 (the "Inception Period"), and in fiscal
1995 and fiscal 1996, respectively. The increase in revenue was primarily due to
increased unit shipments from the continuing market acceptance of the Company's
products.
COST OF REVENUE
Cost of revenue was $77,000 and $673,000 in fiscal 1995 and fiscal 1996,
respectively. The increases in the cost of revenue reflect the higher volume of
unit shipments in each year and the mix of revenue in fiscal 1996.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT. Research and development expenses were $529,000,
$1.8 million and $3.1 million during the Inception Period, in fiscal 1995 and
fiscal 1996, respectively. The increases in research and development expenses in
each of these periods were primarily attributable to increased headcount and
associated expenses incurred to develop, expand and enhance the Company's
product families.
SALES AND MARKETING. Sales and marketing expenses were $175,000, $580,000
and $2.2 million during the Inception Period, in fiscal 1995 and fiscal 1996,
respectively. The increases in sales and marketing expenses were primarily due
to the expansion of the Company's sales force and related travel, entertainment
and other marketing activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$326,000, $500,000 and $1.1 million during the Inception Period, in fiscal 1995
and fiscal 1996, respectively. The increases in general and administrative
expenses were primarily the result of increased headcount and additional
expenses necessary to manage and support the Company's growth.
PROVISION FOR INCOME TAXES
No provision for federal and state income taxes has been recorded as the
Company has incurred net operating losses through July 31, 1996. The provision
for income taxes in fiscal 1995 and fiscal 1996 is comprised of foreign
withholding tax. At July 31, 1996, the Company had approximately $1.6 million of
federal net operating loss carryforwards for tax reporting purposes available to
offset future taxable income; such carryforwards expire beginning in 2008. Under
the ownership changes limitations provided by the Internal Revenue Code of 1986,
as amended (the "Code"), the amount of and benefit from net operating losses
that can be carried forward may be impaired or limited in certain circumstances.
As a result of the cumulative changes in stock ownership of the Company of more
than 50% during fiscal 1994 and again during fiscal 1995 and fiscal 1996, as
defined by the Code, annual utilization by the Company of its net operating loss
carryforwards is limited. The Company has incurred losses since inception. The
Company believes that, based on the history of such losses and other factors,
the weight of available evidence indicates that it is more likely than not that
it will not be able to realize its deferred tax assets and thus a full valuation
reserve has been recorded at July 31, 1995 and 1996. See Note 8 of Notes to
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations and met its capital
expenditure requirements primarily from proceeds from the private sale of
Preferred and Common Stock. Through July 31,
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1996, the Company has raised approximately $5.0 million from the sale of
Preferred and Common Stock. At July 31, 1996, the Company's principal source of
liquidity represented cash and cash equivalents of $982,000. The Company raised
an additional $1.6 million from the sale of Preferred Stock in August 1996.
The Company's operating activities used cash of $724,000 during the
Inception Period, $1.4 million in fiscal 1995 and $896,000 in fiscal 1996. The
increased use of cash in fiscal 1995 as compared with fiscal 1994 was
attributable to an increased net loss and increases in accounts receivable,
offset partially by increased deferred revenue and accounts payable. The
decrease in net cash used in fiscal 1996 as compared with fiscal 1995 is
primarily due to an increase in net loss, offset by the non-cash in-process
research and development charge related to the acquisition of IntelliLink and an
increase in accounts receivable.
Cash flow from investing activities used $105,000 and $680,000 of net cash
during the Inception Period and in fiscal 1995, respectively, to purchase
short-term investments and property and equipment. Cash provided by investing
activities in fiscal 1996 of $132,000 was primarily related to proceeds from
maturities of short-term investments offset by purchases of property and
equipment. Financing activities provided $1.2 million and $3.7 million of net
cash during the Inception Period and fiscal 1995, respectively, due primarily to
the issuance of Preferred and Common Stock. Net cash of $254,000 was used in
financing activities in fiscal 1996 primarily due to advances to a former
officer of IntelliLink.
The Company currently has no significant capital commitments other than
commitments under capital leases. See Note 9 of Notes to Consolidated Financial
Statements. The Company believes that net proceeds from the sale of the Common
Stock offered hereby, together with the proceeds from the issuance of its Series
C Preferred Stock, its current cash balances and cash generated from operations,
if any, will be sufficient to meet its working capital and other cash
requirements for at least the next twelve months.
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<PAGE>
BUSINESS
Puma develops, markets and supports mobile data exchange ("MDE") software,
which allows users to easily access, exchange and synchronize information stored
on a variety of different computing devices such as desktop computers and mobile
computing devices, including notebook and handheld computers, personal
electronic organizers, smart phones and smart pagers. The Company's MDE software
is designed to improve the productivity of business professionals who are
increasingly relying on mobile computing devices to address their growing needs
for accessible, up-to-date information, whether in or out of the office. Puma's
TranXit product family ("TranXit") is the industry's leading software solution
specifically designed to utilize wireless infrared ("IR") connectivity
technology for file exchange, synchronization and printing. Puma's IntelliSync
product family allows "content-aware" data synchronization among computing
devices and, along with TranXit, offers solutions for convenient, reliable and
cost-effective mobile data exchange.
INDUSTRY BACKGROUND
In recent years, significant advancements in miniaturization, visual
displays, long-life batteries and portable communications have led to the
introduction of many innovative new mobile computing devices. These highly
portable devices allow users to work and communicate as they travel and has
fueled the significant growth of mobile computing. According to International
Data Corporation ("IDC"), portable computers represented 15.2% of total personal
computer ("PC") shipments of 58.2 million units in 1995. IDC estimates that this
percentage will grow to 19.6% of 117.2 million units in the year 2000. Other
electronic consumer devices, such as personal electronic organizers and smart
phones, are also being introduced to provide data storage and information
management capabilities to the mobile business professional. The recently
introduced U.S. Robotics Pilot product is an example of a popular handheld
computer. Dataquest estimates that 1.3 million handheld computers, including
organizers and other handheld devices, were shipped worldwide in 1995, and will
grow to 5.3 million in the year 2000.
While notebooks and other mobile computing devices have increased individual
productivity, they have created certain challenges in the areas of connectivity
and synchronization of data and files stored on those devices and on desktop
computers. Until recently, users of mobile computing devices were limited to
cable and wired solutions as the only effective means to connect to their
desktop computers and printing devices. Early attempts at wireless connectivity
were based on radio frequency ("RF") technology. Although RF technology is
adequate for specialized applications, it has not been widely adopted in the
mobile computing industry because it is expensive and difficult to use, and has
little standardization, limited interoperability and many government
restrictions. Consequently, most PC notebook manufacturers have adopted IR as
the most cost-effective, efficient medium for wireless connectivity in the MDE
software market. Today, IR connectivity costs less than other connectivity
technologies, requires less space inside a device, and is based on a single,
international standard developed by the Infrared Data Association ("IrDA") which
includes approximately 150 companies including Compaq, Ericsson, HP, IBM, Intel,
Microsoft, Motorola, Nokia, Sharp and Toshiba. The Company believes the market
for IR connectivity is significant, as IDC estimates that 1.7 million IR-enabled
notebooks were shipped worldwide in 1995, and will grow to 20 million in the
year 2000. IDC also estimates that the percentage of IR-enabled notebook
computers as a percentage of all notebook computers shipped will increase from
21.2% in 1995 to 100.0% by the year 2000.
As more types of new mobile computing devices become available to business
professionals, users are faced with the difficulty of exchanging information
among these various devices. This problem of interoperability is caused by the
need to exchange information among different hardware devices, operating systems
and applications. Hardware platforms range from high-speed Pentium PCs with
hundreds of megabytes of memory and gigabytes of storage, to "shirt pocket"
organizers, with specialized processors and limited memory and storage. In
addition, these devices use numerous operating systems, such as Windows for
Workgroups, Windows 3.1, Windows 95, Windows NT, DOS and proprietary operating
systems, and utilize an even greater range of information management
applications, databases and data formats. Enabling these devices to communicate,
exchange and synchronize information is a complex and challenging task.
Accomplishing this requires data-level, or content-aware, synchronization
technology to maintain complete, up-to-date and accurate information. For
example,
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<PAGE>
content-aware data synchronization technology allows users to exchange addresses
from the Address Book software application on a US Robotics Pilot with Lotus
Organizer on a desktop PC, updating only the fields that have been most recently
modified, rather than copying one file over another, thereby synchronizing both
databases with the latest information.
Business professionals are continuously seeking ways to improve productivity
and, as a result, are increasingly using the growing number of new, innovative
mobile computing devices. In order to manage information effectively, these
users need convenient connectivity and synchronization solutions for the
specific combination of devices and applications that they use. MDE software
solutions allow users to synchronize information maintained separately on
multiple devices (e.g., contact databases maintained by a mobile professional
using a personal electronic organizer in the field and by a support colleague
using a desktop PC in the office). A software solution that links such different
devices must address multiple hardware architectures, operating systems,
communications architectures and application specific formats and structures.
THE PUMA SOLUTION
Puma's MDE software products are designed to increase productivity for
business professionals by allowing users to easily access, exchange and
synchronize information stored on a variety of different computing devices.
Puma's products allow the mobile professional to access information at low cost
with easy-to-use applications, saving time and money. The TranXit product family
is specifically designed to utilize IR connectivity technology for reliable,
cost-effective file exchange, synchronization and printing. Puma's lntelliSync
product family allows users to synchronize data on handheld mobile computing
devices with data on PCs by virtue of lntelliSync's content-aware data
synchronization technology. The Puma solution includes the following
characteristics:
INTELLIGENT, CONTENT-AWARE DATA SYNCHRONIZATION. The Company's technology
provides content aware data synchronization among a growing number of handheld
devices and industry-leading personal information management software ("PIMs")
and contact management and scheduling applications such as Lotus Organizer,
Microsoft Schedule +, NetManage ECCO, Starfish Sidekick and others. This
technology seamlessly and transparently translates the information from one data
format to another as the information is synchronized. Built on a powerful data
translation engine, it can expand via device and application-specific
translators to accommodate new devices and applications.
WIDESPREAD SOLUTIONS FOR INTEROPERABILITY. Puma's products provide
connectivity and content-aware data synchronization among industry-leading PCs
and mobile computing devices, operating systems and applications. Puma products
operate with major PC operating systems including Windows 3.1, Windows for
Workgroups, Windows 95 and DOS as well as several proprietary operating systems.
Puma also provides interoperability across a wide range of industry-standard and
vendor-specific applications by supporting multiple data formats. Puma's IR
communications architecture enables robust operation across IR-enabled
platforms. TranXit is backwards compatible, allowing the latest versions of
TranXit to connect and exchange information with all previous versions across
different operating systems.
LEADING IR CONNECTIVITY SOFTWARE. TranXit and TranXit Pro are the
industry's leading products specifically designed for file exchange and
synchronization over convenient wireless IR connections. The TranXit family
fully supports IrDA standards and was the first file-exchange software to
incorporate the new Fast IR standard (IrDA-2) for 4.0 Mbps connectivity. The
TranXit family provides a rich set of wireless file transfer, synchronization
and wireless printing features that are both easy to use and cost-effective.
Puma has licensed more than 6.5 million copies of TranXit to date and it is
bundled with the vast majority of all IR-enabled notebooks shipping worldwide.
BROAD-BASED OEM ADOPTION WORLDWIDE. Puma has achieved broad penetration
into many of the leading OEM hardware vendors, including Acer, Canon, Citizen,
Compaq, DEC, Epson, Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi,
NEC, Olivetti, Samsung, Sanyo, Sharp and Zenith. This allows business
professionals to choose virtually any mobile computing device and effectively
manage data between a PC or server and a mobile computing device. The Company
believes that its development projects with leading hardware and software
vendors significantly reduce time to market for its products.
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STRATEGY
Puma's objective is to maintain its leadership position as a worldwide
provider of mobile data exchange software, including advanced data
synchronization and wireless IR connectivity software, for business
professionals. To achieve this objective, Puma has adopted the following key
strategies:
CREATE CROSS-PLATFORM STANDARD. The Company's strategy is to provide MDE
software that allows different computing devices to communicate and exchange
data. These devices are based on an increasing number of different operating
systems, processor architectures, communications architectures and applications
which utilize incompatible data formats. The Company plans to continue to work
closely with leading operating system suppliers, OEMs, semiconductor
manufacturers and applications vendors that often compete with one another. The
Company believes that its cross-platform standard will continue to be an
advantage in providing a widely-adopted MDE software solution.
DEVELOP MULTIPLE PRODUCTS FROM CORE TECHNOLOGIES. The Company intends to
leverage its core technologies and engineering experience to expand the breadth
of its software product offerings. By leveraging its advanced content-aware data
synchronization and IR connectivity technologies, Puma plans to continually
broaden its TranXit and lntelliSync product families. In addition, as innovative
new mobile computing devices are introduced into the market, Puma will leverage
its engineering expertise, core technologies and relationships with
market-leading OEMs to develop new advanced MDE software products that support
these devices.
EXPAND AND LEVERAGE STRATEGIC RELATIONSHIPS. Puma currently has OEM and
marketing relationships with more than 70 hardware and software vendors
worldwide including Compaq, Gateway 2000, Geoworks, HP, IBM, Motorola, NEC,
Seiko, Sharp, Toshiba and U.S. Robotics, and plans to develop additional
relationships with computer and mobile computing device manufacturers. These
relationships generally enable Puma to receive product prototypes from hardware
manufacturers and software vendors prior to their market introduction. The
Company believes it is thereby in a strong position to launch complementary
product offerings shortly after the commercial release of these companies' new
hardware and software products.
EXPAND DISTRIBUTION CHANNELS. The Company has developed significant
brand-name recognition with its customers by licensing its products to many of
the world's leading computer and mobile computing device manufacturers. Puma
seeks to leverage this brand name recognition in order to license its products
to additional OEMs and to increase sales through major distributors, resellers,
computer dealers, retailers and mail-order companies. In addition, Puma plans to
continue to expand its co- and joint-marketing programs, channel promotions and
bundling arrangements.
INCREASE PENETRATION OF INTERNATIONAL MARKETS. The Company has established
an international distribution network by forming overseas relationships in Asia,
Australia, Europe and Canada. Puma intends to further develop its international
distribution network by forming additional distribution partnerships and
offering translations of its product family in several additional languages. The
Company believes its growing international distribution network will further its
competitive advantage over potential entrants into a market.
CUSTOMERS
Puma's current customer base consists principally of large OEMs in the PC
market. In fiscal 1995, NEC, Toshiba and Canon accounted for approximately 16%,
15% and 14% of the Company's revenue, respectively. In fiscal 1996, Toshiba and
NEC accounted for approximately 18% and 13% of the Company's revenue,
respectively. No other customer accounted for greater than 10% of the Company's
revenue in fiscal 1995 and fiscal 1996.
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The Company licensed its products to more than 50 OEM customers in fiscal
1996. The following is a list of OEM customers from whom the Company recognized
more than $100,000 in revenue in fiscal 1996:
<TABLE>
<S> <C>
AST NEC
Compaq Olivetti
Fujitsu Samsung
Gateway 2000 Seiko
Hitachi Sharp
IBM Texas Instruments
Matsushita Toshiba
Mitsubishi
</TABLE>
PRODUCTS
Puma offers a wide range of MDE software products to both the OEM and retail
markets. These products allow users to wirelessly connect computing devices as
well as exchange and synchronize information across a diverse set of hardware
platforms, operating systems and applications. By combining its advanced data
synchronization and IR connectivity technologies, the Company is able to develop
a number of products designed for a specific application, operating system or
hardware platform.
<TABLE>
<CAPTION>
INTRODUCTION
PRODUCT NAME DESCRIPTION DATE
- ------------------------- ---------------------------------------------- ----------------
TRANXIT OEM product for file transfer, synchronization October 1994
and wireless printing over IR connections
<S> <C> <C>
TRANXIT PRO Retail version, including SyncPro automatic May 1996
synchronization, delta file transfer and long
file name support for Windows 95
TRANXIT PRO CONNECTIVITY TranXit Pro plus IR-adapter hardware for the May 1996
KIT desktop PC
TRANXIT FOR NT File transfer and directory synchronization October 1996*
over IR connections for Windows NT
TRANXIT FOR DOS File transfer and synchronization over IR October 1996*
connections for DOS
INTELLILINK Data "import" and "export" among PC-based September 1993
applications and mobile computing devices
INTELLISYNC Content-aware data synchronization among PC- August 1996
based applications and mobile computing
devices
CLIPMANAGER Productivity software application that extends October 1996*
the Windows Clipboard capabilities
- ------------
* Expected introduction date
</TABLE>
TRANXIT. TranXit is the industry's leading software solution for wireless
file transfer, synchronization and printing, specifically designed to operate
over convenient IR connections. Directed at the OEM market, TranXit is currently
shipped on the vast majority of all IR-enabled notebook PCs shipped worldwide.
TranXit operates under Windows for Workgroups, Windows 3.1 and Windows 95,
offering users broad operating system interoperability. TranXit has been
significantly enhanced since its original release and each new version of
TranXit is backward compatible with all previous versions.
TRANXIT PRO. TranXit Pro is the retail version of the OEM TranXit software
product. Sold as both an upgrade for TranXit to existing users and as a separate
solution to new users, TranXit Pro adds additional features such as SyncPro for
enhanced and automatic data synchronization, a virtual Windows clipboard for
collaborative processing between two PCs, delta file transfer for enhanced
performance and long file-name support for Windows 95.
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TRANXIT PRO CONNECTIVITY KIT. The TranXit Pro Connectivity Kit combines
TranXit Pro with an IrDA compliant serial IR adapter for a desktop PC. A
complete solution for an IR notebook user, the TranXit Pro Connectivity Kit
provides convenient notebook-to-desktop wireless IR connectivity.
TRANXIT FOR NT. TranXit for NT brings the features and flexibility of the
Company's TranXit/TranXit Pro products to the Windows NT operating system.
TranXit for NT is interoperable with all other versions of the TranXit family.
TRANXIT FOR DOS. Much of the horizontal computing market has migrated to
graphical user interface operating systems, such as Windows for Workgroups,
Windows 3.1 and Windows 95. There are, however, a large number of vertical
market hardware devices, such as those used for data collection or factory
automation, that remain based upon the DOS operating system. TranXit for DOS
provides the necessary connectivity and file transfer capabilities that allows
these devices to interoperate with PCs. TranXit for DOS is interoperable with
all other versions of the TranXit family.
INTELLILINK. IntelliLink provides data "import" and "export" between a
broad range of PC-based contact management and scheduling applications, and a
number of mobile computing devices.
LNTELLISYNC. IntelliSync provides content-aware data synchronization,
including complete conflict resolution, between a broad range of PC-based PIMs,
contact management and scheduling applications, as well as a number of mobile
computing devices. Based upon the Company's proprietary database synchronization
technology, IntelliSync allows users to automatically synchronize their mobile
computing devices directly with various PC applications in a single step,
eliminating the need for intermediate conversions or translations.
CLIPMANAGER. ClipManager is a productivity software application program for
both notebook and desktop PCs. It extends the capabilities of the standard
Windows Clipboard, providing a clipboard of user-definable depth (for multiple
cut and pastes), as well as the ability to organize frequently used clip
objects, such as logos, charts and standard paragraphs of text, into "books" for
immediate and convenient access directly from Windows applications.
FUTURE PRODUCTS
TRANXIT 97. TranXit 97, specifically designed for Windows 95 and Windows
NT, will be a 32-bit application that extends the functionality of TranXit and
Tranxit Pro. Its features will include an enhanced user interface tailored to
Windows 95 and Windows NT; broad compatibility with both new and existing
IR-enabled notebook and desktop PCs; support for the Fast IR standard (IrDA-2)
for 4.0 Mbps connectivity; additional PC-to-PC file transfer capabilities;
enhanced, automated directory synchronization; support for additional
connectivity media including local and wide area networks; backward
compatibility to existing versions of TranXit and TranXit Pro; and content-aware
data synchronization among PIM, contact management and scheduling applications.
PERSONAL INFORMATION EXCHANGE. Personal Information Exchange ("PIE") for
both the OEM and retail markets, is an innovative electronic business card
exchange solution that will allow users to "attach" their electronic business
cards to a full "package" of OLE-based presentation information about themselves
and/or their companies, including text, graphics, video, animation and sound.
PIE cards will be able to be sent or received over a variety of media including
IR, local area network, e-mail, and direct file transfer. When a card is
received, the contact information will automatically extract and transfer to the
user's PIM, contact management, fax or e-mail packages eliminating the need for
cumbersome and time consuming manual entry.
LNTELLISYNC FOR WINDOWS. lntelliSync for Windows will provide content-aware
data synchronization, including complete conflict resolution, among PC-based
PIM, contact management and scheduling applications and a number of mobile
computing devices. lntelliSync for Windows will allow one-step, automatic
synchronization between mobile computing devices and multiple PC applications,
eliminating the need for intermediate conversions or translations.
The markets for Puma's products are characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. The Company first
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introduced its TranXit products in October 1994. As its product families mature,
the Company expects that their gross margins may decline. The Company's future
success will depend to a substantial degree upon its ability to enhance its
existing products and to develop and introduce, on a timely and cost-effective
basis, new products and features that meet changing customer requirements and
emerging and evolving industry standards. The Company budgets amounts to expend
for research and development based on planned product introductions and
enhancements; however, actual expenditures may significantly differ from
budgeted expenditures. Inherent in the product development process are a number
of risks. The development of new, technologically advanced software products is
a complex and uncertain process requiring high levels of innovation, as well as
the accurate anticipation of technological and market trends. The introduction
of new or enhanced products also requires the Company to manage the transition
from older products in order to minimize disruption in customer ordering
patterns, avoid excessive levels of older product inventories and ensure that
adequate supplies of new products can be delivered to meet customer demand.
There can be no assurance that the Company will successfully develop, introduce
or manage the transition to new products. The Company has in the past, and may
in the future, experience delays in the introduction of its products, due to
factors internal and external to the Company. Any future delays in the
introduction or shipment of new or enhanced products, the inability of such
products to gain market acceptance or problems associated with new product
transitions could adversely affect the Company's operating results, particularly
on a quarterly basis. See "Risk Factors--Risks Associated with New Product
Development and Timely Introduction of New and Enhanced Products."
TECHNOLOGY
Puma's software products allow the exchange and synchronization of data
across diverse platforms, operating systems and applications. The Company has
developed two complementary proprietary technologies for mobile data exchange:
content-aware data synchronization and IR connectivity. These complementary
technologies each provide an easy to use graphical user interface to configure
and run IR connectivity and data synchronization operations. The user interface
balances ease of use with the flexibility needed to meet user customization
requirements, reflecting the extensive prior experience of the Company's
engineers in developing user interfaces for consumer product applications
including entertainment software.
CONTENT-AWARE DATA SYNCHRONIZATION. The Company's content-aware data
synchronization technology operates at both the file and record level to
synchronize data among different software applications and hardware platforms
during data transfer. The Company's synchronization technology allows users to
synchronize not only files, but also the data within those files, and to
synchronize databases by field or record, not just copy one database file from
one to another. This advanced data synchronization technology is composed of
three main components that collectively work to enable the effective transfer of
data across supported applications and platforms:
SYNCHRONIZATION ENGINE. Puma's synchronization engine is the central
component responsible for controlling the flow of data throughout the entire
synchronization process. It directs translator modules to retrieve, add,
delete, change and distribute data records or fields on demand.
INTERMEDIATE DATA REPRESENTATION. Puma's synchronization technology makes
extensive use of modularity to maximize reusability for the translator
modules. The synchronization engine communicates with all translator modules
using a common "dialect", referred to as intermediate data representation.
Intermediate data representation stipulates rules for exchanging common types
of data imposing restrictions on data content (i.e., the number and type of
fields in each application). The existence of a common data representation
makes it possible for a new translator to immediately synchronize with any
supported application or mobile computing device.
TRANSLATORS. Each translator module is responsible for interfacing with one
application or mobile computing device. When operating under Windows, a
translator is packaged as a separate Dynamic Link Library ("DLL") for maximum
reusability. The development of new translators (as well as
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<PAGE>
the maintenance of existing modules) is greatly eased by the existence of the
translator framework, a collection of powerful C++ classes which supply
software engineers with the necessary abstractions to quickly and easily
develop translator modules to meet expanding market needs.
IR CONNECTIVITY. Puma's IR connectivity software enables the wireless
transfer of data among notebook and desktop PCs, printers and mobile computing
devices. TranXit is designed to support IrDA standards, and was the first
file-exchange software to incorporate the new Fast IR standard (IrDA-2) for 4.0
Mbps connectivity.
COMMUNICATIONS ARCHITECTURE. The Company's software is based upon an
extensive, proprietary, network and device independent communications
architecture, enabling access to a variety of mobile computing devices
through a flexible and simple application program interface ("API") that
speeds the development of new features. A layered, modular design allows the
architecture to leverage existing published data transfer protocols (IrDA,
Windows Sockets), when available, and to create proprietary data transfer
protocols to provide connectivity to a broad range of devices without
extensive modification of the software.
The Company's IR communications architecture isolates hardware
implementation details from the rest of the protocol stack, enabling quick
support of new IR hardware implementations and fast adoption of new IR standards
and extensions. The architecture supports multiple vendors' implementation of
IrDA protocol stacks for migration to new operating systems and platforms.
Puma's communication protocols are designed to operate across a variety of
network and operating system environments, enabling mobile data exchange among
them. Puma software currently supports data transfer among Windows for
Workgroups, Windows 3.1 and Windows 95. Puma has also worked with Microsoft to
ensure that the Microsoft IR driver supports mobile data exchange among
operating systems and IR devices.
SALES AND MARKETING
Puma primarily sells its products through more than 50 OEM customers
worldwide. In fiscal 1995, NEC, Toshiba and Canon accounted for approximately
16%, 15% and 14% of the Company's revenue, respectively. In fiscal 1996, Toshiba
and NEC accounted for approximately 18% and 13% of the Company's revenue,
respectively.
Puma strives to be both a marketing and a technology partner with its OEM
customers. Puma's sales and marketing organization sells the Company's products
directly to its OEM partners, and then works with them on joint marketing and
channel programs. Puma works closely with OEM partners on their new hardware
products by providing technical input to the OEM, thereby helping to ensure that
Puma's software products will work successfully with the OEM's hardware
products. Puma also trains and educates the OEM's sales and marketing
organizations on Puma's products, allowing them to act as Puma's "virtual" sales
force to their channels and direct customers.
Puma distributes its retail products through several distribution channels
both domestically and internationally. In the United States, Puma's sales
organization works directly with major distributors, resellers, computer
dealers, retailers and mail order companies to distribute its retail packaged
products. In order to further develop its brand name recognition, Puma plans to
continue to expand its joint marketing programs, marketing channel promotions
and bundling arrangements with its strategic partners. See "Risk Factors--Risks
Associated with Development of Retail Distribution Channel."
Revenue from OEMs was 95% and 89% of revenue during fiscal 1995 and fiscal
1996, respectively. In fiscal 1995, NEC, Toshiba and Canon accounted for
approximately 16%, 15% and 14% of the Company's revenue, respectively. In fiscal
1996, Toshiba and NEC accounted for approximately 18% and 13% of the Company's
revenue, respectively. Although several OEMs are subject to certain contractual
minimum purchase obligations, there can be no assurance that any particular OEM
will satisfy the minimum obligations. Weakening demand from any key OEM and the
inability of the Company to replace revenue provided by such OEM could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company maintains individually significant
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<PAGE>
receivable balances from major OEMs. If these OEMs fail to meet their payment
obligations, the Company's operating results could be materially adversely
affected. See "Risk Factors--Dependence on OEMs."
International revenue represented approximately 71% and 67% in fiscal 1995
and fiscal 1996, respectively. Puma markets and sells through selected
distributors and republishers that focus on specific geographic and market
segment areas. These international partners operate as an extension of Puma's
marketing and sales organizations, developing the appropriate sales channels in
their regions. They also work with local resellers as well as local offices of
Puma's OEM customers to develop specific marketing and channel promotions for
their regions. As of July 31, 1996, the Company was represented by seven
distributors and resellers in Asia, Australia, Canada and Europe and is
continuing to expand its international reach as appropriate distributors or
republishers are found. See "Risk Factors--Risks Associated with International
Operations."
COMPETITION
The Company expects the market for MDE software, including data
synchronization and IR connectivity software to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including Traveling Software. In addition to direct competition, the
Company faces indirect competition from existing and potential customers that
provide internally developed solutions. As a result, the Company must educate
prospective customers as to the advantage of the Company's products versus
internally developed solutions. The Company currently faces limited direct
competition from major applications and operating systems software vendors who
may choose to incorporate data synchronization and IR connectivity functionality
into their operating systems software, thereby potentially reducing the need for
OEMs to include Puma's products in their notebook and desktop PCs. For example,
Microsoft's inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the Company
competes or may in the future compete, including internal software development
groups of its current and potential customers, have substantially greater
financial, marketing, sales and support resources and may have more "brand-name"
recognition than the Company. There can be no assurance that the Company will be
able either to develop software comparable or superior to software offered by
its current or future competitors or to adapt to new technologies, evolving
industry standards and changes in customer requirements. In addition, the PC and
mobile computing device markets experience intense price competition, and the
Company expects that, in order to remain competitive, it may have to decrease
its unit royalties on certain products. See "Risk Factors--Competition."
The principal competitive factors affecting the market for the Company's
software are compatibility, functionality, reliability, OEM relationships and
price. The Company believes it competes favorably overall with respect to these
factors.
The Company believes that users will want to be able to utilize IR
connectivity and data synchronization functionality with a wide variety of
mobile computing devices and software applications, and that its standards-based
approach will continue to allow it to compete favorably with larger companies
whose products may not be able to support such a degree of interoperability.
Puma's strategic relationships with hardware and software vendors enable it to
provide interoperability among a broader range of applications than many of its
current and potential competitors.
CUSTOMER SUPPORT
The Company's service and support organization provides secondary technical
support to OEMs, primary technical support to retailers and end users and
education and training services to OEMs and retailers. The Company's current
OEMs typically have software maintenance agreements with the Company that
provide for one or more of the following services:
34
<PAGE>
EDUCATION AND TRAINING. The Company offers training courses designed to
educate OEMs and retailers about its products. Training classes are provided at
the Company's offices in San Jose, California. In fiscal 1996, the Company held
training courses for OEMs on eight occasions and for retailers on seven
occasions. The Company believes its commitment to OEM and retailer education has
accelerated the market acceptance of its products.
TECHNICAL SUPPORT. The Company offers technical support to customers who
have entered into agreements to license the Company's products. The Company
provides service and support through its internal technical support
organization. Technical support includes the maintenance of the Company's
products in accordance with specifications contained in the Company's guide for
such products, as well as access to technical support personnel by telephone,
fax and e-mail. Customers under license agreements are typically entitled to
certain minor product updates and modifications, primarily bug fixes. The
Company's OEMs and some of its retail channel partners provide telephone and
initial support to end users.
RESEARCH AND DEVELOPMENT
The Company seeks to capitalize on its expertise in data synchronization and
IR connectivity technology by developing products for new applications and
increasing the functionality of existing products. The Company believes its core
technology is widely applicable, and it plans to continue to develop new
products based on its core technology.
As of July 31, 1996, the Company's engineering group consisted of 44
full-time employees and full-time equivalent consultants who were engaged in
product development. Product maintenance and customer support responsibilities
are shared by engineering group employees on an as-needed basis. In fiscal 1995
and fiscal 1996, research and development expenses were $1.8 million and $3.1
million, respectively.
The markets for Puma's products are characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. The Company first introduced its TranXit products
in October 1994. As its product families mature, the Company expects that their
gross margins may decline. The Company's future success will depend to a
substantial degree upon its ability to enhance its existing products and to
develop and introduce, on a timely and cost-effective basis, new products and
features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets for research and development based on
planned product introductions and enhancements; however, actual expenditures may
significantly differ from budgeted expenditures. Inherent in the product
development process are a number of risks. The development of new,
technologically advanced software products is a complex and uncertain process
requiring high levels of innovation, as well as the accurate anticipation of
technological and market trends. The introduction of new or enhanced products
also requires the Company to manage the transition from older products in order
to minimize disruption in customer ordering patterns, avoid excessive levels of
older product inventories and ensure that adequate supplies of new products can
be delivered to meet customer demand. There can be no assurance that the Company
will successfully develop, introduce or manage the transition to new products.
The Company has in the past, and may in the future, experienced delays in the
introduction of its products, due to factors internal and external to the
Company. Any future delays in the introduction or shipment of new or enhanced
products, the inability of such products to gain market acceptance or problems
associated with new product transitions could adversely affect the Company's
operating results, particularly on a quarterly basis. See "Risk Factors--Risks
Associated with Product Development and Timely Introduction of New and Enhanced
Products."
PROPRIETARY RIGHTS
Puma relies on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect its
proprietary rights. The Company also believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements and name recognition are essential to establishing
and maintaining a
35
<PAGE>
technology leadership position. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company currently has one issued
United States patent that expires in 2012 and has three patent applications
pending. In addition, the Company has corresponding international patent
applications pending under the Patent Cooperation Treaty in countries to be
designated at a later date. There can be no assurance that the Company's patent
will not be invalidated, circumvented or challenged, that the rights granted
thereunder will provide competitive advantages to the Company or that any of the
Company's pending or future patent applications, whether or not being currently
challenged by applicable governmental patent examiners, will be issued with the
scope of the claims sought by the Company, if at all. Furthermore, there can be
no assurance that others will not develop technologies that are similar or
superior to the Company's technology or design around the patents owned by the
Company. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's products is difficult, and while the Company
is unable to determine the extent to which piracy of its software products
exists, software piracy can be expected to be a persistent problem. In addition,
the laws of some foreign countries do not ensure that the Company's means of
protecting its proprietary rights in the United States or abroad will be
adequate or that competition will not independently develop similar technology.
The Company has entered into source code escrow agreements with a limited number
of its customers and resellers requiring release of source code in certain
circumstances. Such agreements generally provide that such parties will have a
limited, non-exclusive right to use such code in the event that there is a
bankruptcy proceeding by or against the Company, if the Company ceases to do
business or if the Company fails to meet its support obligations. The Company
also provides its source code to foreign language translation service providers
and consultants to the Company in limited circumstances. The provision of source
code may increase the likelihood of misappropriation by third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. The
Company expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the Company's
industry segment grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be time
consuming to defend, result in costly litigation, divert management's attention
and resources or cause product shipment delays. In addition, such claims could
require the Company to discontinue the use of certain software codes or
processes, to cease the manufacture, use and sale of infringing products, to
incur significant litigation costs and expenses and to develop non-infringing
technology or to obtain licenses to the alleged infringing technology. There can
be no assurance that the Company would be able to develop alternative
technologies or to obtain such licenses or, if a license were obtainable, that
the terms would be commercially acceptable to the Company. In the event of a
successful claim of product infringement against the Company and failure or
inability of the Company to license the infringed or similar technology, the
Company's business, operating results and financial condition would be
materially adversely affected. See "Risk Factors--Proprietary Rights Risks of
Infringement and Source Code Release."
EMPLOYEES
As of July 31, 1996, the Company had 79 employees and full-time equivalent
consultants, including 18 in sales and marketing, 44 in engineering, 11 in
finance and administration and six in customer service. All of the Company's
employees are located in the United States and none are represented by a labor
union. The Company has experienced no work stoppages and believes its
relationship with its employees is good.
Competition for qualified personnel in the Company's industry is intense.
The Company believes that its future success will depend in part on its
continued ability to hire, train and retain qualified personnel.
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<PAGE>
FACILITIES
The Company's principal administrative, engineering, manufacturing,
marketing and sales facilities total approximately 19,800 square feet and are
located in a single building in San Jose, California under a lease that expires
in June 1997. The Company also leases approximately 6,200 square feet in a
single building in Nashua, New Hampshire under a lease that expires in December
1998.
Management believes that its current facilities are adequate for its needs
through the next twelve months, and that, should it be needed, suitable
additional space will be available to accommodate expansion of the Company's
operations on commercially reasonable terms.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY MEMBERS OF MANAGEMENT
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bradley A. Rowe 36 President, Chief Executive Officer and Director
Stephen A. Nicol 36 Senior Vice President, Sales and Director
M. Bruce Nakao 52 Senior Vice President, Finance and Administration, and Chief Financial Officer
Michael M. Clair(1) 48 Chairman of the Board
Robert D. Rutner, DDS(1) 38 Director
</TABLE>
Other key members of management of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Masanari Arai 36 Vice President, Business Development
Michael A. Blanchette 43 Vice President, Technology
Kevin E. Flood 44 Vice President, Engineering and Chief Technical Officer
Steven R. Magidson 48 Vice President, Marketing
</TABLE>
- ---------
(1) Member of Compensation Committee and Audit Committee.
MR. ROWE co-founded the Company in August 1993 and has served as President
since October 1993 and Chief Executive Officer since March 1995. He has also
served as a Director of the Company since August 1993. Prior to founding the
Company, from January 1991 to July 1993, he held various management positions at
SystemSoft Corporation, a PC system software supplier, including Vice President
of Worldwide Sales and General Manager of Desktop Computing. In June 1988 Mr.
Rowe co-founded Extar Technologies, a manufacturer's representative of PC
products, where he held a number of management positions, including Vice
President of Sales and President until December 1990. From November 1983 to June
1988, Mr. Rowe served in various sales positions at Western Digital Corporation,
a storage management company, including Director of Western Area Sales. Mr. Rowe
holds a B.S. degree in engineering and management science from Princeton
University.
MR. NICOL co-founded the Company in August 1993 and has served as Senior
Vice President of Sales since its establishment. He has also served as a
Director since August 1993. Prior to founding the Company he served in several
capacities at SystemSoft Corporation, including as Director of Sales for Japan
and Asia Pacific from July 1992 to July 1993 and as Sales Manager for the
Eastern United States from November 1991 to July 1992. Mr. Nicol co-founded
Extar Technologies in June 1988 where he served until November 1991 as Vice
President of Sales. Previously, Mr. Nicol served as OEM Manager for Western
Digital and computer sales representative for Hewlett-Packard. He holds a B.A.
degree in political science from Princeton University.
MR. NAKAO joined the Company in June 1996 as Chief Financial Officer and
Senior Vice President of Finance and Administration. Prior to joining the
Company, from May 1986 to June 1996, he served in several capacities at Adobe
Systems Incorporated, a software company, most recently as its Senior Vice
President, Finance and Administration, Chief Financial Officer and Treasurer. He
holds a B.A. degree in business and economics from the University of Washington
and an M.B.A. degree from Stanford University.
MR. CLAIR became a Director of the Company in November 1994 and has served
as Chairman of the Board since March, 1995. Mr. Clair was a founder of SynOptics
Communications (now Bay Networks), a computer networking company, and from
January 1987 to November 1992, served as Vice President Sales and Marketing and
then as Senior Vice President of Sales and Customer Service of SynOptics. Mr.
Clair has more than 25 years' experience in data processing, data and voice
communications and local area networking. He spent the early part of his career
with Tymshare, a computer time-sharing
38
<PAGE>
company, and ROLM, a manufacturer of digital PBX equipment, in a variety of
sales and marketing positions. He holds a B.S. degree in business and an M.B.A.
degree from the University of Buffalo. Mr. Clair is a director of several
private companies in Silicon Valley.
DR. RUTNER became a Director of the Company in October 1993. He has
practiced dentistry since August 1985 as proprietor of the Serra Park Dental
Group. He holds a B.S. degree in biochemistry from the University of California
at Davis, an M.S. degree in biochemistry from the University of California at
Davis and a D.D.S. degree from Georgetown University. Dr. Rutner is a director
of several private companies in Silicon Valley.
MR. ARAI joined the Company in April 1995 as Vice President of Product
Marketing. From April 1984 to January 1995 he served in various positions at IBM
Japan Ltd., a subsidiary of IBM, Inc. located in Tokyo, Japan, including
computer software engineer and, most recently, Staff Planning Manager in the
ThinkPad Development Organization, a group that executed a worldwide marketing
plan for the ThinkPad. Mr. Arai holds an M.S. degree in computer science from
Toyohashi University of Technology in Toyohashi, Japan.
MR. BLANCHETTE joined IntelliLink Corporation in March 1992, where he served
as President and Director of Engineering until the merger with the Company in
May 1996. Prior to joining IntelliLink, from April 1989 to March 1992, he served
in various management positions at Alsys, a software tools supplier, including
President and Vice President of Engineering. From 1984 to 1989, Mr. Blanchette
was employed by Wang Laboratories in various research and development positions,
including Director of Engineering in charge of programming language products.
Mr. Blanchette holds an M.S. degree in computer science from Boston University.
MR. FLOOD joined the Company as Vice President of Engineering in March 1995.
From August 1987 until he joined the Company, Mr. Flood served as President of
AI Squared, Inc., a company which he founded in 1987 to develop diagnostic
artificial intelligence technology and which he sold to Intelligence Vehicle
Highway Systems in 1994. From October 1980 to July 1987, he held several
management positions in research and development and product support at Wang
Laboratories. Mr. Flood holds a B.A. degree in history from the University of
Colorado.
MR. MAGIDSON joined the Company as Vice President of Marketing in September
1995. Prior to joining the Company, from November 1991 to August 1995, Mr.
Magidson was an independent consultant providing technical, marketing, and
strategic planning contract services to a variety of hardware and software
developers in the mobile computing and connectivity market. In April 1989, he
joined Xircom, a supplier of mobile networking products, serving as Vice
President of Marketing until October 1991. Mr. Magidson has over 25 years of
experience in the computer industry and is a frequent speaker at technical
symposia. He holds a B.A. degree in journalism from Rutgers University and an
M.S. degree in computer science from West Coast University.
BOARD COMMITTEES
The Board of Directors has a Compensation Committee, currently composed of
Mr. Clair and Dr. Rutner, which makes recommendations to the Board concerning
salaries and incentive compensation for officers and employees of the Company.
The Board of Directors also has an Audit Committee, currently composed of Mr.
Clair and Dr. Rutner, which reviews the results and scope of the audit and other
accounting related services.
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<PAGE>
DIRECTOR COMPENSATION
Directors do not receive any cash compensation for their services as members
of the Board of Directors or members of committees of the Board of Directors,
although they are reimbursed for their out-of-pocket expenses incurred in
attending Board and committee meetings. Directors are eligible to receive stock
option grants under the Company's 1993 Stock Option Plan. On December 2, 1994,
Michael Clair, a director of the Company, was granted an option to purchase
100,000 shares of Common Stock of the Company under the Option Plan at an
exercise price of $0.20 per share which vests over three years, with 1/3 of the
option shares becoming vested at the first anniversary of the date of grant and
1/36 vesting each successive month thereafter. On March 17, 1995, Mr. Clair was
granted an option to purchase 25,000 shares of Common Stock of the Company under
the Option Plan at an exercise price of $0.20 per share which vests over four
years, with 1/4 of the option shares vesting at the first anniversary and 1/48
vesting each successive month thereafter. The options have a term of 10 years.
In addition, the Company entered into a consulting agreement effective October
1, 1994 with MacClair Associates, of which Mr. Clair is President, pursuant to
which MacClair Associates receives $1,000 per quarter.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered to the Company during the fiscal year ended July
31, 1996, by the Chief Executive Officer of the Company and the other most
highly compensated executive officer whose total salary for the fiscal year
ended July 31, 1996 exceeded $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION ----------------------
-------------- SHARES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY OPTIONS GRANTED
- ------------------------------------------------------------------------- -------------- ----------------------
<S> <C> <C>
Bradley A. Rowe ......................................................... $ 122,667 100,000
President and Chief Executive Officer
Stephen A. Nicol ........................................................ 122,667 100,000
Senior Vice President, Sales
</TABLE>
OPTION GRANTS
The following table provides information concerning grants of options to
purchase the Company's Common Stock made to each of the named Executive Officers
during the fiscal year ended July 31, 1996:
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SHARES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERM (3)
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL 1996 (1) PER SHARE (2) DATE 5% 10%
- -------------------------- ----------- ---------------- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bradley A. Rowe........... 100,000 9.0% $ 6.05 7/22/01 $ 96,955 $ 280,781
Stephen A. Nicol.......... 100,000 9.0% $ 5.50 7/22/06 345,892 876,558
</TABLE>
- ----------
(1) Excluding options to purchase 98,617 shares of the Company's Common Stock
assured in connection with the acquisition of IntelliLink, all options
granted in fiscal 1996 were granted under the 1993 Option Plan. The Board of
Directors has discretion, subject to plan limits, to modify the terms of
options and to reprice the options. Each option is fully exercisable from
the time of grant, subject to the Company's right to repurchase any unvested
shares at the original exercise price in the event of the optionee's
termination. Shares generally vest at the rate of 1/4 after twelve months
and 1/48 of the total number of shares each month thereafter. See "--Stock
Plans."
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<PAGE>
(2) The exercise price per share of options granted represented the fair market
value of the underlying shares of Common Stock on the dates the respective
options were granted as determined by the Company's Board of Directors. The
Company's Common Stock was not traded publicly at the time of the option
grants to the Named Executive Officers.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of stock price appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information regarding unexercised
stock options held by each of the Named Executive Officers as of July 31, 1996:
FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
JULY 31, 1996 (#) JULY 31, 1996 ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE (2) UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE
- ----------------------------------------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Bradley A. Rowe................................ 100,000 -- -- --
Stephen A. Nicol............................... 100,000 -- -- --
</TABLE>
- ----------
(1) Calculated on the basis of the fair market value of the underlying
securities at July 31, 1996 of $5.50 per share, as determined by the
Company's Board of Directors, minus the aggregate exercise price.
(2) All options are fully exercisable, subject to the Company's right to
repurchase any unvested shares at the original exercise price in the event
of the optionee's termination. Shares generally vest at the rate of 1/4
after twelve months from the date of grant and 1/48 of the total number of
shares each month thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a compensation committee until September 1996,
prior to which time all decisions concerning executive compensation were made by
the entire Board, of which Messrs. Rowe and Nicol are members. Messrs. Rowe and
Nicol abstained from all deliberations concerning their own compensation during
this period. The Compensation Committee currently consists of Mr. Clair and Dr.
Rutner. No member of the Board of Directors or Compensation Committee of the
Company serves as a member of the Board of Directors or Compensation Committee
of an entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee. The Company has entered
into certain transactions with Mr. Clair and Dr. Rutner. See "Director
Compensation" and "Certain Transactions."
STOCK PLANS
1993 STOCK OPTION PLAN. The Company's 1993 Stock Option Plan (the "Option
Plan") was adopted by the Company's Board of Directors and its stockholders in
October 1993. A total of 3,500,000 shares of Common Stock have been reserved for
issuance under the Option Plan, (including 1,000,000 shares of common stock
authorized by the Board of Directors on September 3, 1996). The Option Plan
provides for grants of "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), to employees
(including officers and employee directors), and for grants of nonstatutory
options to employees, non-employee directors and consultants. The Option Plan is
currently being administered by the Board of Directors of the Company, which
determines the optionees and the terms of the options granted, including the
exercise price, number of shares subject to the option and the exercisability
thereof. Unless sooner terminated by the Board of Directors, the Option Plan
will continue until all of the shares subject to the plan have been issued and
all have been issued and all restrictions on such shares have lapsed. However,
no incentive stock options may be granted more than 10 years after the date of
the most recent stockholder approval of a change to the share reserve of the
Option Plan.
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<PAGE>
The exercise price of incentive stock options granted under the Option Plan
must be not less than the fair market value of the Common Stock on the date of
grant, and the exercise price of nonstatutory options must be not less than 85%
of the fair market value of the Common Stock on the date of grant. With respect
to any optionee who owns stock representing more than 10% of the voting power of
all classes of the Company's outstanding capital stock, the exercise price of
any incentive stock option must be equal to at least 110% of the fair market
value of the Common Stock on the date of grant, and the term of the option must
not exceed five years. The terms of incentive stock options may not exceed ten
years, although there is no limit as to the term of nonstatutory stock options.
The aggregate fair market value of Common Stock (determined as of the date of
the option grant) for which an incentive stock option may for the first time
become exercisable in any calendar year may not exceed $100,000.
As of July 31, 1996, 800,353 shares of Common Stock had been issued upon
exercise of options granted under the Option Plan, (of which 24,375 shares had
been repurchased by the Company) and options to purchase 1,008,365 shares of
Common Stock, at a weighted average exercise price of $2.63 per share, were
outstanding. There are currently 1,715,657 shares available for future option
grants.
INTELLILINK CORP. 1992 INCENTIVE STOCK OPTION PLAN In connection with the
Company's acquisition of IntelliLink Corp. ("IntelliLink"), the Company assumed
options granted under IntelliLink's 1992 Incentive Stock Option Plan (the
"IntelliLink Plan"), and such options became exercisable for shares of the
Company's Common Stock. Options granted under the IntelliLink Plan are incentive
stock options which generally have a six-year term. Generally, options granted
under the IntelliLink Plan became exercisable as the underlying shares vest.
Such shares generally vest in four equal annual installments following the date
of option grant, subject to the optionee's continued employment. No additional
options will be granted under the IntelliLink Plan. As of July 31, 1996, no
shares of the Company's Common Stock had been issued upon the exercise of
options granted under the IntelliLink Plan, and options to purchase 98,617
shares of the Company's Common Stock were outstanding at a weighted average
exercise price of $2.06 per share. The Company does not intend to issue options
under the IntelliLink Plan in the future.
1996 EMPLOYEE STOCK PURCHASE PLAN The Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Company's Board of
Directors in September 1996 and approved by the stockholders of the Company in
September 1996. A total of 250,000 shares of Common Stock has been reserved for
issuance under the Purchase Plan. The Purchase Plan, which is intended to
qualify under Section 423 of the Code, is administered by the Board of Directors
or by a committee appointed by the Board. Employees (including officers and
employee directors of the Company) of the Company or any parent or subsidiary
designated by the Board for participation in the Purchase Plan are eligible to
participate in the Purchase Plan if they are customarily employed for more than
20 hours per week and more than five months per year. The Purchase Plan will be
implemented by sequential 24-month offerings. Each offering will generally be
comprised of four six-month purchase periods, with shares purchased on the last
day of each purchase period (a "Purchase Date"). The Company has not yet offered
or sold shares of Common Stock to employees pursuant to the Purchase Plan, but
intends to initiate the first offering under the Purchase Plan concurrent with
the Offering. The initial offering period will terminate on August 31, 1998.
Thereafter, offering periods will begin on March 1 and September 1 of each year.
The Purchase Plan permits eligible employees to purchase Common Stock through
payroll deductions, which may not exceed 10% of an employee's compensation. The
price at which stock may be purchased under the Purchase Plan is equal to 85% of
the lower of the fair market value of the Company's Common Stock on the first
day of the offering period or the Purchase Date. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment with the Company.
In addition, participants generally may not purchase more than 5,000 shares in
an offering or stock having a value (measured at the beginning of the offering)
greater then $25,000 in any calendar year.
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<PAGE>
CHANGE OF CONTROL ARRANGEMENTS
The Option Plan provides that, in the event of (i) certain mergers or
consolidations to which the Company is a party in which the stockholders of the
Company do not retain beneficial ownership of at least a majority of the voting
stock of the Company or its successor, (ii) the sale, exchange or transfer of
all or substantially all of the assets of the Company other than to one or more
subsidiary corporations, or (iii) a liquidation or dissolution of the Company
(collectively, a "Transfer of Control"), the Board of Directors of the Company
may provide for the acquiring or successor corporation to assume or substitute
new options for the options outstanding under the Option Plan. To the extent
that the options outstanding under the Option Plan are not assumed, substituted
for, or exercised prior to such event, they will terminate. As of July 31, 1996,
currently unvested options exercisable into 31,250 shares of Common Stock will
become fully vested on the effective date of the Company's intial public
offering and currently unvested options exercisable into 135,349 shares of
Common Stock will become fully vested on a Transfer of Control.
43
<PAGE>
CERTAIN TRANSACTIONS
Between January 31, 1994 and December 2, 1994 the Company sold an aggregate
of 739,668 shares of its Series A Preferred Stock at a purchase price of $1.00
per share. Between July 15, 1994 and December 28, 1994, the Company sold an
aggregate of 104,187 Units at a purchase price of $40.00 per Unit. Each Unit was
composed of seven shares of its Series A Preferred Stock and eleven shares of
its Series B Preferred Stock and also, in some cases, warrants for ten shares of
Common Stock. The Company also issued warrants to purchase its Common Stock at
an exercise price of $3.00 per share to certain Unit purchasers. On August 15,
1996, the Company sold an aggregate of 285,715 shares of its Series C Preferred
Stock at a purchase price of $5.60 per share. The investors in these
transactions included the following officers, directors and holders of more than
5% of the voting securities of the Company.
<TABLE>
<CAPTION>
SHARES OF PREFERRED STOCK UNIT TOTAL SHARES
------------------------------- FINANCING AS CONVERTED
NAME SERIES A SERIES B SERIES C WARRANTS OTHER (1)
- ------------------------------------- --------- --------- --------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Greylock Equity Limited
Partnership......................... 437,500 687,500 -- 135,000(2) 587,243(3) 2,284,743
One & Co............................. 344,750 112,750 -- 103,000 -- 905,250
Funds Affiliated with CSK Capital
Venture Co., Ltd. (4)............... 175,000 275,000 133,929 -- -- 758,929
Robert D. Rutner, DDS (5)............ 100,000 -- -- -- -- 200,000
Audrey MacLean and Michael M. Clair,
as trustees or their successors, of
the Audrey MacLean and Michael Clair
Trust Agreement UAD 12/1/90 (6)..... 17,500 27,500 -- -- -- 62,500
</TABLE>
- ----------
(1) Upon the closing of the Offering, each share of the Company's Series A
Preferred Stock will be converted into two shares of Common Stock and each
share of the Company's Series B Preferred Stock and Series C Preferred Stock
will be converted into one share of Common Stock.
(2) If Greylock elects to exercise its Unit Financing Warrant pursuant to the
net exercise provision contained in its warrant, 90,000 shares of the
Company's Common Stock will be issued prior to the closing of the Offering
based upon an assumed offering price of $9.00 per share.
(3) In connection with the acquisition of IntelliLink on April 30, 1996, in
exchange for securities of IntelliLink held by Greylock Equity Limited
Partnership ("Greylock"), the Company issued to Greylock (i) a warrant to
purchase 250,243 shares of the Company's Common Stock at an exercise price
of $5.60 per share (alternatively, Greylock may exercise its warrant for a
total of 94,536 shares of the Company's Common Stock prior to the closing of
this Offering at an assumed offering price of $9.00 per share) and (ii) a
$850,000 promissory note bearing interest at 7.0% per annum and convertible
into shares of the Company's Common Stock at the rate of approximately $2.77
per share, or approximately 337,000 shares at the closing of the Offering.
(4) Includes shares held by CSK Venture Capital Co., Ltd., as Investment Manager
for each of the following funds: CSK-1(A) Investment Fund, CSK-1(B)
Investment Fund and CSK-2 Investment Fund.
(5) Dr. Rutner is a director of the Company.
(6) Michael Clair, a director of the Company, is a trustee of the Audrey MacLean
and Michael Clair Trust Agreement UAD 12/1/90.
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the Delaware General
Corporation Law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.
44
<PAGE>
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
officers and directors containing provisions that may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors; and
officers' insurance if available on reasonable terms.
For a description of the compensation of officers of the Company and the
eligibility of officers and directors of the Company to participate in the
Company's employee benefit plans. See "Management-- Executive Compensation" and
"--Stock Plans."
All transactions between the Company and its officers, directors, principal
stockholders and other affiliates have been and will be on terms no less
favorable to the Company than could be obtained from unaffiliated parties. To
date, the Company has made no loans to officers, directors, principal
stockholders or other affiliates other than advances of reimbursable expenses.
All such future transactions will be approved by a majority of the Company's
independent and disinterested directors.
45
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of August 15, 1996 by:
(i) each of the directors and Named Executive Officers of the Company; (ii) all
directors and executive officers of the Company as a group; (iii) each other
person known by the Company to own beneficially more than 5% of the Company's
Common Stock and (iv) each other Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BEFORE THE OFFERING SHARES AFTER THE OFFERING
--------------------------- BEING ---------------------------
OFFICERS AND DIRECTORS NUMBER PERCENT (1)(2) OFFERED NUMBER PERCENT (1)(2)
- ---------------------------------------------- ----------- -------------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Bradley A. Rowe (3)........................... 1,372,000 14.6% -- 1,372,000 11.5%
Stephen A. Nicol (3).......................... 680,500 7.2 -- 680,500 5.7
Michael M. Clair (4).......................... 346,500 3.7 -- 346,500 2.9
Robert D. Rutner, DDS......................... 300,000 3.2 -- 300,000 2.5
All current directors and executive officers
as a group (5 persons) (5)................... 3,049,000 30.8 -- 3,049,000 24.6
OTHER 5% STOCKHOLDERS
- ----------------------------------------------
Greylock Equity Limited Partnership (6) 2,084,036 22.3 286,197 1,797,839 15.2
755 Page Mill Road, Suite A100
Palo Alto, California 94304
One & Co.(7) ................................. 905,250 9.7 -- 905,250 7.7
c/o Welch & Forbes
45 School Street
Boston, Massachusetts 02108
Funds affiliated with CSK Venture Capital Co.,
Ltd. (8) .................................... 758,929 8.1 139,010 619,919 5.2
6th Floor, First Akiyama Bldg.
2-3-22 Toranomon, Minato-Ku
Tokyo 105, Japan
OTHER SELLING STOCKHOLDERS
- ----------------------------------------------
C. Bruce Johnstone (9) ....................... 200,000 2.1 36,633 163,367 1.4
P.H. Morton (10) ............................. 100,000 1.1 18,317 81,683 *
Stephen L. LaVaute & Blanca Maria
Isabel LaVaute Trust dated 4/6/83,
as amended 9/22/92, Stephen L. LaVaute,
Trustee (11)................................. 50,000 * 9,158 40,842 *
Jerome or JoAnne Robertson (12) .............. 50,000 * 9,158 40,842 *
Agora Marketing International, Inc. (13) 5,000 * 916 4,084 *
Greg Dalcher (14) ............................ 3,336 * 611 2,725 *
</TABLE>
- ----------
* Less than 1%
(1) Assumes no exercise of Underwriters' over-allotment option.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within 60 days
after August 15, 1996 are deemed outstanding, while such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other person. Options granted under the Option Plan are fully exercisable
from the date of grant, subject to the Company's right to repurchase any
unvested shares at the original exercise price upon termination of
employment. See "Management Executive Compensation Stock Plans." Unless
otherwise indicated in the footnotes below, the persons and entities named
in the table have sole voting and investment power with respect to all
46
<PAGE>
shares beneficially owned, subject to community property laws where
applicable. Unless otherwise indicated, the address of each of the
individuals listed in the table is: c/o Puma Technology, Inc., 2940 North
First Street, San Jose, California 95134.
(3) Includes 100,000 shares subject to options which are exercisable within 60
days of August 15, 1996.
(4) Includes 125,000 shares subject to options which are exercisable within 60
days of August 15, 1996, 16,000 shares registered in the names of children
of Mr. Clair, and 105,500 shares registered in the name of the Audrey
MacLean and Michael M. Clair, as Trustees, or their successors, of the
Audrey MacLean and Michael Clair Trust Agreement UAD 12/1/90, of which Mr.
Clair is a trustee.
(5) Includes 575,000 shares subject to options which are exercisable within 60
days of August 15, 1996.
(6) Includes 184,536 shares issuable upon the net exercise of outstanding
warrants at an assumed public offering price of $9.00 and 337,000 shares
issuable upon the conversion of the Convertible Debenture. If the
Underwriters' over-allotment option is exercised in full, an additional
291,745 shares would be offered for sale in the Offering.
(7) Includes 90,000 shares issuable upon the full exercise of outstanding
warrants at an exercise price of $3.00 per share prior to the consummation
of the Offering. Also includes 71,875 shares held by Francis W. Hatch and
71,875 shares held by Serena M. Hatch. One & Co. acts as investment manager
for the shares held by these stockholders.
(8) Includes 232,143 shares held by CSK Venture Capital Co., Ltd., as Investment
Manager of CSK-1(A) Investment Fund, 232,143 shares held by CSK Venture
Capital Co., Ltd., as Investment Manager of CSK-1(B) Investment Fund and
294,643 shares held by CSK Venture Capital Co., Ltd., as Investment Manager
of CSK-2 Investment Fund. If the Underwriters' over-allotment option is
exercised in full, an additional 141,705 shares would be offered for sale in
the Offering.
(9) If the Underwriters' over-allotment option is exercised in full, an
additional 3,367 shares would be offered for sale in the Offering.
(10) If the Underwriters' over-allotment option is exercised in full, an
additional 1,683 shares would be offered for sale in the Offering.
(11) If the Underwriters' over-allotment option is exercised in full, an
additional 9,336 shares would be offered for sale in the Offering.
(12) If the Underwriters' over-allotment option is exercised in full, an
additional 842 shares would be offered for sale in the Offering.
(13) If the Underwriters' over-allotment option is exercised in full, an
additional 933 shares would be offered for sale in the Offering.
(14) If the Underwriters' over-allotment option is exercised in full, an
additional 389 shares would be offered for sale in the Offering.
47
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Puma has authorized capital of 40,000,000 shares of Common Stock, par value
$0.001 per share, and 2,000,000 shares of Preferred Stock, par value $0.001 per
share.
COMMON STOCK
Excluding the shares of Common Stock to be issued upon the conversion of all
outstanding Preferred Stock at the closing of the Offering and including an
aggregate of 656,536 shares of Common Stock to be issued upon the exercise of
certain outstanding warrants and the conversion of the Convertible Debenture
prior to the closing of the Offering, there were 4,953,626 shares of Common
Stock outstanding held of record by 60 stockholders at July 31, 1996.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
therefore, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution, or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to the prior liquidation rights of any
outstanding Preferred Stock. Upon the closing of the offering, the Common Stock
will have no preemptive, subscription, redemption or conversion rights. The
outstanding shares of Common Stock are, and the shares offered by the Company in
the offering will be, when issued and paid for, fully paid and nonassessable.
The rights, preferences and privileges of holders of Common Stock are subject
to, and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which the Company may designated and issue in the
future.
PREFERRED STOCK
Upon the closing of the offering, all outstanding shares of Preferred Stock
will be converted into 4,374,726 shares of Common Stock and automatically
retired. Thereafter, the Board of Directors will be authorized, without further
stockholder approval, to issue up to 2,000,000 shares of Preferred Stock in one
or more series. Each series of Preferred Stock shall have such rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by the Board of Directors.
The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of the Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock. As of the closing of the offering, no shares of
Preferred Stock will be outstanding and the Company currently has no plans to
issue any shares of Preferred Stock.
WARRANTS
Between July 15, 1994 and September 25, 1994, the Company issued warrants to
purchase its Common Stock to several investors in connection with the issuance
of its Series A and Series B Preferred Stock (the "Unit Financing Warrants").
The Unit Financing Warrants are exercisable into an aggregate of up to 135,000
shares of Common Stock at an exercise price of $3.00 per share, and each warrant
will expire upon the closing of the Offering. On December 28, 1994, the Company
issued a warrant to purchase Common Stock to Greylock in connection with its
purchase of Series A and Series B Preferred Stock of the Company (the "Greylock
Unit Financing Warrant"). The Greylock Unit Financing Warrant, which expires
upon the closing of the Offering, is exercisable into up to 135,000 shares of
Common Stock at an exercise price of $3.00 per share. Alternatively, Greylock
may net exercise its warrant into 90,000 shares of Common Stock at an assumed
public offering price of $9.00 per share.
In connection with the acquisition by the Company of IntelliLink in April
1996, the Company issued to Greylock a warrant to purchase Common Stock (the
"Greylock Acquisition Warrant") and a debenture convertible into Common Stock
(the "Greylock Debenture") in exchange for similar securities for shares of
IntelliLink Common Stock held by Greylock. The Greylock Acquisition Warrant,
which expires upon the closing of the Offering, is exercisable into up to
250,243 shares of Common Stock at $5.60 per share.
48
<PAGE>
Alternatively, Greylock may net exercise its warrant into 94,536 shares of
Common Stock at an assumed public offering price of $9.00 per share. The
Greylock Debenture, which has a principal amount of $850,000 and accrues
interest at 7.0% per annum from January 1995 as to $600,000 of the principal
balance and from July 1995 as to $250,000 of the principal balance,
automatically converts into approximately 337,000 shares of Common Stock at a
conversion price of approximately $2.77 on the closing of the Offering.
In August 1996, the Company issued a warrant (the "Intel Warrant") to Intel
Corporation in connection with the issuance of its Series C Preferred Stock (the
"Intel Warrant"). The Intel Warrant, which expires in August 2001, is
exercisable into up to 140,000 shares of Common Stock at an exercise price of
$5.50 per share and contains a net exercise provision.
REGISTRATION RIGHTS
Upon the closing of the offering, the holders of 3,874,726 shares of Common
Stock (collectively, the "Registrable Securities"), are entitled to certain
rights with respect to the registration of such shares under the Securities Act
of 1933, as amended (the "Securities Act"). In the event that the Company
proposes to register any of its securities under the Securities Act, the holders
of the Registrable Securities are entitled to notice of such registration and
are entitled to include their Registrable Securities in such registration,
subject to certain marketing and other limitations. Beginning six months after
the effective date of the offering, the holders of at least a majority of the
Registrable Securities have the right to require the Company on occasion to
register all or a portion of their shares with registration rights on Form S-3,
after such form becomes available to the Company, subject to certain conditions
and limitations. For example, the Company may, in certain circumstances, defer
such registration, and the underwriters involved in such registrations have the
right, subject to certain limitations, to limit the number of shares included in
such registrations.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is a Delaware corporation and will be subject to Section 203 of
the Delaware General Corporation Law (the "Delaware Law"), an anti-takeover law.
In general, Section 203 of the Delaware Law prevents an "interested stockholder"
(defined generally as a person owning 15% or more of a corporation's outstanding
voting stock) from engaging in a "business combination" (as defined in the
Delaware law) with a Delaware corporation for three years following the date
such person became an interested stockholder, subject to certain exceptions such
as the approval of the board of directors and of the holders of at least
two-thirds of the outstanding shares of voting stock not owned by the interested
stockholder. The existence of this provision could have the effect of
discouraging takeover attempts, including attempts that might result in a
premium over the market price for the shares of Common Stock.
The Company's Certificate of Incorporation provides that, upon the closing
of the Offering, any action required or permitted to be taken by the
stockholders of the Company may be taken only at a duly called annual or special
meeting of the stockholders and does not provide for cumulative voting in the
election of directors. The Certificate of Incorporation and Bylaws restrict the
right of stockholders to change the size of the Board of Directors and to fill
vacancies on the Board of Directors. The Bylaws also establish procedures,
including advance notice procedures, with regard to the nomination, other than
by or at the direction of the Board of Directors, of candidates for elections as
directors or for stockholder proposals to be submitted at stockholder meetings.
The amendment of any of these provisions would require approval by holders of
66.67% or more of the outstanding Common Stock.
These and other provisions could have the effect of making it more difficult
for a third party to effect a change in the control of the Board of Directors.
This may discourage another person or entity from making a tender offer for the
Company's Common Stock, including offers at a premium over the market price of
the Common Stock, and might result in a delay in changes in control of
management. In addition, these provisions could have the effect of making it
more difficult for proposals favored by the stockholders to be presented for
stockholder consideration.
49
<PAGE>
The Company has also included in its Certificate of Incorporation provisions
to eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
Delaware Law and to indemnify its directors and officers to the fullest extent
permitted by Section 145 of the Delaware Law.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Harris Trust
Company of California. Its telephone number is (213) 239-0671.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has not been any public market for the Common
Stock and there can be no assurance that a significant public market for the
Common Stock will be developed or be sustained after the Offering. Sales of
substantial amounts of Common Stock in the public market after this Offering, or
the possibility of such sales occurring, could adversely affect prevailing
market prices for the Common Stock or the future ability of the Company to raise
capital through an offering of equity securities.
After the Offering, the Company will have outstanding 11,828,352 shares of
Common Stock. Of these shares, the 3,000,000 shares offered hereby will be
freely tradeable in the public market without restriction under the Securities
Act, unless such shares are held by "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act.
The remaining 8,828,352 shares of Common Stock outstanding upon completion
of the Offering will be "restricted securities" as that term is defined in Rule
144 ("Restricted Shares"). The Restricted Shares were issued and sold by the
Company in private transactions in reliance upon exemptions from registration
under the Securities Act. Restricted Shares may be sold in the public market
only if they are registered or if any qualify for an exemption from registration
under Rules 144 or 701 under the Securities Act, which are summarized below.
Pursuant to certain "lock-up" agreements, all of the executive officers,
directors and certain stockholders and employees of the Company, who
collectively hold an aggregate of approximately 8,042,751 shares, have agreed
not to offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of any such shares for a period of 180 days from the date of this
Prospectus. The Company has also entered into an agreement with the
representatives of the Underwriters that it will not offer, sell or otherwise
dispose of Common Stock for a period of 180 days from the date of this
Prospectus, other than pursuant to existing stock option plans. As a result of
such lock-up agreements, approximately 6,805,977 of the Restricted Shares will
be eligible for immediate sale beginning 181 days after the date of this
Prospectus (of which 2,451,456 shares will be subject to certain volume, manner
of sale and other limitations under Rule 144). Of the approximately 785,601
Restricted Shares held by existing stockholders of the Company not subject to
lock-up agreements, 57,529 shares will be eligible for immediate sale in the
public market under Rule 144(k).
Following the expiration of such lock-up periods, certain shares issued upon
exercise of options granted by the Company prior to the date of this Prospectus
will also be available for sale in the public market pursuant to Rule 701 under
the Securities Act. Rule 701 permits resales of such shares in reliance upon
Rule 144 but without compliance with certain restrictions, including the holding
period requirement, imposed under Rule 144. In general, under Rule 144 as
currently in effect, beginning 90 days after the date of this Prospectus, a
person (or persons whose shares of the Company are aggregated) who has
beneficially owned Restricted Shares for at least two years (including the
holding period of any prior owner who is not an affiliate of the Company) would
be entitled to sell within any three-month period a number of shares that does
not exceed the greater of (i) one percent of the then outstanding shares of
Common Stock (approximately 119,000 shares immediately after the Offering), or
(ii) the average weekly trading volume of the Common Stock during the four
calendar weeks preceding the filing of a Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale and notice
requirements and to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days
50
<PAGE>
preceding a sale and who has beneficially owned the shares proposed to be sold
for at least three years (including the holding period of any prior owner who is
not an affiliate of the Company) is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.
As of July 31, 1996, options to purchase 1,008,365 shares of Common Stock
were outstanding under the Company's 1993 Stock Option Plans. All such shares
are subject to lock-up agreements for a period of 180 days from the date of this
Prospectus and thereafter pursuant to Rule 701. As of July 31, 1996, there were
715,657 shares available for future option grants under its 1993 Stock Option
Plan. Options to purchase 98,617 shares of Common Stock assumed in the
acquisition of IntelliLink were also outstanding. Moreover, on September 3,
1996, the Board of Directors of the Company, subject to stockholder approval,
adopted the 1996 Employee Stock Purchase Plan, under which 250,000 additional
shares have been reserved for issuance, and increased the shares authorized for
issuance under its 1993 Stock Option Plan by 1,000,000 shares to 3,500,000
shares.
The Company intends to file after the effective date of the Offering a
Registration Statement on Form S-8 to register an aggregate of 2,322,639 shares
of Common Stock reserved for issuance under its 1993 Stock Option Plan and 1996
Employee Stock Purchase Plan. Such Registration Statement will become effective
automatically upon filing. Shares issued under the foregoing plans, after the
filing of Registration Statement on Form S-8, may be sold in the open market,
subject, in the case of certain holders, to the Rule 144 limitations applicable
to affiliates, the above-referenced lock-up agreements and vesting restrictions
imposed by the Company. In addition, after the Offering, holders of
approximately 3,874,726 shares of Common Stock and 140,000 shares of Common
Stock issuable upon the exercise of the Intel Warrant will be entitled to
certain rights to cause the Company to register the sale of such shares under
the Securities Act. See "Description of Capital Stock--Registration Rights."
51
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
person that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or an estate or trust,
in each case not subject to U.S. federal income tax on a net income tax basis in
respect of income or gain from Common Stock (a "non-U.S. holder"). This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations as of the date hereof, all of which may be changed. This
discussion does not address all the aspects of U.S. federal income and estate
taxation that may be relevant to non-U.S. holders in light of their particular
circumstances, or to certain types of holders subject to special treatment under
U.S. federal income tax laws (such as life insurance companies and dealers in
securities). Nor does it address tax consequences under the laws of any state,
municipality or other taxing jurisdiction or under the laws of any country other
than the United States.
Prospective holders should consult their own tax advisors about the
particular tax consequences to them of holding and disposing of Common Stock.
DIVIDENDS
Generally, dividends paid to a non-U.S. holder of Common Stock will be
subject to United States federal withholding tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty, unless the
dividends are effectively connected with the conduct of a trade or business
within the United State (or alternatively are attributable to a U.S. permanent
establishment of such holder, if an applicable income tax treaty so requires as
a condition for the non-U.S. holder to be subject to U.S. income tax on a net
income basis in respect of such dividends). Such "effectively connected"
dividends, or dividends attributable to a permanent establishment, are subject
to tax at rates applicable to U.S. citizens, resident aliens and domestic U.S.
corporations, and are not generally subject to withholding. Effectively
connected dividends received by a non-U.S. corporation may be subject to an
additional "branch profits tax" at a 30% rate (or a lower rate under an
applicable income tax treaty) when such dividends are deemed repatriated from
the United States.
Under current U.S. Treasury regulations, dividends paid to an address
outside the United States in a foreign country are presumed to be paid to a
resident of such country for purposes of the withholding tax. Under the current
interpretation of U.S. Treasury regulations, the same presumption applies to
determine the applicability of a reduced rate of withholding under a tax treaty.
Thus, non-U.S. holders receiving dividends at addresses outside the United
States are not currently required to file tax forms to obtain the benefit of an
applicable treaty rate. Under U.S. Treasury regulations that are proposed to be
effective for distributions after 1997 (the "Proposed Regulations"), to claim
the benefits of a tax treaty a non-U.S. holder of Common Stock would be required
to satisfy applicable certification requirements. In addition, under the
Proposed Regulations, in the case of Common Stock held by a foreign partnership,
(x) the certification requirement would generally be applied to the partners of
the partnership and (y) the partnership would be required to provide certain
information. The Proposed Regulations also provide look-through rules for tiered
partnerships. It is not certain whether, or in what form, the Proposed
Regulations will be adopted as final regulations.
If there is excess withholding on a person eligible for a treaty benefit,
the person can file for a refund with the U.S. Internal Revenue Service.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless (i) the
gain is effectively connected with a trade or business of the non-U.S. holder in
the United States, (ii) in the case of a non-U.S. holder who is an individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the disposition and
certain other conditions are met, (iii) the non-
52
<PAGE>
U.S. holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates, or (iv) the Company is or has been a
"U.S. real property holding corporation" for federal income tax purposes and, if
the Common Stock is regularly traded on an established securities market, the
non-U.S. holder held, directly or indirectly, at any time during the 5-year
period ending on the date of disposition (or such shorter period that such
shares were held) more than 5% of the Common Stock. The Company has not been and
does not anticipate becoming a "U.S. real property holding corporation" for U.S.
federal income tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient and the amount,
if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or other agreements, the U.S. Internal Revenue Service may make its
reports available to tax authorities in the recipient's country of residence.
Dividends not subject to withholding tax may be subject to backup withholding if
the non-U.S. holder is not an "exempt recipient" and fails to provide a tax
identification number and other information to the Company. Under the Proposed
Regulations, dividend payments generally will be subject to information
reporting and backup withholding unless applicable certification requirements
are satisfied.
If the proceeds of a disposition of Common Stock are paid over by or through
a U.S. office of a broker, the payment is subject to information reporting and
possible backup withholding at a 31% rate unless the disposing holder certifies
under penalties of perjury as to his name, address and non-U.S. holder status or
otherwise establishes an exemption. Generally, U.S. information reporting and
backup withholding requirement will not apply to a payment of disposition
proceeds if the payment is made outside the United States through a non-U.S.
office of a broker. However, U.S. information reporting requirements (but not
backup withholding) will apply to a payment of diposition proceeds outside the
United States if (A) the payment is made through an office outside the United
States of a broker that either (i) is a U.S. person, (ii) derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States or (iii) is a "controlled foreign corporation" for U.S.
federal income tax purposes and (B) the broker fails to maintain documentary
evidence that the holder is a non-U.S. holder or that the holder otherwise is
entitled to an exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
FEDERAL ESTATE TAXES
Common Stock held by a non-U.S. holder at the time of death will be included
in such holder's gross estate for U.S. federal estate tax purposes unless an
applicable estate tax treaty provides otherwise.
53
<PAGE>
UNDERWRITING
The U.S. Underwriters named below, for whom Deutsche Morgan Grenfell/C.J.
Lawrence Inc. and Alex. Brown & Sons Incorporated are acting as representatives
(the "U.S. Representatives"), and the International Underwriters named below,
for whom Morgan Grenfell & Co., Limited and Alex. Brown & Sons Incorporated are
acting as representatives (the "International Representatives"), have severally
agreed, subject to the terms and conditions contained in the Underwriting
Agreement (the form of which is filed as an exhibit to the Company's
Registration Statement, of which this Prospectus is a part), to purchase from
the Company and the Selling Stockholders the respective number of shares of
Common Stock indicated below opposite their respective names. The Underwriters
are committed to purchase all of the shares, if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- -----------
<S> <C>
Deutsche Morgan Grenfell/C.J. Lawrence Inc.................................................
Alex. Brown & Sons Incorporated............................................................
-----------
Subtotal............................................................................... 2,250,000
-----------
<CAPTION>
INTERNATIONAL UNDERWRITERS
- -------------------------------------------------------------------------------------------
<S> <C>
Morgan Grenfell & Co., Limited.............................................................
Alex. Brown & Sons Incorporated............................................................
-----------
Subtotal............................................................................... 750,000
-----------
Total.................................................................................. 3,000,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder
are subject to approval of certain legal matters by counsel and to various other
conditions.
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate Agreement,
sales may be made between the U.S. Underwriters and the International
Underwriters of such number of shares of Common Stock as may be mutually agreed.
The price of any shares of Common Stock so sold shall be the initial public
offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the International
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are United States
persons or to persons they believe intend to resell to persons who are United
States persons, and the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
any non-United States person or to persons they believe intend to resell to
non-United States persons, except, in each case, for transactions pursuant to
such agreement. As used herein, "United States person" means any national or
resident of the United States or any corporation, pension, profit-sharing or
other trust or other entity organized under the laws of the United States or any
political subdivision thereof (other than a branch located outside of the United
54
<PAGE>
States of any United States person) and includes any United States branch of a
person who is otherwise not a United States person and "United States" means the
United States of America, its territories, its possessions and all areas subject
to its jurisdiction.
The Underwriters propose to offer the Common Stock to the public on the
terms set forth on the cover page of this Prospectus. The Price to Public and
Underwriting Discount will be identical in the U.S. and International Offerings.
The Underwriters may allow to selected dealers (who may include the
Underwriters) a concession of not more than $ per share. The selected dealers
may reallow a concession of not more than $ to certain other dealers. After
the initial public offering, the price and concessions and re-allowances to
dealers and other selling terms may be changed by the Underwriters. The Common
Stock is offered subject to receipt and acceptance by the Underwriters, and to
certain other conditions, including the right to reject orders in whole or in
part. The Underwriters do not intend to sell any of the shares of Common Stock
offered hereby to accounts for which they exercise discretionary authority.
The Selling Stockholders have granted an option to the Underwriters to
purchase up to a maximum of 450,000 additional shares of Common Stock to cover
over-allotments, if any, at the public offering price, less the underwriting
discount set forth on the cover page of this Prospectus. Such option may be
exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent the Underwriters exercise this option, each of the
Underwriters will be committed, subject to certain conditions, to purchase such
additional shares in approximately the same proportion as set forth in the above
table. The Underwriters may purchase such shares only to cover over-allotments
made in connection with the Offering.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that it has not offered or sold, and has agreed not to
offer or sell, any shares of Common Stock, directly or indirectly, in Canada in
contravention of the securities laws of Canada or any province or territory
thereof and has represented that any offer of shares of Common Stock in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each International Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance that,
by purchasing such shares such dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of such
shares in Canada or to, or for the benefit of, any resident of Canada in
contravention of the securities laws of Canada or any province or territory
thereof and that any offer of shares of Common Stock in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealer will deliver to any other dealer to whom it sells any of such shares of
Common Stock a notice to the foregoing effect.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that (i) it has not offered or sold and will not offer or
sell any shares of Common Stock offered hereby to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purpose of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 (the "Regulations"), (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
relation to the shares of Common Stock offered hereby in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on and will
not issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of the shares of Common Stock offered hereby
if that person is a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exceptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on.
55
<PAGE>
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that it has not offered or sold, and will not offer or
sell, directly or indirectly, in Japan or to or for the account or any resident
thereof, any shares of Common Stock acquired in connection with this offering,
except for offers or sales to Japanese International Underwriters or dealers and
except pursuant to any exemption from the regulation requirement of the
Securities and Exchange law of Japan. Each International Underwriter has further
agreed to send to any dealer who purchases form it any of such shares of Common
Stock a notice stating in substance that such dealer may not offer to sell any
of such shares, directly or indirectly, in Japan or to or for the account of any
resident thereof, except pursuant to any exemption from the registration
requirement of the Securities and Exchange Law of Japan, and that such dealer
will send to any other dealer to whom it sells any shares a notice to the
foregoing effect.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that it has not offered or sold, and will not offer and
sell, directly or indirectly, or offer to sell to any person for re-offering or
resale, directly or indirectly any shares of Common Stock to any resident of the
Republic of Korea (as the term is defined under the Foreign Exchange Management
Law of the Republic of Korea), or in the Republic of Korea, except pursuant to
applicable laws and regulations of the Republic of Korea.
Certain stockholders, including affiliates of the Company (as that term is
defined in the Securities Act), have agreed not to offer or sell any Common
Stock until the expiration of 180 days following the date of the final
Prospectus without the prior written consent of Deutsche Morgan Grenfell/C. J.
Lawrence Inc.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the several Underwriters against certain liabilities
including civil liabilities under the Securities Act of 1933, as amended, or
will contribute to payments the Underwriters may be required to make in respect
thereof.
In July 1996, the Company issued 17,857 shares of the Company's Series C
Preferred Stock to The Quattrone Family Trust, Frank P. Quattrone and Denise A.
Foderaro Trustees (the "Quattrone Trust") which will convert automatically into
17,857 shares of Common Stock upon the completion of the Offering. Frank
Quattrone, the Chief Executive Officer of DMG Technology Group, a division of
Deutsche Morgan Grenfell/C. J. Lawrence, Inc., is a trustee of the Quattrone
Trust.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been determined by negotiation between the
Company, the Selling Stockholders and the Representatives. The principal factors
to be considered in determining the public offering price include the
information set forth in this Prospectus and otherwise available to the
Representatives; the history and the prospects for the industry in which the
Company will compete; the ability of the Company's management; the prospectus
for future earnings of the Company; the present state of the Company's
development and its current financial condition; the general condition of the
securities markets at the time of the Offering; and the recent market prices of,
and the demand for, publicly traded common stock of generally comparable
companies. Each of the Representatives has informed the Company that it
currently intends to make a market in the shares subsequent to the effectiveness
of the Offering, but there can be no assurance that the Representatives will
take any action to make a market in any securities of the Company.
Pursuant to regulations promulgated by the Securities and Exchange
Commission, market makers in the Common Stock who are Underwriters or
prospective underwriters ("passive market makers") may, subject to certain
limitations, make bids for or purchases of shares of Common Stock until the
earlier of the time of commencement (the "Commencement Date") of offers or sales
of the Common Stock contemplated by this Prospectus or the time at which a
stabilizing bid for such shares is made. In general, on and after the date two
business days prior to the Commencement Date (i) such passive market maker's net
daily purchases of the Common Stock may not exceed 30% of its average daily
trading volume in such stock for the two full consecutive calendar months
immediately proceeding the filing date of the Registration Statement of which
this Prospectus forms a part, (ii) such passive market
56
<PAGE>
maker may not effect transactions in, or display bids for, the Common Stock at a
price that exceeds the highest bid for the Common Stock by persons who are not
passive market makers and (iii) bids made by passive market makers must be
identified as such.
LEGAL MATTERS
The validity of the securities offered hereby and general corporate legal
matters will be passed upon for the Company by Gray Cary Ware & Freidenrich, A
Professional Corporation, Palo Alto, California. Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California is acting as counsel for
the Underwriters in connection with certain legal matters relating to the sale
of the Common Stock offered hereby.
EXPERTS
The Consolidated Financial Statements of the Company as of July 31, 1995,
and 1996 and for the period from August 27, 1993 (inception) to July 31, 1994
and each of the two years in the period ended July 31, 1996 and the financial
statements of IntelliLink Corp. for each of the three years in the period ended
December 31, 1995 included in this Prospectus have been so included in reliance
on the reports of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement (which term shall include any amendments thereto) on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
and the financial statements and notes filed as a part thereof. Statements made
in this Prospectus concerning the contents of any document referred to herein
are not necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved. The Registration
Statement, including the exhibits thereto and the financial statements and notes
filed as a part thereof, as well as such reports and other information filed
with the Commission, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
all or any part thereof may be obtained from the Commission upon the payment of
certain fees prescribed by the Commission. Such reports and other information
may also be inspected without charge at a Web site maintained by the Commission.
The address of such site is http://www.sec.gov.
57
<PAGE>
PUMA TECHNOLOGY, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PUMA TECHNOLOGY, INC.
Report of Independent Accountants........................................................................ F-2
Consolidated Balance Sheet............................................................................... F-3
Consolidated Statement of Operations..................................................................... F-4
Consolidated Statement of Stockholders' Equity........................................................... F-5
Consolidated Statement of Cash Flows..................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-7
INTELLILINK CORP.
Report of Independent Accountants........................................................................ F-17
Statement of Operations.................................................................................. F-18
Statement of Stockholders' Deficit....................................................................... F-19
Statement of Cash Flows.................................................................................. F-20
Notes to Financial Statements............................................................................ F-21
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Unaudited Pro Forma Combined Statement of Operations..................................................... F-27
Notes to Unaudited Pro Forma Combined Statement of Operations............................................ F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Puma Technology, Inc.
The reincorporation described in Note 10 to the Consolidated Financial
Statements has not been consummated at September 4, 1996. When it has been
consummated, we will be in a position to furnish the following report:
"In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity
and of cash flows present fairly, in all material respects, the
financial position of Puma Technology, Inc. and its subsidiaries at July
31, 1995 and 1996, and the results of their operations and their cash
flows for the period from August 27, 1993 (inception) to July 31, 1994
and for the years ended July 31, 1995 and 1996 in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for the opinion expressed above."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
August 20, 1996, except for Note 10
which is as of September 4, 1996
F-2
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
JULY 31,
-------------------- PRO FORMA
1995 1996 JULY 31, 1996
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................................. $ 2,000 $ 982 $ 2,987
Short-term investments.................................................... 500 -- --
Accounts receivable net of allowances of $0 at July 31, 1995, $184 at July
31, 1996 and $184 at July 31, 1996, pro forma (unaudited)................ 125 1,837 1,837
Inventories............................................................... 24 165 165
Other current assets...................................................... 48 114 114
--------- --------- -------------
Total current assets................................................ 2,697 3,098 5,103
Property and equipment, net................................................. 251 449 449
Other assets................................................................ -- 457 457
--------- --------- -------------
$ 2,948 $ 4,004 $ 6,009
--------- --------- -------------
--------- --------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................... $ 227 $ 682 $ 682
Accrued liabilities....................................................... 171 645 645
Deferred revenue.......................................................... 628 1,042 1,042
Current portion of capital lease obligations.............................. 20 21 21
--------- --------- -------------
Total current liabilities........................................... 1,046 2,390 2,390
Capital lease obligations, net of current portion........................... 16 28 28
Convertible debenture....................................................... -- 933 --
--------- --------- -------------
Total liabilities................................................... 1,062 3,351 2,418
--------- --------- -------------
Commitments (Note 9)
Stockholders' equity:
Preferred stock, $0.001 par value; 3,500 shares authorized at July 31,
1995 and 1996; 2,000 shares authorized, none issued and outstanding at
July 31, 1996 pro forma (unaudited)...................................... -- -- --
Series A convertible preferred stock, $0.001 par value; 2,000 shares
designated; 1,469 shares issued and outstanding at July 31, 1995 and
1996 (liquidation preference of $1.00 per share); none issued and
outstanding at July 31, 1996 pro forma (unaudited)..................... 2 2 --
Series B convertible preferred stock, $0.001 par value; 1,500 shares
designated; 1,151 shares issued and outstanding at July 31, 1995 and
1996 (liquidation preference of $3.00 per share); none issued and
outstanding at July 31, 1996 pro forma (unaudited)..................... 1 1 --
Common Stock, $0.001 par value; 20,000 shares authorized; 2,722 and 4,297
shares issued and outstanding at July 31, 1995 and 1996; 40,000 shares
authorized, 9,328 shares issued and outstanding at July 31, 1996 pro
forma (unaudited)........................................................ 3 4 9
Additional paid-in capital................................................ 4,982 6,686 9,622
Notes receivable from stockholders........................................ (2) (431) (431)
Deferred stock compensation............................................... -- (108) (108)
Accumulated deficit....................................................... (3,100) (5,501) (5,501)
--------- --------- -------------
Total stockholders' equity.......................................... 1,886 653 3,591
--------- --------- -------------
$ 2,948 $ 4,004 $ 6,009
--------- --------- -------------
--------- --------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993
(INCEPTION) YEAR ENDED JULY 31,
TO JULY 31, --------------------
1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Revenue...................................................................... $ 70 $ 860 $ 7,716
Cost of revenue.............................................................. -- 77 673
------ --------- ---------
Gross profit................................................................. 70 783 7,043
------ --------- ---------
Operating expenses:
Research and development................................................... 529 1,840 3,107
Sales and marketing........................................................ 175 580 2,169
General and administrative................................................. 326 500 1,064
In-process research and development........................................ -- -- 2,680
------ --------- ---------
Total operating expenses............................................. 1,030 2,920 9,020
------ --------- ---------
Operating loss............................................................... (960) (2,137) (1,977)
Interest income.............................................................. 9 77 110
Interest expense............................................................. (3) (6) (25)
------ --------- ---------
Loss before provision for income taxes....................................... (954) (2,066) (1,892)
Provision for income taxes................................................... -- (80) (509)
------ --------- ---------
Net loss..................................................................... $ (954) $ (2,146) $ (2,401)
------ --------- ---------
------ --------- ---------
Pro forma net loss per share (unaudited)..................................... $ (0.25)
---------
---------
Shares used in pro forma per share calculation (unaudited)................... 9,474
---------
---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CONVERTIBLE NOTES RE-
PREFERRED STOCK COMMON STOCK ADDITIONAL CEIVABLE DEFERRED
--------------- --------------- PAID-IN FROM STOCK- STOCK COM- ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL HOLDERS PENSATION DEFICIT TOTAL
------ ------ ------ ------ ---------- ------------ ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock
to founders............. -- $-- 3,045 $3 $ 73 $ (28) $ -- $ -- $ 48
Issuance of Series A
convertible preferred
stock................... 818 1 -- -- 817 -- -- -- 818
Issuance of Series B
convertible preferred
stock................... 125 -- -- -- 375 -- -- -- 375
Net loss................. -- -- -- -- -- -- -- (954) (954)
-- --
------ ------ ---------- ------ ------ ----------- -------
Balance at July 31,
1994.................... 943 1 3,045 3 1,265 (28) -- (954) 287
Issuance of Common Stock
upon exercise of stock
options................. -- -- 220 -- 57 -- -- -- 57
Issuance of Series A
convertible preferred
stock, net of issuance
costs................... 651 1 -- -- 641 -- -- -- 642
Issuance of Series B
convertible preferred
stock, net of issuance
costs................... 1,026 1 -- -- 3,026 -- -- -- 3,027
Repurchase of unvested
founder Common Stock.... -- -- (543) -- (7) 26 -- -- 19
Net loss................. -- -- -- -- -- -- -- (2,146) (2,146)
-- --
------ ------ ---------- ------ ------ ----------- -------
Balance at July 31,
1995.................... 2,620 3 2,722 3 4,982 (2) -- (3,100) 1,886
Issuance of Common Stock
upon exercise of stock
options................. -- -- 580 -- 321 (53) -- -- 268
Issuance of Common Stock
in connection with
acquisition of
IntelliLink............. -- -- 1,019 1 1,273 (194) -- -- 1,080
Loan to former officer of
IntelliLink Corp........ -- -- -- -- -- (184) -- -- (184)
Repurchase of unvested
Common Stock............ -- -- (24) -- (5) 2 -- -- (3)
Deferred compensation
related to stock
options................. -- -- -- -- 115 -- (108) -- 7
Net loss................. -- -- -- -- -- -- -- (2,401) (2,401)
-- --
------ ------ ---------- ------ ------ ----------- -------
Balance at July 31,
1996.................... 2,620 $3 4,297 $4 $6,686 $(431) $(108) $(5,501) $ 653
-- --
-- --
------ ------ ---------- ------ ------ ----------- -------
------ ------ ---------- ------ ------ ----------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993
(INCEPTION) YEAR ENDED JULY 31,
TO JULY 31, --------------------
1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................................................... $ (954) $ (2,146) $ (2,401)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization............................................ 17 73 217
In-process research and development...................................... -- -- 2,680
Other.................................................................... -- 56 42
Changes in assets and liabilities:
Accounts receivable.................................................... -- (125) (1,637)
Inventories............................................................ -- (24) (105)
Other assets........................................................... (31) (17) (82)
Accounts payable....................................................... 9 218 17
Accrued liabilities.................................................... 85 86 272
Deferred revenues...................................................... 150 478 101
------------- --------- ---------
Net cash used in operating activities................................ (724) (1,401) (896)
------------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment......................................... (105) (180) (317)
Purchase of short term investments......................................... -- (500) --
Maturities of short-term investments....................................... -- -- 500
Cash used in acquisition of IntelliLink Corp., net......................... -- -- (51)
------------- --------- ---------
Net cash provided by (used in) investing activities.................. (105) (680) 132
------------- --------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligations......................... (6) (14) (22)
Principal repayments on notes payable...................................... -- -- (119)
Note advances to former IntelliLink officer................................ -- -- (184)
Net proceeds from issuance of Series A convertible preferred stock......... 818 642 --
Net proceeds from issuance of Series B convertible preferred stock......... 375 3,027 --
Net proceeds from issuance of Common Stock................................. 48 20 71
------------- --------- ---------
Net cash provided by (used in) financing activities.................. 1,235 3,675 (254)
------------- --------- ---------
Net increase (decrease) in cash and cash equivalents......................... 406 1,594 (1,018)
Cash and cash equivalents at the beginning of the period..................... -- 406 2,000
------------- --------- ---------
Cash and cash equivalents at the end of the period........................... $ 406 $ 2,000 $ 982
------------- --------- ---------
------------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid.............................................................. $ 3 $ 6 $ 7
Income taxes paid.......................................................... -- 80 509
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Property and equipment acquired under capital leases....................... 36 20 --
Common Stock issued in connection with the acquisition of IntelliLink
Corp...................................................................... -- -- 1,274
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
THE COMPANY
Puma Technology, Inc. (the "Company") was incorporated in California on
August 27, 1993 and was subsequently reincorporated in Delaware (see Note 10).
The Company develops, markets and supports mobile data exchange software which
allows user to easily access, exchange and synchronize information stored on a
variety of different computing devices.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, IntelliLink Corp. ("IntelliLink")
and Puma Ireland, Inc. All significant intercompany accounts and transactions
have been eliminated.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants' Statement of Position 91-1 on software revenue
recognition.
Revenue is comprised of license revenue and service revenue. License revenue
is derived from the sale of software products and royalty agreements with
original equipment manufacturers (OEMs). Service revenue is derived from
customer funded engineering services. To date, service revenue has been less
than 10% of revenue.
License revenue is recognized upon shipment of the software if no
significant obligation remains and collection of the resulting receivable is
deemed probable. The Company currently sells its products primarily to OEMs and
to a lesser extent to distributors and resellers in the United States, Asia,
Australia, Canada and Europe. The Company grants distributors and resellers
certain rights of return and price protection on unsold merchandise held by
those distributors and resellers. Accordingly, reserves for estimated future
returns and credits for price protection are provided for upon revenue
recognition. Such reserves are based on historical rates of returns and
allowances, distributor inventory levels and other factors.
Revenue from OEMs under minimum guaranteed royalty arrangements, which are
not subject to significant future obligations, is recognized when such royalties
are earned and become payable. Royalty revenue that is subject to significant
future obligations is recognized when such obligations are fulfilled. Royalty
revenue that exceeds minimum guarantees is recognized in the period earned.
Payments from customers received in advance of revenue recognition are recorded
as deferred revenue.
The Company provides a limited amount of telephone technical support to
customers. These activities are generally considered insignificant postcontract
customer support obligations and related costs are accrued upon recognition of
the license revenue.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with a maturity of
three months or less at the date of purchase to be cash equivalents.
SHORT TERM INVESTMENTS
The Company accounts for its marketable securities in accordance with
Statement of Financial Accounting Standards No. 115 (FAS 115), "Accounting for
Certain Investments in Debt and Equity
F-7
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
Securities", which requires the Company to classify debt and equity securities
into one of three categories: held to maturity, trading or available for sale.
The Company has classified its investments as available for sale. The cost of
securities sold is based on the specific identification method.
INVENTORIES
Inventories consist principally of infrared hardware components supplied by
third-party vendors and software and related documentation, which are stated at
the lower of cost (first-in, first-out) or market.
SOFTWARE DEVELOPMENT COSTS
Software development costs incurred prior to the establishment of
technological feasibility are included in research and development and are
expensed as incurred. The Company defines establishment of technological
feasibility as the completion of a working model. Software development costs
incurred subsequent to the establishment of technological feasibility through
the period of general market availability of the product are capitalized, if
material. To date, all software development costs have been expensed as
incurred.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization is
computed using the straight-line method over the estimated useful lives of the
assets, generally three to five years, or in the case of leased assets the life
of the lease, if shorter.
OTHER ASSETS
Other assets are primarily comprised of intangibles and goodwill.
Amortization is computed on the straight-line basis over the expected lives of
the assets ranging from two to three years. Accumulated amortization was $45,000
at July 31, 1996.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the
asset and liability method, deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax
bases of the assets and liabilities and are measured using the currently enacted
tax rates and laws.
CONCENTRATION OF CREDIT RISK AND EXPORT SALES
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash, cash equivalents,
short-term investments and trade accounts receivable. The Company places its
cash, cash equivalents and short-term investments primarily in money market
accounts and commercial paper. The Company, by policy, limits the amount of
credit exposure for cash and cash equivalents to any one issuer.
The Company performs ongoing credit evaluations of its customers and to date
has not experienced any material losses. During fiscal 1995, NEC, Toshiba and
Canon accounted for approximately 16%, 15% and 14% of revenue, respectively.
Toshiba and NEC accounted for approximately 18% and 13% of fiscal 1996 revenue,
respectively. At July 31, 1996, three customers accounted for approximately 28%,
18% and 11% of accounts receivable.
Revenue from export sales to customers outside the United States, primarily
Asia, were approximately 71% and 67% of fiscal 1995 and fiscal 1996 revenue,
respectively. The Company's sales are generally denominated in US dollars. The
Company does not undertake any foreign currency hedging activities.
F-8
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
PRO FORMA NET LOSS PER SHARE (UNAUDITED)
Pro forma net loss per share is computed using the weighted average number
of common shares, preferred shares (on an as converted basis) and common
equivalent shares outstanding during the period (using the treasury stock
method, if dilutive). Pursuant to the requirements of the Securities and
Exchange Commission, common shares, convertible preferred stock (using the as
converted method) and stock options and warrants (using the treasury stock
method and the assumed initial public offering price) issued during the twelve
month period prior to the offering have been included in the computation as if
they were outstanding for all periods presented.
Historical net loss per share data has not been presented since such amounts
are not deemed to be meaningful due to the significant change in the Company's
capital structure which will occur upon the completion of the initial public
offering.
PRO FORMA BALANCE SHEET (UNAUDITED)
On August 15, 1996, the Company issued approximately 286,000 shares of
Series C convertible preferred stock and received cash of $1,600,000 (see Note
4). If the offering contemplated by this prospectus (the "Offering") is
consummated, all shares of convertible preferred stock outstanding at the
closing date will automatically convert into an aggregate of approximately
4,375,000 shares of Common Stock, (based on the Series C convertible preferred
stock issued in August 1996 and the Series A and B convertible preferred stock
outstanding at July 31, 1996); the 270,000 warrants issued in connection with
sales of preferred stock will be exercised partially for cash proceeds of
$405,000 and partially on a net basis for an aggregate of 225,000 shares of
Common Stock; the 250,000 warrants issued in connection with the acquisition of
IntelliLink will be fully exercised on a net basis for approximately 95,000
shares of Common Stock; and the 7% convertible subordinated debenture and
related accrued interest issued in connection with the acquisition of
IntelliLink will automatically convert into approximately 337,000 shares of
Common Stock.
The pro forma effect of the above mentioned transactions has been reflected
in the accompanying unaudited pro forma balance sheet as of July 31, 1996.
RECENT PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation" which established a fair value based method of accounting for
stock-based compensation plans and requires additional disclosures for those
companies who elect not to adopt the new method of accounting. The Company will
be required to adopt FAS 123 in fiscal 1997. The Company's intention is to
continue to account for employee stock awards in accordance with APB Opinion No.
25 and to adopt the "disclosure only" alternative described in FAS 123.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of," which
requires the Company to review for impairment of long lived assets, certain
identifiable intangibles, and goodwill related to those assets whenever events
or changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. In certain situations, an impairment loss would be
recognized. FAS 121 will become effective for the Company's year ending July 31,
1997. The Company has studied the implications of FAS 121 and, based on its
initial evaluation, does not expect its adoption to have a material impact on
the Company's financial condition or results of operations.
F-9
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- ACQUISITION OF INTELLILINK CORP.:
On March 6, 1996, the Company agreed to acquire IntelliLink, a developer of
advanced synchronization software, in a transaction accounted for as a purchase.
The IntelliLink acquisition was completed on April 30, 1996. The consolidated
financial statements of the Company include the results of operations of
IntelliLink since the date of acquisition. Pursuant to the acquisition, (i) all
shares of outstanding common and preferred stock of IntelliLink were exchanged
for 769,000 shares of the Company's Common Stock, (ii) outstanding options to
purchase IntelliLink Common Stock were exchanged for options to acquire 99,000
shares of the Company's Common Stock, (iii) the Company issued a 7% convertible
subordinated debenture for $850,000 in a replacement of a debenture owed by
IntelliLink for the same principal amount, and (iv) the Company issued a warrant
to purchase 250,000 shares of the Company's Common Stock at $5.60 per share in
replacement of a similar warrant outstanding for IntelliLink Common Stock.
Additionally, in conjunction with the IntelliLink acquisition, the Company
issued 250,000 shares of Common Stock to two former officers and principal
stockholders of IntelliLink in exchange for cancellation of debt owed to them by
IntelliLink and notes receivable of $194,000. The shares vest over a two year
period. The notes receivable bear interest at 8% per annum.
The shares of Common Stock issued in connection with the IntelliLink
acquisition were valued based on an independent appraisal obtained by the
Company. The total purchase price of approximately $3,483,000 (including
$1,207,000 for liabilities assumed) was assigned, based on an independent
appraisal, to the fair value of the assets acquired, including $327,000 to
tangible assets acquired, $2,680,000 to in-process research and development,
$120,000 to identified intangible assets and the remaining $356,000 to goodwill.
The in-process research and development was expensed at the acquisition date.
The 7% convertible subordinated debenture is due January 23, 1998. The
outstanding principal and accrued interest thereon will automatically convert
into Common Stock based on a conversion price of approximately $2.77 per share,
subject to antidilution adjustment, on the earlier of: (i) the acquisition of
the Company by another entity or (ii) the effective date of an initial public
offering of the Company's Common Stock in which proceeds to the Company are not
less than $6.00 per share. At July 31, 1996, the debenture and related interest
was convertible into approximately 337,000 shares of Common Stock.
The warrants to purchase Common Stock are exercisable until the earlier of:
(i) January 23, 1998, (ii) the acquisition of the Company by another entity or
(iii) the effective date of an initial public offering of the Company's Common
Stock in which proceeds to the Company are not less than $6.00 per share.
In conjunction with the acquisition, the Company entered into a loan
agreement with a former officer of IntelliLink under which the Company provided
an initial loan of $150,000 in May 1996. Additionally, the Company is required
to make 24 monthly advances of $11,000. Amounts outstanding under the agreement
bear interest at 8% and are secured by 175,000 shares of the Company's Common
Stock. All principal and accrued but unpaid interest is due and payable on the
earlier of: (i) April 30, 2000, (ii) the acquisition of the Company by another
entity, or (iii) the effective date of an initial public offering of the
Company's Common Stock or the end of any associated lockup period, if
applicable. As of July 31, 1996, the Company has made advances of $184,000 under
the agreement.
Unaudited pro forma information, which reflects the results of operations
for the year ended July 31, 1996 as if the acquisition of IntelliLink had
occurred as of August 1, 1995 and after giving effect to certain
F-10
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- ACQUISITION OF INTELLILINK CORP.: (CONTINUED)
adjustments, including amortization of goodwill and other intangibles, and
excluding the effect of a nonrecurring charge of $2,680,000 of in-process
research and development directly attributable to the acquisition of
IntelliLink, is as follows (in thousands, except per share data):
<TABLE>
<S> <C>
Pro forma revenue.................................................. $ 8,831
Pro forma net (loss)............................................... (610)
Pro forma net (loss) per share..................................... $ (0.06)
</TABLE>
NOTE 3 -- BALANCE SHEET COMPONENTS:
Cash equivalents and short-term investments include available-for-sale
securities as follows (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Cash equivalents:
Commercial paper................................................................... $ 1,317 $ 568
Money market funds................................................................. 296 208
--------- ---------
$ 1,613 $ 776
--------- ---------
--------- ---------
Short-term investments:
Commercial paper................................................................... $ 500 $ --
--------- ---------
--------- ---------
</TABLE>
Realized gains or losses on sales of available-for-sale securities were
immaterial for the years ended July 31, 1995 and 1996. There were no unrealized
holding gains or losses on such securities at July 31, 1995 and 1996. The
short-term investments have maturities of less than one year.
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Computer equipment and software......................................................... $ 267 $ 522
Furniture and office equipment.......................................................... 73 245
--------- ---------
340 767
Less: accumulated depreciation and amortization......................................... (89) (318)
--------- ---------
$ 251 $ 449
--------- ---------
--------- ---------
</TABLE>
At July 31, 1995 and 1996, the Company had $56,000 and $94,000 of equipment
under capital leases, respectively, and related accumulated amortization of
$20,000 and $48,000, respectively.
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Accrued compensation.................................................................... $ 65 $ 278
Other accrued liabilities............................................................... 106 367
--------- ---------
$ 171 $ 645
--------- ---------
--------- ---------
</TABLE>
F-11
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- CONVERTIBLE PREFERRED STOCK:
SERIES A AND B CONVERTIBLE PREFERRED STOCK
CONVERSION
At the option of the stockholder, each share of Series A preferred stock is
convertible into two shares of Common Stock and each share of Series B preferred
stock is convertible into one share of Common Stock, subject to adjustment for
antidilution. The Series A and B preferred stock will automatically convert into
Common Stock in the event of the closing of an underwritten public offering of
the Company's Common Stock at a minimum price of $6.00 per share and an
aggregate offering price of not less than $10,000,000 or upon the affirmative
vote of 51% of each of the Series A and B stockholders.
VOTING
Except as required by law, the Series A and B stockholders have voting
rights equal to Common Stock on an as-converted basis.
DIVIDENDS
Series A and B stockholders are entitled to receive noncumulative dividends
when and as declared by the Board of Directors at a rate of $0.10 and $0.30 per
share, respectively, per annum. The Company may make no distributions to holders
of Common Stock until Series A and B dividends have been paid. No dividends have
been declared by the Board of Directors from August 27, 1993 (inception) through
July 31, 1996.
LIQUIDATION
In the event of any liquidation or dissolution of the Company, the Series A
and B stockholders are entitled to receive $1.00 and $3.00 per share,
respectively, adjusted for antidilution, and any declared but unpaid dividends
prior and in preference to any distributions to the holders of Common Stock. The
remaining assets, if any, shall be distributed ratably among the holders of the
Common Stock and the Series A and B preferred stock, based on the number of
shares held assuming conversion of the preferred stock.
SERIES C CONVERTIBLE PREFERRED STOCK
In July 1996, the Company agreed to issue approximately 286,000 shares of
Series C convertible preferred stock to a group of investors at $5.60 per share.
These shares were subsequently issued on August 14, 1996. Holders of Series C
preferred stock are entitled to annual noncumulative dividends when and as
declared by the Board of Directors at a rate of $0.56 per share and in the event
of liquidation or dissolution of the Company, $5.60 per share plus any declared
but unpaid dividends, and voting rights equal to stockholders of Common Stock on
an as-converted basis. Each share of the Series C preferred stock is convertible
into one share of Common Stock, subject to adjustment for antidilution, at the
stockholders option. The shares automatically convert into Common Stock upon the
closing of an initial public offering on the same terms as the Series A and B
preferred stock.
NOTE 5 -- COMMON STOCK:
In October 1993, the Company issued 3,045,000 shares of its Common Stock to
founders which vest over three years. During the year ended July 31, 1995,
unvested shares of 543,000 issued to founders were repurchased by the Company at
the original issue price. At July 31, 1996, unvested shares aggregated 113,000.
At July 31, 1996, the Company had reserved approximately 6,054,000 shares of
its Common Stock for future issuance upon conversion of Common Stock equivalent
securities.
F-12
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- COMMON STOCK WARRANTS:
In conjunction with certain equity offerings during the period from August
27, 1993 (inception) to July 31, 1994 and fiscal 1995, the Company issued
114,000 and 156,000 warrants, respectively, for the purchase of Common Stock.
Each warrant is convertible into one share of Common Stock at $3.00 per share.
The warrants are exercisable immediately and expire no more than five years from
the date of grant. As of July 31, 1996, no warrants have been exercised. Of
these warrants outstanding, 135,000 expire the earlier of the closing of an
initial public offering in which gross proceeds to the Company are not less than
$6.00 per share, or the acquisition of the Company by another entity. All other
warrants outstanding expire the earlier of the closing of an initial public
offering in which gross proceeds to the Company are not less than $10,000,000,
the acquisition of the Company by another entity, or after the fair value of the
Company's Common Stock is equal to or greater than $6.00 per share. In addition,
commencing two years after the issuance date, 50% of the warrants will expire
once the fair value of the Company's Common Stock is equal to or greater than
$4.50 per share but less than $6.00 per share. The fair value of the Company's
Common Stock will be determined by the Board of Directors.
In July 1996, the Company agreed to issue a warrant to purchase 140,000
shares of its Common Stock at $5.50 per share to one of its Series C
stockholders in exchange for rights to certain technology. These warrants were
subsequently issued in August 1996. The aggregate value of the warrant has been
estimated by the Company at $175,000 and will be accounted for as purchased
technology. The warrant is exercisable immediately and expires at the earlier of
August 1999 or the acquisition of the Company by another entity. The purchased
technology will be amortized over its estimated life.
NOTE 7 -- STOCK OPTIONS:
In October 1993, the Board of Directors and stockholders adopted the 1993
Stock Option Plan (the Plan) which provides for granting of incentive stock
options (ISOs) and nonqualified stock options (NSOs) to purchase shares of
Common Stock to employees, consultants and advisors of the Company. To date, the
Company has not granted any significant options to consultants or advisors. ln
accordance with the Plan, the stated exercise price shall be not less than 100%
and 85% of the estimated fair market value of Common Stock on the date of grant
for ISOs and NSOs, respectively, as determined by the Board of Directors. The
Plan provides that the options shall be exercisable over a period not to exceed
ten years. Options generally vest 25% one year after date of grant and 1/48th
each month thereafter for the next 36 months. The Plan provides that the options
may be exercised prior to the options becoming vested. If the optionee's
employment is terminated for any reason, the Company has the right to repurchase
any unvested shares. At July 31, 1996, the options authorized under the Plan
aggregated 2,500,000 (see Note 10).
F-13
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- STOCK OPTIONS: (CONTINUED)
Activity under the Plan is summarized as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------
SHARES PRICE PER SHARE
----------- ---------------
<S> <C> <C>
Options granted........................................................................ 216 $0.025-$0.20
Options canceled....................................................................... (8) $0.20
-----
Balance at July 31, 1994............................................................... 208 $0.025-$0.20
Options granted........................................................................ 597 $0.20
Options canceled....................................................................... (30) $0.20
Options exercised...................................................................... (220) $0.025-$0.20
-----
Balance at July 31, 1995............................................................... 555 $0.025-$0.20
Options granted........................................................................ 1,113 $0.20-$6.05
Options canceled....................................................................... (80) $0.20-$2.50
Options exercised...................................................................... (580) $0.025-$1.25
-----
Balance at July 31, 1996............................................................... 1,008 $0.20-$6.05
-----
-----
</TABLE>
At July 31, 1996, a total of 103,000 options were vested, and 540,000 shares
were subject to repurchase and options to purchase approximately 716,000 shares
were available for future grants (See Note 10.)
In addition to the options outstanding under the Plan, the Company issued
options to purchase 99,000 shares of its Common Stock in exchange for
outstanding options of IntelliLink. These options are exercisable at prices from
$0.41 to $4.01 per share. At July 31, 1996, options to purchase 21,000 shares
were vested.
Based on an independent appraiser's valuation report, management believes
that the exercise price for certain options granted during fiscal 1996 was below
the estimated fair value of the Company's Common Stock at the dates of grant.
Accordingly, the Company will recognize approximately $115,000 of compensation
expense over the options' four-year vesting periods.
NOTE 8 -- INCOME TAXES:
The income tax provision for the period from August 27, 1993 to July 31,
1994 and the years ended July 31, 1995 and 1996 is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993 YEAR ENDED JULY 31,
(INCEPTION)
TO JULY 31, --------------------
1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Current:
Federal................................................................ $ -- $ -- $ --
State.................................................................. -- -- --
Foreign withholding tax................................................ -- 80 509
------------- --------- ---------
$ -- $ 80 $ 509
------------- --------- ---------
------------- --------- ---------
</TABLE>
F-14
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- INCOME TAXES: (CONTINUED)
Deferred tax assets are summarized as follows (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Net operating loss carryforwards................................................ $ 860 $ 550
Research and development credit carryforwards................................... 220 300
Foreign tax credit carryforwards................................................ 80 589
Reserves and allowances......................................................... 50 161
Research and development........................................................ 123 600
--------- ---------
Total deferred tax assets................................................... 1,333 2,200
Deferred tax asset valuation allowance.......................................... (1,333) (2,200)
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
</TABLE>
The Company has incurred losses since inception. Management believes that,
based on the history of such losses and other factors, the weight of available
evidence indicates that it is more likely than not that the Company will not be
able to realize its deferred tax assets and thus a full valuation reserve has
been recorded at July 31, 1995 and 1996.
A reconciliation of the income tax provision to the amount computed by
applying the statutory federal income tax rate to loss before income tax
provision is summarized as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993 YEAR ENDED JULY 31,
(INCEPTION)
TO --------------------
JULY 31, 1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Amounts computed at statutory federal rate........................... $ (324) $ (702) $ (644)
Foreign withholding taxes............................................ -- 80 509
In-process research and development not deductible................... -- -- 911
Utilization of tax loss carryforwards................................ -- -- (322)
Future benefits not currently recognized............................. 324 702 55
------ --------- ---------
$ -- $ 80 $ 509
------ --------- ---------
------ --------- ---------
</TABLE>
At July 31, 1996, the Company had federal net operating loss carryforwards
of $1,600,000 which expire beginning in 2008. The Company also has $150,000 of
federal and state research and development credit carryforwards and $589,000 of
foreign tax credit carryforwards. At July 31, 1996, IntelliLink had
preacquisition federal net operating loss carryforwards of approximately
$400,000. Utilization of approximately $1,400,000 of the Company's net operating
losses and credits is subject to an annual limitation of $360,000 due to
ownership change limitations provided by the Internal Revenue Code of 1986 and
similar state provisions and may be further limited should another ownership
change occur. The annual limitation may result in the expiration of the net
operating losses and credits before utilization. At July 31, 1996, IntelliLink's
pre acquisition net operating loss carryforwards were subject to an annual
limitation of approximately $180,000 per year due to change in ownership of
IntelliLink resulting from its acquisition by the Company.
NOTE 9 -- COMMITMENTS:
The Company leases certain computer equipment and office equipment under
long-term lease agreements that are classified as capital leases. The leases
expire over the next four years and include options to purchase the equipment at
the end of the lease terms.
F-15
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- COMMITMENTS: (CONTINUED)
The Company leases its facilities under operating leases that expire at
various dates through December 1998. The leases provide for escalating lease
payments. The Company subleases one of its facilities under a noncancelable
operating lease that expires in 1997. Future minimum lease receipts under this
sublease total approximately $171,000.
Future minimum lease payments, net of sublease income, at July 31, 1996 were
as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
Fiscal year ending July 31,
1997..................................................................................... $ 28 $ 269
1998..................................................................................... 11 39
1999..................................................................................... 11 --
2000..................................................................................... 2 --
--- -----
Total minimum lease payments............................................................. 52 $ 308
-----
-----
Less amount representing interest........................................................ (3)
---
Present value of future minimum lease payments........................................... 49
Less current portion of capital lease obligations........................................ (21)
---
Long-term capital lease obligations...................................................... $ 28
---
---
</TABLE>
Total rent expense was approximately $35,000, $122,000 and $293,000 for the
period from inception to July 31, 1994 and for the years ended July 31, 1995 and
1996, respectively. The 1996 rental expense was offset by approximately $72,000
of sublease income.
NOTE 10 -- SUBSEQUENT EVENTS:
REINCORPORATION AND STOCK PLANS
On September 3, 1996, the Company's Board of Directors authorized management
of the Company to file a Registration Statement with the Securities and Exchange
Commission covering the proposed sale of shares of its Common Stock to the
public. In addition, the Company's Board of Directors authorized the
reincorporation of the Company in Delaware, increased the authorized shares of
Common Stock to 40,000,000, increased the number of options authorized and
available under the Company's 1993 Stock Option Plan by 1,000,000 and approved
the adoption of the 1996 Employee Stock Purchase Plan pursuant to which 250,000
shares of the Company's Common Stock have been reserved for future issuance. All
of the above items will be effected prior to the effective date of the Company's
initial public offering. All per share amounts have been adjusted on the
accompanying financial statements to reflect the reincorporation in Delaware.
F-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
IntelliLink Corp.
In our opinion, the accompanying statements of operations, of stockholders'
deficit and of cash flows of IntelliLink Corp. present fairly, in all material
respects, the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 7, 1996
F-17
<PAGE>
INTELLILINK CORP.
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenue:
License revenue.................................................. $ 300 $ 758 $ 1,262 $ 448 $ 375
Service revenue.................................................. 476 229 269 4 18
--------- --------- --------- --------- ---------
Total revenue.................................................. 776 987 1,531 452 393
--------- --------- --------- --------- ---------
Cost of revenue:
Cost of license revenue.......................................... 45 124 371 137 74
Cost of service revenue.......................................... 102 443 291 111 166
--------- --------- --------- --------- ---------
Total cost of revenue.......................................... 147 567 662 248 240
--------- --------- --------- --------- ---------
Gross profit................................................... 629 420 869 204 153
--------- --------- --------- --------- ---------
Operating expenses:
Research and development......................................... 292 325 497 78 50
Sales and marketing.............................................. 315 440 681 245 161
General and administrative....................................... 186 458 495 121 124
--------- --------- --------- --------- ---------
Total operating expenses....................................... 793 1,223 1,673 444 335
--------- --------- --------- --------- ---------
Operating loss..................................................... (164) (803) (804) (240) (182)
Interest income.................................................... 8 14 23 1 5
Interest expense................................................... (8) (38) (162) (28) (48)
--------- --------- --------- --------- ---------
Net loss........................................................... $ (164) $ (827) $ (943) $ (267) $ (225)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
INTELLILINK CORP.
STATEMENT OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992.................. -- $ -- 200 $ 2 $ -- $ (249)
Issuance of Common Stock...................... -- -- 21 -- -- --
Net loss...................................... -- -- -- -- -- (164)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1993.................. -- -- 221 2 -- (413)
Issuance of Common Stock upon exercise of
stock options................................ -- -- 1 -- 1 --
Net loss...................................... -- -- -- -- -- (827)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1994.................. -- -- 222 2 1 (1,240)
Conversion of Common Stock to Series A
convertible preferred stock.................. 2,215 3 (222) (2) (1) --
Issuance of warrants to purchase Series A
convertible preferred stock.................. -- -- -- -- 128 --
Issuance of warrants to stockholder to
purchase Series B convertible preferred
stock........................................ -- -- -- -- 127 --
Dividend on Preferred Stock................... -- -- -- -- -- (110)
Net loss...................................... -- -- -- -- -- (943)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1995.................. 2,215 3 -- -- 255 (2,293)
Net loss (unaudited).......................... -- -- -- -- -- (225)
----- ----- ----------- ----- ----- -------------
Balance at March 31, 1996 (unaudited)......... 2,215 $ 3 -- $ -- $ 255 $ (2,518)
----- ----- ----------- ----- ----- -------------
----- ----- ----------- ----- ----- -------------
<CAPTION>
TOTAL
---------
<S> <C>
Balance at December 31, 1992.................. $ (247)
Issuance of Common Stock...................... --
Net loss...................................... (164)
---------
Balance at December 31, 1993.................. (411)
Issuance of Common Stock upon exercise of
stock options................................ 1
Net loss...................................... (827)
---------
Balance at December 31, 1994.................. (1,237)
Conversion of Common Stock to Series A
convertible preferred stock.................. --
Issuance of warrants to purchase Series A
convertible preferred stock.................. 128
Issuance of warrants to stockholder to
purchase Series B convertible preferred
stock........................................ 127
Dividend on Preferred Stock................... (110)
Net loss...................................... (943)
---------
Balance at December 31, 1995.................. (2,035)
Net loss (unaudited).......................... (225)
---------
Balance at March 31, 1996 (unaudited)......... $ (2,260)
---------
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
INTELLILINK CORP.
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss............................................................ $ (164) $ (827) $ (943) $ (267) $ (225)
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:
Depreciation and amortization................................... 6 17 67 13 15
Issuance of warrants and notes payable for consulting
services....................................................... -- 35 127 127 --
Changes in assets and liabilities:
Accounts receivable........................................... (45) 45 (41) (38) 27
Inventories................................................... -- (54) 14 (8) 19
Interest receivable........................................... (8) (14) 14 14 --
Accounts payable.............................................. 34 211 67 79 91
Accrued officer compensation.................................. 130 241 4 (158) (105)
Accrued liabilities........................................... 53 143 66 (105) 15
Deferred revenue.............................................. (13) 211 (96) (75) 207
--------- --------- --------- --------- ---------
Net cash provided by (used in) operating activities......... (7) 8 (721) (418) 44
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment............................... (11) (15) (27) (10) (2)
Restricted short-term investment.................................. -- -- (100) (100) --
Loans to officer.................................................. (64) (88) -- (3) --
Repayment of notes receivable from officer........................ -- -- 21 -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities....................... (75) (103) (106) (113) (2)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from line of credit and long-term debt................... 124 75 928 588 --
Principal payments of long-term debt.............................. (75) -- (7) -- (3)
Proceeds from issuance of notes payable to stockholders........... 48 20 65 56 --
Repayments of notes payable and capital lease obligations......... (6) (8) (26) (2) (1)
Dividends paid.................................................... -- -- (110) (60) --
Proceeds from issuance of Common Stock............................ -- 1 -- -- --
--------- --------- --------- --------- ---------
Net cash provided by financing activities................... 91 88 850 582 (4)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash..................................... 9 (7) 23 51 38
Cash at the beginning of the year................................... -- 9 2 2 25
--------- --------- --------- --------- ---------
Cash at the end of the year......................................... $ 9 $ 2 $ 25 $ 53 $ 63
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid..................................................... $ 8 $ 38 $ 119 $ 26 $ 24
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Fixed assets acquired under capital leases........................ 13 -- 28 -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
IntelliLink Corp. ("IntelliLink") was incorporated in New Hampshire on July
23, 1992. IntelliLink develops, markets and supports advanced data
synchronization software. Its principal market is the domestic consumer market.
ACQUISITION OF THE COMPANY
On April 30, 1996, IntelliLink was acquired by Puma Technology, Inc.
("Puma") (Note 10). Pursuant to Securities and Exchange Commission financial
statement requirements, an audited balance sheet of IntelliLink has not been
presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
IntelliLink's license revenue is derived from product licensing fees and
royalties relating to sales of IntelliLink's packaged software products.
IntelliLink's service revenue is derived from customer funding under software
development agreements and from annual maintenance contracts.
Revenue from product licensing fees is recognized upon shipment from
IntelliLink, net of allowances for estimated returns, provided that no
significant vendor obligations remain and collection of the related receivable
is probable. IntelliLink provides a limited amount of free telephone support to
end-users, the costs of which are insignificant. Revenue from annual maintenance
contracts is recognized ratably over the term of the contract.
Revenue from customer-funded software development agreements is recognized
on a percentage of completion basis, measured by the percentage of labor cost
incurred to date to estimated total labor cost for each contract, provided that
no significant acceptance criteria exist. Nonrefundable advances pursuant to
software development agreements can generally be applied to reduce future
royalties due to IntelliLink by the customer upon sale of products incorporating
such developed software. Royalties in excess of payments made to IntelliLink
during development of the software are recognized as revenue when earned based
upon product shipments to end-users.
SOFTWARE DEVELOPMENT COSTS
Software development costs incurred prior to the establishment of
technological feasibility are expensed as incurred. IntelliLink defines
technological feasibility as the completion of a working model. Software
development costs incurred subsequent to the establishment of technological
feasibility through the period of general market availability of the product are
capitalized, if material. To date, all software development costs have been
expensed as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally three to seven years. Equipment held under
capital lease obligations is amortized on a straight-line basis over the shorter
of the life of the related asset or the lease term. Repair and maintenance costs
are expensed as incurred. Depreciation and amortization expense relating to
fixed assets, exclusive of amortization of equipment under capital lease
obligations, was $1,000, $10,000 and
F-21
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
$16,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
Amortization expense relating to equipment under capital lease obligations
amounted to $5,000, $7,000 and $8,000 for the years ended December 31, 1993,
1994 and 1995, respectively.
In connection with the issuance of the 10% convertible subordinated
debentures (Note 4), IntelliLink capitalized certain debt issuance costs. The
related amortization expense, amounting to approximately $4,000 during the year
ended December 31, 1995, is being charged to interest expense using the
effective interest method over the term of the related debt.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose IntelliLink to concentrations
of credit risk include accounts receivable. At December 31, 1994, IntelliLink
had accounts receivable of $48,000 due from one customer. At December 31, 1995,
IntelliLink had accounts receivable of $25,000, $23,000 and $31,000,
respectively, due from three customers. IntelliLink does not require collateral
and performs ongoing credit evaluations of its customers and to date has not
experienced any material losses.
INTERIM RESULTS (UNAUDITED)
The accompanying statements of operations and of cash flows for the three
months ended March 31, 1995 and 1996 and the statement of stockholders' deficit
for the three months ended March 31, 1996 are unaudited. In the opinion of
management, these statements have been prepared on the same basis as the audited
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair statement of results of the
interim periods.
RECENT DEVELOPMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation" which established a fair value based method of accounting for
stock-based compensation plans and requires additional disclosures for those
companies who elect not to adopt the new method of accounting. IntelliLink will
be required to adopt FAS 123 in fiscal 1996. IntelliLink's intention is to
continue to account for employee stock awards in accordance with APB Opinion No.
25 and to adopt the "disclosure only" alternative described in FAS 123.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
requires IntelliLink to review for impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets whenever events
or changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. In certain situations, an impairment loss would be
recognized. FAS 121 will become effective for IntelliLink's year ending December
31, 1996. IntelliLink has studied the implications of FAS 121 and, based on its
initial evaluation, does not expect its adoption to have a material impact on
its financial condition or results of operations.
NOTE 2 -- RELATED PARTY TRANSACTIONS:
IntelliLink has an unsecured note receivable totaling $197,000 at December
31, 1995 from an officer and stockholder of IntelliLink which is due on demand.
Interest is due annually at 8% per annum. Related interest income for the years
ended December 31, 1993, 1994 and 1995 was $8,000, $14,000 and $16,000,
respectively.
F-22
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- RELATED PARTY TRANSACTIONS: (CONTINUED)
IntelliLink has notes payable totaling $116,000 at December 31, 1995 due to
certain other stockholders and officers of IntelliLink. The notes are unsecured
and are payable on demand. Interest on the notes is payable annually at 8% per
annum. Related interest expense for the years ended December 31, 1993, 1994 and
1995 was $2,000, $5,000 and $7,000, respectively.
NOTE 3 -- LINE OF CREDIT:
In June 1995, IntelliLink entered into an agreement with a bank to establish
a revolving line of credit facility. The facility allows for total borrowings up
to $90,000 and is secured by a certificate of deposit in the amount of $100,000
held at the bank. Borrowings on the line of credit bear interest at prime (8.5%
at December 31, 1995) plus 2%.
NOTE 4 -- LONG-TERM DEBT:
In August 1993, IntelliLink entered into a $100,000 working capital
installment note payable with a significant customer. The note bears interest at
10% per annum and is secured by substantially all assets of IntelliLink. The
note is convertible at the option of the holder into a warrant to purchase
280,000 shares of Common Stock of IntelliLink at an exercise price of $0.01 per
share. The note matured in August 1995 and at December 31, 1995, IntelliLink was
in default of the note. In April 1996, the note was converted into Common Stock
in connection with the acquisition of IntelliLink (Note 10).
In July and August 1994, IntelliLink issued convertible subordinated
debentures totaling $50,000. The notes mature in twenty four months and bear
interest at 8% per annum. The debentures may be converted into Common Stock at
any time at the option of the holder at a conversion rate defined in the notes.
In April 1996, the debentures were converted into Common Stock in connection
with the acquisition of IntelliLink (Note 10).
In January and July 1995, IntelliLink issued convertible subordinated
debentures totaling $600,000 and $250,000, respectively. The debentures mature
in January and July 1998, respectively, and bear interest at 10% per annum. The
debentures are convertible, at the option of the holder, into Series A preferred
stock at the rate of $0.69 per share. In April 1996, in connection with the
acquisition of IntelliLink, the debentures were exchanged for a debenture issued
by Puma in the same principal amount and convertible into Puma Common Stock.
In May 1995, IntelliLink borrowed $50,000 from a bank under an installment
note payable maturing in April 2000. The note bears interest at prime (8.5% at
December 31, 1995) plus 3% and is secured by substantially all assets of
IntelliLink.
Maturities of long-term debt for the next five years are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- ---------------------------------------------------------------- -----------
<S> <C>
1996 $ 162
1997 12
1998 862
1999 12
2000 5
</TABLE>
NOTE 5 -- STOCKHOLDERS' DEFICIT:
On January 20, 1995, IntelliLink amended and restated its certificate of
incorporation to (i) increase the authorized number of shares of Common Stock,
$0.01 par value, from 1,500,000 shares to 9,000,000 shares and (ii) authorize
the issuance of up to 6,000,000 shares of convertible preferred stock, $0.01 par
value. The authorized shares of convertible preferred stock include 4,000,000
shares designated as
F-23
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- STOCKHOLDERS' DEFICIT: (CONTINUED)
Series A convertible preferred stock (the "Series A preferred") and 1,500,000
shares designated as Series B convertible preferred stock (the "Series B
preferred"). The remaining authorized shares of convertible preferred stock have
not been designated.
In addition, on January 20, 1995, each share of outstanding Common Stock was
converted into ten shares of Series A preferred stock. In connection with the
conversion, IntelliLink authorized a ten-for-one stock split for all outstanding
Common Stock options and warrants. All Common Stock option and warrant share and
per share amounts included in the financial statements have been adjusted to
give retroactive effect to the stock split.
CONVERSION
Each share of Series A and Series B preferred stock is convertible into
Common Stock at the option of the holder at a conversion price per share defined
in the amended and restated articles of incorporation. In connection with the
acquisition of IntelliLink, each share of IntelliLink's Series A and Series B
preferred stock outstanding immediately prior to April 30, 1996 was exchanged
for shares of Puma Common Stock (Note 10). At December 31, 1995, IntelliLink had
reserved a total of 2,215,000 shares of Common Stock for the conversion of the
outstanding Series A preferred stock.
DIVIDENDS
The holders of the Series B preferred stock were entitled to receive, out of
any funds legally available, dividends at a rate of 10% of the Series B
conversion price, as defined in the amended and restated articles of
incorporation, per annum, payable in preference and priority to the payment of
any dividends on the Series A preferred stock or Common Stock. Dividends are
payable when and if declared by the Board of Directors and are noncumulative.
Dividends of $110,000 were declared and paid to the holders of the Series A
preferred stock during the year ended December 31, 1995.
WARRANTS
In January 1995, in connection with the issuance of the 10% convertible
subordinated debentures (Note 4), IntelliLink issued warrants for the purchase
of 1,449,000 shares of Series B preferred stock. The warrants were issued with
an aggregate exercise price of $1,440,000 and expire on January 23, 1998. Upon
the acquisition of IntelliLink (Note 10), the warrants were exchanged for
warrants to purchase Puma Common Stock. IntelliLink has accounted for the value
ascribed to the warrants, totaling $128,000, as a discount on the related debt.
Such discount is being amortized as interest expense over the term of the debt.
At December 31, 1995, IntelliLink had reserved 1,449,000 shares of Series B
preferred stock and 1,449,000 shares of Common Stock for issuance upon exercise
of the warrants and conversion of the related preferred stock, respectively.
On February 1, 1995, IntelliLink issued warrants to a stockholder of
IntelliLink for the purchase of 550,000 shares of Series A preferred stock in
exchange for consulting services. The warrants are exercisable at a price of
$0.001 per share and expire on February 28, 2002. The value of $127,000 ascribed
to the warrants was recorded as additional paid-in capital and as a charge to
operations for consulting services. In April 1996, these warrants were exercised
and exchanged for Puma stock in connection with the acquisition of IntelliLink
(Note 10). At December 31, 1995, IntelliLink had reserved 550,000 shares of
Series A preferred stock and 550,000 shares of Common Stock for issuance upon
exercise of the warrants and conversion of the related preferred stock,
respectively.
NOTE 6 -- STOCK OPTIONS:
The 1992 Incentive Stock Option Plan (the "Plan") provides for the grant of
incentive stock options for the purchase of up to an aggregate of 400,000 shares
of IntelliLink's Common Stock by employees, directors, and consultants.
Incentive stock options may be granted at not less than the fair market value of
IntelliLink's Common Stock at the date of the option grant and for a term not to
exceed ten years. For
F-24
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- STOCK OPTIONS: (CONTINUED)
holders of more than 10% of IntelliLink's total combined voting power of all
classes of stock, incentive stock options may be granted at not less than 110%
of the fair market value of IntelliLink's Common Stock at the date of the option
grant and for a term not to exceed five years. On April 30, 1996, these stock
options were converted to options to purchase Puma Common Stock in connection
with the acquisition of IntelliLink (Note 10).
A summary of the Plan activity is as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
----------- --------------
<S> <C> <C>
Outstanding at December 31, 1992..................................................... 59,000 $0.10
Granted.............................................................................. 22,000 $0.88
-----------
Outstanding at December 31, 1993..................................................... 81,000 $ 0.10-$0.88
Granted.............................................................................. 35,000 $0.88
Exercised............................................................................ (1,000 ) $1.00
Canceled............................................................................. (2,000 ) $ 0.10-$0.88
-----------
Outstanding at December 31, 1994..................................................... 113,000 $ 0.10-$0.88
Granted.............................................................................. 75,000 $1.00
-----------
Outstanding at December 31, 1995..................................................... 188,000 $ 0.10-$1.00
-----------
-----------
Exercisable at December 31, 1995..................................................... 84,000
-----------
-----------
</TABLE>
At December 31, 1995, IntelliLink had 211,000 shares of its Common Stock
available for future grant under the Plan and had reserved 399,500 shares of
Common Stock for issuance under the Plan.
NOTE 7 -- INCOME TAXES:
Prior to January 20, 1995, IntelliLink had elected to be taxed as an S
corporation for federal income tax reporting purposes as provided in Section
1362 (a) of the Internal Revenue Code. As such, the corporate income or loss and
tax credits were passed through to the stockholders and reported in their
personal tax returns. In connection with the conversion of Common Stock into
Series A preferred stock in January 1995 (Note 5), IntelliLink's election to be
treated as an S corporation terminated. As a result, the income or loss of
IntelliLink subsequent to January 20, 1995 will be subject to corporate income
tax. At the time of conversion IntelliLink recorded a net deferred tax asset of
$186,000, comprised primarily of certain accrued expenses that have not been
recognized for tax reporting purposes, and a corresponding valuation allowance.
No federal or state taxes were provided during the period from January 20, 1995
to December 31, 1995 as a result of losses incurred.
Deferred tax assets at December 31, 1995 are summarized as follows (in
thousands):
<TABLE>
<S> <C>
Net operating loss carryforwards.................................... $ 93
Nondeductible reserves and accrued expenses......................... 463
Depreciation........................................................ 1
---------
Total deferred tax assets......................................... 557
Deferred tax asset valuation allowance.............................. (557)
---------
$ --
---------
---------
</TABLE>
IntelliLink has incurred losses since its change to a C Corporation.
Management believes that, based on the history of such losses and other factors,
the weight of the available evidence indicates that it is more likely than not
that IntelliLink will not be able to realize its deferred tax assets and thus, a
full valuation reserve has been recorded at December 31, 1995.
F-25
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES: (CONTINUED)
As of December 31, 1995, IntelliLink has net operating loss carryforwards of
approximately $225,000 which may be used to offset future federal and state
taxable income and tax liabilities through 2010. Under the Internal Revenue
Code, certain substantial changes in the Company's ownership may limit the
annual amount of net operating loss carryforwards that can be utilized to offset
future taxable income or tax liability. The acquisition of IntelliLink by Puma
in April 1996 created such a change.
NOTE 8 -- INDUSTRY SEGMENT, SIGNIFICANT CUSTOMERS AND EXPORT SALES:
IntelliLink operates in a single industry segment which is the development,
marketing and sale of software products.
During the year ended December 31, 1993, two customers accounted for 14% and
21% of total revenue, respectively. During the year ended December 31, 1994,
three customers accounted for 10%, 13% and 15% of total revenue, respectively.
One customer accounted for 16% of total revenue for the year ended December 31,
1995.
Export sales for the years ended December 31, 1993, 1994 and 1995 were not
significant.
NOTE 9 -- LEASING ARRANGEMENTS AND COMMITMENTS:
IntelliLink leases certain office equipment under a long-term lease
agreement that is classified as a capital lease and expires in five years.
IntelliLink also has various noncancelable operating leases for office space
that expire in various years.
Future minimum lease payments at December 31, 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
Fiscal year ending December 31,
1996.................................................................. $ 8 $ 80
1997.................................................................. 8 93
1998.................................................................. 8 93
1999.................................................................. 8 4
2000.................................................................. 8 --
--- -----
Total minimum lease payments.......................................... 40 $ 270
-----
-----
Less: Amount representing interest.................................... (13)
---
Present value of future minimum lease payments........................ $ 27
---
---
</TABLE>
Total rent expense under the operating leases for the years ended December
31, 1993, 1994 and 1995 was $16,000, $32,000 and $35,000, respectively.
NOTE 10 -- SUBSEQUENT EVENT:
On March 6, 1996, IntelliLink and Puma signed a letter of intent to merge
the two companies. In accordance with the terms of the letter of intent and
definitive agreement, each share of IntelliLink's preferred and Common Stock
issued and outstanding immediately prior to April 30, 1996, the effective date
of the merger, was converted into .2495 shares of Puma Common Stock and
IntelliLink was merged with the effect that it became a wholly-owned subsidiary
of Puma. In connection with the merger, IntelliLink's outstanding working
capital installment note payable totaling $100,000 and the 8% convertible
subordinated debentures (Note 4) were deemed to have been fully converted or
exercised immediately prior to the effective date of the agreement and each
resulting share of IntelliLink stock was converted into .2495 shares of Puma
Common Stock.
F-26
<PAGE>
PUMA TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
The following unaudited pro forma combined statement of operations gives
effect to the acquisition by Puma Technology, Inc. ("Puma" or the "Company") of
IntelliLink Corp. ("IntelliLink") in a transaction accounted for as a purchase.
The unaudited pro forma combined statement of operations is based on the
individual statements of operations of Puma for the year ended July 31, 1996,
appearing elsewhere in this prospectus, and IntelliLink for the period from
August 1, 1995 through April 30, 1996. IntelliLink's operating results for the
three months ended July 31, 1996 are included in Puma's historical consolidated
statement of operations for the year ended July 31, 1996. Adjustments have been
made to such information to give effect to the April 30, 1996 acquisition of
IntelliLink Corp., as if the acquisition had occurred on August 1, 1995.
The following unaudited pro forma combined statement of operations is not
necessarily indicative of the future results of operations of the Company or the
results of operations which would have resulted had the Company and IntelliLink
been combined during the period presented. In addition, the pro forma results
are not intended to be a projection of future results. The unaudited pro forma
combined statement of operations should be read in conjunction with the
consolidated financial statements of Puma and subsidiaries and the financial
statements of IntelliLink, including the notes thereto, appearing elsewhere in
this Prospectus.
F-27
<PAGE>
PUMA TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1996
-----------------------------------------------------
PUMA INTELLILINK PRO FORMA PRO FORMA
ACTUAL ACTUAL (1) ADJUSTMENTS (2) COMBINED
--------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue..................................................... $ 7,716 $ 1,115 $ -- $ 8,831
Cost of revenue............................................. 673 486 -- 1,159
--------- ----------- ------- -----------
Gross profit................................................ 7,043 629 -- 7,672
--------- ----------- ------- -----------
Operating expenses:
Research and development.................................. 3,107 362 -- 3,469
Selling and marketing..................................... 2,169 488 -- 2,657
General and administrative................................ 1,064 385 134(a) 1,583
In-process research and development....................... 2,680 -- (2,680)(b) --
--------- ----------- ------- -----------
Total operating expenses.................................... 9,020 1,235 (2,546) 7,709
--------- ----------- ------- -----------
Operating loss.............................................. (1,977) (606) 2,546 (37)
Interest income (expense), net.............................. 85 (149) -- (64)
--------- ----------- ------- -----------
Loss before provision for income taxes...................... (1,892) (755) 2,546 (101)
Provision for income taxes.................................. (509) -- -- (509)
--------- ----------- ------- -----------
Net loss.................................................... $ (2,401) $ (755) $ 2,546 $ (610)
--------- ----------- ------- -----------
--------- ----------- ------- -----------
Pro forma net loss per share (1)............................ $ (0.06)
-----------
-----------
Share and share equivalents used in pro forma per share
computation................................................ 9,474
-----------
-----------
</TABLE>
See accompanying notes.
F-28
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NOTE 1 -- BASIS OF PRESENTATION:
The unaudited pro forma combined statement of operations has been prepared
to reflect the acquisition of IntelliLink by Puma, as if the acquisition had
occurred on August 1, 1995.
Puma completed the acquisition of IntelliLink on April 30, 1996 and
consequently, Puma's results of operations for the year ended July 31, 1996
include IntelliLink's results of operations for the three months ended July 31,
1996. Accordingly, in preparing the pro forma combined statement of operations,
the Company combined its results of operations for the year ended July 31, 1996
with IntelliLink's results of operations for the nine months ended April 30,
1996.
NOTE 2 -- PRO FORMA ADJUSTMENTS:
Based on an independent appraisal, the total purchase price of $3,483,000
(including $1,207,000 for liabilities assumed) was assigned to the fair value of
the net assets acquired, including $327,000 to tangible assets acquired,
$2,680,000 to in-process research and development, $120,000 to identified
intangible assets and the remaining $356,000 to goodwill.
The following adjustments were applied to the historical statement of
operations to arrive at the pro forma combined statement of operations:
(a) Reflects the additional amortization expense of $134,000 related to
intangible assets resulting from the acquisition of IntelliLink over
their estimated useful lives.
(b) Eliminates the nonrecurring write-off of in-process research and
development directly attributable to the acquisition of IntelliLink.
F-29
<PAGE>
THE PUMA TECHNOLOGY PRODUCT FAMILIES
<TABLE>
<S> <C>
[Screen shot of the TranXit Pro Graphical
User Interface]
[Screen shot of the IntelliSync for Pilot
configuration]
Puma's Products are bundled with major OEMs' mobile products and available in major
retail outlets.
[OEM logos] [Side-by-side point of sale display
featuring the US Robotics Pilot and the
IntelliSync for Pilot]
</TABLE>
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Capitalization............................................................ 15
Dilution.................................................................. 16
Selected Consolidated and Pro Forma Combined Financial Data............... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 19
Business.................................................................. 27
Management................................................................ 38
Certain Transactions...................................................... 44
Principal and Selling Stockholders........................................ 45
Description of Capital Stock.............................................. 48
Shares Eligible for Future Sale........................................... 50
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................ 52
Underwriting.............................................................. 54
Legal Matters............................................................. 57
Experts................................................................... 57
Additional Information.................................................... 57
Index to Financial Statements............................................. F-1
</TABLE>
UNTIL , 1996, (25 DAYS FROM THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
3,000,000 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
ALEX. BROWN & SONS
INCORPORATED
PROSPECTUS
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All amounts shown are estimates except for
the registration fee, the NASD filing fee and the Nasdaq National Market fee.
<TABLE>
<CAPTION>
TO BE PAID BY
REGISTRANT
-------------
<S> <C>
Registration fee............................................................... 11,897
NASD filing fee................................................................ 3,950
Nasdaq National Market fee..................................................... 45,429
Blue sky qualification fees and expenses....................................... 8,500
Printing and engraving expenses................................................ 120,000
Legal fees and expenses........................................................ 250,000
Accounting fees and expenses................................................... 200,000
Transfer agent and registrar fees.............................................. 15,000
Miscellaneous.................................................................. 45,224
-------------
Total...................................................................... $ 700,000
-------------
-------------
</TABLE>
- ---------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law ("Delaware Law") permits
the indemnification of officers, directors, and other corporate agents under
certain circumstances and subject to certain limitations. The Registrant's
Certificate of Incorporation (Exhibit 3.2) and Bylaws (Exhibit 3.4) provide that
the Registrant shall indemnify its directors, officers, employees, and agents to
the full extent permitted by Delaware Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant has entered into separate indemnification agreements (Exhibit 10.4)
with its directors and officers which would require the Registrant, among other
things, to indemnify them against certain liabilities which may arise by reason
of their status or service (other than liabilities arising from willful
misconduct of a culpable nature). These indemnification provisions may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act of 1933, as amended (the "Securities Act").
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Since August 27, 1993, (inception) Registrant has sold and issued the
following unregistered securities:
(1) Between August 28 and October 30, 1993, Registrant issued 3,045,000
shares of Common Stock to its founders for aggregate cash
consideration of $76,125, 542,850 shares of which were repurchased by
the Company at the original issuance price per share, or an aggregate
of $13,571.
II-1
<PAGE>
(2) Between January 31, 1994 and December 2, 1994 Registrant sold an
aggregate of 739,668 shares of its Series A Preferred Stock to
sophisticated investors for aggregate cash consideration of $739,668.
(3) Between July 15, 1994 and December 28, 1994, Registrant sold an
aggregate of 104,187 Units to sophisticated investors. Each Unit was
composed of seven shares of its Series A Preferred Stock and eleven
shares of its Series B Preferred Stock. Registrant also issued
warrants to purchase 270,000 shares of its Common Stock at an
exercise price of $3.00 per share to certain Unit purchasers.
Registrant received aggregate cash consideration of $4,167,480.
(4) On December 2, 1994, in exchange for certain consulting services,
Registrant issued 5,000 shares of its Series B Preferred Stock.
(5) On April 30, 1996, in connection with the acquisition of all of the
outstanding securities of IntelliLink Corp. ("IntelliLink"), the
Registrant issued to former IntelliLink securityholders (i) 768,962
shares of its Common Stock, (ii) a $850,000 debenture, which bears
interest at 7.0% per annum beginning January 1, 1995 as to $600,000
of the principal balance and July 31, 1995 as to the remaining
principal balance, and which is convertible into its Common Stock at
a rate of $2.766531 per share, and (iii) warrants to purchase 250,243
shares of its Common Stock at an exercise price of $5.60 per share.
In addition, the Registrant assumed outstanding options to purchase
98,617 shares of its Common Stock under IntelliLink's 1992 Incentive
Stock Option Plan.
(6) On August 15, 1996, Registrant sold to sophisticated investors an
aggregate of 285,715 shares of its Series C Preferred Stock and
warrants to purchase 140,000 shares of its Common Stock at an
exercise price of $5.50 per share. Registrant received aggregate cash
consideration of $1,600,004.
(7) From March 22, 1994 to July 31, 1996, Registrant issued options to
purchase an aggregate of 1,925,115 shares of Common Stock under its
Stock Option Plan, of this total 800,353 shares have been exercised,
of which 24,375 shares have been repurchased by the Company.
(b) The issuances of securities described in Item 10(a)(1) through (6) were
deemed to be exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act as transactions by an
issuer not involving any public offering. The issuances of Securities
described in Item 10(a)(7) were deemed to be exempt from registration
under the Securities Act in reliance on Rule 701 promulgated thereunder
as transactions pursuant to a compensatory benefit plan or a written
contract relating to compensation.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1* Agreement and Plan of Merger by and between Puma Technology, Inc., a California
corporation, and Puma Technology, Inc., a Delaware corporation.
3.1 Articles of Incorporation of the Puma Technology, Inc., a California corporation.
3.2* Certificate of Incorporation of Puma Technology, Inc., a Delaware corporation.
3.3 Bylaws of Puma Technology, Inc., a California corporation.
3.4* Bylaws of Puma Technology, Inc., a Delaware corporation.
4.1* Specimen Stock Certificate of the Registrant.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------------------------
5.1* Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
<C> <S>
10.1* 1993 Stock Option Plan and forms of stock option agreements used thereunder.
10.2* Puma Technology, Inc. 1996 Employee Stock Purchase Plan and form of notice of
exercise used thereunder.
10.3 Lease Agreement dated October 18, 1995, between the Registrant and Photonics
Corporation.
10.4 Form of Indemnity Agreement for directors and officers.
10.5+ Software License Agreement dated as of May 30, 1995, between the Registrant and
Toshiba Corporation.
10.6+ Software License Agreement dated as of September 14, 1995, between the Registrant
and NEC Technologies, Inc. and Amendment No. 1 thereto dated October 25, 1995 and
Amendment No. 2 thereto dated January 10, 1996.
10.7+ Software License Agreement dated as of May 23, 1995, between the Registrant and NEC
Corporation and Amendment No. 1 thereto dated February 19, 1996.
10.8+ Software License Agreement dated as of May 20, 1996 between the Registrant and NEC
Corporation.
10.9* IntelliLink Corp. 1992 Incentive Stock Option Plan and forms of stock agreements
used thereunder.
10.10* Agreement and Plan of Merger dated April 30, 1996 among the Registrant, IntelliLink
Corp. and certain securityholders of IntelliLink Corp.
11.1 Statement Regarding Computation of Pro Forma Net Loss Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2 Consent of Independent Accountants.
23.3* Consent of Gray Cary Ware & Freidenrich, A Professional Corporation (included in
Exhibit 5.1)
24.1 Power of Attorney (included on page II-5 hereof).
27.1 Financial Data Schedule (filed in EDGAR format only).
</TABLE>
- ---------
* To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II - Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a
II-3
<PAGE>
director, officer, or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this Offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-1 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Palo
Alto, County of Santa Clara, State of California, on the 5th day of September,
1996.
PUMA TECHNOLOGY, INC.
By: /s/ BRADLEY A. ROWE
-----------------------------------
Bradley A. Rowe
President and Chief Executive
Officer
(PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Bradley A. Rowe and M. Bruce Nakao, and
each of them acting individually, as his attorney-in-fact, each with full power
of substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective amendments),
and any and all Registration Statements filed pursuant to Rule 462 under the
Securities Act of 1933, as amended, in connection with or related to the
offering contemplated by this Registration Statement and its amendments, if any,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorney to any and
all amendments to said Registration Statement.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------
/s/ BRADLEY A. ROWE President, Chief Executive
------------------------------------------- Officer and Director September 5, 1996
Bradley A. Rowe (PRINCIPAL EXECUTIVE OFFICER)
/s/ STEPHEN A. NICOL
------------------------------------------- Senior Vice President, Sales and September 5, 1996
Stephen A. Nicol Director
Senior Vice President, Finance
/s/ M. BRUCE NAKAO and Administration and Chief
------------------------------------------- Financial Officer (PRINCIPAL September 5, 1996
M. Bruce Nakao FINANCIAL AND ACCOUNTING
OFFICER)
/s/ MICHAEL M. CLAIR
------------------------------------------- Chairman of the Board September 5, 1996
Michael M. Clair
/s/ ROBERT D. RUTNER
------------------------------------------- Director September 5, 1996
Robert D. Rutner
</TABLE>
II-5
<PAGE>
PUMA TECHNOLOGY, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD/ BALANCE AT CHARGED TO
YEAR ENDED BEGINNING OF COSTS AND END OF
JULY 31, PERIOD/YEAR EXPENSES DEDUCTIONS PERIOD/YEAR
------------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts and Sales
Returns................................... 1994 $ -- $ -- $ -- $ --
Allowance for Doubtful Accounts and Sales
Returns................................... 1995 $ -- $ -- $ -- $ --
Allowance for Doubtful Accounts and Sales
Returns................................... 1996 $ -- $ 184 $ -- $ 184
</TABLE>
S-1
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
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 any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1996
[LOGO]
3,000,000 Shares
Common Stock
Of the 3,000,000 shares of Common Stock, $0.001 par value, being offered
hereby by Puma Technology, Inc. ("Puma" or the "Company"), 750,000 shares are
being offered initially outside the United States (the "International
Offering") by the International Underwriters and 2,250,000 shares are being
offered initially in the United States (the "U.S. Offering" and together with
the International Offering, the "Offering") by the U.S. Underwriters (together
with the International Underwriters, the "Underwriters"). See "Underwriting."
Of the shares offered hereby, 2,500,000 shares are being sold by Puma and
500,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of shares by the Selling Stockholders. See "Principal and Selling
Stockholders."
Prior to the Offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
will be between $8.00 and $10.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have its Common Stock approved for
listing on the Nasdaq National Market under the symbol "PUMA."
For the information concerning certain factors which should be considered by
prospective investors, see "Risk Factors" commencing on page 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
PROCEEDS
PRICE UNDERWRITING PROCEEDS TO TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $700,000.
(3) Certain Selling Stockholders have granted to the Underwriters a 30-day
option to purchase up to an additional 450,000 shares of Common Stock to
cover over-allotments. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to the Selling Stockholders
will be $ , $ and $ , respectively. See
"Underwriting."
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, and subject to
approval of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares
of Common Stock will be made in New York, New York against payment therefor on
or about , 1996.
<TABLE>
<S> <C>
DEUTSCHE MORGAN GRENFELL ALEX. BROWN & SONS
INTERNATIONAL
</TABLE>
The date of this Prospectus is , 1996
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Capitalization............................................................ 15
Dilution.................................................................. 16
Selected Consolidated and Pro Forma Combined Financial Data............... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 19
Business.................................................................. 27
Management................................................................ 38
Certain Transactions...................................................... 44
Principal and Selling Stockholders........................................ 46
Description of Capital Stock.............................................. 48
Shares Eligible for Future Sale........................................... 50
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................ 52
Underwriting.............................................................. 54
Legal Matters............................................................. 57
Experts................................................................... 57
Additional Information.................................................... 57
Index to Financial Statements............................................. F-1
</TABLE>
UNTIL , 1996, (25 DAYS FROM THE DATE OF THIS PROSPECTUS) ALL
DEALERS AFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
3,000,000 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
ALEX. BROWN & SONS
INTERNATIONAL
PROSPECTUS
, 1996
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1* Agreement and Plan of Merger by and between Puma Technology, Inc., a California
corporation, and Puma Technology, Inc., a Delaware corporation.
3.1 Articles of Incorporation of the Puma Technology, Inc., a California corporation.
3.2* Certificate of Incorporation of Puma Technology, Inc., a Delaware corporation.
3.3 Bylaws of Puma Technology, Inc., a California corporation.
3.4* Bylaws of Puma Technology, Inc., a Delaware corporation.
4.1* Specimen Stock Certificate of the Registrant.
5.1* Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
10.1* 1993 Stock Option Plan and forms of stock option agreements used thereunder.
10.2* Puma Technology, Inc. 1996 Employee Stock Purchase Plan and form of notice of
exercise used thereunder.
10.3 Lease Agreement dated October 18, 1995, between the Registrant and Photonics
Corporation.
10.4 Form of Indemnity Agreement for directors and officers.
10.5+ Software License Agreement dated as of May 30, 1995, between the Registrant and
Toshiba Corporation.
10.6+ Software License Agreement dated as of September 14, 1995, between the Registrant
and NEC Technologies, Inc. and Amendment No. 1 thereto dated October 25, 1995 and
Amendment No. 2 thereto dated January 10, 1996.
10.7+ Software License Agreement dated as of May 23, 1995, between the Registrant and NEC
Corporation and Amendment No. 1 thereto dated February 19, 1996.
10.8+ Software License Agreement dated as of May 20, 1996 between the Registrant and NEC
Corporation.
10.9* IntelliLink Corp. 1992 Incentive Stock Option Plan and forms of stock agreements
used thereunder.
10.10* Agreement and Plan of Merger dated April 30, 1996 among the Registrant, IntelliLink
Corp. and certain securityholders of IntelliLink Corp.
11.1 Statement Regarding Computation of Pro Forma Net Loss Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2 Consent of Independent Accountants.
23.3* Consent of Gray Cary Ware & Freidenrich, A Professional Corporation (included in
Exhibit 5.1)
24.1 Power of Attorney (included on page II-5 hereof).
27.1 Financial Data Schedule (filed in EDGAR format only).
</TABLE>
- ---------
* To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II - Valuation and Qualifying Accounts
<PAGE>
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PUMA TECHNOLOGY, INC.
A California corporation
Brad Rowe and Steve Nicol certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of Puma Technology, Inc. (the "Corporation").
2. The articles of incorporation of the Corporation are hereby amended
and restated to read as set forth on APPENDIX A hereto.
3. These Second Amended and Restated Articles of Incorporation have been
duly approved by the Board of Directors of the Corporation.
4. These Second Amended and Restated Articles of Incorporation have been
duly approved by the required vote of shareholders of the Corporation in
accordance with Sections 902 and 903 of the California Corporations Code. The
total number of outstanding shares of the Corporation entiytled to vote with
respect to the foregoing amendment and restatement was 4,279,715 shares of
Common Stock, 1,468,977 shares of Series A Preferred Stock and 1,151,057 shares
of Series B Preferred Stock. The number of shares voting in favor of the
amendment equalled or exceeded the vote required. The percentage vote required
was at least fifty-one percent (51%) of the outstanding shares of Series A
Preferred Stock voting as a class, at least fifty-one percent (51%) of the
outstanding shares of Series B Preferred Stock voting as a class, and at least
fifty-one percent (51%) of the outstanding Common Stock of the Corporation.
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They further declare under penalty of perjury under the laws of the State
of California that the matters set forth in the foregoing Certificate are true
and correct of their own knowledge.
Executed at Santa Clara, California on July 29, 1996.
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Brad Rowe, President
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Steve Nicol, Secretary
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APPENDIX A
ARTICLE I
NAME
The name of the Corporation is Puma Technology, Inc.
ARTICLE II
PURPOSES
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. This corporation is authorized to issue two classes of shares
designated respectively "Common Stock" and "Preferred Stock," and referred to
herein either as Common Stock or Common shares and Preferred Stock or Preferred
shares, respectively. The number of shares of Common Stock is 10,000,000 and
the number of shares of Preferred Stock is 3,785,715. The initial series of
Preferred Stock shall comprise 2,000,000 shares and shall be designated
"Series A Preferred Stock." The second series of Preferred Stock shall comprise
1,500,000 shares and shall be designated "Series B Preferred Stock." The third
series of Preferred Stock shall comprise 285,715 shares and shall be designated
"Series C Preferred Stock." As used herein, the term "Preferred Stock," without
designation shall refer to shares of Series A Preferred Stock, to shares of
Series B Preferred Stock, to shares of Series C Preferred Stock or to shares of
any such series.
B. The balance of the shares of authorized Preferred Stock and may be
issued in any number of series, as determined by the Board of Directors. The
Board, by resolution, may fix the designation and number of shares of any such
series, and may determine, alter, or revoke the rights, preferences, privileges,
and restrictions
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pertaining to any wholly unissued series. The Board may thereafter, in the same
manner, increase or decrease the number of shares of any series, but not below
the number of shares of that series then outstanding.
C. The rights, preferences, privileges and restrictions granted to or
imposed upon the Preferred Stock and Common Stock are as follows:
(a) DIVIDENDS.
(1) The holders of outstanding Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be entitled to
receive in any fiscal year, when and as declared by the Board of Directors, out
of any assets at the time legally available therefor, distributions (as defined
below) in cash at the rate per annum of $0.10 per share of Series A Preferred
Stock, $0.30 per share of Series B Preferred Stock and $0.56 per share of Series
C Preferred Stock. Such distributions may be payable quarterly or otherwise as
the Board of Directors may from time to time determine. Distributions may be
declared and paid upon common shares in any fiscal year of the Corporation only
if distributions shall have been paid to or declared and set apart upon all
shares of Preferred Stock at the annual rate for each quarter of such fiscal
year of the Corporation including the quarter in which such distributions upon
common shares are declared. The right to such distributions on Preferred Stock
shall not be cumulative and no right shall accrue to holders of Preferred Stock
by reason of the fact that distributions on said shares are not declared in any
prior year, nor shall any undeclared or unpaid distribution bear or accrue
interest.
(2) For purposes of this Paragraph (a), unless the context
otherwise requires, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable other
than in common stock, or the purchase or redemption of shares of the Corporation
(other than repurchases of common stock held by employees or consultants of the
Corporation upon termination of their employment or services pursuant to
agreements providing for such repurchase) for cash or property, including any
such transfer, purchase or redemption by a subsidiary of the Corporation.
(3) Each holder of shares of Preferred Stock shall be deemed to
have consented, for purposes of Sections 502 and 506 of the General Corporation
Law of the State of California, to distributions made by the Corporation in
connection with the repurchase of shares of common stock issued to or held by
employees or consultants upon termination of their employment or services
pursuant to agreements providing for such repurchase.
(b) PREFERENCE ON LIQUIDATION.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets and funds of the
Corporations shall be distributed as follows: First, the holders of shares of
the
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Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
then outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its shareholders, whether from
capital, surplus or earnings, before any payment shall be made in respect of the
Corporation's common stock, an amount equal to $1.00 for each outstanding share
of Series A Preferred Stock, $3.00 for each outstanding share of Series B
Preferred Stock, and $5.60 for each outstanding share of Series C Preferred
Stock plus all declared and unpaid dividends with respect to each such series to
the date fixed for distribution. After setting apart or paying in full the
preferential amount due the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, all remaining assets and funds of
the Corporation available for distribution to its shareholders shall be
distributed ratably on a per share basis among the holders of common stock, the
holders of Series A Preferred Stock, the holders of Series B Preferred Stock,
and the holders of the Series C Preferred Stock as if fully converted to common
stock. If upon liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to its shareholders shall
be insufficient to pay the holders of the Series A Preferred Stock, the holders
of Series B Preferred Stock and the holders of the Series C Preferred Stock the
full amounts to which they shall be entitled pursuant to this Paragraph, the
holders of the Series A Preferred Stock, the holders of Series B Preferred Stock
and the holders of the Series C Preferred Stock shall share ratably in any
distribution of assets according to the respective amounts which would be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full. The merger
or consolidation of the Corporation into or with another corporation in which
the shareholders of the Corporation shall own less than 50% of the voting
securities of the surviving corporation or the sale, transfer or lease (but not
including a transfer or lease by pledge or mortgage to a bona fide lender) of
all or substantially all of the assets of the Corporation shall be deemed to be
a liquidation, dissolution or winding up of the Corporation as those terms are
used in this Paragraph (b).
(2) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Corporation shall, within ten
(10) days after the date the Board of Directors approves such action, or twenty
(20) days prior to any shareholders' meeting called to approve such action, or
twenty (20) days after the commencement of any involuntary proceeding, whichever
is earlier, give each holder of shares of Preferred Stock initial written notice
of the proposed action. Such initial written notice shall describe the material
terms and conditions of such proposed action, including a description of the
stock, cash and property to be received by the holders of Preferred Stock upon
consummation of the proposed action and the date of delivery thereof. If any
material change in the facts set forth in the initial notice shall occur, the
Corporation shall promptly give written notice to each holder of shares of
Preferred Stock of such material change.
(3) The Corporation shall not consummate any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation before the
expiration of thirty (30) days after the mailing of the initial notice or ten
(10) days after the mailing of any subsequent written notice, whichever is
later; provided that
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any such 30-day or 10-day period may be shortened upon the written consent of
the holders of all of the outstanding shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, each series consenting as
a class.
(4) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve the distribution
of assets other than cash, the Corporation shall promptly engage competent
independent appraisers to determine the value of the assets to be distributed to
the holders of shares of Series A Preferred Stock, the holders of shares of
Series B Preferred Stock, the holders of the Series C Preferred Stock, and the
holders of shares of common stock (it being understood that with respect to the
valuation of securities, the Corporation shall engage such appraiser as shall be
approved by the holders of a majority of shares of the Corporation's outstanding
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
each voting as a single class). The Corporation shall, upon receipt of such
appraiser's valuation, give prompt written notice to each holder of shares of
Preferred Stock of the appraiser's valuation.
(c) VOTING. Except as otherwise required by law, the shares of
Preferred Stock shall be voted equally with the shares of the Corporation's
common stock at any annual or special meeting of shareholders of the
Corporation, or may act by written consent in the same manner as the
Corporation's common stock, upon the following basis: each holder of shares of
Preferred Stock shall be entitled to such number of votes for the Preferred
Stock held by him on the record date fixed for such meeting, or on the effective
date of such written consent, as shall be equal to the largest number of whole
shares of the Corporation's common stock into which all of his shares of
Preferred Stock are convertible immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
(d) CONVERSION RIGHTS.
(1) Each share of Series A Preferred Stock, Series B Preferred
Stock, and Series C Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the issuance of such share (the "Initial
Issuance Date") and without payment of further consideration into fully paid and
nonassessable shares of common stock of the Corporation. Each share of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of common
stock of the Corporation at any time after the Initial Issuance Date immediately
upon the closing of a sale of the Corporation's securities in a firm commitment
underwritten registered public offering with proceeds to the Corporation of at
least Ten Million Dollars ($10,000,000) and an offering price per share to the
public equal to or greater than Six Dollars ($6.00) per share appropriately
adjusted for stock dividends, stock splits, stock combinations and the like. In
addition, each share of Series A Preferred Stock shall automatically be
converted into fully paid and nonassessable shares of common stock of the
Corporation at any time after the Initial Issuance Date immediately upon the
approval of the conversion of the Series A Preferred Stock into common stock by
vote
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or written consent of the holders of at least fifty-one percent (51%) of the
outstanding shares of Series A Preferred Stock. Each share of Series B
Preferred Stock shall automatically be converted into fully paid and
nonassessable shares of common stock of the Corporation at any time after the
Initial Issuance Date immediately upon the approval of the conversion of the
Series B Preferred Stock into common stock by vote or written consent of the
holders of at least fifty-one percent (51%) of the outstanding shares of
Series B Preferred Stock. Each share of Series C Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of common
stock of the Corporation at any time after the Initial Issuance Date immediately
upon the approval of the conversion of the Series C Preferred Stock into common
stock by vote or written consent of the holders of at least fifty-one percent
(51%) of the outstanding shares of Series C Preferred Stock.
(2) The number of shares of common stock into which each share
of Series A Preferred Stock may be converted shall be determined by dividing
$1.00 by the Conversion Price for the series (determined as hereinafter
provided) in effect at the time of the conversion. The Conversion Price per
share at which shares of common stock shall be initially issuable upon
conversion shall be, in the case of any shares of Series A Preferred Stock,
$0.50, subject to adjustment as provided in Paragraph (e) hereof. The number of
shares of common stock into which each share of Series B Preferred Stock may be
converted shall be determined by dividing $3.00 by the Conversion Price for the
series (determined as hereinafter provided) in effect at the time of the
conversion. The Conversion Price per share at which shares of common stock
shall be initially issuable upon conversion shall be, in the case of any shares
of Series B Preferred Stock, $3.00, subject to adjustment as provided in
Paragraph (e) hereof. The number of shares of common stock into which each
share of Series C Preferred Stock may be converted shall be determined by
dividing $5.60 by the Conversion Price for the series (determined as hereinafter
provided) in effect at the time of the conversion. The Conversion Price per
share at which shares of common stock shall be initially issuable upon
conversion shall be, in the case of any shares of Series C Preferred Stock,
$5.60, subject to adjustment as provided in Paragraph (e) hereof.
(3) The holder of any shares of Preferred Stock may exercise the
conversion rights after the Initial Issuance Date as to such shares or any part
thereof by delivering to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation for the Preferred Stock, or at
the principal office of the Corporation or at such other place as may be
designated by the Corporation, the certificate or certificates for the shares to
be converted, duly endorsed for transfer to the Corporation (if required by it),
accompanied by written notice stating that the holder elects to convert such
shares. Conversion shall be deemed to have been effected on the date when such
delivery is made, and such date is referred to herein as the "Conversion Date."
As promptly as practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the number of
full shares of common stock to which such holder is entitled and a check for
cash with respect to any fractional interest in a share of common stock as
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provided in Subparagraph (4) of this Paragraph (d). The holder shall be deemed
to have become a shareholder of record on the applicable Conversion Date unless
the transfer books of the Corporation are closed on the date, in which event he
shall be deemed to have become a shareholder of record on the next succeeding
date on which the transfer books are open, but the Conversion Price for such
series shall be that in effect on the Conversion Date. Upon conversion of only
a portion of the number of shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock represented by a certificate
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock, Series B Preferred Stock or Series
C Preferred Stock, as the case may be, representing the unconverted portion of
the certificate so surrendered.
(4) No fractional shares of common stock or script shall be
issued upon conversion of shares of Preferred Stock. If more than one share of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the
number of full shares of common stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case may be,
so surrendered. Instead of any fractional shares of common stock which would
otherwise be issuable upon conversion of any shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest equal to the fair
market value of such fractional interest as determined by the Corporation's
Board of Directors.
(5) The Corporation shall pay any and all issue and other taxes
that may be payable with respect to any issue or delivery of shares of common
stock on conversion of Preferred Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax which may be payable with respect to
any transfer involved in the issue and delivery of shares of common stock in a
name other than that in which the Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax, or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(6) The Corporation shall at all times reserve and keep
available out of its authorized but unissued common stock, solely for the
purpose of effecting the conversion of the Preferred Stock, the full number of
shares of common stock deliverable upon the conversion of all Preferred Stock
from time to time outstanding. The Corporation shall from time to time (subject
to obtaining necessary director and shareholder approval), in accordance with
the laws of the State of California, increase the authorized amount of its
common stock if at any time the authorized number of shares of its common stock
remaining unissued shall not be sufficient to permit the conversion of all of
the shares of Preferred Stock at the time outstanding.
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(7) All shares of common stock which may be issued upon
conversion of the shares of Preferred Stock will, upon issuance by the
corporation, be without payment of further consideration, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issuance thereof.
(8) In case any shares of Preferred Stock shall be converted
pursuant to Paragraph (d) hereof, the shares so converted shall resume the
status of authorized but unissued shares of Preferred Stock.
(e) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price as to all
authorized shares of each series of Preferred Stock, whether or not then
outstanding, shall be subject to adjustment from time to time as follows:
(1) STOCK SPLITS, DIVIDENDS AND COMBINATIONS. In case the
Corporation shall at any time subdivide the outstanding shares of common stock,
or shall issue a stock dividend on its outstanding common stock, the Conversion
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Corporation shall
at any time combine the outstanding shares of common stock, the Conversion Price
in effect immediately prior to such combination shall be proportionately
increased, effective at the close of business on the date of such subdivision,
dividend or combination.
(2) Noncash Dividends, Stock Purchase Rights, Capital
Reorganizations and Dissolutions. In case:
(i) the Corporation shall take a record of the holders of
its common stock for the purpose of entitling them to receive a dividend,
or any other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the holders of
its common stock for the purpose of entitling them to subscribe for or
purchase any shares of stock of any class or to receive any other rights;
or
(iii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of its outstanding shares of common stock),
consolidation or merger of the Corporation with or into another corporation
or conveyance of all or substantially all of the assets of the Corporation
to another corporation; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent for the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock, and to the holders of record of the
outstanding Preferred Stock at
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least ten (10) days prior to the date hereinafter specified, a notice stating
the date on which such a record is to be taken for the purpose of such dividend,
distribution or rights, or such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which holders of common stock of record
shall be entitled to exchange their shares of common stock for securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(3) ISSUANCES AT LESS THAN THE CONVERSION PRICE. Upon the
issuance by the Corporation of common stock, or any right or option to purchase
common stock or stock convertible into common stock, or any obligation or any
share of stock convertible into or exchangeable for common stock for a
consideration per share less than the Conversion Price in effect immediately
prior to the time of such issue or sale other than an issuance of stock or
securities pursuant to Subparagraph (e)(1) or the issuance of shares of common
stock upon conversion of any Preferred Stock, then forthwith upon such issue or
sale, the Conversion Price shall be reduced to a price (calculated to the
nearest cent) determined separately for each series of Preferred Stock by
dividing:
(i) an amount equal to the sum of (x) the number of
shares of common stock outstanding immediately prior to such issue or sale
multiplied by the then existing Conversion Price of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case
may be, (y) the number of shares of common stock issuable upon conversion
or exchange of any obligations or of any shares of stock of the Corporation
outstanding immediately prior to such issue or sale multiplied by the then
existing Conversion Price of the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock, as the case may be, and (z) an
amount equal to the aggregate "consideration actually received" by the
Corporation upon such issue or sale by
(ii) the sum of the number of shares of common stock
outstanding immediately after such issue or sale and the number of shares
of common stock issuable upon conversion or exchange of any obligations or
of any shares of stock of the Corporation outstanding immediately after
such issue or sale.
For purposes of this Paragraph (3), the following provisions will be
applicable:
(A) In the case of an issue or sale for cash of shares of
common stock, the "consideration actually received" by the Corporation therefor
shall be deemed to be the amount of cash received, before deducting therefrom
any commissions or expenses paid by the Corporation.
(B) In case of the issuance (otherwise than upon
conversion or exchange of obligations or shares of stock of the Corporation) of
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additional shares of common stock for a consideration other than cash or a
consideration partly other than cash, the amount of the consideration other than
cash received by the Corporation for such shares shall be deemed to be the value
of such consideration as determined by the Board of Directors.
(C) In case of the issuance by the Corporation in any
manner of any rights to subscribe for or to purchase shares of common stock, or
any options for the purchase of shares of common stock or stock convertible into
common stock, all shares of common stock or stock convertible into common stock
to which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed "outstanding"
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the shares of common stock or stock convertible into common stock
covered thereby, plus the consideration, if any, received by the Corporation for
such rights or options, shall be deemed to be the "consideration actually
received" by the Corporation (as of the date of the offering of such rights or
the granting of such options, as the case may be) for the issuance of such
shares.
(D) In case of the issuance or issuances by the
Corporation in any manner of any obligations or of any shares of stock of the
Corporation that shall be convertible into or exchangeable for common stock, all
shares of common stock issuable upon the conversion or exchange of such
obligations or shares shall be deemed issued as of the date such obligations or
shares are issued, and the amount of the "consideration actually received" by
the Corporation for such additional shares of common stock shall be deemed to be
the total of (X) the amount of consideration received by the Corporation upon
the issuance of such obligations or shares, as the case may be, plus (Y) the
minimum aggregate consideration, if any, other than such obligations or shares,
receivable by the Corporation upon such conversion or exchange, except in
adjustment of dividends.
(E) The amount of the "consideration actually received"
by the Corporation upon the issuance of any rights or options referred to in
Subparagraph (C) above or upon the issuance of any obligations or shares which
are convertible or exchangeable as described in Subparagraph (D) above, and the
amount of the consideration, if any, other than such obligations or shares so
convertible or exchangeable, receivable by the Corporation upon the exercise,
conversion or exchange thereof shall be determined in the same manner provided
in Subparagraphs (A) and (B) above with respect to the consideration received by
the Corporation in case of the issuance of additional shares of common stock;
provided, however, that if such obligations or shares of stock so convertible or
exchangeable are issued in payment or satisfaction of any dividend upon any
stock of the Corporation other than common stock, the amount of the
"consideration actually received" by the Corporation upon the original issuance
of such obligations or shares or stock so convertible or exchangeable shall be
deemed to be the value of such obligations or shares of stock, as of the date of
the adoption of the resolution declaring such dividend, as determined by the
Board of Directors at or as of that date. On the
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expiration of any rights or options referred to in Subparagraph (C), or the
termination of any right of conversion or exchange referred to in
Subparagraph (D), or any change in the number of shares of common stock
deliverable upon exercise of such options or rights or upon conversion of or
exchange of such convertible or exchangeable securities, the Conversion Price
then in effect shall forthwith be readjusted to such Conversion Price as would
have obtained had the adjustments made upon the issuance of such options, rights
or convertible or exchangeable securities been made upon the basis of the
delivery of only the number of shares of common stock actually delivered or to
be delivered upon the exercise of such rights or options or upon the conversion
or exchange of such securities.
(F) Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of the Conversion Price
in the case of
(i) the grant of options to purchase, or the issue of
common stock to officers, directors, employees or consultants of the
Corporation and its subsidiaries pursuant to stock options or stock
purchase plans or agreements, whether "qualified" for tax purposes or not,
and such unexercised options granted to officers, employees and consultants
shall be considered shares of stock outstanding for purposes of
Subparagraphs (e)(3)(i) and (ii) above, except that for purposes of the
calculations made pursuant to Subparagraphs (e)(3)(i) and (ii) above, the
number of such option shares shall be multiplied by the exercise price of
such options rather than by the then existing Conversion Price, unless said
exercise price is equal to or greater than such Conversion Price, in which
event the number of option shares shall be multiplied by the then existing
Conversion Price of the Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock, as the case may be;
(ii) any shares of common stock acquired in conjunction
with the purchase of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock;
(iii) any shares of common stock or Preferred Stock that
may be issued upon exercise of any option or warrant outstanding on the
date these Second Amended and Restated Articles of Incorporation are filed.
(G) Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of the Conversion Price
for Series B Preferred Stock in the case of the issuance of units consisting of
both Series A Preferred Stock and Series B Preferred Stock at an issuance price
equal to or more than $1.60 per share of common stock into which all such
preferred stock may be converted at issuance.
(H) In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons or options or rights not referred to
in Subparagraph (e)(3) above, then, in each such case, the holders of the
Preferred Stock
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shall be entitled to the distribution at the rate provided for in Paragraph (a)
above before any distribution shall be made to the holders of the Corporation's
common stock, and no adjustment to the Conversion Price provided for in this
Paragraph (e) shall be applicable.
For purposes of the foregoing, the per share consideration with respect to
the sale or issuance of Preferred Stock shall be the price per share received by
the Corporation, prior to the payment of any expenses, commissions, discounts
and other applicable costs.
(4) NONIMPAIRMENT. The Corporation will not, by amendment of
its Articles 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 to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Paragraph (e) and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against impairment.
(5) NOTICE OF ADJUSTMENT. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this
Paragraph (e), the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and prepare and
furnish to each holder of Preferred Stock affected thereby a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (A) such
adjustment or readjustment, (B) the Conversion Price at the time in effect for
the Preferred Stock held by such holder, and (C) the number of shares of common
stock and the amount, if any, of other property which at the time would be
received upon the conversion of his shares.
(f) CHANGES. So long as any shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of the holders of at least fifty-one
percent (51%) of the total number of shares of Series A Preferred Stock
outstanding, at least fifty-one percent (51%) of the total number of shares of
Series B Preferred Stock outstanding, at least fifty-one percent (51%) of the
total number of shares of Series C Preferred Stock outstanding, and at least
fifty-one percent (51%) of the total number of common shares outstanding,
undertake any of the following actions:
(1) amend the provisions of the Corporation's Articles of
Incorporation; or
(2) sell, lease, convey, exchange, transfer or otherwise dispose
of all or substantially all of its assets (other than for the purposes of
securing payment of any contract or obligation); or
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(3) license any of its technology in such a manner as to have
the same economic effect as a sale or disposition of all or substantially all of
the assets of the Corporation; or
(4) make any "distribution," as defined in Subparagraph (a)(2),
with respect to the common stock; or
(5) merge or consolidate with or into any other corporation
except into or with a wholly owned subsidiary.
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BYLAWS
OF
PUMA TECHNOLOGY, INC.
<PAGE>
I N D E X
Section Page
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ARTICLE I
OFFICES
1.1 Principal Executive Office . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice of Meetings or Reports . . . . . . . . . . . . . . . . . . . 2
2.5 Adjourned Meetings and Notice Thereof . . . . . . . . . . . . . . . 3
2.6 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Consent of Absentees . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Action Without Meeting. . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
DIRECTORS
3.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Election and Term of Office . . . . . . . . . . . . . . . . . . . . 6
3.4 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Organization Meeting . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Other Regular Meetings . . . . . . . . . . . . . . . . . . . . . . 7
3.9 Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . 7
3.11 Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Notice of Special Meetings . . . . . . . . . . . . . . . . . . . . 8
3.13 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.16 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.17 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . 9
3.18 Fees and Compensation . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
4.1 Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Minutes and Reports . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Term of Office of Committee Members . . . . . . . . . . . . . . . . 10
ARTICLE V
OFFICERS
5.1 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Subordinate Officers, etc . . . . . . . . . . . . . . . . . . . . . 11
5.4 Removal and Resignation . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . 11
5.8 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Treasurer and Chief Financial Officer . . . . . . . . . . . . . . 12
5.12 Assistant Secretary . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI
MISCELLANEOUS
6.1 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Inspection of Corporate Records . . . . . . . . . . . . . . . . . . 14
6.3 Execution of Corporate Instruments . . . . . . . . . . . . . . . . 14
6.4 Ratification by Shareholders . . . . . . . . . . . . . . . . . . . 14
6.5 Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Representation of Shares of Other Corporations . . . . . . . . . . 15
6.7 Inspection of Bylaws . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE VII
SHARES OF STOCK
7.1 Form of Certificates . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Corporation . . . . . . . . . . . . . . . . . . 16
8.2 Right of Claimant to Bring Suit . . . . . . . . . . . . . . . . . . 17
8.3 Indemnification of Employees and Agents of the Corporation . . . . 17
8.4 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . 17
8.5 Indemnity Agreements . . . . . . . . . . . . . . . . . . . . . . . 18
8.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.7 Amendment, Repeal or Modification . . . . . . . . . . . . . . . . . 18
ARTICLE IX
AMENDMENTS
9.1 Power of Shareholders . . . . . . . . . . . . . . . . . . . . . . . 18
9.2 Power of Directors . . . . . . . . . . . . . . . . . . . . . . . . 18
iii
<PAGE>
BYLAWS
OF
PUMA TECHNOLOGY, INC.
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL EXECUTIVE OFFICE.
The principal executive office for the transaction of the business of
the corporation is hereby fixed and located at 1800 Wyatt Drive, Suite 17, Santa
Clara, California 95054, County of Santa Clara, State of California. The Board
of Directors is hereby granted full power and authority to change said principal
office from one location to another.
SECTION 1.2 OTHER OFFICES.
Branch or subordinate offices may at any time be established by the
Board of Directors at any place or places where the corporation is qualified to
do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.1 PLACE OF MEETINGS.
All meetings of shareholders shall be held either at the principal
executive office or at any other place within or without the State of California
which may be designated either by the Board of Directors or by the written
consent of a majority of the shareholders entitled to vote thereat as determined
pursuant to Section 6.1 of these Bylaws given either before or after the
meeting.
SECTION 2.2 ANNUAL MEETINGS.
The annual meetings of shareholders shall be held on such day and at
such hour as may be fixed by the Board of Directors. At such meeting, Directors
shall be elected, and any other proper business may be transacted.
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SECTION 2.3 SPECIAL MEETINGS.
Special meetings of the shareholders may be called at any time by the
Board of Directors, the Chairman of the Board, the President, or by the holders
of shares entitled to cast not less than ten percent (10%) of the votes at the
meeting. Notice of such special meeting shall be given in the same manner as
for the annual meeting of shareholders. Notices of any special meetings shall
specify in addition to the place, date and hour of such meeting, the general
nature of the business to be transacted thereat.
SECTION 2.4 NOTICE OF MEETINGS OR REPORTS.
Written notice of each meeting of shareholders shall be given not less
than ten (10) days nor more than sixty (60) days before the date of the meeting
to each shareholder entitled to vote thereat. Such notice shall be given either
personally or by mail or other means of written communication, addressed or
delivered to each shareholder entitled to vote at such meeting at the address of
such shareholder appearing on the books of the corporation or given by him to
the corporation for the purpose of such notice. If no such address appears or
is given, notice shall be given either personally or by mail or other means of
written communication addressed to the shareholder at the place where the
principal executive office of the corporation is located, or by publication at
least once in a newspaper of general circulation in the county in which said
office is located. The notice shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by other means of
written communication.
The same procedure for the giving of notice shall apply to the giving
of any report to shareholders.
All such notices shall state the place, the date and the hour of such
meeting, and shall state such matters, if any, as may be expressly required by
the California Corporations Code.
Upon request by any person or persons entitled to call a special
meeting, the Chairman of the Board, President, Vice President or Secretary shall
within twenty (20) days after receipt of the request cause notice to be given to
the shareholders entitled to vote that a special meeting will be held at a time
requested by the person or persons calling the meeting, but not less than
thirty-five (35) nor more than sixty (60) days after receipt of the request.
All other notices shall be sent by the Secretary or an Assistant
Secretary, or if there be no such officer, or in the case of his neglect or
refusal to act, by any other officer, or by persons calling the meeting.
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SECTION 2.5 ADJOURNED MEETINGS AND NOTICE THEREOF.
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of a majority of the
shares, represented either in person or by proxy, but in the absence of a
quorum, no other business may be transacted at such meeting, except as provided
in Section 2.7 of these Bylaws.
When a shareholders' meeting is adjourned to another time or place,
notice of the adjourned meeting need not be given if the time and place thereof
are announced at the meeting at which the adjournment is taken; except that if
the adjournment is for more than forty-five (45) days or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each shareholder of record entitled to vote
thereat.
At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting.
SECTION 2.6 VOTING.
Except as otherwise provided in the Articles of Incorporation and
subject to Section 6.1 of these Bylaws, each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote of
shareholders. Vote may be viva voce or by ballot; provided, however, that
elections for directors must be by ballot upon demand made by a shareholder at
the meeting and before the voting begins.
Every shareholder entitled to vote at any election for Directors may
cumulate his votes and give one candidate a number of votes equal to the number
of directors to be elected, multiplied by the number of votes to which his
shares are entitled, or to distribute his votes on the same principle among as
many candidates as he thinks fit, provided that no shareholder shall be entitled
to cumulate votes unless such candidate or candidates names have been placed in
nomination prior to the voting and the shareholder has given notice at the
meeting, prior to the voting, of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The
candidates receiving the highest number of votes of the shares entitled to be
voted for them, up to the number of directors to be elected by such shares,
shall be elected.
Any holder of shares entitled to vote on any matter may vote part of
the shares in favor of the proposal and refrain from voting the remaining shares
or vote them against the proposal, other than elections to office, but, if the
shareholder fails to specify the number of shares such shareholder is voting
affirmatively, it shall be conclusively presumed that the shareholder's
approving vote is with respect to all shares said shareholder is entitled to
vote.
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SECTION 2.7 QUORUM.
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at any meeting of shareholders. If a quorum is
present, the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on any matter shall be the act of the shareholders,
unless otherwise required by the Articles of Incorporation.
The shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum.
SECTION 2.8 CONSENT OF ABSENTEES.
The transactions of any meeting of shareholders, if not duly called
and noticed, and wherever held, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, each of the
shareholders entitled to vote, not present in person or by proxy, signs a
written waiver of notice, or a consent to the holding of such meeting, or an
approval of the minutes thereof. All such waivers, consents, or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when a person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened; provided, that attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law or these
Bylaws to be included in the notice but not so included if such objection is
expressly made at the meeting.
SECTION 2.9 ACTION WITHOUT MEETING.
Any action which may be taken at any meeting of shareholders may be
taken without a meeting and without prior notice, if a consent in writing,
setting forth the actions so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes which would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted; provided, that except to fill a
vacancy as provided in Section 3.6 of these Bylaws, Directors may not be elected
by written consent except by unanimous written consent of all shares entitled to
vote for the election of Directors.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, notice of the following actions approved by shareholders
without a meeting by less than unanimous written consent shall be given to those
shareholders entitled to vote who have not consented in writing at least ten
(10) days before the consummation of the action authorized by such approval:
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1. Approval of a contract or other transaction between the
corporation and one or more of its Directors, or between the corporation and any
corporation, firm or association in which one or more of its Directors has a
material financial interest.
2. Approval of any indemnification to be made by the corporation of
a person who was or is a party or is threatened to be made a party to any
proceeding by reason of the fact that such person was or is an agent of the
corporation.
3. Approval of the principal terms of a reorganization.
4. Approval of a plan of distribution of the shares, obligations or
securities of any other corporation, or assets other than money, which is not in
accordance with the liquidation rights of the preferred shares as specified in
the Articles of Incorporation or a Certificate of Determination.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, prompt notice of the taking of any corporate action not
listed above which is approved by shareholders without a meeting by less than
unanimous written consent, shall be given to those shareholders entitled to vote
who have not consented in writing.
Such notice shall be given as provided in Section 2.4 of these Bylaws.
SECTION 2.10 PROXIES.
Every person entitled to vote shares may authorize another person or
persons to act by proxy with respect to such shares. No proxy shall be valid
after the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy.
ARTICLE III
DIRECTORS
SECTION 3.1 POWERS.
Subject to the limitations stated in the Articles of Incorporation,
these Bylaws, and the California Corporations Code as to actions which shall be
approved by the shareholders or by the affirmative vote of a majority of the
outstanding shares entitled to vote, and subject to the duties of Directors as
prescribed by the California Corporations Code, all corporate powers shall be
exercised by, or under the direction of, and the business and affairs of the
corporation shall be managed by, the Board of Directors.
5
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SECTION 3.2 NUMBER OF DIRECTORS.
The authorized number of Directors of the corporation shall not be
less than three (3) nor more than five (5), the exact number of directors to be
fixed from time to time within such limit by a duly adopted resolution of the
Board of Directors or the shareholders. The exact number of directors presently
authorized shall be three (3) until changed within the limits specified above by
a duly adopted resolution of the Board of Directors or shareholders.
SECTION 3.3 ELECTION AND TERM OF OFFICE.
The Directors shall be elected at each annual meeting of shareholders,
but if any such annual meeting is not held, or the Directors are not elected
thereat, the Directors may be elected at any special meeting of the shareholders
held for that purpose. All Directors shall hold office until the expiration of
the term for which elected and until their respective successors are elected,
except in the case of the death, resignation or removal of any Director. A
Director need not be a shareholder.
SECTION 3.4 RESIGNATION.
Any Director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors of
the corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes effective.
SECTION 3.5 REMOVAL.
The entire Board of Directors or any individual Director may be
removed from office, prior to the expiration of their or his term of office only
in the manner and within the limitations provided by the California Corporations
Code.
No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of such Director's term
of office.
SECTION 3.6 VACANCIES.
A vacancy in the Board of Directors shall be deemed to exist in case
of the death, resignation or removal of any Director, or if the authorized
number of Directors be increased, or if the shareholders fail at any annual or
special meeting of shareholders at which any Director or Directors are elected
to elect the full authorized number of Directors to be voted for at that
meeting.
Vacancies in the Board of Directors may be filled by a majority of the
Directors then in office, whether or not less than a quorum, or by a sole
remaining Director. Each Director so elected shall hold office until the
expiration of the term for
6
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which he was elected and until his successor is elected at an annual or a
special meeting of the shareholders, or until his death, resignation or removal.
The shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors. Any such election by
written consent other than to fill a vacancy created by removal requires the
consent of a majority of the outstanding shares entitled to vote. A Director
may not be elected by written consent to fill a vacancy created by removal
except by unanimous written consent of all shares entitled to vote for the
election of directors.
SECTION 3.7 ORGANIZATION MEETING.
Immediately after each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, the
election of officers and the transaction of other business. No notice of such
meeting need be given.
SECTION 3.8 OTHER REGULAR MEETINGS.
The Board of Directors may provide by resolution the time and place
for the holding of regular meetings of the Board; provided, however, that if the
date so designated falls upon a legal holiday, then the meeting shall be held at
the same time and place on the next succeeding day which is not a legal holiday.
No notice of such regular meetings of the Board need be given.
SECTION 3.9 CALLING MEETINGS.
Meetings of the Board of Directors for any purpose or purposes shall
be held whenever called by the Chairman of the Board, the President or the
Secretary or any two Directors of the corporation.
SECTION 3.10 PLACE OF MEETINGS.
Meetings of the Board of Directors shall be held at any place within
or without the State of California which may be designated in the notice of the
meeting, or, if not stated in the notice or there is no notice, designated by
resolution of the Board. In the absence of such designation, meetings of the
Board of Directors shall be held at the principal executive office of the
corporation.
SECTION 3.11 TELEPHONIC MEETINGS.
Members of the Board may participate in a regular or special meeting
through use of conference telephone or similar communications equipment, so long
as all members participating in such meeting can hear one another.
Participation in a meeting pursuant to this Section 3.11 constitutes presence in
person at such meeting.
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SECTION 3.12 NOTICE OF SPECIAL MEETINGS.
Written notice of the time and place of special meetings of the Board
of Directors shall be delivered personally to each Director, or sent to each
Director by mail, telephone or telegraph. In case such notice is sent by mail,
it shall be deposited in the United States mail at least four (4) days prior to
the time of the holding of the meeting. In case such notice is delivered
personally, or by telephone or telegraph, it shall be so delivered at least
forty-eight (48) hours prior to the time of the holding of the meeting. Such
notice may be given by the Secretary of the corporation or by the persons who
called said meeting. Such notice need not specify the purpose of the meeting,
and notice shall not be necessary if appropriate waivers, consents and/or
approvals are filed in accordance with Section 3.13 of these Bylaws.
SECTION 3.13 WAIVER OF NOTICE.
Notice of a meeting need not be given to any Director who signs a
waiver of notice, whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such Director.
The transactions of any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice if a quorum is present and if,
either before or after the meeting, each of the Directors not present signs a
written waiver of notice, a consent to holding the meeting or an approval of the
minutes thereof. All such waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
SECTION 3.14 ACTION WITHOUT MEETING.
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting, if all members of the Board shall individually
or collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board. Such
action by written consent shall have the same force and effect as a unanimous
vote of such Directors.
SECTION 3.15 QUORUM.
A majority of the authorized number of Directors shall constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the Directors present at a meeting duly held at which a quorum is
present shall be the act of the Board of Directors, unless the Articles of
Incorporation, or the California Corporations Code, specifically requires a
greater number. In the absence of a quorum at any meeting of the Board of
Directors, a majority of the Directors present may adjourn the meeting as
provided in Section 3.16 of these Bylaws. A meeting at which a quorum is
initially present may continue to transact business, notwithstanding the
withdrawal of enough Directors to leave less than a quorum, if any action taken
is approved by at least a majority of the required quorum for such meeting.
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SECTION 3.16 ADJOURNMENT.
Any meeting of the Board of Directors, whether or not a quorum is
present, may be adjourned to another time and place by the vote of a majority of
the Directors present. Notice of the time and place of the adjourned meeting
need not be given to absent Directors if said time and place are fixed at the
meeting adjourned.
SECTION 3.17 INSPECTION RIGHTS.
Every Director shall have the absolute right at any time to inspect,
copy and make extra copies of, in person or by agent or attorney, all books,
records and documents of every kind and to inspect the physical properties of
the corporation.
SECTION 3.18 FEES AND COMPENSATION.
Directors shall not receive any stated salary for their services as
directors, but, by resolution of the Board, a fixed fee, with or without
expenses of attendance, may be allowed for attendance at each meeting. Nothing
herein contained shall be construed to preclude any Director from serving the
corporation in any other capacity as an officer, agent, employee, or otherwise,
and receiving compensation therefor.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
SECTION 4.1 EXECUTIVE COMMITTEE.
The Board of Directors may, by resolution adopted by a majority of the
authorized number of Directors, appoint an executive committee, consisting of
two or more Directors. The Board may designate one or more Directors as an
alternate member of such committee, who may replace any absent member of any
meeting of the committee. The executive committee, subject to any limitations
imposed by the California Corporations Code, or by resolution adopted by the
affirmative vote of a majority of the authorized number of Directors, or imposed
by the Articles of Incorporation or by these Bylaws, shall have and may exercise
all of the powers of the Board of Directors.
SECTION 4.2 OTHER COMMITTEES.
The Board of Directors may, by resolution adopted by a majority of the
authorized number of Directors, designate such other committees, each consisting
of 2 or more Directors, as it may from time to time deem advisable to perform
such general or special duties as may from time to time be delegated to any such
committee by the Board of Directors, subject to the limitations contained in the
California Corporations
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Code, or imposed by the Articles of Incorporation or by these Bylaws. The Board
may designate one or more Directors as alternate members of any committee, who
may replace any absent member at any meeting of the committee.
SECTION 4.3 MINUTES AND REPORTS.
Each committee shall keep regular minutes of its proceedings, which
shall be filed with the Secretary. All action by any committee shall be
reported to the Board of Directors at the next meeting thereof, and, insofar as
rights of third parties shall not be affected thereby, shall be subject to
revision and alteration by the Board of Directors.
SECTION 4.4 MEETINGS.
Except as otherwise provided in these Bylaws or by resolution of the
Board of Directors, each committee shall adopt its own rules governing the time
and place of holding and the method of calling its meetings and the conduct of
its proceedings and shall meet as provided by such rules, and it shall also meet
at the call of any member of the committee. Unless otherwise provided by such
rules or by resolution of the Board of Directors, committee meetings shall be
governed by Sections 3.11, 3.12 and 3.13 of these Bylaws.
SECTION 4.5 TERM OF OFFICE OF COMMITTEE MEMBERS.
The term of office of any committee member shall be as provided in the
resolution of the Board of Directors designating him but shall not exceed his
term as a Director. Any member of a committee may be removed at any time by
resolution adopted by Directors holding a majority of the directorships, either
present at a meeting of the Board or by written approval thereof.
ARTICLE V
OFFICERS
SECTION 5.1 OFFICERS.
The officers of the corporation shall be a President, a Vice
President, a Secretary, and a Treasurer, who shall be the Chief Financial
Officer of the corporation. The corporation may also have, at the discretion of
the Board of Directors, a Chairman of the Board, one or more additional Vice
Presidents, one or more Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 5.3. One person may hold
two or more offices.
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SECTION 5.2 ELECTION.
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 and 5.5, shall be
chosen annually by the Board of Directors and each shall hold his office until
he shall resign or shall be removed or otherwise disqualified to serve, or his
successor shall be elected and qualified.
SECTION 5.3 SUBORDINATE OFFICERS, ETC.
The Board of Directors may appoint such other officers as the business
of the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in these Bylaws or
as the Board of Directors may from time to time determine.
SECTION 5.4 REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a
majority of the Directors at the time in office, at any regular or special
meeting of the Board, or, except in case of an officer chosen by the Board of
Directors, by an officer upon whom such power of removal may be conferred by the
Board of Directors.
Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 5.5 VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these Bylaws for regular appointments to such office.
SECTION 5.6 CHAIRMAN OF THE BOARD.
The Chairman of the Board, if there shall be such an officer, shall,
if present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by these Bylaws.
SECTION 5.7 CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer shall share responsibility for management
of the corporation equally with the President, if such office be held by another
person, and shall, subject to the control of tbe Board of Directors, share
responsibility for supervision, direction, and control of the business of the
corporation with the President. In the absence or disability of the President,
if such office is held by another person, the Chief Executive Officer shall
perform all duties of the President, and when so acting shall have
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all the powers of, and be subject to all the restrictions upon, the President.
He shall preside at all meetings of the shareholders and, in the absence of the
Chairman of the Board, or if there be none, at all meetings of the Board of
Directors. He shall be ex-officio a member of all the standing committees. He
shall have such other powers and duties as may be prescribed by the Board of
Directors or these Bylaws.
SECTION 5.8 PRESIDENT.
The President shall have responsibility for the day-to-day management
of the business and affairs of the corporation. The President shall share
responsibility for management of the corporation equally with the Chief
Executive Officer, if such office be held by another perosn, and shall, subject
to the control of the Board of Directors, share responsibility for supervision,
direction, and control of the business of the corporation with the Chief
Executive Officer. In the absence or disability of the Chief Executive Officer,
if such office is held by another person, the President shall perform all duties
of the Chief Executive Officer, and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the Chief Executive Officer. He
shall be ex-officio a member of all the standing committees. He shall have such
other powers and duties as may be prescribed by the Board of Directors or these
Bylaws.
SECTION 5.9 VICE PRESIDENT.
In the absence or disability of the President, the Vice Presidents in
order of their rank as fixed by the Board of Directors, or if not ranked, the
Vice President designated by the Board of Directors, shall perform the duties of
the President, and when so acting shall have all the powers of, and be subject
to all the restrictions upon, the President. The Vice Presidents shall have
such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or these Bylaws.
SECTION 5.10 SECRETARY.
The Secretary shall keep, or cause to be kept, a book of minutes in
written form of the proceedings of the Board of Directors, committees of the
Board, and shareholders. Such minutes shall include all waivers of notice,
consents to the holding of meetings, or approvals of the minutes of meetings
executed pursuant to these Bylaws or the California Corporations Code. The
Secretary shall keep, or cause to be kept at the principal executive office or
at the office of the corporation's transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of shares held by each.
The Secretary shall give or cause to be given, notice of all meetings
of the shareholders and of the Board of Directors required by these Bylaws or by
law to be given, and shall keep the seal of the corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the Board of Directors or these Bylaws.
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SECTION 5.11 TREASURER AND CHIEF FINANCIAL OFFICER.
The Treasurer and Chief Financial Officer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
account in written form or any other form capable of being converted into
written form.
The Treasurer and Chief Financial Officer shall deposit all monies and
other valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
all funds of the corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all of his transactions as Treasurer and Chief Financial Officer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or by
these Bylaws.
SECTION 5.12 ASSISTANT SECRETARY.
The Assistant Secretary shall have all the powers, and perform all the
duties of, the Secretary in the absence or inability of the Secretary to act.
SECTION 5.13 COMPENSATION.
The compensation of the officers shall be fixed from time to time by
the Board of Directors, and no officer shall be prevented from receiving such
compensation by reason of the fact that he is also a Director of the
corporation.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 RECORD DATE.
The Board of Directors may fix, in advance, a time in the future as
the record date for the determination of shareholders entitled to notice of any
meeting or to vote or entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise any rights in
respect of any other lawful action. Shareholders on the record date are
entitled to notice and to vote or receive the dividend, distribution or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares in the books of the corporation after
the record date, except as otherwise provided by law. Said record date shall
not be more than sixty (60) or less than ten (10) days prior to the date of such
meeting, nor more than sixty (60) days prior to any other action.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board fixes a new record date for the adjourned meeting, but the
Board shall fix a new
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record date if the meeting is adjourned for more than forty-five (45) days from
the date set for the original meeting.
If no record date is fixed by the Board of Directors, the record date
shall be fixed pursuant to the California Corporations Code.
SECTION 6.2 INSPECTION OF CORPORATE RECORDS.
The accounting books and records, and minutes of proceedings of the
shareholders and the Board of Directors and committees of the Board shall be
open to inspection upon written demand made upon the corporation by any
shareholder or the holder of a voting trust certificate, at any reasonable time
during usual business hours, for a purpose reasonably related to his interest as
a shareholder, or as the holder of such voting trust certificate. The record of
shareholders shall also be open to inspection by any shareholder or holder of a
voting trust certificate at any time during usual business hours upon written
demand on the corporation, for a purpose reasonably related to such holder's
interest as a shareholder or holder of a voting trust certificate. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to copy and to make extracts.
SECTION 6.3 EXECUTION OF CORPORATE INSTRUMENTS.
The Board of Directors may, in its discretion, determine the method
and designate the statutory officer or officers, or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation. Unless otherwise
specifically determined by the Board of Directors, formal contracts of the
corporation, promissory notes, mortgages, evidences of indebtedness, conveyances
or other instruments in writing, and any assignment or endorsement thereof,
executed or entered into between the corporation and any person, may be signed
by the Chairman of the Board, the President, any Vice President, the Secretary
or the Treasurer of the corporation.
SECTION 6.4 RATIFICATION BY SHAREHOLDERS.
The Board of Directors may, subject to applicable notice requirements,
in its discretion, submit any contract or act for approval or ratification of
the shareholders at any annual meeting of shareholders, or at any special
meeting of shareholders called for that purpose; and any contract or act which
shall be approved or ratified by the affirmative vote of a majority of the
shares entitled to vote represented at a duly held meeting at which a quorum is
present, or by the written consent of shareholders, shall be as valid and
binding upon the corporation and upon the shareholders thereof as though
approved or ratified by each and every shareholder of the corporation, unless a
greater vote is required by law for such purpose.
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SECTION 6.5 ANNUAL REPORT.
For so long as the corporation has less than 100 holders of record of
its shares, the mandatory requirement of an annual report is hereby expressly
waived. The Board of Directors may, in its discretion, cause an annual report
to be sent to the shareholders. Such reports shall contain at least a balance
sheet as of the close of such fiscal year and an income statement and statement
of changes in financial position for such fiscal year, and shall be accompanied
by any report thereon of independent accountants, or if there is no such report,
the certificate of an authorized officer of the corporation that such statements
were prepared without audit in the books and records of the corporation.
A shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of the corporation may make a written
request to the corporation for an income statement and/or a balance sheet of the
corporation for the three-month, six-month or nine-month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request,
and such statement shall be delivered or mailed to the person making the request
within thirty (30) days thereafter. Such statements shall be accompanied by the
report thereon, if any, of any independent accountants engaged by the
corporation or the certificates of an authorized officer of the corporation that
such financial statements were prepared without audit from the books and records
of the corporation.
SECTION 6.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The President and Vice President of this corporation are authorized to
vote, represent and exercise on behalf of the corporation all rights incident to
any and all shares of any other corporation or corporations standing in the name
of this corporation. The authority herein granted to said officers to vote or
represent on behalf of this corporation any and all shares held by this
corporation and any other corporation or corporations may be exercised either by
such officers in person or by any person authorized so to do by proxy or power
of attorney and duly executed by said officers.
SECTION 6.7 INSPECTION OF BYLAWS.
The corporation shall keep in its principal executive office in this
State the original or a copy of the Bylaws as amended or otherwise altered to
date, which shall be open to inspection by the shareholders at all reasonable
times during office hours.
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ARTICLE VII
SHARES OF STOCK
SECTION 7.1 FORM OF CERTIFICATES.
Certificates for shares of stock of the corporation shall be in such
form and design as the Board of Directors shall determine and shall be signed in
the name of the corporation by the Chairman of the Board, or the President or
Vice President and by the Treasurer or an Assistant Treasurer or the Secretary
or any Assistant Secretary. Each certificate shall state the certificate
number, the date of issuance, the number, class or series and the name of the
record holder of the shares represented thereby, the name of the corporation,
and, if the shares of the corporation are classified or if any class of shares
has two or more series, there shall appear the statement required by the
California Corporations Code.
SECTION 7.2 TRANSFER OF SHARES.
Shares of stock may be transferred in any manner permitted or provided
by law. Before any transfer of stock is entered upon the books of the
corporation, or any new certificate issued therefor, the older certificate,
properly endorsed, shall be surrendered and cancelled, except when a certificate
has been lost, stolen or destroyed.
SECTION 7.3 LOST CERTIFICATES.
The Board of Directors may order a new certificate for shares of stock
to be issued in the place of any certificate alleged to have been lost, stolen
or destroyed, but in every such case, the owner or the legal representative of
the owner of the lost, stolen or destroyed certificates may be required to give
the corporation a bond (or other adequate security) in such form and amount as
the Board may deem sufficient to indemnify it against any claim that may be made
against the corporation (including any expense or liability) on account of the
alleged loss, theft or destruction of any such certificate or issuance of such
new certificate.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION BY CORPORATION.
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("Proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is or
was a director or officer of the corporation or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or
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other enterprise, including service with respect to employee benefit plans, or
was a director, officer, employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, whether the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the fullest
extent authorized by the California General Corporation Law, against all
expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; PROVIDED, HOWEVER, that, except as provided in
Section 8.2 of this Article VIII, the corporation shall indemnify any such
person seeking indemnity in connection with a Proceeding (or part thereof)
initiated by such person only if such Proceeding (or part thereof) was
authorized by the board of directors of the corporation. The right to
indemnification conferred by this Section shall include the right to be paid by
the corporation expenses incurred in defending any such Proceeding in advance of
its final disposition to the fullest extent authorized by the California General
Corporation Law; PROVIDED, HOWEVER, that, if required by the California General
Corporation Law, the payment of such expenses incurred by such person in advance
of the final disposition of such Proceeding shall be made only upon delivery to
the corporation of an undertaking, by or on behalf of such person, to repay all
amounts so advanced if it should be determined ultimately that such person is
not entitled to be indemnified under this Section or otherwise.
SECTION 8.2 RIGHT OF CLAIMANT TO BRING SUIT.
If a claim under Section 8.1 of this Article VIII is not paid in full
by the corporation within ninety (90) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or it shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the California General Corporation
Law, nor an actual determination by the corporation (including its board of
directors, independent legal counsel, or its shareholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that claimant has not met the applicable standard of
conduct.
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SECTION 8.3 INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.
The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and to the advancement of
expenses to any employee or agent of the corporation to the fullest extent of
the provisions of this Article with respect to the indemnification of and
advancement of expenses to directors and officers of the corporation.
SECTION 8.4 RIGHTS NOT EXCLUSIVE.
The rights conferred on any person by this Article VIII above shall
not be exclusive of any other right which such person may have or hereafter
acquire under any statute, provision of the Articles of Incorporation, Bylaw,
agreement, vote of shareholders or disinterested directors or otherwise.
SECTION 8.5 INDEMNITY AGREEMENTS.
The Board of Directors is authorized to enter into a contract with any
Director, officer, employee or agent of the corporation, or any person who is or
was serving at the request of the corporation as a Director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, or any person who was a director,
officer, employee or agent of a corporation which was a predecessor corporation
of the corporation or of another enterprise at the request of such predecessor
corporation, providing for indemnification rights equivalent to or, if the Board
of Directors so determines, greater than, those provided for in this Article
VIII.
SECTION 8.6 INSURANCE.
The corporation may purchase and maintain insurance, at its expense,
to protect itself and any Director, officer, employee or agent of the
corporation or another corporation (including a predecessor corporation),
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the
California Corporations Code.
SECTION 8.7 AMENDMENT, REPEAL OR MODIFICATION.
Any amendment, repeal or modification of any provision of this Article
VIII by the shareholders or the Directors of the corporation shall not adversely
affect any right or protection of a Director or officer of the corporation
existing at the time of such amendment, repeal or modification.
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ARTICLE IX
AMENDMENTS
SECTION 9.1 POWER OF SHAREHOLDERS.
New Bylaws may be adopted or these Bylaws may be amended or repealed
by the affirmative vote of a majority of the outstanding shares entitled to vote
or by the written consent thereof, except as otherwise provided by law or by the
Articles of Incorporation.
SECTION 9.2 POWER OF DIRECTORS.
Subject to the right of shareholders as provided in Section 9.1 of
these Bylaws, Bylaws other than a Bylaw or amendment thereof specifying or
changing the authorized number of Directors, or the minimum or maximum number of
a variable Board of Directors, or changing from a fixed to a variable Board of
Directors or vice versa, may be adopted, amended or repealed by the approval of
the Board of Directors.
CERTIFICATE OF SECRETARY
I hereby certify:
That I am the duly elected Secretary of Puma Technology, Inc., a California
corporation and
That the foregoing Bylaws comprising nineteen (19) pages, constitute the
original Bylaws of said corporation duly adopted by the sole incorporator of
such corporation and approved by unanimous written consent of the Board of
Directors in lieu of first meeting.
IN WITNESS WHEREOF, I have hereunder subscribed my name this 27th day of
August, 1993.
------------------------------
Stephen Nicol, Secretary
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TABLE OF CONTENTS
OFFICE BUILDING LEASE EXHIBIT A
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PAGE
Article 1 LEASE OF PREMISES........................................ 1
Article 2 DEFINITIONS.............................................. 1
Article 3 EXHIBITS AND ADDENDA..................................... 2
Article 4 DELIVERY OF POSSESSION................................... 2
Article 5 RENT..................................................... 2
Article 6 INTEREST AND LATE CHARGES................................ 4
Article 7 SECURITY DEPOSIT......................................... 4
Article 8 TENANT'S USE OF THE PREMISES............................. 4
Article 9 SERVICES AND UTILITIES................................... 5
Article 10 CONDITION OF THE PREMISES................................ 5
Article 11 CONSTRUCTION, REPAIRS AND MAINTENANCE.................... 5
Article 12 ALTERATIONS AND ADDITIONS................................ 6
Article 13 LEASEHOLD IMPROVEMENTS, TENANT'S PROPERTY................ 6
Article 14 RULES AND REGULATIONS.................................... 7
Article 15 CERTAIN RIGHTS RESERVED BY LANDLORD...................... 7
Article 16 ASSIGNMENT AND SUBLETTING................................ 7
Article 17 HOLDING OVER............................................. 8
Article 18 SURRENDER OF PREMISES.................................... 8
Article 19 DESTRUCTION OR DAMAGE.................................... 8
Article 20 EMINENT DOMAIN........................................... 8
Article 21 INDEMNIFICATION.......................................... 9
Article 22 TENANT'S INSURANCE....................................... 9
Article 23 WAIVER OF SUBROGATION.................................... 10
Article 24 SUBORDINATION AND ATTORNMENT............................. 10
Article 25 TENANT ESTOPPEL CERTIFICATES............................. 10
Article 26 TRANSFER OF LANDLORD'S INTEREST.......................... 10
Article 27 DEFAULT.................................................. 10
Article 28 BROKERAGE FEES........................................... 11
Article 29 NOTICES.................................................. 11
Article 30 GOVERNMENT ENERGY OR UTILITY CONTROLS.................... 11
Article 31 RELOCATION OF PREMISES................................... 11
Article 32 QUIET ENJOYMENT.......................................... 12
Article 33 OBSERVANCE OF LAW........................................ 12
Article 34 FORCE MAJEURE............................................ 12
Article 35 CURING TENANT'S DEFAULTS................................. 12
Article 36 SIGN CONTROL............................................. 12
Article 37 MISCELLANEOUS............................................ 12
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OFFICE BUILDING LEASE
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This Lease between COOPERAGE-ROSE PROPERTIES I, a General Partnership
("Landlord"), and PUMA TECHNOLOGY, INC., a California Corporation, ("Tenant"),
is dated July 20, 1994.
1. LEASE OF PREMISES.
In consideration of the Rent (as defined at Section 54) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown on the floor plan attached hereto as Exhibit "A," and further
described at Section 21. The Premises are located within the Building and
Project described in Section 2m. Tenant shall have the non-exclusive right
(unless otherwise provided herein) in common with Landlord, other tenants,
subtenants and invitees, to use of the Common Areas (as defined at Section 2e).
2. DEFINITIONS
As used in this Lease, the following terms shall have the following meanings:
a. BASE RENT (INITIAL): $ Twenty-Seven Thousand Three Hundred Six and no/100
($27,306.00) per year.
b. BASE YEAR: The calendar year of 1994.
c. BROKER(S)
Landlord's: None
Tenant's: Cornish and Carey.
d. COMMENCEMENT DATE: August 1, 1994.
e. COMMON AREAS: the building lobbies, common corridors and hallways,
restrooms, garage and parking areas, stairways, elevators and other
generally understood public or common areas. Landlord shall have the right
to regulate or restrict the use of the Common Areas.
f. EXPENSE STOP: (fill in if applicable): $ N/A.
g. EXPIRATION DATE: October 31, 1997, unless otherwise sooner terminated in
accordance with the provisions of this Lease.
h. INDEX (SECTION 5.2): United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All Urban Consumers, N/A Average,
Subgroup "All Items" (1967=100).
i. LANDLORD'S MAILING ADDRESS: 3375 Scott Blvd., Suite 308 Santa Clara, CA
95054.
TENANT'S MAILING ADDRESS: 3375 Scott Blvd., Suite 340 Santa Clara, CA
95054.
j. MONTHLY INSTALLMENTS OF BASE RENT (INITIAL): $ Two Thousand Two Hundred
Seventy-Five and 50/100 per month.
k. PARKING: Tenant shall be permitted, upon payment of the then prevailing
monthly rate (as set by Landlord from time to time) to park 6 cars on a non-
exclusive basis in the area(s) designated by Landlord for parking. Tenant
shall abide by any and all parking regulations and rules established from
time to time by Landlord or Landlord's parking operator.
l. PREMISES: that portion of the Building containing approximately 1,850
square feet of Rentable Area, shown by diagonal lines on Exhibit "A",
located on the First floor of the Building and known as Suite 340.
m. PROJECT: the building of which the Premises are a part (the "Building") and
any other buildings or improvements on the real property (the "Property")
located at 3375 Scott Blvd., Santa Clara, CA 95054 and further described
at Exhibit "B". The Project is known as Garrett Business Center.
n. RENTABLE AREA as to both the Premises and the Project, the respective
measurements of floor area as may from time to time be subject to lease by
Tenant and all tenants of the Project, respectively, as determined by
Landlord and applied on a consistent basis throughout the Project.
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o. SECURITY DEPOSIT (ARTICLE 7): $ Two Thousand Two Hundred Seventy-Five and
50/100 ($2,275.50).
p. STATE: the State of California.
q. TENANT'S FIRST ADJUSTMENT DATE (SECTION 5.2): the first day of the calendar
month following the Commencement Date plus N/A months.
r. TENANT'S PROPORTIONATE SHARE: 2.57%. Such share is a fraction, the
numerator of which is the Rentable Area of the Premises, and the denominator
of which is the Rentable Area of the Project, as determined by Landlord
from time to time. The Project consists of 4 building(s) containing a
total Rentable Area of 72,000 square feet.
s. TENANT'S USE CLAUSE (ARTICLE 8): Research and development of software,
marketing and general office use.
t. TERM: the period commencing on the Commencement Date and expiring at
midnight on the Expiration Date.
3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
Exhibit "A"-Floor Plan showing the Premises.
Exhibit "B"-Site Plan of the Project.
Exhibit "D"-Rules and Regulations.
Addenda:
Exhibit "F"-Addendum to Office Building Lease.
4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord shall not be subject to any
liability for such failure, the Expiration Date shall not change and the
validity of this Lease shall not be impaired, but Rent shall be abated until
delivery of possession. "Delivery of possession" shall be deemed to occur on
the date Landlord completes Landlord's Work as defined in Exhibit "A". If
Landlord permits Tenant to enter into possession of the Premises before the
Commencement Date, such possession shall be subject to the provisions of this
Lease, including, without limitation, upon payment of Rent. Landlord's work
shall be complete upon the City's final inspection and approval of the
Premises, excepting any punch list items.
5. RENT.
5.1 PAYMENT OF BASE RENT. Tenant agrees to pay the Base Rent for the
Premises. Monthly Installments of Base Rent shall be payable in advance
on the first day of each calendar month of the Term. If the Term begins
(or ends) on other than the first (or last) day of a calendar month, the
Base Rent for the partial month shall be prorated on a per diem basis.
Tenant shall pay Landlord the first Monthly Installment of Base Rent when
Tenant executes the Lease.
5.3 PROJECT OPERATING COSTS.
a. In order that the Rent payable during the Term reflect any increase in
Project Operating Costs, Tenant agrees to pay to Landlord as Rent, Tenant's
Proportionate Share of all increases in costs, expenses and obligations
attributable to the Project and its operation, all as provided below.
b. If, during any calendar year during the Term, Project Operating Costs
exceed the Project Operating Costs for the Base Year, Tenant shall pay to
Landlord, in addition to the Base Rent and all other payments due under this
Lease, an amount equal to Tenant's Proportionate Share of such excess Project
Operating Costs in accordance with the provisions of this Section 5 3b.
(2)
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(1) The term "Project Operating Costs" shall include all those items
described in the following subparagraphs (a) and (b):
(a) All taxes, assessments, water and sewer charges and other similar
governmental charges levied on or attributable to the Building or Project
or their operation, including without limitation, (i) real property taxes
or assessments levied or assessed against the Building or Project, (ii)
assessments or charges levied or assessed against the Building or Project
by any redevelopment agency, (iii) any tax measured by gross rentals
received from the leasing of the Premises, Building or Project, excluding
any net income, franchise, capital stock, estate or inheritance taxes
imposed by the State or federal government or their agencies, branches or
departments; provided that if at any time during the Term any governmental
entity levies, assesses or imposes on Landlord any (1) general or special,
ad valorem or specific, excise, capital levy or other tax, assessment, levy
or charge directly on the Rent received under this Lease or on the rent
received under any other leases of space in the Building or Project, or (2)
any license fee, excise or franchise tax, assessment, levy or charge
measured by or based, in whole or in part, upon such rent, or (3) any
transfer, transaction, or similar tax, assessment, levy or charge based
directly or indirectly upon the transaction represented by this Lease or
such other leases, or (4) any occupancy, use, per capita or other tax,
assessment, levy or charge based directly or indirectly upon the use or
occupancy of the Premises or other premises within the Building or Project,
then any such taxes, assessments, levies and charges shall be deemed to be
included in the term Project Operating Costs. If at any time during the
Term the assessed valuation of, or taxes on, the Project are not based on a
completed Project having at least eighty-five percent (85%) of the Rentable
Area occupied, then the "taxes" component of Project Operating Costs shall
be adjusted by Landlord to reasonably approximate the taxes which would
have been payable if the Project were completed and at least eighty-five
percent (85%) occupied.
(b) Operating costs incurred by Landlord in maintaining and operating the
Building and Project, including without limitation the following: costs of
(1) utilities; (2) supplies; (3) insurance (including public liability,
property damage, earthquake, and fire and extended coverage insurance for
the full replacement cost of the Building and Project as required by
Landlord or its lenders for the Project; (4) services of independent
contractors; (5) compensation (including employment taxes and fringe
benefits) of all persons who perform duties connected with the operation,
maintenance, repair or overhaul of the Building or Project, and equipment,
improvements and facilities located within the Project, including without
limitation engineers, janitors, painters, floor waxers, window washers,
security and parking personnel and gardeners (but excluding persons
performing services not uniformly available to or performed for
substantially all Building or Project tenants); (6) operation and
maintenance of a room for delivery and distribution of mail to tenants of
the Building or Project as required by the U.S. Postal Service (including,
without limitation, an amount equal to the fair market rental value of the
mail room premises); (7) management of the Building or Project, whether
managed by Landlord or an independent contractor (including, without
limitation, an amount equal to the fair market value of any on-site
manager's office); (8) rental expenses for (or a reasonable depreciation
allowance on) personal property used in the maintenance, operation or
repair of the Building or Project; (9) costs, expenditures or charges
(whether capitalized or not) required by any governmental or quasi-
governmental authority; (10) amortization of capital expenses (including
financing costs) (i) required by a governmental entity for energy
conservation or life safety purposes, or (ii) made by Landlord to reduce
Project Operating Costs; and (11) any other costs or expenses incurred by
Landlord under this Lease and not otherwise reimbursed by tenants of the
Project. If at any time during the Term, less than eighty-five percent
(85%) of the Rentable Area of the Project is occupied, the "operating
costs" component of Project Operating Costs shall be adjusted by Landlord
to reasonably approximate the operating costs which would have been
incurred if the Project had been at least eighty-five percent (85%)
occupied. Notwithstanding anything to the contrary above, Tenant's share
of operating expenses shall not exceed 7% in any comparison year. This
maximum 7% will not apply to option period.
(2) Tenant's Proportionate Share of Project Operating Costs shall be payable by
Tenant to Landlord as follows:
(a) Beginning with the calendar year following the Base Year and for each
calendar year thereafter ("Comparison Year"). Tenant shall pay Landlord an
amount equal to Tenant's Proportionate Share of the Project Operating Costs
incurred by Landlord in the Comparison Year which exceeds the total amount
of Project Operating Costs payable by Landlord for the Base Year. This
excess is referred to as the "Excess Expenses."
(b) To provide for current payments of Excess Expenses, Tenant shall, at
Landlord's request, pay as additional rent during each Comparison Year, an
amount equal to Tenant's Proportionate Share of the Excess Expenses payable
during such Comparison Year, as estimated by Landlord from time to time.
Such payments shall be made in monthly installments, commencing on the
first day of the month following the month in which Landlord notifies
Tenant of the amount it is to pay hereunder and continuing until the first
day of the month following the month in which Landlord gives Tenant a new
notice of estimated Excess Expenses. It is the intention hereunder to
estimate from time to time the amount of the Excess Expenses for each
Comparison Year and Tenant's Proportionate Share thereof, and then to make
an adjustment in the following year based on the actual Excess Expenses
incurred for that Comparison Year.
(c) On or before April 1 of each Comparison Year after the first Comparison
Year (or as soon thereafter as is practical), Landlord shall deliver to
Tenant a statement setting forth Tenant's Proportionate Share of the Excess
Expenses for the preceding Comparison Year. If Tenant's Proportionate
Share of the actual Excess Expenses for the previous Comparison Year
exceeds the total of the estimated monthly payments made by Tenant for such
year, Tenant shall pay Landlord the amount of the deficiency within ten
(10) days of the receipt of the statement. If such total exceeds Tenant's
Proportionate Share of the actual Excess Expenses for such Comparison
Year, then Landlord shall credit against Tenant's next ensuing monthly
installment(s) of additional rent an amount equal to the difference until
the credit is exhausted. If a credit is due from Landlord on the
Expiration Date, Landlord shall pay Tenant the amount of the credit. The
obligations of Tenant and Landlord to make payments required under this
Section 5.3 shall survive the Expiration Date.
(d) Tenant's Proportionate Share of Excess Expenses in any Comparison Year
having less than 365 days shall be appropriately prorated.
(e) If any dispute arises as to the amount of any additional rent due
hereunder, Tenant shall have the right after reasonable notice and at
reasonable times to inspect Landlord's accounting records at Landlord's
accounting office and if after such inspection Tenant still disputes the
amount of additional rent owed, a certification as to the proper amount
shall be made by Landlord's certified public accountant, which certification
shall be final and conclusive. Tenant agrees to pay the cost of such
certification unless it is determined that Landlord's original statement
overstated Project Operating Costs by more than five percent (5%).
(3)
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(f) If this Lease sets forth an Expense Stop at Section 2f, then during the
Term Tenant shall be liable for Tenant's Proportionate Share of any actual
Project Operating Costs which exceed the amount of the Expense Stop. Tenant
shall make current payments of such excess costs during the Term in the
same manner as is provided for payment of Excess Expenses under the
applicable provisions of Section 5.3b(2)(b) and (c) above.
5.4 DEFINITION OF RENT. All costs and expenses which Tenant assumes or agrees
to pay to Landlord under this Lease shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent"). The Rent
shall be paid to the Building manager (or other person) and at such place, as
Landlord may from time to time designate in writing, without any prior demand
therefor and without deduction or offset, in lawful money of the United States
of America.
5.5 RENT CONTROL. If the amount of Rent or any other payment due under this
Lease violates the terms of any governmental restrictions on such Rent or
payment, then the Rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon
termination of the restrictions, Landlord shall, to the extent it is legally
permitted, recover from Tenant the difference between the amounts received
during the period of the restrictions and the amounts Landlord would have
received had there been no restrictions.
5.6 TAXES PAYABLE BY TENANT. In addition to the Rent and any other charges to
be paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any
and all taxes payable by Landlord (other than net income taxes) which are not
otherwise reimbursable under this Lease, whether or not now customary or within
the contemplation of the parties, where such taxes are upon, measured by or
reasonably attributable to (a) the cost or value of Tenant's equipment,
furniture, fixtures and other personal property located in the Premises, or the
cost or value of any leasehold improvements made in or to the Premises by or for
Tenant, other than Exhibit "A". Work made by Landlord, regardless of whether
title to such improvements is held by Tenant or Landlord; (b) the gross or net
Rent payable under this Lease, including, without limitation, any rental or
gross receipts tax levied by any taxing authority with respect to the receipt of
the Rent hereunder, (c) the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (d) this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises. If
it becomes unlawful for Tenant to reimburse Landlord for any costs as required
under this Lease, the Base Rent shall be revised to net Landlord the same net
Rent after imposition of any tax or other charge upon Landlord as would have
been payable to Landlord but for the reimbursement being unlawful.
6. INTEREST AND LATE CHARGES.
If Tenant fails to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear interest at the maximum rate then allowed by law. Tenant
acknowledges that the late payment of any Monthly Installment of Base Rent will
cause Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease, including without limitation, administrative and
collection costs and processing and accounting expenses, the exact amount of
which is extremely difficult to ascertain. Therefore, in addition to interest,
if any such installment is not received by Landlord within ten (10) days from
the date it is due, Tenant shall pay Landlord a late charge equal to ten percent
(10%) of such installment. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered from such nonpayment by Tenant.
Acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
from exercising any other rights or remedies available to Landlord under this
Lease.
7. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord the Security Deposit set forth at Section
2.0 upon execution of this Lease, as security for Tenant's faithful performance
of its obligations under this Lease. Landlord and Tenant agree that the
Security Deposit may be commingled with funds of Landlord and Landlord shall
have no obligation or liability for payment of interest on such deposit. Tenant
shall not mortgage, assign, transfer or encumber the Security Deposit without
the prior written consent of Landlord and any attempt by Tenant to do so shall
be void, without force or effect and shall not be binding upon Landlord.
If Tenant fails to pay any Rent or other amount when due and payable under this
Lease, or fails to perform any of the terms hereof, Landlord may appropriate and
apply or use all or any portion of the Security Deposit for Rent payments or any
other amount then due and unpaid, for payment of any amount for which Landlord
has become obligated as a result of Tenant's default or breach, and for any loss
or damage sustained by Landlord as a result of Tenant's default or breach, and
Landlord may so apply or use this deposit without prejudice to any other remedy
Landlord may have by reason of Tenant's default or breach. If Landlord so uses
any of the Security Deposit, Tenant shall, within ten (10) days after written
demand therefor, restore the Security Deposit to the full amount originally
deposited. Tenant's failure to do so shall constitute an act of default
hereunder and Landlord shall have the right to exercise any remedy provided for
at Article 27 hereof. Within fifteen (15) days after the Term (or any extension
thereof) has expired or Tenant has vacated the Premises, whichever shall last
occur, and provided Tenant is not then in default on any of its obligations
hereunder, Landlord shall return the Security Deposit to Tenant, or, if Tenant
has assigned its interest under this Lease, to the last assignee of Tenant. If
Landlord sells its interest in the Premises, Landlord may deliver this deposit
to the purchaser of Landlord's interest and thereupon be relieved of any further
liability or obligation with respect to the Security Deposit.
8. TENANT'S USE OF THE PREMISES.
Tenant shall use the Premises solely for the purposes set forth in Tenant's Use
Clause. Tenant shall not use or occupy the Premises in violation of law or any
covenant, condition or restriction affecting the Building or Project or the
certificate of occupancy issued for the Building or Project, and shall, upon
notice from Landlord, immediately discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
law or the certificate of occupancy. Tenant, at Tenant's own cost and expense,
shall comply with all laws, ordinances, regulations, rules and/or any directions
of any governmental agencies or authorities having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or its use or
occupation. A judgment of any court of competent jurisdiction or the admission
by Tenant in any action or proceeding against Tenant that Tenant has violated
any such laws, ordinances, regulations, rules and/or directions in the use of
the Premises shall be deemed to be a conclusive determination of that fact as
betweeen Landlord and Tenant. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any fire extended coverage or
other insurance policy covering the Building or Project and/or property located
therein and shall comply with all rules, orders, regulations, requirements and
recommendations of the Insurance Services Office or any other organization
performing a similar function. Tenant shall
(4)
<PAGE>
promptly upon demand reimburse Landlord for any additional premium charged for
such policy by reason of Tenant's failure to comply with the provisions of this
Article. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them, or use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall not commit or suffer to be committed
any waste in or upon the Premises.
9. SERVICES AND UTILITIES.
Provided that Tenant is not in default hereunder, Landlord agrees to furnish
to the Premises during generally recognized 7 days, and 24 hours a day and
subject to the Rules and Regulations of the Building or Project, electricity
for normal desk top office equipment and normal copying equipment, and
heating, ventilation and air conditioning ("HVAC") as required in Landlord's
judgment for the comfortable use and occupancy of the Premises. If Tenant
desires HVAC at any other time, Landlord shall use reasonable efforts to
furnish such service upon reasonable notice from Tenant and Tenant shall pay
Landlord's charges therefor on demand. Landlord shall also maintain and keep
lighted the common stairs, common entries and restrooms in the Building.
Landlord shall not be in default hereunder or be liable for any damages
directly or indirectly resulting from, nor shall the Rent be abated by reason
of (i) the installation, use or interruption of use of any equipment in
connection with the furnishing of any of the foregoing services, (ii) failure
to furnish or delay in furnishing any such services where such failure or
delay is caused by accident or any condition or event beyond the reasonable
control of Landlord, or by the making of necessary repairs or improvements to
the Premises, Building or Project, or (iii) the limitation, curtailment or
rationing of, or restrictions on, use of water, electricity, gas or any other
form of energy serving the Premises, Building or Project. Landlord shall not
be liable under any circumstances for a loss of or injury to property or
business, however occurring, through or in connection with or incidental to
failure to furnish any such services. If Tenant uses heat generating
machines or equipment in the Premises which affect the temperature otherwise
maintained by the HVAC system, Landlord reserves the right to install
supplementary air conditioning units in the Premises and the cost thereof,
including the cost of installation, operation and maintenance thereof, shall
be paid by Tenant to Landlord upon demand by Landlord.
Tenant shall not, without the written consent of Landlord, use any apparatus
or device in the Premises, including without limitation, electronic data
processing machines, punch card machines or machines using in excess of 120
volts, which consumes more electricity than is usually furnished or supplied
for the use of premises as general office space, as determined by Landlord.
Tenant shall not connect any apparatus with electric current except through
existing electrical outlets in the Premises. Tenant shall not consume water
or electric current in excess of that usually furnished or supplied for the
use of premises as general office space (as determined by Landlord), without
first procuring the written consent of Landlord, which Landlord may refuse,
and in the event of consent, Landlord may have installed a water meter or
electrical current meter in the Premises to measure the amount of water or
electric current consumed. The cost of any such meter and of its
installation, maintenance and repair shall be paid for by the Tenant and
Tenant agrees to pay to Landlord promptly upon demand for all such water and
electric current consumed as shown by said meters, at the rates charged for
such services by the local public utility plus any additional expense
incurred in keeping account of the water and electric current so consumed if
a separate meter is not installed, the excess cost for such water and
electric current shall be established by an estimate made by a utility
company or electrical engineer hired by Landlord at Tenant's expense.
Nothing contained in this Article shall restrict Landlord's right to require at
any time separate metering of utilities furnished to the Premises. In the event
utilities are separately metered, Tenant shall pay promptly upon demand for all
utilities consumed at utility rates charged by the local public utility plus any
additional expense incurred by Landlord in keeping account of the utilities so
consumed. Tenant shall be responsible for the maintenance and repair of any
such meters at its sole cost.
Landlord shall furnish elevator service, lighting replacement for building
standard lights, restroom supplies, window washing and janitor services in a
manner that such services are customarily furnished to comparable office
buildings in the area.
10. CONDITION OF THE PREMISES.
Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave Landlord
notice on or before the Commencement Date. No promise of Landlord to alter,
remodel, repair or improve the Premises, the Building or the Project and no
representation, express or implied, respecting any matter or thing relating to
the Premises, Building, Project or this Lease (including, without limitation,
the condition of the Premises, the Building or the Project) have been made to
Tenant by Landlord or its Broker or Sales Agent, other than as may be contained
herein or in a separate exhibit or addendum signed by Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
a. LANDLORD'S OBLIGATIONS. Landlord shall perform Landlord's Work to the
Premises as described in Exhibit "C." Landlord shall maintain in good order,
condition and repair the Building and all other portions of the Premises not
the obligation of Tenant or of any other tenant in the Building.
b. TENANT'S OBLIGATIONS.
(1) Tenant shall perform Tenant's Work to the Premises as described in
Exhibit "A", if applicable.
(2) Tenant at Tenant's sole expense shall, except for services
furnished by Landlord pursuant to Article 9 hereof maintain the
Premises in good order, condition and repair, including the interior
surfaces of the ceilings, walls and floors, all doors, all interior
windows. Building Standard furnishings and special items and equipment
installed by or at the expense of Tenant.
(3) Tenant shall be responsible for all repairs and alterations in and
to the Premises, Building and Project and the facilities and systems
thereof, the need for which arises out of (i) Tenant's use or occupancy
of the Premises (ii) the installation, removal, use or operation of
Tenant's Property (as defined in Article 13) in the Premises, (iii)
the moving of Tenant's Property into or out of the Building or (iv) the
act, omission, misuse or negligence of Tenant, its agents, contractors,
employees or invitees.
(5)
<PAGE>
(4) If Tenant fails to maintain the Premises in good order, condition
and repair, Landlord shall give Tenant notice to do such acts as are
reasonably required to so maintain the Premises. If Tenant fails to
promptly commence such work and diligently prosecute it to completion,
then Landlord shall have the right to do such acts and expend such
funds at the expense of Tenant as are reasonably required to perform
such work. Any amount so expended by Landlord shall be paid by Tenant
promptly after demand with interest at the prime commercial rate then
being charged by Bank of America NT & SA plus two percent (2%) per
annum, from the date of such work, but not to exceed the maximum rate
then allowed by law. Landlord shall have no liability to Tenant for
any damage, inconvenience, or interference with the use of the Premises
by Tenant as a result of performing any such work.
c. COMPLIANCE WITH LAW. Landlord and Tenant shall each do all acts required
to comply with all applicable laws, ordinances, and rules of any public
authority relating to their respective maintenance obligations as set forth
herein.
d. WAIVER BY TENANT. Tenant expressly waives the benefits of any statute
now or hereafter in effect which would otherwise afford the Tenant the
right to make repairs at Landlord's expense or to terminate this Lease
because of Landlord's failure to keep the Premises in good order, condition
and repair.
e. LOAD AND EQUIPMENT LIMITS. Tenant shall not place a load upon any floor
of the Premises which exceeds the load per square foot which such floor was
designed to carry, as determined by Landlord or Landlord's structural
engineer. The cost of any such determination made by Landlord's structural
engineer shall be paid for by Tenant upon demand. Tenant shall not install
business machines or mechanical equipment which cause noise or vibration to
such a degree as to be objectionable to Landlord or other Building tenants.
f. Except as otherwise expressly provided in this Lease, Landlord shall
have no liability to Tenant nor shall Tenant's obligations under this Lease
be reduced or abated in any manner whatsoever by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's making any repairs or changes which Landlord is required or
permitted by this Lease or by any other tenant's lease or required by law
to make in or to any portion of the Project, Building or the Premises.
Landlord shall nevertheless use reasonable efforts to minimize any
interference with Tenant's business in the Premises. Tenant shall give
Landlord prompt notice of any damage to or defective condition in any
part or appurtenance of the Building's mechanical, electrical, plumbing,
HVAC or other systems serving, located in, or passing through the Premises.
g. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical,
electrical, plumbing, HVAC or other systems serving, located in, or passing
through the Premises.
h. Upon the expiration or earlier termination of this Lease, Tenant shall
return the Premises to Landlord clean and in the same condition as on the
date Tenant took possession, except for normal wear and tear. Any damage
to the Premises, including any structural damage, resulting from Tenant's
use or from the removal of Tenant's fixtures, furnishings and equipment
pursuant to Section 13b shall be repaired by Tenant at Tenant's expense.
12. ALTERATIONS AND ADDITIONS.
a. Tenant shall not make any additions, alterations or improvements to the
Premises without obtaining the prior written consent of Landlord.
Landlord's consent may be conditioned on Tenant's removing any such
additions, alterations or improvements upon the expiration of the Term and
restoring the Premises to the same condition as on the date Tenant took
possession. All work with respect to any addition, alteration or
improvement shall be done in a good and workmanlike manner by properly
qualified and licensed personnel approved by Landlord, and such work shall
be diligently prosecuted to completion. Landlord may, at Landlord's
option, require that any such work be performed by Landlord's contractor,
in which case the cost of such work shall be paid for before commencement
of the work. Tenant shall pay to Landlord upon completion of any such work
by Landlord's contractor, an administrative fee of fifteen percent (15%) of
the cost of the work.
b. Tenant shall pay the costs of any work done on the Premises pursuant to
Section 12a, and shall keep the Premises, Building and Project free and
clear of liens of any kind. Tenant shall indemnify, defend against and
keep Landlord free and harmless from all liability, loss, damage, costs,
attorneys' fees and any other expense incurred on account of claims by any
person performing work or furnishing materials or supplies for Tenant or
any person claiming under Tenant.
Tenant shall keep Tenant's leasehold interest, and any additions or
improvements which are or become the property of Landlord under this Lease,
free and clear of all attachment or judgment liens. Before the actual
commencement of any work for which a claim or lien may be filed, Tenant
shall give Landlord notice of the intended commencement date a sufficient
time before that date to enable Landlord to post notices of non-
responsibility or any other notices which Landlord deems necessary for the
proper protection of Landlord's interest in the Premises, Building or the
Project, and Landlord shall have the right to enter the Premises and post
such notices at any reasonable time.
c. Landlord may require, at Landlord's sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount
equal to at least one and one-half (1 1/2) times the total estimated cost
of any additions, alterations or improvements to be made in or to the
Premises, to protect Landlord against any liability for mechanic's and
materialmen's liens and to insure timely completion of the work. Nothing
contained in this Section 12c shall relieve Tenant of its obligation under
Section 12b to keep the Premises, Building and Project free of all liens.
d. Unless their removal is required by Landlord as provided in Section 12a,
all additions, alterations and improvements made to the Premises shall
become the property of Landlord and be surrendered with the Premises upon
the expiration of the Term; provided, however, Tenant's equipment,
machinery and trade fixtures which can be removed without damage to the
Premises shall remain the property of Tenant and may be removed, subject to
the provisions of Section 13b.
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.
a. All fixtures, equipment, improvements and appurtenances attached to or
built into the Premises at the commencement of or during the Term, whether
or not by or at the expense of Tenant ("Leasehold Improvements") shall be
and remain a part of the Premises, shall be the property of Landlord and
shall not be removed by Tenant, except as expressly provided in Section 13b.
(6)
<PAGE>
b. All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located in the
Premises and acquired by or for the account of Tenant, without expense to
Landlord, which can be removed without structural damage to the Building,
and all furniture, furnishings and other articles of movable personal
property owned by Tenant and located in the Premises (collectively
"Tenant's Property") shall be and shall remain the property of Tenant and
may be removed by Tenant at any time during the Term; provided that if
any of Tenant's Property is removed, Tenant shall promptly repair any
damage to the Premises or to the Building resulting from such removal.
14. RULES AND REGULATIONS.
Tenant agrees to comply with (and cause its agents, contractors, employees
and invitees to comply with) the rules and regulations attached hereto as
Exhibit "D" and with such reasonable modifications thereof and additions
thereto as Landlord may from time to time make. Landlord shall not be
responsible for any violation of said rules and regulations by other tenants
or occupants of the Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord reserves the following rights, exercisable without liability to
Tenant for (a) damage or injury to property, person or business, (b) causing
an actual or constructive eviction from the Premises, or (c) disturbing
Tenant's use or possession of the Premises:
a. To name the Building and Project and to change the name or street
address of the Building or Project;
b. To install and maintain all signs on the exterior and interior of the
Building and Project;
c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;
d. At any time during the Term, and on reasonable prior notice to
Tenant, to inspect the Premises, and to show the Premises to any
prospective purchaser or mortgagee of the Project, or to any assignee of
any mortgage on the Project, or to others having an interest in the
Project or Landlord, and during the last six months of the Term, to show
the Premises to prospective tenants thereof; and
e. To enter the Premises for the purpose of making inspections, repairs,
alterations, additions or improvements to the Premises or the Building
(including, without limitation, checking, calibrating, adjusting or
balancing controls and other parts of the HVAC system), and to take all
steps as may be necessary or desirable for the safety, protection,
maintenance or preservation of the Premises or the Building or Landlord's
interest therein, or as may be necessary or desirable for the operation
or improvement of the Building or in order to comply with laws, orders or
requirements of governmental or other authority. Landlord agrees to use
its best efforts (except in an emergency) to minimize interference with
Tenant's business in the Premises in the course of any such entry.
16. ASSIGNMENT AND SUBLETTING.
No assignment of this Lease or sublease of all or any part of the Premises
shall be permitted, except as provided in this Article 16.
a. Tenant shall not, without the prior written consent of Landlord,
assign or hypothecate this Lease or any interest herein or sublet the
Premises or any part thereof, or permit the use of the Premises by any
party other than Tenant. Any of the foregoing acts without such consent
shall be void and shall, at the option of Landlord, terminate this Lease.
This Lease shall not, nor shall any interest of Tenant herein, be
assignable by operation of law without the written consent of Landlord.
b. If at any time or from time to time during the Term Tenant desires to
assign this Lease or sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms and provisions of the
proposed assignment or sublease, and the identity of the proposed
assignee or subtenant. Tenant shall promptly supply Landlord with such
information concerning the business background and financial condition of
such proposed assignee or subtenant as Landlord may reasonably request.
Landlord shall have the option, exercisable by notice given to Tenant
within twenty (20) days after Tenant's notice is given, either to sublet
such space from Tenant at the rental and on the other terms set forth in
this Lease for the term set forth in Tenant's notice, or, in the case of
an assignment, to terminate this Lease. If Landlord does not exercise
such option, Tenant may assign the Lease or sublet such space to such
proposed assignee or subtenant on the following further conditions:
(1) Landlord shall have the right to approve such proposed assignee
or subtenant, which approval shall not be unreasonably withheld;
(2) The assignment or sublease shall be on the same terms set forth
in the notice given to Landlord;
(3) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises until an executed
counterpart of such assignment or sublease has been delivered to
Landlord;
(4) No assignee or sublessee shall have a further right to assign or
sublet except on the terms herein contained, and
(5) Any sums or other economic consideration received by Tenant as
a result of such assignment or subletting however denominated under
the assignment or sublease, which exceed, in the aggregate, (i) the
total sums which Tenant is obligated to pay Landlord under this
Lease (prorated to reflect obligations allocable to any portion of
the Premises subleased), plus (ii) any real estate brokerage
commissions or fees payable in connection with such assignment or
subletting, shall be paid to Landlord as additional rent under this
Lease without affecting or reducing any other obligations of Tenant
hereunder.
c. Notwithstanding the provisions of paragraphs a and b above, Tenant
may assign this Lease or sublet the Premises or any portion thereof,
without Landlord's consent and without extending any recapture or
termination option to Landlord, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any
corporation resulting from a merger or consolidation with Tenant, or to
any person or entity which acquires all the assets of Tenant's business
as a going concern, provided that (i) the assignee or sublessee assumes,
in full, the obligations of Tenant under this Lease, (ii) Tenant remains
fully liable under this Lease, and (iii) the use of the Premises under
Article 8 remains unchanged.
(7)
<PAGE>
d. No subletting or assignment shall release Tenant of Tenant's
obligations under this Lease or alter the primary liability of Tenant to
pay the Rent and to perform all other obligations to be performed by
Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision
hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting in the event of
default by an assignee or subtenant of Tenant or any successor of Tenant
in the performance of any of the terms hereof. Landlord may proceed
directly against Tenant without the necessity of exhausting remedies
against such assignee, subtenant or successor. Landlord may consent to
subsequent assignments of the Lease or sublettings or amendments or
modifications to the Lease with assignees of Tenant, without notifying
Tenant, or any successor of Tenant, and without obtaining its or their
consent thereto and any such actions shall not relieve Tenant of
liability under this Lease.
e. If Tenant assigns the Lease or sublets the Premises or requests the
consent of Landlord to any assignment or subletting or if Tenant requests
the consent of Landlord for any act that Tenant proposes to do, any
attorneys' fees reasonably incurred by Landlord in connection with such
act or request, not to exceed $1,000.00.
17. HOLDING OVER.
If after expiration of the Term, Tenant remains in possession of the Premises
with Landlord's permission (express or implied), Tenant shall become a tenant
from month to month only, upon all the provisions of this Lease (except as to
term and Base Rant), but the "Monthly Installments of Base Rent" payable by
Tenant shall be increased to 125% of the Monthly Installments of Base Rent
payable by Tenant at the expiration of the Term. Such monthly rent shall be
payable in advance on or before the first day of each month. If either party
desires to terminate such month to month tenancy. It shall give the other
party not less than thirty (30) days advance written notice of the date of
termination.
18. SURRENDER OF PREMISES.
a. Tenant shall peaceably surrender the Premises to Landlord on the
Expiration Date, in broom-clean condition and in as good condition as
when Tenant took possession, except for (i) reasonable wear and tear,
(ii) loss by fire or other casualty, and (iii) loss by condemnation.
Tenant shall, on Landlord's request, remove Tenant's Property on or
before the Expiration Date and promptly repair all damage to the Premises
or Building caused by such removal.
b. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant's Property left on the
Premises shall be deemed to be abandoned, and, at Landlord's option,
title shall pass to Landlord under this Lease as by a bill of sale. If
Landlord elects to remove all or any part of such Tenant's Property, the
cost of removal, including repairing any damage to the Premises or
Building caused by such removal, shall be paid by Tenant On the
Expiration Date Tenant shall surrender all keys.
19. DESTRUCTION OR DAMAGE.
a. If the Premises or the portion of the Building necessary for Tenant's
occupancy is damaged by fire, earthquake, act of God, the elements of
other casualty, Landlord shall, subject to the provisions of this
Article, promptly repair the damage, if such repairs can, in Landlord's
opinion, be completed within (90) days. If Landlord determines that
repairs can be completed within ninety (90) days, this Lease shall remain
in full force and effect, except that if such damage is not the result of
the negligence or willful misconduct of Tenant or Tenant's agents,
employees, contractors, licensees or invitees, the Base Rent shall be
abated to the extent Tenant's use of the Premises is impaired, commencing
with the date of damage and continuing until completion of the repairs
required of Landlord under Section 19d.
b. If in Landlord's opinion, such repairs to the Premises or portion of
the Building necessary for Tenant's occupancy cannot be completed within
ninety (90) days, Landlord may elect, upon notice to Tenant given within
thirty (30) days after the date of such fire or other casualty, to repair
such damage, in which event this Lease shall continue in full force and
effect, but the Base Rent shall be partially abated as provided in
Section 19a. If Landlord does not so elect to make such repairs, this
Lease shall terminate as of the date of such fire or other casualty.
c. If any other portion of the Building or Project is totally destroyed
or damaged to the extent that in Landlord's opinion repair thereof cannot
be completed within ninety (90) days, Landlord may elect upon notice to
Tenant given within thirty (30) days after the date of such fire or other
casualty, to repair such damage, in which event this Lease shall continue
in full force and effect, but the Base Rent shall be partially abated as
provided in Section 19a. If Landlord does not elect to make such
repairs, this Lease shall terminate as of the date of such fire or other
casualty.
d. If the Premises are to be repaired under this Article, Landlord shall
repair at its cost any injury or damage to the Building and Building
Standard Work in the Premises. Tenant shall be responsible at its sole
cost and expense for the repair, restoration and replacement of any other
Leasehold Improvements and Tenant's Property. Landlord shall not be
liable for any loss of business, inconvenience or annoyance arising from
any repair or restoration of any portion of the Premises, Building or
Project as a result of any damage from fire or other casualty.
e. This Lease shall be considered an express agreement governing any
case of damage to or destruction of the Premises, Building or Project by
fire or other casualty, and any present or future law which purports to
govern the rights of Landlord and Tenant in such circumstances in the
absence of express agreement, shall have no application.
20. EMINENT DOMAIN.
a. If the whole of the Building or Premises is lawfully taken by
condemnation or in any other manner for any public or quasi-public
purpose, this Lease shall terminate as of the date of such taking, and
Rent shall be prorated to such date. If less than the whole of the
Building or Premises is so taken, this Lease shall be unaffected by such
taking provided that (i) Tenant shall have the right to terminate this
Lease by notice to Landlord given within ninety (90) days after the date
of such taking if twenty percent (20%) or more of the Premises is taken
and the remaining area of the Premises is not reasonably sufficient for
Tenant to continue operation of its businesses, and (ii) Landlord shall
have the right to terminate this Lease by notice to Tenant given within
ninety (90) days after the date of such taking. If either Landlord or
Tenant so elects to terminate this Lease, the Lease shall terminate on
the thirtieth (30th) day after either such notice. The Rent shall be
prorated to the date of termination. If this Lease continues in force
upon such partial taking the Base Rent and Tenant's Proportionate Share
shall be equitably adjusted according to the remaining Rentable Area of
the Premises and Project
(8)
<PAGE>
b. In the event of any taking, partial or whole, all of the proceeds of any
award, judgment or settlement payable by the condemning authority shall be
the exclusive property of Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any award, judgment or settlement
from the condemning authority. Tenant, however, shall have the right, to
the extent that Landlord's award is not reduced or prejudiced, to claim
from the condemning authority (but not from Landlord) such compensation
as may be recoverable by Tenant in its own right for relocation expenses
and damage to Tenant's personal property.
c. In the event of a partial taking of the Premises which does not result
in a termination of this Lease, Landlord shall restore the remaining
portion of the Premises as nearly as practicable to its condition prior to
the condemnation or taking, but only to the extent of Building Standard
Work. Tenant shall be responsible at its sole cost and expense for the
repair, restoration and replacement of any other Leasehold Improvements
and Tenant's Property.
21. INDEMNIFICATION.
a. Tenant shall indemnify and hold Landlord harmless against and from
liability and claims of any kind for loss or damage to property of Tenant
or any other person, or for any injury to or death of any person, arising
out of: (1) Tenant's use and occupancy of the Premises, or any work,
activity or other things allowed or suffered by Tenant to be done in, on
or about the Premises; (2) any breach or default by Tenant of any of
Tenant's obligations under this Lease; or (3) any negligent or otherwise
tortious act or omission of Tenant, its agents, employees, invitees or
contractors. Tenant shall at Tenant's expense, and by counsel
satisfactory to Landlord, defend Landlord in any action or proceeding
arising from any such claim and shall indemnify Landlord against all
costs, attorneys' fees, expert witness fees and any other expenses
incurred in such action or proceeding. As a material part of the
consideration for Landlord's execution of this Lease, Tenant hereby
assumes all risk of damage or injury to any person or property in, on or
about the Premises from any cause.
b. Landlord shall not be liable for injury or damage which may be
sustained by the person or property of Tenant, its employees, invitees or
customers, or any other person in or about the Premises, caused by or
resulting from fire, steam, electricity, gas, water or rain which may
leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, whether such
damage or injury results from conditions arising upon the Premises or
upon other portions of the Building or Project or from other sources.
Landlord shall not be liable for any damages arising from any act or
omission of any other tenant of the Building or Project.
22. TENANT'S INSURANCE.
a. All insurance required to be carried by Tenant hereunder shall be
issued by responsible insurance companies acceptable to Landlord and
Landlord's lender and qualified to do business in the State. Each policy
shall name Landlord, and at Landlord's request any mortgagee of Landlord,
as an additional insured, as their respective interests may appear. Each
policy shall contain (i) a cross-liability endorsement, (ii) a provision
that such policy and the coverage evidenced thereby shall be primary and
non-contributing with respect to any policies carried by Landlord and
that any coverage carried by Landlord shall be excess insurance, and
(iii) a waiver by the insurer of any right of subrogation against
Landlord, its agents, employees and representatives, which arises or
might arise by reason of any payment under such policy or by reason of
any act or omission of Landlord, its agents, employees or
representatives. A copy of each paid up policy (authenticated by the
insurer) or certificate of the insurer evidencing the existence and
amount of each insurance policy required hereunder shall be delivered to
Landlord before the date Tenant is first given the right of possession of
the Premises, and thereafter within thirty (30) days after any demand by
Landlord therefor. Landlord may, at any time and from time to time,
inspect and/or copy any insurance policies required to be maintained by
Tenant hereunder. No such policy shall be cancellable except after twenty
(20) days written notice to Landlord and Landlord's lender. Tenant shall
furnish Landlord with renewals or "binders" of any such policy at least
ten (10) days prior to the expiration thereof. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may (but
shall not be required to) procure said insurance on Tenant's behalf and
charge the Tenant the premiums together with a twenty-five percent (25%)
handling charge, payable upon demand. Tenant shall have the right to
provide such insurance coverage pursuant to blanket policies obtained by
the Tenant, prvoided such blanket policies expressly afford coverage to
the Premises, Landlord, Landlord's mortgagee and Tenant as required by
this Lease.
b. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect policies of casualty insurance
covering (i) all Leasehold improvements (including any alterations,
additions or improvements as may be made by Tenant pursuant to the
provisions of Article 12 hereof), and (ii) trade fixtures, merchandise
and other personal property from time to time in, on or about the
Premises, in an amount not less than one hundred percent (100%) of their
actual replacement cost from time to time, providing protection against
any peril included within the classification "Fire and Extended Coverage"
together with insurance against sprinkler damage, vandalism and malicious
mischief. The proceeds of such insurance shall be used for the repair or
replacement of the property so insured. Upon termination of this Lease
following a casualty as set forth herein, the proceeds under (i) shall be
paid to Landlord, and the proceeds under (ii) above shall be paid to
Tenant.
c. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect workers' compensation insurance
as required by law and comprehensive public liability and property damage
insurance with respect to the construction of improvements on the
Premises, the use, operation or condition of the Premises and the
operations of Tenant in, on or about the Premises, providing personal
injury and broad form property damage coverage for not less than One
Million Dollars ($1,000,000.00) combined single limit for bodily injury,
death and property damage liability.
d. Not less than every three (3) years during the Term, Landlord and
Tenant shall mutually agree to increases in all of Tenant's insurance
policy limits for all insurance to be carried by Tenant as set forth
in this Article in the event Landlord and Tenant cannot mutually agree
upon the amounts of said increases, then Tenant agrees that all
insurance policy limits as set forth in this Article shall be
adjusted for increases in the cost of living in the same manner as is
set forth in Section 5.2 hereof for the adjustment of the Base Rent.
(9)
<PAGE>
23. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other, on
account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of the loss or damage. Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT.
Upon written request of Landlord, or any first mortgagee or first deed of
trust beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in
writing, subordinate its rights under this Lease to the lien of any first
mortgage or first deed of trust, or to the interest of any lease in which
Landlord is lessee, and to all advances made or hereafter to be made
thereunder. However, before signing any subordination agreement, Tenant
shall have the right to obtain from any lender or lessor or Landlord
requesting such subordination, an agreement in writing providing that, as
long as Tenant is not in default hereunder, this Lease shall remain in effect
for the full Term. The holder of any security interest may, upon written
notice to Tenant, elect to have this Lease prior to its security interest
regardless of the time of the granting or recording of such security interest.
In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of the lease in which Landlord is lessee, Tenant shall attorn to the
purchaser, transfer or lessor as the case may be, and recognized that party as
Landlord under this Lease, provided such party acquires and accepts the Premises
subject to this Lease.
25. TENANT ESTOPPEL CERTIFICATES.
Within ten (10) days after written request from Landlord, Tenant shall
execute and deliver to Landlord or Landlord's designee, a written statement
certifying (a) that this Lease is unmodified and in full force and effect, or
is in full force and effect as modified and stating the modifications; (b)
the amount of Base Rent and the date to which Base Rent and additional rent
have been paid in advance; (c) the amount of any security deposited with
Landlord; and (d) that Landlord is not in default hereunder or, if Landlord
is claimed to be in default, stating the nature of any claimed default. Any
such statement may be relied upon by a purchaser, assignee or lender.
Tenant's failure to execute and deliver such statement within the time
required shall at Landlord's election be a default under this Lease and shall
also be conclusive upon Tenant that: (1) this Lease is in full force and
effect and has not been modified except as represented by Landlord; (2) there
are no uncured defaults in Landlord's performance and that Tenant has no
right of offset, counter-claim or deduction against Rent; and (3) not more
than one month's Rent has been paid in advance.
26. TRANSFER OF LANDLORD'S INTEREST.
In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project or Lease occurring after
the consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease. If any security deposit or prepaid Rent has been paid by Tenant,
Landlord may transfer the security deposit or prepaid Rent to Landlord's
successor and upon such transfer. Landlord shall be relieved of any and all
further liability with respect thereto.
27. DEFAULT.
27.1 TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
b. If Tenant fails to pay any Rent or any other charges required to be
paid by Tenant under this Lease and such failure continues for three (3)
days after such payment is due and payable; or
c. If Tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease and such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
or
d. If a writ of attachment or execution is levied on this Lease or on any
of Tenant's Property; or
e. If Tenant makes a general assignment for the benefit of creditors, or
provides for an arrangement, composition, extension or adjustment with its
creditors; or
f. If Tenant files a voluntary petition for relief or if a petition
against Tenant in a proceeding under the federal bankruptcy laws or other
insolvency laws is filed and not withdrawn or dismissed within forty-five
(45) days thereafter, or if under the provisions of any law providing for
reorganization or winding up of corporations, any court of competent
jurisdiction assumes jurisdiction, custody or control of Tenant or any
substantial part of its property and such jurisdiction, custody or control
remains in force unrelinquished, unstayed or unterminated for a period of
forty-five (45) days; or
g. If in any proceeding or action in which Tenant is a party, a trustee
receiver, agent or custodian is appointed to take charge of the Premises or
Tenant's Property (or has the authority to do so) for the purpose of
enforcing a lien against the Premises or Tenant's Property, or
h. If Tenant is a partnership or consists of more than one (1) person or
entity if any partner of the partnership or other person or entity is
involved in any of the acts or events described in subparagraphs a through
g above
27.2 REMEDIES. In the event Tenant's default hereunder, then in addition to
any other rights or remedies Landlord may have under any law, Landlord shall
have the right, at Landlord's option, without further notice or demand of any
kind to do the following
a. Terminate this Lease and Tenant's right to possession of the Premises
and reenter the Premises and take possession thereof, and Tenant shall have
no further claim to the Premises or under this Lease; or
b. Continue this Lease in effect, reenter and occupy the Premises for the
account of Tenant, and collect any unpaid Rent or other charges which have
or thereafter become due and payable; or
c. Reenter the Premises under the provisions of subparagraph b, and
thereafter elect to terminate this Lease and Tenant's right to possession
of the Premises.
<PAGE>
If Landlord reenters the Premises under the provisions of subparagraphs b or
c above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to
terminate this Lease in the event of any reentry or retaking of possession by
Landlord. Landlord shall have the right, but not the obligation, to remove
all or any part of Tenant's Property in the Premises and to place such
property in storage at a public warehouse at the expense and risk of Tenant.
If Landlord elects to relet the Premises for the account of Tenant, the rent
received by Landlord from such reletting shall be applied as follows: first,
to the payment of any indebtedness other than Rent due hereunder from Tenant
to Landlord; second, to the payment of any costs of such reletting, third,
to the payment of the cost of any alterations or repairs to the Premises;
fourth to the payment of Rent due and unpaid hereunder; and the balance, if
any, shall be held by Landlord and applied in payment of future Rent as it
becomes due. If that portion of rent received from the reletting which is
applied against the Rent due hereunder is less than the amount of the Rent
due, Tenant shall pay the deficiency to Landlord promptly upon demand by
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as determined, any costs and expenses incurred
by Landlord in connection with such reletting or in making alterations and
repairs to the Premises, which are not covered by the rent received from the
reletting.
Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant the
following:
1. PAST RENT. The worth at the time of the award of any unpaid Rent
which had been earned at the time of termination, plus
2. RENT PRIOR TO AWARD. The worth at the time of the award of the amount
by which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; plus
3. RENT AFTER AWARD. The worth at the time of the award of the amount by
which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of the rental loss that Tenant proves could
be reasonably avoided; plus
4. PROXIMATELY CAUSED DAMAGES. Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses (including attorneys' fees),
incurred by Landlord in (a) retaking possession of the Premises, (b)
maintaining the Premises after Tenant's default, (c) preparing the
Premises for reletting to a new tenant, including any repairs or
alterations, and (d) reletting the Premises, including broker's
commissions.
"The worth at the time of the award" as used in subparagraphs 1 and 2 above, is
to be computed by allowing interest at the rate of ten percent (10%) per annum.
"The worth at the time of the award" as used in subparagraph 3 above, is to be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank situated nearest to the Premises at the time of the award plus one
percent (1%).
The waiver by Landlord of any breach of any term, covenant or condition of
this Lease shall not be deemed a waiver of such term, covenant or condition
of any subsequent breach of the same or any other term, covenant or
condition. Acceptance of Rent by Landlord subsequent to any breach hereof shall
not be deemed a waiver of any preceding breach other than the failure to pay the
particular Rent so accepted, regardless of Landlord's knowledge of any breach
at the time of such acceptance of Rent. Landlord shall not be deemed to have
waived any term, covenant or condition unless Landlord gives Tenant written
notice of such waiver.
27.3 LANDLORD'S DEFAULT. If Landlord fails to perform any convent,
condition or agreement contained in this Lease within thirty (30) days after
receipt of written notice from Tenant specifying such default, or if such
default cannot reasonably be cured within thirty (30) days, if Landlord fails
to commence to cure within that thirty (30) day period, then Landlord shall
be liable to Tenant for any damages sustained by Tenant as a result of
Landlord's breach; provided, however, it is expressly understood and agreed
that if Tenant obtains a money judgment against Landlord resulting from any
default or other claim arising under this Lease that judgment shall be
satisfied only out of the rents, issues, profits, and other income actually
received on account of Landlord's right title and interest in the Premises,
Building or Project, and no other real, personal or mixed property of
Landlord (or of any of the partners which comprise Landlord, if any) wherever
situated, shall be subject to levy to satisfy such judgment. If, after
notice to Landlord of default, Landlord (or any first mortgagee or first deed
of trust beneficiary of Landlord) fails to cure the default as provided
herein, then Tenant shall have the right to cure that default at Landlord's
expense. Tenant shall not have the right to terminate this Lease or to
withhold, reduce or offset any amount against any payments of Rent or any
other charges due and payable under this Lease except as otherwise
specifically provided herein.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate
broker or agent in connection with this Lease or its negotiation except
Broker and Sales Agent. Tenant shall indemnify and hold Landlord harmless
from any cost, expense or liability (including costs of suit and reasonable
attorneys' fees) for any compensation, commission or fees claimed by any
other real estate broker or agent in connection with this Lease or its
negotiation by reason of any act of Tenant.
29. NOTICES.
All notices, approvals and demands permitted or required to be given under
this Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and
to the Building manager, and (b) if to Tenant, to Tenant's Mailing Address,
provided, however, notices to Tenant shall be deemed duly served or given if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from
time to time by notice to the other designate another place for receipt of
future notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, regulations or restrictions on the use or consumption of energy or other
utilities during the Term, both Landlord and Tenant shall be bound thereby. In
the event of a difference in interpretation by Landlord and Tenant of such
controls, the interpretation of Landlord shall prevail, and Landlord shall have
the right to enforce compliance therewith, including the right of entry into the
Premises to effect compliance.
<PAGE>
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated Tenant shall, at its sole cost and expense, promptly comply with
al laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the condition, use or
occupancy of the Premises, excluding structural changes not related to or
affected by Tenant's improvements or acts. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether Landlord is a party thereto or not, that Tenant has violated any law,
ordinance or governmental rule, regulation or requirement, shall be conclusive
of that fact as between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or Tenant
which is due to strikes, labor disputes, inability to obtain labor, materials,
equipment or reasonable substitutes therefor, acts of God, governmental
restrictions or regulations or controls, judicial orders, enemy or hostile
government actions, civil commotion, fire or other casualty, or other causes
beyond the reasonable control of the party obligated to perform hereunder, shall
excuse performance of the work by that party for a period equal to the duration
of that prevention, delay or stoppage. Nothing in this Article 34 shall excuse
or delay Tenant's obligation to pay Rent or other charges under this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant
shall pay Landlord all costs of such performance promptly upon receipt of a bill
therefor.
36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord. Landlord shall have the right
to remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the cost
of removal to Tenant as additional rent hereunder, payable within ten (10) days
of written demand by Landlord.
37. MISCELLANEOUS.
a. ACCORD AND SATISFACTION, ALLOCATION OF PAYMENTS. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent provided for in this Lease
shall be deemed to be other than on account of the earliest due Rent, nor shall
any endorsement or statement on any check or letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of the Rent or pursue any other remedy provided for in this Lease in
connection with the foregoing. Landlord shall have the absolute right in its
sole discretion to apply any payment received from Tenant to any account or
other payment of Tenant then not current and due or delinquent.
b. ADDENDA. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein the provision contained in the
addendum shall control, unless otherwise provided in the addendum.
c. ATTORNEY'S FEES. If any action or proceeding is brought by either party
against the other pertaining to or arising out of this Lease, the finally
prevailing party shall be entitled to recover all costs and expenses, including
reasonable attorneys fees incurred on account of such action or proceeding.
d. CAPTIONS, ARTICLES AND SECTION NUMBERS. The captions appearing within the
body of this Lease have been inserted as a matter of convenience and for
reference only and in no way define, limit or enlarge the scope or meaning of
this Lease. All references to Article and Section numbers refer to Articles and
Sections in this Lease.
e. CHANGES REQUESTED BY LENDER. Neither Landlord or Tenant shall unreasonably
withhold its consent to changes or amendments to this Lease requested by the
lender on Landlord's interest, so long as these changes do not alter the -----
business terms of this Lease or otherwise materially diminish any rights or
materially increase any obligations of the ---- from whom consent to such change
or amendment is requested.
(12)
<PAGE>
f. CHOICE OF LAW. This Lease shall be construed and enforced in accordance
with the laws of the -----.
g. CONSENT. Notwithstanding anything contained in this Lease to the contrary,
Tenant shall have no claim, and hereby waives the right to any claim against
Landlord for money damages by reason of any refusal, withholding or delaying by
Landlord of any consent, approval or statement of satisfaction, and in such
event, Tenant's only remedies therefor shall be an action for specific
performance, injunction or declaratory judgment to enforce any right to such
consent, etc.
h. CORPORATE AUTHORITY. If Tenant is a corporation, each individual signing
this Lease on behalf of Tenant represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation, and
that this Lease is binding on Tenant in accordance with its terms. Tenant
shall, at Landlord's request, deliver a certified copy of a resolution of its
board of directors authorizing such execution.
i. COUNTERPARTS. This Lease may be executed in multiple counterparts, all of
which shall constitute one and the same Lease.
j. EXECUTION OF LEASE; NO OPTION. The submission of this Lease to Tenant shall
be for examination purposes only, and does not and shall not constitute a
reservation of or option for Tenant to lease, or otherwise create any interest
of Tenant in the Premises or any other premises within the Building or Project.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding on Landlord notwithstanding any time interval, until Landlord has in
fact signed and delivered this Lease to Tenant.
k. FURNISHING OF FINANCIAL STATEMENTS; TENANT'S REPRESENTATIONS. In order to
induce Landlord to enter into this Lease Tenant agrees that it shall promptly
furnish Landlord, from time to time, upon Landlord's written request, with
financial statements reflecting Tenant's current financial condition. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
l. FURTHER ASSURANCES. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
m. MORTGAGE PROTECTION. Tenant agrees to send by certified or registered mail
to any first mortgagee or first deed of trust beneficiary of Landlord whose
address has been furnished to Tenant, a copy of any notice of default served by
Tenant on Landlord. If Landlord fails to cure such default within the time
provided for in this Lease, such mortgagee or beneficiary shall have an
additional thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then such
mortgagee or beneficiary shall have such additional time to cure the default as
is reasonably necessary under the circumstances.
n. PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all of the agreements of
the parties with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties or their respective
successors in interest.
o. RECORDING. Tenant shall not record this Lease without the prior written
consent of Landlord. Tenant, upon the request of Landlord, shall execute and
acknowledge a "short form" memorandum of this Lease for recording purposes.
p. SEVERABILITY. A final determination by a court of competent jurisdiction
that any provision of this Lease is invalid shall not affect the validity of any
other provision, and any provision so determined to be invalid shall, to the
extent possible, be construed to accomplish its intended effect.
q. SUCCESSORS AND ASSIGNS. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the parties.
r. TIME OF THE ESSENCE. Time is of the essence of this Lease.
s. WAIVER. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver of such default.
The receipt and acceptance by Landlord of delinquent Rent shall not constitute a
waiver of any other default, it shall constitute only a waiver of timely payment
for the particular Rent payment involved.
No act or conduct of Landlord, including, without limitation, the acceptance of
keys to the Premises, shall constitute an acceptance of the surrender of the
Premises by Tenant before the expiration of the Term. Only a written notice
from Landlord to Tenant shall constitute acceptance of the surrender of the
Premises and accomplish a termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of the
Lease.
The parties hereto have executed this Lease as of the dates set forth below.
Date: 21 JULY 94 Date: 7-20-94
------------------------------ ----------------------------------
Landlord: COOPERAGE-ROSE PROPERTIES I Tenant: PUMA TECHNOLOGY, INC.
-------------------------- --------------------------------
By: /s/ Terrence J. Rose By: /s/ Jim Bracking
-------------------------------- ------------------------------------
Terrence J. Rose Jim Bracking, Vice-President
Title: Partner Title: of Engineering
----------------------------- ---------------------------------
By: By:
-------------------------------- ------------------------------------
Title: Title:
----------------------------- ---------------------------------
- --------------------------------------------------------------------------------
CONSULT YOUR ADVISORS - This document has been prepared for approval by your
attorney. No representation or recommendation is made by Landlord as to the
legal sufficiency or tax consequences of this document or the transaction to
which it relates. These are questions for your attorney.
In any real estate transaction, it is recommended that you consult with a
professional such as a civil engineer, industrial hygienist or other person with
experience in evaluating the condition of the property, including the possible
presence of asbestos, hazardous materials and underground storage tanks.
- --------------------------------------------------------------------------------
<PAGE>
[FLOOR PLAN]
EXHIBIT A
<PAGE>
[FLOOR PLAN]
EXHIBIT A
<PAGE>
[FLOOR PLAN]
EXHIBIT B
<PAGE>
EXHIBIT D
OFFICE BUILDING LEASE
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside
or inside of the Building without the written consent of Landlord first had
and obtained and Landlord shall have the right to remove any such sign,
placard, picture, advertisement, name or notice to and at the expense of
Tenant.
All approved signs or lettering on doors shall be printed, painted, affixed
or inscribed at the expense of Tenant by a person approved of by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside the Premises, provided, however, that Landlord may furnish and
install a Building standard window covering at all exterior windows.
Tenant shall not without prior written consent of Landlord cause or
otherwise sunscreen any window.
2. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of Tenant only and
Landlord reserves the right to exclude any other names therefrom.
3. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective
Premises. The halls, passages, exits, entrances, elevators, stairways,
balconies and roof are not for the use of the general public and the
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence in the judgement of the Landlord shall
be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom the Tenants normally
deals in the ordinary course of Tenant's business unless such persons are
engaged in illegal activities. No tenant and no employees or invitees of
any tenant shall go upon the roof of the Building.
4. Tenant shall not alter any lock or install any new or additional locks or
any bolts on any door of the Premises without the written consent of
Landlord.
5. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees
shall have caused it.
6. Tenant shall not overload the floor of the Premises or mark, drive nails,
screw or drill into the partitions, woodwork or plaster or in any way
deface the Premises or any part thereof. No boring cutting or stringing of
wires or laying of linoleum or other similar floor coverings shall be
permitted except with the prior written consent of the Landlord and as the
Landlord may direct.
7. Landlord shall have the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the Building and also the
time and manner of moving the same in and out of the Building. Safes or
other heavy objects shall, if considered necessary by Landlord, stand on
wood strips of such thickness as is necessary to properly distribute the
weight. Landlord will not be responsible for loss of or damage to any such
safe or property from any cause and all damage done to the Building by
moving or maintaining any such safe or other property shall be repaired at
the expense of Tenant. There shall not be used in any space, or in the
public halls of the Building, either by any tenant or others, any hand
trucks except those equipped with rubber tires and side guards.
Page 1 of 4
<PAGE>
8. Tenant shall not employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the Premises unless otherwise agreed
to by Landlord. Except with the written consent of Landlord, no person or
persons other than those approved by Landlord shall be permitted to enter
the Building for the purpose of cleaning the same. Tenant shall not cause
any unnecessary labor by reason of Tenant's carelessness or indifference in
the preservation of good order and cleanliness, Landlord shall in no way
be responsible to any Tenant for any loss of property on the Premises,
however occurring, or for any damage done to the effects of any Tenant by
the janitor or any other employee or any other person. Janitor service
shall include ordinary dusting and cleaning by the janitor assigned to such
work and shall not include cleaning of carpets or rugs, except normal
vacuuming, or moving of furniture and other special services. Janitor
service will not be furnished on nights when rooms are occupied after 9:30
P.M. Window cleaning shall be done only by Landlord, and only between 6:00
A.M. and 5:00 P.M.
9. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit to suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or
other occupants of the Building by reason of noise, odors and or
vibrations, or interfere in any way with other tenants or those having
business therein, not shall any animals or birds be brought in or kept in
or about the Premises or the Building. No Tenant shall make or permit to
be made any unseemly or disturbing noises or disturb or interfere with
occupants of this or neighboring Buildings or Premises or those having
business with them whether by the use of any musical instrument, radio,
phonograph, unusual noise, or in any other way. No Tenant shall throw
anything out of doors or down the passageways.
10. Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material, or use any method
of heating or air conditioning other than that supplied by Landlord.
11. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will
be allowed without the consent of Landlord. The location of telephones,
call boxes and other office equipment affixed to the Premises shall be
subject to the approval of Landlord.
12. All keys, including security access cards, to the Building, offices, rooms
and toilets rooms shall be obtained from Landlord's Building Management
Office and Tenant shall not from any other source duplicate, obtain keys or
have keys made. The Tenant, upon termination of the tenancy, shall deliver
to the Landlord the keys and access cards of the Building, offices, rooms
and toilet rooms which shall have been furnished or shall pay the Landlord
the cost of replacing same or of changing the lock or locks operated by
such lost key if Landlord deems it necessary to make such changes.
13. No Tenant shall lay linoleum, tile, carpet or other similar floor covering
so that the same shall be affixed to the floor of the Premises in any
manner except as approved by the Landlord. The expense of repairing any
damage resulting from a violation of this rule or removal of any floor
covering shall be borne by the Tenant by whom, or by whose contractors
employees or invitees, the damage shall have been caused.
14. No furniture, packages, supplies, equipment or merchandise will be received
in the Building or carried up or down in the elevators, except between such
hours and in such elevators as shall be designated by Landlord.
15. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 7:00 P.M. and 7:00 A.M. the following day, access to the Building,
or to the halls, corridors, elevators or stairways in the Building, or to
the Premises may be refused unless the person seeking access is known to
the person or employee of the Building in charge. The Landlord shall in no
case be liable for damages for any error with
Page 2 of 4
<PAGE>
regard to the admission to or exclusion from the Building of any person.
In case of invasion, mob, riot, public excitement, or other commotion, the
Landlord reserves the right to prevent access to the Building during the
continuance of the same by closing of the doors or otherwise, for the
safety of the tenants and protection of property in the Building and the
Building.
16. Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Building and must observe strict care and caution
that all water faucets or water apparatus are entirely shut off before
Tenant or Tenant's employees leave the Building, and that all electricity
shall likewise be carefully shut off, so as to prevent waste or damage, and
for any default or careless Tenant shall make good all injuries sustained
by other tenants or occupants of the Building or Tenant.
17. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgement of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.
18. The requirements of Tenant will be attended to only upon application at the
Office of the Building. Employees of Landlord shall not perform any work
or do anything outside of their regular duties unless under special
instructions from the Landlord, and no employee will admit any person
(Tenant or otherwise) to any office without specific instructions from the
Landlord.
19. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of the
Landlord.
20. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and the street address of the
Building of which the Premises are a part.
21. Tenant agrees that it shall comply with all fire and security regulations
that may be issued from time to time by Landlord and Tenant also shall
provide Landlord with the name of a designated responsible employee to
represent Tenant in all matters pertaining to such fire or security
regulations.
22. Landlord reserves the right by written notice to Tenant, to rescind, alter
or waiver any rule or regulation at any time prescribed for the Building
when, in Landlord's judgement, it is necessary, desirable or proper for the
best interest of the Building and its tenants.
23. Tenants shall not disturb, solicit, or canvass any occupancy of the
Building and shall cooperate to prevent same.
24. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
25. No inoperative vehicles, waste materials, or exterior storage shall be
permitted on the parking lot and common area of the Project.
26. Tenant shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Landlord or by applicable
governmental agencies as non-smoking areas.
27. Tenant agree's not to use the Premises for lodging or manufacturing,
cooking or food preparation.
28. Tenant assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.
Page 3 of 4
<PAGE>
29. Parking areas shall be used only for parking by vehicles no longer than
full size, passenger automobiles herein called "Permitted Size Vehicles".
Vehicles other than Permitted Size Vehicles are herein referred to as
"Oversized Vehicles".
30. Users of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.
31. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Landlord will not be
responsible for any damage to vehicles, injury to persons or loss of
property, all of which risks are assumed by the party using the parking
area.
32. The maintenance, washing, waxing or cleaning of vehicles in the parking lot
or Common Areas is prohibited.
33. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers,
or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities.
34. Tenant shall be responsible for seeing that all of its employees, agents
and invitees comply with the applicable parking rules, regulations, laws and
agreements.
35. Landlord reserves the right to modify these rules and/or adopt such other
reasonable and non-discriminatory rules and regulations as it may deem
necessary for the proper operation of the parking area.
Landlord reserves the right to make such other and further rules and regulations
as in its judgement may be for the safety, care and cleanliness of the Premises
and for the preservation of good order therein Tenant agrees to abide by all
such rules and regulations hereinabove stated and any additional rules and
regulations which are adopted.
Page 4 of 4
<PAGE>
EXHIBIT "F"
ADDENDUM TO OFFICE BUILDING LEASE
DATE: July 20, 1994
LANDLORD: COOPERAGE-ROSE PROPERTIES I
TENANT: PUMA TECHNOLOGY, INC.
1. EXPANSION. Commencing on November 1, 1994, Tenant shall expand into Suite
300, containing approximately 2,720 square feet, and Suite 342, containing
approximately 3,030 square feet. Herein after referred to as "Suite 300".
2. RENT. Commencing on November 1, 1994, the new monthly rental
3. SECURITY DEPOSIT. Additional Security Deposit, for Suite 300
4. PERCENTAGE OF OCCUPANCY. The typed in percentage shown in Article 2r of
the Lease shall be 10.55% commencing November 1, 1994.
5. TENANT IMPROVEMENTS. Landlord shall, at Landlord's sole expense, remove
walls and construct walls as shown on the Attached Exhibit "A", repaint,
patch and steam clean the carpet in suites 300 and 342. All of Suite 340
shall be recarpeted and the walls repainted.
6. OPTION. Landlord grants to Tenant an option to extend the term of this
Lease for a period of two (2) years beginning on November 1, 1997, at the
rate being offered to the public for space at Garrett Business Center,
subject to all of the other terms, conditions and covenants herein
contained; provided (1) Tenant is not in default in the performance of any
of the terms and conditions of the Lease, upon the commencement of said
extended term and (2) Tenant has given Landlord written notice of its
intention to exercise said option, at least ninety (90) days prior to the
expiration of the Lease.
7. FIRST RIGHT TO NEGOTIATE. During the term of this Lease, Landlord shall
notify Tenant in writing of the availability of any space at Garrett
Business Center. Tenant shall have 24 hours from receipt of such notice
to give Landlord written notice of its desire to lease said space for its
own use. If Tenant fails to respond to said notice from Landlord within
said 24 hour period, or after giving written notice of its intent to
lease said space, Tenant does not enter into an agreement to extend the
provisions of its lease to include such space within 5 days from
Landlord's initial written notice to Tenant, Tenant's right under this
paragraph shall be null and void.
8. PARKING. Commencing November 1, 1994 the number of non-exclusive parking
spaces, as per Article 2k shall be 30.
<PAGE>
9. HAZARDOUS MATERIALS. "Hazardous Materials" shall mean any substance or
material which has been or is hereafter designated hazardous or toxic by
any federal, state, county, municipal or other governmental authority
(collectively "Governmental Authority") or determined by such Governmental
Authority to be capable of endangering or posing a risk of injury to, or
having an adverse effect on, the health or safety of persons, the
environment or property.
Tenant and Tenant's employees and agents shall not store, use, generate,
release, or dispose of (collectively "Release"), or allow the Release, of
any Hazardous Materials in, on, under, or adjacent to the Premises or the
Industrial Center. Tenant and Tenant's employees and agents shall strictly
comply with all laws, ordinances, regulations, rules, orders and policies
of any Governmental Authority in effect from time to time, (Collectively
"Environmental Laws"), including without limitation any obligation to
notify Landlord with respect to Hazardous Materials. Tenant shall
immediately notify Landlord of any inquiry, test, investigation or
enforcement proceeding by or against Tenant or the Premises concerning
Hazardous Materials. Tenant acknowledges that Landlord shall have the
right, but not the obligation, in Landlord's own name, to negotiate,
contest, defend, and approve, at Tenant's expense, any action taken or
threatened or order issued by a Governmental Authority with regard to
Tenant's failure to comply with the provisions contained herein. Tenant
shall, within five (5) days after receipt by Tenant, submit to Landlord
copies of all inquiries, tests, investigations, and enforcement proceedings
described above and copies of all reports and responses thereto prepared by
or on behalf of Tenant. In connection with the transporting of any
Hazardous Materials to or from the Premises, Tenant shall list itself as
the transporter and generator. Any breach by Tenant of the foregoing
obligations shall constitute a default under the Lease, which is not cured
within the time period specified for curing a default under the Lease,
shall entitle the Landlord to exercise any rights or remedies available to
Landlord under the Lease or at law or in equity, including the right to
terminate the Lease.
Tenant shall indemnify, defend and hold Landlord and Landlord's partners,
employees and agents harmless from and against any and all claims, actions,
suits, proceedings, orders, judgments, losses, costs, damages, liabilities
or expenses (including without limitation attorney's fees and costs of
remediation and/or cleanup) arising in connection with any Hazardous
Materials released in, on, under or adjacent to the Premises of any portion
of the Industrial Center, or any Hazardous Materials shipped thereto or
therefrom, by Tenant or Tenant's agents, employee, contractors, invitees,
assigns or subtenants (collectively "Tenant's Agents"), including, without
limitation, (i) any cost, damage or liability incurred or sustained by
Landlord in connection with an order or requirement of an governmental
agency to remediate, remove or clean up such Hazardous Materials, (ii) any
third party claim resulting from death, personal injury or property damage
arising out of the Release of such Hazardous Materials, and (iii) any
consequential damages incurred by Landlord as a result of such Release of
Hazardous Material including, loss of profits, reduction in value, and
inability to sell, lease, or finance. If Tenant or Tenant's Agents cause
or allow any Hazardous Materials to be Released in, on, under or adjacent
to any portion of the Premises, and any portion of the Premises or adjacent
areas becomes contaminated by such Hazardous Materials, Tenant shall
promptly, at its sole cost, take all actions necessary to clean up and
remove such contamination, and restore the Premises and adjacent areas to
the condition existing prior to the appearance of such Hazardous Material.
Tenant shall Surrender the Premises to Landlord upon expiration or earlier
<PAGE>
termination of the Lease free of all Hazardous Materials Released by Tenant
or Tenant's Agents, and in a condition which complies with all
Environmental Laws, recommendations of consultants hired by Landlord, and
such other requirements as may be reasonably imposed by Landlord. Tenant's
obligations herein shall survive the termination of this Lease.
10. SUBORDINATION AND ATTORNMENT. Tenant's failure to execute subordination
documents within ten (10) days after written demand (and satisfaction that
so long as Tenant is not in default hereunder this Lease shall remain in
effect for the full Term) shall constitute a material default by Tenant
hereunder without further notice to Tenant or, at Landlord's option,
Landlord shall execute such documents on behalf of Tenant as Tenant's
attorney-in fact. Tenant does hereby make, constitute and irrevocable
appoint Landlord as Tenant's attorney-in fact and in Tenant's name, place
and stead, to execute such documents in accordance with Article 24 of the
Office Building Lease.
11. LATE CHARGE. In reference to Article 6 of the Lease, the ten (10) day time
period for performance shall end at 4:00 p.m. Pacific Time on the tenth
(10) day. Notwithstanding anything to the contrary contained in the
previous sentence, if the ten (10) day time period for performance ends on
a Saturday, Sunday, or federal, state, city or legal holiday, then such
date for performance shall automatically be accelerated to 4:00 p.m.
Pacific Time on the prior day which is not a Saturday, Sunday or federal,
state, city or legal holiday.
<PAGE>
EXHIBIT 10.5
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of September , 1996, is made by and
between Puma Technology Corporation, a Delaware corporation (the "Company"), and
, (the "Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such
directors, officers and other agents.
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.
D. The Company believes that it is unfair for its directors, officers and
agents and the directors, officers and agents of its subsidiaries to assume the
risk of huge judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases where the
director, officer or agent was not culpable.
E. The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters, and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent from serving in that position.
F. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as directors, officers and agents
of the Company and its subsidiaries and to encourage such individuals to take
the business risks necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually indemnify its
directors, officers and agents and the directors, officers and agents of its
subsidiaries, and to assume for itself maximum liability for expenses and
damages in connection with claims against such directors, officers and agents in
connection with their service to the Company and its subsidiaries, and has
further concluded that the
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failure to provide such contractual indemnification could result in great harm
to the Company and its subsidiaries and the Company's stockholders.
G. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized ("Section 145"), empowers the Company to indemnify its
directors, officers, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive.
H. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company and/or one or
more subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or one or more
subsidiaries of the Company.
I. Indemnitee is willing to serve, or to continue to serve, the Company
and/or one or more subsidiaries of the Company, provided that he is furnished
the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
(a) AGENT. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee or other
agent of the Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) EXPENSES. For purposes of this Agreement, "expenses" include all
out-of-pocket costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements), actually and
reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or Section 145 or otherwise;
provided, however, that "expenses" shall not include any judgments, fines, ERISA
excise taxes or penalties, or amounts paid in settlement of a proceeding.
(c) PROCEEDING. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, or investigative.
(d) SUBSIDIARY. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or
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indirectly by the Company, by the Company and one or more other subsidiaries, or
by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue to
serve as agent of the Company, at its will (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as an agent of
the Company, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as he tenders his resignation in
writing; provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
3. LIABILITY INSURANCE.
(a) MAINTENANCE OF D&O INSURANCE. The Company hereby covenants and
agrees that, so long as the Indemnitee shall continue to serve as an agent of
the Company and thereafter so long as the Indemnitee shall be subject to any
possible proceeding by reason of the fact that the Indemnitee was an agent of
the Company, the Company, subject to Section 3(c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) RIGHTS AND BENEFITS. In all policies of D&O Insurance, the
Indemnitee shall be named as an insured in such a manner as to provide the
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if the Indemnitee is a director; or of the
Company's officers, if the Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if the Indemnitee is not a director
or officer but is a key employee.
(c) LIMITATION ON REQUIRED MAINTENANCE OF D&O INSURANCE.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee as follows:
(a) SUCCESSFUL DEFENSE. To the extent the Indemnitee has been
successful on the merits or otherwise in defense of any proceeding (including,
without limitation, an action by or in the right of the Company) to which the
Indemnitee was a party by reason of the fact that he is or was an Agent of the
Company at any time, against all expenses of any type whatsoever actually and
reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding.
(b) THIRD PARTY ACTIONS. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, the Company shall indemnify the Indemnitee against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding, provided the
Indemnitee acted in good faith and in a manner he reasonably believed to be
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in or not opposed to the best interests of the Company and its stockholders,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful.
(c) DERIVATIVE ACTIONS. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding by or in the right
of the Company by reason of the fact that he is or was an agent of the Company,
or by reason of anything done or not done by him in any such capacity, the
Company shall indemnify the Indemnitee against all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement, or appeal of such proceeding, provided the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and its stockholders; except that no indemnification
under this subsection 4(c) shall be made in respect to any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to
the Company by a court of competent jurisdiction unless and only to the extent
that the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper.
(d) ACTIONS WHERE INDEMNITEE IS DECEASED. If the Indemnitee is a
person who was or is a party or is threatened to be made a party to any
proceeding by reason of the fact that he is or was an agent of the Company, or
by reason of anything done or not done by him in any such capacity, and if prior
to, during the pendency of after completion of such proceeding Indemnitee
becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors
and administrators against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) actually and reasonably incurred
to the extent Indemnitee would have been entitled to indemnification pursuant to
Sections 4(a), 4(b), or 4(c) above were Indemnitee still alive.
(e) Notwithstanding the foregoing, the Company shall not be obligated
to indemnify the Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes and
penalties, and amounts paid in settlement) for which payment is actually made to
or on behalf of Indemnitee under a valid and collectible insurance policy of D&O
Insurance, or under a valid and enforceable indemnity clause, by-law or
agreement.
5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding, but not entitled, however, to indemnification for all of
the total amount hereof, the Company shall nevertheless indemnify the Indemnitee
for such total amount except as to the portion hereof to which the Indemnitee is
not entitled.
6. MANDATORY ADVANCEMENT OF EXPENSES. Subject to Section 8(a) below, the
Company shall advance all expenses incurred by the Indemnitee in connection with
the investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall be determined ultimately that the Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the Company to the Indemnitee within twenty (20) days
following delivery of a written request therefor by the Indemnitee to the
Company.
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7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 7(a) hereof, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
(c) In the event the Company shall be obligated to pay the expenses
of any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee shall have the right to employ his
counsel in any such proceeding at the Indemnitee's expense; and (ii) if (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, (B) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct of
any such defense, or (C) the Company shall not, in fact, have employed counsel
to assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the Company under the
General Corporation Law of Delaware or (iv) the proceeding is brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145.
(b) LACK OF GOOD FAITH. To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding unless the Company
consents to such settlement, which consent shall not be unreasonably withheld.
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9. NON-EXCLUSIVITY. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
10. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee in
any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. It shall be a defense to any
action for which a claim for indemnification is made under this Agreement (other
than an action brought to enforce a claim for expenses pursuant to Section 6
hereof, provided that the required undertaking has been tendered to the Company)
that Indemnitee is not entitled to indemnification because of the limitations
set forth in Sections 4 and 8 hereof. Neither the failure of the Corporation
(including its Board of Directors or its stockholders) to have made a
determination prior to the commencement of such enforcement action that
indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its
stockholders) that such indemnification is improper, shall be a defense to the
action or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise.
11. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
12. SURVIVAL OF RIGHTS.
(a) All agreements and obligations of the Company contained herein
shall continue during the period Indemnitee is an agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that Indemnitee was serving in the capacity referred to herein.
(b) The Company shall require any successor to the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.
13. INTERPRETATION OF AGREEMENT. It is understood that the parties hereto
intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent permitted by law
including those circumstances in which indemnification would otherwise be
discretionary.
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14. SEVERABILITY. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.
15. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
16. NOTICE. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
17. GOVERNING LAW. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware as applied to contracts
between Delaware residents entered into and to be performed entirely within
Delaware.
The parties hereto have entered into this Indemnity Agreement effective as
of the date first above written.
PUMA TECHNOLOGY DELAWARE
CORPORATION
By:
------------------------------------
Bradley A. Rowe, President and
Chief Executive Officer
Address: 2940 North First Street San
Jose, CA 95134
INDEMNITEE:
----------------------------------------
Address:
------------------------------
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Confidential Treatment Requested
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT
Toshiba Information Puma Technology Information
- ------------------- ---------------------------
Toshiba Corporation Puma Technology, Inc.
1-1, Shibaura 1-chome, 3375 Scott Blvd., Suite 300
Minato-ku, Tokyo 105-01 JAPAN Santa Clara, CA 95054
Tel: 81-3-3457-2386 Tel: (408) 987-0200
Fax: 81-3-5444-9214 Fax: (408) 970-8750
Contact Representative: Contract Representative:
Mr. Masayuki Miyanaga Mr. Bradley Rowe
This Agreement is entered into by and between Puma Technology, Inc. ("Puma") and
Toshiba Corporation ("Toshiba") as of the date executed by both parties
("Effective Date"). Puma agrees to grant Toshiba certain licenses to the
Licensed Software set forth in EXHIBIT A of this Agreement, subject to the
License Agreement Terms and Conditions attached and the Exhibits set forth
below.
EXHIBITS:
Exhibit A - Licensed Software; Software Documentation; Subsidiaries;
Support and Training Responsibilities
Exhibit B - Per Unit Royalty Pricing; Guaranteed Minimum Payment;
Payment Terms; Minimum Value of Agreement
BOTH PARTIES ACKNOWLEDGE HAVING READ THE TERMS AND CONDITIONS SET FORTH ON THIS
FACING PAGE AND THE AGREEMENT ATTACHED HERETO, UNDERSTAND ALL SUCH TERMS AND
CONDITIONS, AND AGREE TO BE BOUND THEREBY.
TOSHIBA PUMA TECHNOLOGY, INC.
By: /s/S. Yamashita By: /s/Bradley A. Rowe
------------------------------ ----------------------------
S. Yamashita Bradley A. Rowe
General Manager, Legal Affairs Division President & CEO
Date: MAY 30 1995 Date: 5/24/95
----------------------------- ---------------------------
<PAGE>
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT TERMS AND CONDITIONS
1. DEFINITIONS
1.1 SYSTEM UNIT. "System Unit" shall mean
either i.) the single user system product consisting of a single central
processing unit, ii.) the PCMCIA card containing an infrared transceiver, or
iii.) the infrared expansion unit containing an infrared transceiver which is
intended to be added onto a personal computer. System Unit is marketed and
distributed under Toshiba's trademark(s) or product name(s).
1.2 SOFTWARE DOCUMENTATION. "Software Documentation"
shall mean the information, in written form, regarding the executable code
version of the Licensed Software supplied by Puma and reprinted by Toshiba as
specified in Exhibit A.
1.3 LICENSED SOFTWARE. "Licensed Software" shall
mean the Puma software in executable code form, specified on Exhibit A, and all
modifications to such Licensed Software, if any, supplied by Puma to Toshiba
under this Agreement.
1.4 SUBSIDIARY. "Subsidiary" shall mean any
corporation, company or entity in which fifty percent (50%) or more of the
outstanding shares of stock entitled to vote for the election of directors are
owned or controlled, directly or indirectly, by a party. Subsidiaries shall
mean those Subsidiaries specified on Exhibit A.
1.5 PRELOAD OR PRELOADING. "Preload" or "Preloading"
refers to the act of reproducing and installing a single copy of Licensed
Software onto the hard disk drive which is inside of System Unit. Preload also
includes the reproduction and inclusion of Software Documentation with the
System Unit.
1.6 BUNDLE OR BUNDLING. "Bundle" or "Bundling" refers
to the act of including an installation diskette of the Licensed Software with
System Unit, which is intended for end user to install onto his personal
computer and/or System Unit. Bundle also includes the reproduction and inclusion
of Software Documentation with the System Unit.
1.7 UNIT. "Unit" shall mean a single
copy of the Licensed Software.
1.8 PER UNIT ROYALTY. "Per Unit Royalty" shall mean
the royalty price paid by Toshiba to Puma for each Unit which is Preloaded or
Bundled into or with a System Unit or otherwise copied, produced, or reproduced
by Toshiba subject to the terms of this Agreement.
2. LICENSE AND LICENSE FEES
2.1 OBJECT LICENSE. As of the Effective Date Puma
grants to Toshiba a non-exclusive, non transferable, worldwide license to copy
the Licensed Software
SY BR 2
- -------- --------
initials initials
<PAGE>
(executable code form only) and to distribute the Licensed Software directly to
customers, or through its Subsidiaries or distribution network only when
Licensed Software is Preloaded and/or Bundled into System Unit as set forth in
Section 1.1 and under the terms of this Agreement.
2.2 NO SUBLICENSE. Toshiba shall not have a
right to grant any license or sublicense to any third party (including, without
limitation, any subsidiaries not listed on Exhibit A) to use the Licensed
Software for any purpose, except a sublicense to use the copy produced and
distributed by Toshiba as set forth in Section 2.1.
2.3 MODIFICATIONS. Toshiba shall have no right
to modify all or any part of the Licensed Software. Toshiba agrees not to take
any actions, such as reverse assembly or reverse compilation, to derive a source
code equivalent to the Licensed Software.
2.4 LICENSE FEES. Toshiba agrees to pay Puma
the fees shown in Exhibit B for the rights granted by this Agreement. Within
forty-five (45) days following the end of each calendar quarter during the
term of this Agreement in which Toshiba produces System Unit, which
incorporates the Licensed Software, Toshiba shall account to Puma for the Per
Unit Royalties due as set forth in Exhibit B , based upon production totals
for System Units for that quarter. Toshiba shall provide Puma with a written
report that reflects the facts or basis upon which the total Per Unit
Royalties due was calculated. For purposes of this Agreement, production
occurs when System Units are [***] by Toshiba. Toshiba shall retain such
books and records during the term of this Agreement and for a period of three
(3) years after each transaction.
2.5 PAYMENTS. All payments made are non-
refundable unless provided for specifically in this Agreement. All payments
shall be in U.S. Dollars and be made by telephone transfer directly to Puma's
bank account as follows:
Silicon Valley Bank
3000 Lakeside Drive
Santa Clara, CA 95054
ABA # 121140399 for benefit of Puma Technology, Inc.
Account # 035175-3570
The amounts indicated on Exhibit B for payments do not include any federal,
state, local or other governmental taxes, excise taxes, tariffs or other
governmental charges that may be imposed on sale, transportation, production,
storage or export of the Licensed Software. Toshiba shall pay any and all such
taxes and charges (other than taxes imposed upon or measured by Puma's net
income) and Puma, its agents and distributors shall have no liability therefor.
Notwithstanding the above, the ten percent (10%) income tax provided for under
the Japan/USA Tax Treaty upon Puma's income arising out of this Agreement shall
be withheld by Toshiba from all royalty payments described in this Agreement.
Toshiba shall provide Puma with a tax certificate form from the competent
Japanese tax authority establishing the fact that the tax has been withheld by
Toshiba and paid to the competent Japanese tax Authority, so as to avoid double
taxation.
SY BR 3
- -------- --------
initials initials
[***] Confidential Treatment Requested
<PAGE>
3. DELIVERY
3.1 DELIVERY OF LICENSED SOFTWARE. Within five business days
after execution of this Agreement, Puma shall deliver the Licensed Software,
contained upon a master diskette(s) and the Software Documentation in both
written and electronic form to Toshiba.
3.2 ACCEPTANCE. The Licensed Software will be
deemed accepted by Toshiba if Puma is not notified of any errors in writing
within thirty (30) business days after delivery of the Licensed Software to
Toshiba. In the event Toshiba notifies Puma of such errors, Toshiba shall
return the Licensed Software to Puma in the manner specified by Puma. Puma
shall, at its option, repair or replace the Licensed Software, as soon as
commercially practicable, but no later than sixty (60) days after the return of
the Licensed Software to Puma. Acceptance of the repaired or replaced Licensed
Software will be subject to the same procedures.
4. AUDIT; TAXES
4.1 AUDIT. Toshiba shall maintain at
Toshiba's principal office Toshiba's usual records relating to the Licensed
Software as shall be sufficient to confirm Toshiba's compliance with this
Agreement. Toshiba shall permit a mutually agreed upon certified public
accountant to audit such books and records as may reasonably be required to
verify compliance with this Agreement, at such times as Puma may reasonably
request, upon reasonable written notice. Puma shall pay the cost of audits
unless the number of copies of Licensed Software exceeds the number of units of
System Unit manufactured by Toshiba by more than two percent (2%), in which
event Toshiba shall reimburse Puma for the cost of such audits in addition to
all other amounts to which Puma may be legally entitled as a result of such
unauthorized copies. Audits shall not unreasonably interfere with Toshiba's
business activities and shall not be conducted more than once in any twelve
month period so long as the number of copies of Licensed Software does not
exceed the number of System Units manufactured by Toshiba during the session in
which case the number of allowed audits during this period will be determined at
the sole discretion of Puma.
5. PROPRIETARY OWNERSHIP RIGHTS
5.1 OWNERSHIP. Puma shall retain all
ownership, right, title and interest in and to all current and hereafter
existing revisions of or modifications to the Licensed Software (including all
copies made hereunder).
5.2 COPYRIGHT NOTICES. All copies of the Licensed
Software made by Toshiba shall contain Puma's copyright notice and Toshiba shall
not remove any copyright notices contained in the Licensed Software. The
copyright notice shall be visibly displayed when Licensed Software is
initialized. No other copyright notice shall appear in, or be associated with,
the Licensed Software.
5.3 TRADEMARKS. Except as specified or
required by this Agreement and its Exhibits, neither party may use the other's
name, logo or trademarks without the other party's prior written consent except
as required by this Agreement.
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5.4 NO ASSERTION. Toshiba hereby expressly
acknowledges and affirms Puma's ownership in the Licensed Software as set forth
in Section 5.1 above.
6. WARRANTY
6.1 LIMITED WARRANTY. Puma warrants that the media
upon which the Licensed Software is placed by Puma will be free from defects in
workmanship and materials, and that the Licensed Software will meet the stated
specifications in the Software Documentation. Puma does not warrant or claim
that the software will run error free. If Toshiba finds any errors or failure
of the Licensed Software to meet such specifications and provides Puma with a
written report thereof, as Toshiba's sole remedy, Puma will use its best efforts
to correct such errors. Puma's warranty and obligation with respect to the
Licensed Software shall extend for a period of ninety (90) days from the date
the Licensed Software is delivered to Toshiba and is solely for the benefit of
Toshiba. Toshiba has no authority to extend this warranty to any other person.
This warranty shall not apply to any Licensed Software which has been i.)
repaired, altered or installed, other than by Puma, ii.) subject to misuse,
mishandling, neglect or accident, or iii.) not maintained in accordance with
handling or operating instructions supplied by Puma.
6.2 WARRANTY EXCLUSION. EXCEPT AS PROVIDED IN SECTION
6.1, PUMA MAKES NO WARRANTY OF ANY KIND WITH REGARD TO THE LICENSED SOFTWARE.
PUMA EXPRESSLY DISCLAIMS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
WHETHER ARISING IN LAW, CUSTOM, CONDUCT OR OTHERWISE.
7. this section intentionally left blank
8. LIMITATION OF LIABILITY
8.1 LIMITATION. IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR
INCIDENTAL DAMAGES ARISING UNDER THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY DAMAGES
ATTRIBUTABLE TO EITHER PARTY EXCEED THE AMOUNT OF PAYMENTS MADE TO PUMA UNDER
THIS AGREEMENT.
8.2 FORCE MAJEURE. Except for payment of moneys
due under this Agreement, nonperformance of either party shall be excused to the
extent that performance is rendered impossible by fire, flood, governmental acts
or orders or restrictions, failure of suppliers, or any other reason where
failure to perform is beyond the control and not caused by the negligence of the
non-performing party.
9. PROPRIETARY RIGHTS INDEMNIFICATION
9.1 REPRESENTATIONS. Puma represents that it has
the right to grant the license hereunder and that it has no knowledge of any
facts which might lead to a claim of infringement of any patent of the United
States, European Countries, or Japan, or copyright or trade secret of any third
party as a result of the license to the Licensed Software granted by this
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Agreement. Should Licensed Software become or be likely to become the subject
of a claim of infringement of such intellectual property of a third party, Puma,
at its option may either i.) procure for Toshiba, at no additional cost to
Toshiba, the right to continue to use the Licensed Software, ii.) replace or
modify the Licensed Software, at no additional cost to Toshiba, to make the
Licensed Software non-infringing, or iii.) terminate the license to use such
Licensed Software and refund to Toshiba amounts that Toshiba refunds to its
customers for such Licensed Software due to the claim of infringement.
9.2 INDEMNITY. Puma assumes no liability for
i.) any combination of the Licensed Software with other software not supplied by
Puma; or ii.) the modification of the Licensed Software, unless such
modification was made by Puma pursuant to specifications and designs drafted by
Puma.
9.3 EXCLUSIVE REMEDY. THE FOREGOING PROVISIONS OF
THIS SECTION 9 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF EACH PARTY AND THE
EXCLUSIVE REMEDY OF EACH PARTY WITH RESPECT TO ANY ALLEGED INTELLECTUAL PROPERTY
RIGHTS INFRINGEMENT BY THE LICENSED SOFTWARE.
10. CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. "Confidential Information"
means any information, technical data, or know-how, related to any aspect of
either party's business, including, but not limited to, research, products,
proposals, software, services, development, inventions, processes, designs,
drawings, engineering, marketing, customer lists and finances, which is
disclosed by one party to the other i.) in writing; ii.) orally, provided that
the disclosing party will make reasonable commercial efforts to confirm the
confidential nature of the information within thirty (30) days of its
disclosure; iii.) by drawings or plans; or iv.) by inspection of products,
materials, parts or equipment. In all cases "Confidential Information" shall be
designated as confidential in a written notification or confirmation on its
disclosure.
10.2 EXCLUSION. "Confidential Information"
does not include any such information, technical data, or know-how which: i.) is
or becomes publicly available without breach of this Agreement by the party
receiving the Confidential Information; ii.) is released for disclosure by the
disclosing party with its written consent; iii.) is known by the receiving party
prior to the disclosure; iv.) is rightly received by the receiving party from a
third party without confidential limitations; v.) is hereafter disclosed to a
third party without restriction on disclosure; or vi.) is independently
developed by the receiving party's employees not having access to such
information. The receiving party shall bear the burden of proof for such
exclusions.
10.3 RESTRICTIONS. Each party, for a period of
three (3) years following the termination of this Agreement i.) agrees not to
disclose Confidential Information given to it by the other party to any person,
real or legal, except as necessary for the other party to perform its obligation
under this Agreement or as required by court order; ii.) shall require its
employees having access to Confidential Information and any third party to whom
disclosure of Confidential Information is necessary to sign a confidentiality
agreement containing provisions similar to this Agreement; iii.) shall exercise
the same degree of care to safeguard the confidentiality of such Confidential
Information as it would exercise in protecting
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the confidentiality of similar property of its own (but in no event less than is
standard in the industry); and iv.) agrees to use its diligent efforts to
prevent inadvertent or unauthorized disclosure, publication or dissemination of
any Confidential Information.
10.4 UNAUTHORIZED DISCLOSURES. Each party shall notify the
other of any actual or suspected unauthorized use or disclosure of Confidential
Information or infringement of any of either party's proprietary rights of which
such party has knowledge and will reasonably cooperate with the other party in
the investigation and prosecution of such unauthorized use, disclosure or
infringement.
11. TERM; TERMINATION
11.1 TERM. This Agreement shall commence
on the Effective Date and continue for one (1) year after such date, unless
earlier terminated under this Section 11. This Agreement will automatically
renew for additional one (1) year terms unless either of the parties provides
written notice to the other party of its intention not to renew at least ninety
(90) days prior to the end of the then current term.
11.2 TERMINATION FOR CAUSE. If either party defaults in
the performance of any material provision of this Agreement, then the non-
defaulting party may give written notice to the defaulting party that if the
default is not cured within thirty (30) days, then the Agreement shall
automatically terminate at the end of such period. Any breach of the provisions
in Sections 2.1, 2.2, 2.3, or 5.2 by Toshiba will be considered breaches which
cannot be cured and may be the basis for the automatic termination of this
Agreement.
11.3 BANKRUPTCY. If either party files a
petition in bankruptcy or is adjudicated a bankrupt, or if a petition in
bankruptcy is filed against either party and such petition is not discharged
within sixty (60) days of such filing, or if either party becomes insolvent, or
makes an assignment for the benefit or creditors or an arrangement pursuant to
any bankruptcy law, or if either party discontinues its business or if a
receiver is appointed for it or its business, this Agreement shall automatically
terminate without any notice whatsoever being necessary.
11.4 SURVIVAL The obligations under
Sections 4, 5, 6, 8, 9, 10, and the relevant portions of Sections 11 and 12,
shall survive any termination of this Agreement.
11.5 TERMINATION EFFECT Within thirty (30) days after
the termination of this Agreement, upon written request, each party shall return
to the other party any item embodying any Confidential Information of the other
party which may be entrusted to or created by such party. Toshiba shall return
to Puma the master copy of the Licensed Software, the Software Documentation,
and any other materials delivered to Toshiba by Puma. Unless this Agreement was
terminated by Puma for cause under Section 11.2, any Licensed Software in
Toshiba's inventory on the effective date of termination may be disposed of by
Toshiba within a period of ninety (90) days after such date. Termination of
this Agreement for any reason shall not affect the rights of any end user to use
the Licensed Software under any sublicense granted in accordance with this
Agreement.
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11.6 ADDITIONAL REMEDIES. Except as expressly limited
by this Agreement, termination of this Agreement shall be without prejudice to
any other remedy which may be available to a party due to default of this
Agreement. Violation of obligations under this Agreement may cause irreparable
harm and damage which may not be recovered at law, and remedies for breach of
this Agreement may be awarded in equity through injunctive relief.
12. MISCELLANEOUS
12.1 RELATIONSHIP. The relationship between
parties shall be that of independent contractors. Nothing contained herein
shall be construed to imply a joint venture, principal or agent relationship, or
other joint relationship, and neither party shall have the rights, power of
authority to create any obligation, express or implied, on behalf of the other.
12.2 GOVERNING LAW. This Agreement shall be
governed in all respects by the substantive laws of the State of California,
United States of America, exclusive of its conflicts of laws rules, as applied
to agreements entered into in California between California residents.
12.3 JURISDICTION VENUE. The parties expressly
stipulate that all litigation under this Agreement shall be brought in the state
courts of the County of Santa Clara, California, or in the U.S. District Court
of the Northern District of California.
12.4 ATTORNEY'S FEES. In the event of any
litigation or arbitration by the parties under this Agreement, the prevailing
party shall be entitled to costs and reasonable attorney's fees.
12.5 ASSIGNMENT. Neither party shall assign or
otherwise transfer any of its rights, obligations or licenses hereunder without
the prior written the prior written consent of the other party. Subject to the
foregoing, the provisions of this Agreement shall apply to and bind the
successors and permitted assigns of the parties.
12.6 WAIVER. Failure by any party to
enforce any of its rights under this Agreement shall not be deemed a waiver of
any right which that party has under this Agreement.
12.7 NOTICES. All notices, requests,
consents and other communications hereunder shall be in writing and delivered
personally, by mail or by facsimile (with facsimiles to be promptly confirmed in
writing). All such written communications delivered by mail shall be mailed,
postage prepaid, either by certified or registered, first-class mail to the
parties at their respective addresses as set forth on the facing page of this
Agreement, subject to the right of either party to change its address by
delivering written notice to the other. Such notices shall be deemed to be
effective upon two (2) business days following the date of mailing or upon
receipt if by facsimile or personal delivery.
12.8 SEVERABILITY. Should any provisions of this
Agreement contravene any law or valid regulation of any government having
jurisdiction over the parties, then such provision shall be automatically
terminated and performance thereof by the parties waived, and all other
provisions of this Agreement shall continue in full force and effect.
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12.9 EXPORT COMPLIANCE. Toshiba shall not export,
directly or indirectly, any Licensed Software to any country for which United
States' laws or regulations require an export license or other governmental
approval, without first obtaining such license or approval. Toshiba hereby
agrees to indemnify and hold Puma harmless from and against any losses, damages,
penalties or causes of action resulting from a violation of this Section.
12.10 GOVERNMENT RESTRICTED RIGHTS. The Licensed Software is
subject to restricted rights as follows. For units of the DoD: Use duplication
or disclosure by the government is subject to restrictions as set forth in
subparagraph (c)(1)ii.) of the Rights in Technical Data and Computer Software
clause at 252.227-7013. Puma Technology, Inc., 2041 Mission College Blvd.,
Suite 200, Santa Clara, CA 95054. For Civilian Agencies: Use, reproduction, or
disclosure is subject to restrictions set forth in subparagraphs (a) through (d)
of the Commercial Computer Software-Restricted Rights clause at 52.227-19 and
the limitations set forth in Puma's standard commercial agreement for this
Licensed Software. Unpublished - rights reserved under the copyright laws of
the United States.
12.11 TOSHIBA'S EXPENSES. Costs and expenses incurred
by Toshiba relating to its marketing, distribution, promotion and advertising of
the System Unit or the object code or executable code versions of the Licensed
Software, or any other costs not agreed upon specifically in writing, shall be
the express responsibility of Toshiba.
12.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
facing page and all Exhibits) reflects the entire agreement of the parties
regarding the subject matter hereof, and supersedes all prior agreements between
the parties, whether written or oral. This Agreement shall not be amended,
altered or changed, except by written agreement signed by both parties. This
agreement is executed in the English language.
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A
LICENSED SOFTWARE:
TranXit-TM- 1.0 and, upon availability by Puma, TranXit-TM- 2.0 file transfer
software (collectively "TranXit"), in executable code form, as defined by the
feature set listed below, and including all modifications and updates thereof,
designated by Puma as a positive increase in either the tenths digit or
hundredths digit after the decimal point. Both parties expressly understand and
agree that these specific versions of TranXit, supplied to Toshiba by Puma under
this Agreement, are for Preloading and/or Bundling only and are distinguished
from the retail version of TranXit ("TranXit PowerPro-TM-"), which is intended
for sale directly to end users, and are further distinguished by a different set
of features determined at Puma's sole discretion.
TRANXIT 1.0 /2.0 FEATURE SET
- [***]
TRANXIT POWERPRO FEATURES (TENTATIVE LIST)
- [***]
Upon production availability by Puma, Toshiba may, at its option, convert all
or part of its Preloads from TranXit 1.0 to TranXit 2.0. Toshiba may also
provide field upgrades for such end users of TranXit 1.0 to TranXit 2.0 at
its option and expense. It is confirmed and agreed by both parties that in
the event Toshiba furnishes its existing licensed end users of TranXit 1.0
with an upgrade to TranXit 2.0, [***] shall be due to Puma from Toshiba for
such upgrade. Toshiba agrees to provide sufficient security measures to
prevent unauthorized access to either version of TranXit.
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[***] Confidential Treatment Requested
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A CONTINUED
SOFTWARE DOCUMENTATION:
The Software Documentation defines the features and functionality of the
Licensed Software and may also include promotional material regarding software
upgrades or other Puma products or third party accessories determined at Puma's
sole discretion. The Software Documentation is the exclusive property of Puma.
Toshiba agrees to reprint, at its own expense, and include the following
documents with each Preloaded or Bundled copy of the Licensed Software included
with each System Unit:
- TranXit Quick Reference Guide ( estimate 12 pages )
- TranXit Accessories Flyer ( estimate 4 pages )
- Puma End User Registration Card ( estimate 1 page )
Puma agrees to provide camera ready copy of each of the documents listed above
to Toshiba. Toshiba expressly understands that software upgrades and sales of
other Puma products or third party accessories to end users of System Units is
an important part of Puma's business and an integral part of the Per Unit
Pricing structure granted by Puma in this Agreement, and therefor agrees to
include the above documents with each copy of Licensed Software it ships.
SUBSIDIARIES:
1. Toshiba America Information Systems, Inc.
Address: 9740 Irvine Blvd., Irvine, CA. 92718
Tel: 714-583-3000
Fax: 714-583-3499
2. Toshiba Europe (I.E.) GmbH
Address: Hammfelddamm 8, 41460 Neuss 1, Germany
Tel: 02131-15801
Fax: 02131-158341
3. Toshiba Systems (France) S.A.
Address: 7 Rue Ampere 92800 Puteaux, France
Tel: 1-47-282828
Fax: 1-45-062952
4. Toshiba Info. Syst. Benelux Nevenvestiging van Toshiba Europe GmbH
Address: Rivium Boulevard 41, 2909 LK
Capelle a/d Ijssel, The Netherlands
Tel: 010-4479300
Fax: 010-4470901
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A CONTINUED
5. Toshiba Europe (I.E.) GmbH Sucursal en Espana
Address: Parque Empresarial San Fernand Edificio Europa, IA
planta Escalera A, 28831 Madrid, Spain
Tel: 1-660-6700
Fax: 1-660-6707
6. Toshiba Information Systems (UK) Ltd.
Address: Weybridge Business Park Addlestone Road Weybridge,
Surrey, KT 15 2UL United Kingdom
Tel: 0932-84-1600
Fax: 0932-85-2455
7. Toshiba (Australia) Pty, Ltd.
Address: 84-92 Talavera Road, North Ryde, N.S.W. 2113,
Australia
Tel: 2-887-3322
Fax: 2-805-0501
8. Toshiba of Canada, Ltd.
Address: 191 McNabb St. Markham, Ontario, L3R 8H2, Canada
Tel: 905-470-3500
Fax: 905-470-3509
9. Toshiba Info. Syst. (Singapore) Pte., Ltd.
Address: 152 Beach Road, #17-03/04 Gateway East Singapore
0718, Singapore
Tel: 296-5767
Fax: 292-7621
10. Toshiba Data Dynamics Pte., Ltd.
Address: 10 Kallang Sector, Data Dynamics Building, Singapore
1334, Singapore
Tel: 741-8181
Fax: 748-2505
11. Sord Computer Corporation
Address: 20-7, Masago 5-chome, Mihama-ku,
Chiba-shi, Chiba 261, Japan
Tel: 81-43-279-2673
Fax: 81-43-279-2628
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A CONTINUED
12. Semp Toshiba Amazonas S.A.
Address: Rua 1ca No.500, Distrito Industrial de Suframa,
Manaus, Cep. 69000. Amazonas, Brasil
Tel: (092) 237-2366
Fax: (092) 237-2067
SUPPORT AND TRAINING RESPONSIBILITIES:
Toshiba shall provide all Level I and Level II support at its own expense. For
purposes of this Agreement, Level I support shall mean all technical support and
assistance relating to the System Unit or Licensed Software given directly to
end users, distributors, OEMs, or customers of System Unit. Level II support
shall mean the service rendered by Toshiba relating to System Unit or Licensed
Software given directly to end users, distributors, OEMs, or customers of System
Unit to analyze or reproduce error(s) in the Licensed Software and to determine
if said error(s) are reproducible. Toshiba will further provide training, at
its option and expense, for all personnel associated with the sales and support
of System Unit. Puma shall provide all Level III support for the Licensed
Software only. For purposes of this Agreement, Level III support shall mean all
Puma technical support and assistance relating to the Licensed Software given
directly to authorized personnel who are the direct employees of Toshiba and are
trained in the usage of Licensed Software. Level III support will be provided
only during Puma's normal business hours and in the English Language.
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B
PER UNIT ROYALTY PRICING:
Toshiba agrees to pay Puma a Per Unit Royalty for each Unit shipment of the
Licensed Software according to the following schedule:
0 through [***] Units $ [***] per Unit
[***] through [***] Units $ [***] per Unit
[***] through [***] Units $ [***] per Unit
[***] through [***] Units $ [***] per Unit
[***] and greater Units $ [***] per Unit
GUARANTEED MINIMUM PAYMENT:
Toshiba agrees to pay Puma Technology $[***] as a guaranteed minimum payment
toward purchase of [***] Units of Licensed Software. Toshiba agrees to make
minimum payments according to the following payment schedule:
net [***] days after Effective Date $[***] for [***] Units
[***] 1, [***] $[***] for [***] Units
[***] 1, 1995 $[***] for [***] Units
[***], 1996 $[***] for [***] Units
PAYMENT TERMS:
If any amount is not paid to Puma when due hereunder, Toshiba shall pay to Puma
on demand a late fee in an amount not to exceed [***] of such
delinquent payment for each month or part thereof from the due date until the
date paid; but Toshiba shall have such grace period as may be required by law
and the late fee shall not exceed the maximum allowed by law.
MINIMUM VALUE OF AGREEMENT:
$[***]
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<PAGE>
Confidential Treatment Requested
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT
Licensee Information Puma Technology Information
- -------------------- ---------------------------
Company: NEC Technologies, Inc. Puma Technology, Inc.
Address: 1414 Massachusetts Avenue 3375 Scott Blvd., Suite 300
Boxborough, MA 01719 Santa Clara, CA 95054
Tel:(508)264-8360 Fax:(508)264-8904 Tel (408)987-0200 Fax(408)970-8750
Contact Contract
Representative /s/Jennifer S. Lee Representative: Bradley A. Rowe
----------------------
This Agreement is entered into by and between Puma Technology, Inc. ("PUMA") and
the Licensee set forth above ("Licensee") as of the date executed by both
parties ("Effective Date"). PUMA agrees to grant Licensee certain licenses to
the Licensed Software set forth in EXHIBIT A of this Agreement, subject to the
License Agreement Terms and Conditions attached and the Exhibits set forth
below.
EXHIBITS:
Exhibit A - Licensed Software; Software Documentation; Support and
Training Responsibilities; Authorized Subsidiaries; Authorized Affiliates
Exhibit B - Per Unit Royalty Pricing; Guaranteed Minimum Payment; Payment
Terms; Minimum Value of Agreement
BOTH PARTIES ACKNOWLEDGE HAVING READ THE TERMS AND CONDITIONS SET FORTH ON THIS
FACING PAGE AND THE AGREEMENT ATTACHED HERETO, UNDERSTAND ALL SUCH TERMS AND
CONDITIONS, AND AGREE TO BE BOUND THEREBY.
LICENSEE PUMA TECHNOLOGY, INC.
By: /s/Sheldon Safir By: /s/Bradley A. Rowe
--------------------------------- ---------------------------------
Name: SHELDON SAFIR Name: Bradley A. Rowe
------------------------------- -------------------------------
Director, 3rd Party Relations
Title: NEC Technologies, Inc. Title: President and CEO
------------------------------ ------------------------------
Date: 9/14/95 Date: 8/05/95
------------------------------- -------------------------------
<PAGE>
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT TERMS AND CONDITIONS
1. DEFINITIONS
1.1 SYSTEM UNIT. "System Unit" shall mean the single user
system product consisting of a single central processing unit which is marketed
and distributed under Licensee's trademark(s) or product name(s).
1.2 SOFTWARE DOCUMENTATION. "Software Documentation" shall mean the
information, in written form, regarding the executable code version of the
Licensed Software supplied by PUMA and reprinted by Licensee as specified in
Exhibit A.
1.3 LICENSED SOFTWARE. "Licensed Software" shall mean the PUMA
software in executable code form, specified on Exhibit A, and all modifications
to such Licensed Software, if any, supplied by PUMA to Licensee under this
Agreement.
1.4 SUBSIDIARY. "Subsidiary" shall mean any corporation,
company or entity in which fifty percent (50%) or more of the outstanding shares
of stock entitled to vote for the election of directors are owned or controlled,
directly or indirectly, by a party. Authorized Subsidiaries shall mean those
Subsidiaries specified on Exhibit A.
1.5 PRELOAD OR PRELOADING. "Preload" or "Preloading" refers to
the act of reproducing and installing a single copy of Licensed Software onto a
non volatile storage device which is to be included as a part of System Unit.
Preload also includes the reproduction and inclusion of Software Documentation
with the System Unit.
1.6 UNIT. "Unit" shall mean a single copy of the
Licensed Software.
1.7 PER UNIT ROYALTY. "Per Unit Royalty" shall mean the
royalty price paid by Licensee to PUMA for each Unit which is Preloaded onto a
System Unit or otherwise copied, produced, or reproduced by Licensee subject to
the terms of this Agreement. No royalties shall accrue for Units which are (i)
made for replacement of existing Units which are defective in materials,
manufacture or reproduction, (ii) made as archival backups for an existing Unit,
or (iii) provided as a bug fix to end users by Licensee.
1.8 OEM FULFILLMENT. "OEM Fulfillment" shall refer to the
marketing and sales of retail products which are manufactured and or marketed by
PUMA and sold directly to end users of System Units via PUMA's authorized
fulfillment channels on a worldwide basis.
1.9 AFFILIATE. "Affiliate" shall mean NEC Corporation
or any corporation, company or entity in which fifty percent (50%) or more of
the outstanding shares of stock entitled to vote for the election of directors
are owned or controlled, directly or indirectly, by NEC Corporation. Authorized
Affiliates shall mean those Affiliates specified on
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Exhibit A. Licensee reserves the right from time to time throughout the term of
this Agreement to update the Authorized Affiliates list upon written notice to
Puma.
2. LICENSE AND LICENSE FEES
2.1 OBJECT LICENSE. As of the Effective Date PUMA
grants to Licensee a non-exclusive, non transferable, worldwide license to copy,
or have copied, the Licensed Software (executable code form only) and to
distribute the Licensed Software directly to customers, or through its
Subsidiaries, Affiliates or distribution network only when Licensed Software is
Preloaded into System Unit as set forth in Section 1.1 and under the terms of
this Agreement.
Puma hereby grants to Licensee a world-wide, non-exclusive license to
archive, copy and use the Licensed Software and Licensed Documentation for
testing, maintenance and evaluation purposes only.
2.2 NO SUBLICENSE. Except as expressly provided herein,
Licensee shall not have a right to grant any license or sublicense to any third
party (including, without limitation, any Subsidiaries or Affiliates not listed
on Exhibit A) to use the Licensed Software for any purpose, except a sublicense
to use the copy produced and distributed by Licensee as set forth in Section
2.1.
2.3 MODIFICATIONS. Licensee shall have no right to modify
all or any part of the Licensed Software. Licensee agrees not to take any
actions, such as reverse assembly or reverse compilation, to derive a source
code equivalent to the Licensed Software.
2.4 SOFTWARE DOCUMENTATION. Licensee is hereby granted a royalty-
free license to reproduce or have reproduced the Software Documentation for
purposes of Preloading it with system Unit only.
2.5 LICENSE FEES. License agrees to pay PUMA the fees
shown in Exhibit B for the rights granted by this Agreement. Within thirty (30)
days following the end of each calendar quarter during the term of this
Agreement in which Licensee produces System Unit, which incorporates the
Licensed Software, Licensee shall account to PUMA for the Per Unit Royalties due
as set forth in Exhibit B, based upon production totals for System Units for
that quarter. Licensee shall provide PUMA with a written report that reflects
the facts or basis upon which the total Per Unit Royalties due was calculated
and will clearly indicate applicable Per Unit Royalty Rates that apply to
different versions of the Licensed Software, if any, as noted in Exhibit B. For
purposes of this Agreement, production occurs when System Units are shipped out
of the manufacturing facility ("Production"), even if such shipment is to
another manufacturing or storage facility maintained by Licensee. Licensee
shall retain such books and records during the term of this Agreement and for a
period of three (3) years after each transaction.
2.6 PAYMENTS. All payments made are non-refundable unless
provided for specifically in this Agreement. All payments shall be in U.S.
Dollars and be made by check accompanying the written royalty report or by
telephone transfer directly to
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PUMA's bank account as follows:
Silicon Valley Bank
3000 Lakeside Drive
Santa Clara, CA 95054
ABA # 121140399 for benefit of Puma Technology, Inc.
Account # 035175-3570
The amounts indicated on Exhibit B for payments do not include any federal,
state, local or other governmental taxes, excise taxes, tariffs or other
governmental charges that may be imposed on sale, transportation, production,
storage or export of the Licensed Software. Licensee shall pay any and all such
taxes and charges (other than taxes imposed upon or measured by PUMA's net
income) and PUMA, its agents and distributors shall have no liability therefor.
If taxes are required to be withheld for any foreign government on payments
required under this Agreement, then Licensee may deduct such withholding taxes
from the amount owed PUMA as will enable PUMA to receive a U.S. Foreign Tax
Credit; provided, Licensee pays such amounts to the appropriate tax authority.
Licensee shall obtain and deliver to PUMA a receipt and all other documents
necessary for PUMA to claim a Foreign Tax Credit.
3. DELIVERY
3.1 DELIVERY OF LICENSED SOFTWARE. PUMA shall deliver the
Licensed Software, contained upon a master diskette(s) and the Software
Documentation in both written and electronic form to Licensee by [August 2,
1995]. Should PUMA fail to deliver the Licensed Software by such date,
LICENSEE shall have the right to terminate immediately this Agreement without
any penalty or charge by giving written notice of such termination to Puma, and
Puma shall promptly refund any prepayments made by LICENSEE pursuant to this
Agreement.
3.2 ACCEPTANCE.
(a) The Licensed Software will be deemed accepted by Licensee if PUMA is
not notified of any errors in writing within sixty (60) days after delivery of
the Licensed Software to Licensee. In the event Licensee notifies PUMA of such
errors, Licensee shall return the Licensed Software to PUMA in the manner
specified by PUMA. PUMA shall, at its option, repair or replace the Licensed
Software, as soon as commercially practicable, but no later than thirty (30)
days after the return of the Licensed Software to PUMA. Acceptance of the
repaired or replaced Licensed Software will be subject to the same procedures.
Preloading of one or more copies of the Licensed Software by Licensee
automatically denotes acceptance.
(b) If it is determined that the Licensed Software has not successfully
completed the acceptance test as set forth in this Section, at Licensee's sole
option, (1) LICENSEE shall have the right to terminate immediately this
Agreement without any penalty or charge by giving written notice of such
termination to Puma, or (2) LICENSEE may agree to repeat the acceptance
procedure under this Section.
(c) Should LICENSEE terminate this Agreement pursuant to this Section, Puma
shall promptly refund any prepayments made by LICENSEE pursuant to this
Agreement.
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4. AUDIT; TAXES
4.1 AUDIT. Licensee shall maintain at Licensee's
principal office Licensee's usual records relating to the Licensed Software as
shall be sufficient to confirm Licensee's compliance with this Agreement.
Licensee shall permit a mutually agreed upon certified public accountant, not
working on a contingency fee basis, to audit such books and records as may
reasonably be required to verify compliance with this Agreement, at such times
as PUMA may reasonably request, upon reasonable written notice. PUMA shall pay
the cost of audits unless the number of copies of Licensed Software exceeds the
number of units of System Unit manufactured by Licensee by more than five
percent (5%), in which event Licensee shall reimburse PUMA for the cost of such
audits in addition to all other amounts to which PUMA may be legally entitled as
a result of such unauthorized copies. Audits shall not unreasonably interfere
with Licensee's business activities and shall not be conducted more than once in
any twelve month period so long as the number of copies of Licensed Software
does not exceed the number of System Units manufactured by Licensee during the
session in which case the number of allowed audits during this period will be
determined at the sole discretion of PUMA.
4.2 TAXES. Licensee shall be responsible for the
payment of all export, excise, sales, use, property and other taxes based upon
the transactions under this Agreement or the fees paid hereunder, other than
taxes imposed upon or measured by PUMA's net income.
5. PROPRIETARY OWNERSHIP RIGHTS
5.1 OWNERSHIP. PUMA shall retain all ownership, right,
title and interest in and to all current and hereafter existing revisions of or
modifications to the Licensed Software (including all copies made hereunder).
5.2 COPYRIGHT NOTICES. All copies of the Licensed Software made
by Licensee shall contain PUMA's copyright notice and Licensee shall not remove
any copyright notices contained in the Licensed Software. No other copyright
notice shall appear in, or be associated with, the Licensed Software. If
Licensee is required to ship Licensed Software contained on a floppy diskette as
permitted under this Agreement, upon PUMA's request Licensee shall affix to each
diskette or other item containing the Licensed Software such copyright or other
proprietary notices with the content, in the form, and in the clearly visible
place mutually agreed upon.
5.3 TRADEMARKS. Except as specified or required by this
Agreement and its Exhibits, neither party may use the other's name, logo or
trademarks without the other party's prior written consent except as required by
this Agreement.
5.4 NO ASSERTION. Licensee hereby expressly acknowledges
and affirms PUMA's ownership in the Licensed Software as set forth in Section
5.1 above. Accordingly, Licensee shall not at any time, directly or indirectly,
oppose the grant of, dispute the validity of or cooperate in any suit or
proceeding which challenges or disputes any proprietary rights of PUMA in the
Licensed Software.
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6. WARRANTY
6.1 LIMITED WARRANTY. PUMA warrants that the media upon which
the Licensed Software is placed by PUMA will be free from defects in workmanship
and materials, and that the Licensed Software will meet the stated
specifications in the Software Documentation. PUMA does not warrant or claim
that the software will run error free. If Licensee finds any errors or failure
of the Licensed Software to meet such specifications and provides PUMA with a
written report thereof, as Licensee's sole remedy, PUMA will use its best
efforts to correct such errors. PUMA's warranty and obligation with respect to
the Licensed Software shall extend for a period of ninety (90) days from the
date the Licensed Software is delivered to Licensee and is solely for the
benefit of Licensee. Licensee has no authority to extend this warranty to any
other person. This warranty shall not apply to any Licensed Software which has
been (i) repaired, altered or installed, other than by PUMA, (ii) subject to
misuse, mishandling, neglect or accident, or (iii) not maintained in accordance
with handling or operating instructions supplied by PUMA. Licensee shall have
the right to distribute any such repair or replacement at no additional cost.
6.2 WARRANTY EXCLUSION. EXCEPT AS PROVIDED IN SECTION 6.1, PUMA
MAKES NO WARRANTY OF ANY KIND WITH REGARD TO THE LICENSED SOFTWARE. PUMA
EXPRESSLY DISCLAIMS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
WHETHER ARISING IN LAW, CUSTOM, CONDUCT OR OTHERWISE.
7. [This section left intentionally blank]
8. LIMITATION OF LIABILITY
8.1 LIMITATION. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY LOSS OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL
DAMAGES ARISING UNDER THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY DAMAGES ATTRIBUTABLE TO
EITHER PARTY EXCEED THE AMOUNT OF PAYMENTS MADE TO PUMA UNDER THIS AGREEMENT.
LICENSEE and PUMA may not institute any action in any form arising out of
this Agreement more than eighteen (18) months after the cause of action has
arisen, or in the case of non-payment, more than eighteen (18) months from the
date of last payment or promise to pay, except that this limitation does not
apply to any action for payment of taxes.
8.2 FORCE MAJEURE. Except for payment of moneys due under
this Agreement, nonperformance of either party shall be excused to the extent
that performance is rendered impossible by fire, flood, governmental acts or
orders or restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the control and not caused by the negligence of the non-
performing party.
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9. PROPRIETARY RIGHTS INDEMNIFICATION
9.1 REPRESENTATIONS. PUMA represents that it has the right to
enter into this Agreement and grant the license(s) hereunder and that it has no
knowledge of any facts which might lead to a claim of infringement of any United
States patent, copyright or trade secret of any third party as a result of the
license to the Licensed Software granted by this Agreement.
9.2 INDEMNITY.
PUMA agrees to defend, indemnify and hold harmless LICENSEE from and
against any and all loss, damage, liability or direct expenses (including
reasonable attorney's fees) assessed against LICENSEE, or incurred by LICENSEE,
arising out of any claim, action or suit: (a) for breach of any warranty set
forth in Section 9.1 ("Representations"), above; and (b) of third parties
alleging that the Licensed Software and/or the Licensed Documentation violate
said third party's copyright, patent, trademark, or other proprietary rights,
provided LICENSEE (1) promptly notifies PUMA in writing of any such claim,
action or suit, and (2) gives PUMA complete authority, information, and
necessary cooperation required to control the defense of any such claim, action
or suit (if brought by a third party), and any related negotiations or
settlement.
PUMA assumes no liability to the extent a claim is due to (i) infringement of
any proprietary right covering any assembly, circuit, combination, method or
process in which any of the Licensed Software may be used but not covering the
Licensed Software standing alone; (ii) any combination of the Licensed Software
with other software not supplied by PUMA; or (iii) the modification of the
Licensed Software, unless such modification was made by PUMA or PUMA's agents
pursuant to specifications and designs drafted by PUMA. Licensee agrees to
indemnify and hold PUMA harmless from any and all damages, liability, costs and
expenses (including but not limited to reasonable attorney's fees) resulting
from the foregoing; provided however, that Licensee shall be relieved of the
foregoing obligations unless (i) PUMA gives Licensee immediate notice of any
such claim or suit against PUMA, and (ii) Licensee has sole control of the
defense and any related settlement discussions relating to such claim or suit.
PUMA shall cooperate with Licensee, at Licensee's expense, in the defense of any
such claim or suit. Notwithstanding the foregoing, LICENSEE shall have no
obligation to PUMA under this Section to the extent any such claim, action or
suit is based upon: (i) use of any Licensed Software delivered hereunder in
connection or in combination with equipment, software or devices not supplied by
LICENSEE; (ii) use of the Licensed Software in the practicing of any process
or in a manner for which it was not designed; or (iii) Licensee's compliance
with PUMA's designs, specifications or instructions; or (iv) modification or
alteration by a third party."
9.3 EXCLUSIVE REMEDY. THE FOREGOING PROVISIONS OF THIS SECTION
9 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF EACH PARTY AND THE EXCLUSIVE
REMEDY OF EACH PARTY WITH RESPECT TO ANY ALLEGED INTELLECTUAL PROPERTY RIGHTS
INFRINGEMENT BY THE LICENSED SOFTWARE.
10. CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. "Confidential Information" means
any information, technical data, or know-how, related to any aspect of either
party's business,
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including, but not limited to, research, products, proposals, software,
services, development, inventions, processes, designs, drawings, engineering,
marketing, customer lists and finances, which is disclosed by one party to the
other (i) in writing; (ii) orally; (iii) by drawings or plans; or (iv) by
inspection of products, materials, parts or equipment. In all cases
"Confidential Information" shall be designated as confidential in a written
notification or confirmation promptly after the disclosure.
10.2 EXCLUSION. "Confidential Information" does not
include any such information, technical data, or know-how which: (i) is or
becomes publicly available without breach of this Agreement by the party
receiving the Confidential Information; (ii) is released for disclosure by the
disclosing party with its written consent; (iii) is known by the receiving party
prior to the disclosure; (iv) is rightly received by the receiving party from a
third party without confidential limitations; (v) is hereafter disclosed to a
third party without restriction on disclosure; or (vi) is independently
developed by the receiving party's employees not having access to such
information. The receiving party shall bear the burden of proof for such
exclusions.
10.3 RESTRICTIONS. Each party, for a period of three (3)
years following the termination of this Agreement (i) agrees not to disclose
Confidential Information given to it by the other party to any person, real or
legal, except as necessary for the other party to perform its obligation under
this Agreement or as required by court order; (ii) shall require its employees
having access to Confidential Information and any third party to whom disclosure
of Confidential Information is necessary to sign a confidentiality agreement
containing provisions similar to this Agreement; (iii) shall exercise the same
degree of care to safeguard the confidentiality of such Confidential Information
as it would exercise in protecting the confidentiality of similar property of
its own (but in no event less than is standard in the industry); and (iv) agrees
to use its diligent efforts to prevent inadvertent or unauthorized disclosure,
publication or dissemination of any Confidential Information.
10.4 UNAUTHORIZED DISCLOSURES. Each party shall notify the other
of any actual or suspected unauthorized use or disclosure of Confidential
Information or infringement of any of either party's proprietary rights of which
such party has knowledge and will reasonably cooperate with the other party in
the investigation and prosecution of such unauthorized use, disclosure or
infringement.
11. TERM: TERMINATION
11.1 TERM. This Agreement shall commence on the
Effective Date and continue for one (1) year after such date, unless earlier
terminated under this Section 11. This Agreement may be renewed for additional
one (1) year terms upon the mutual written consent of the parties.
11.2 TERMINATION FOR CAUSE. If either party defaults in the
performance of any material provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party that if the default is not
cured within thirty (30) days, then the Agreement shall automatically terminate
at the end of such period. Any breach of the provisions in Sections 2 and 5 by
Licensee will be considered breaches which cannot be cured and may be the basis
for the automatic termination of this Agreement.
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11.3 BANKRUPTCY. If either party files a petition in
bankruptcy or is adjudicated a bankrupt, or if a petition in bankruptcy is filed
against either party and such petition is not discharged within sixty (60) days
of such filing, or if either party becomes insolvent, or makes an assignment for
the benefit or creditors or an arrangement pursuant to any bankruptcy law, or if
either party discontinues its business or if a receiver is appointed for it or
its business, this Agreement shall automatically terminate without any notice
whatsoever being necessary.
11.4 SURVIVAL The obligations under Sections 4, 5, 6, 7, 8,
9, 10, and the relevant portions of Sections 11 and 12, shall survive any
termination of this Agreement.
11.5 TERMINATION EFFECT (a) Within thirty (30) days after the
termination of this Agreement, upon written request, each party shall return to
the other party any item embodying any Confidential Information of the other
party which may be entrusted to or created by such party. Licensee shall return
to PUMA the master copy of the Licensed Software, Source Code, if any, the
Software Documentation, and any other materials delivered to Licensee by PUMA.
Unless this Agreement was terminated by PUMA for cause under Section 11.2, any
Licensed Software in Licensee's inventory on the effective date of termination
may be disposed of by Licensee within a period of ninety (90) days after such
date. Termination of this Agreement for any reason shall not affect the rights
of any end user to use the Licensed Software under any sublicense granted in
accordance with this Agreement.
Upon any termination or expiration of this Agreement, and notwithstanding
anything else to the contrary in this Agreement, it is expressly agreed by the
parties that:
(i) LICENSEE shall have only the necessary right and interest in and to the
Licensed Software and any other tangible property delivered to LICENSEE
hereunder as necessary only to comply with its obligations to support and
maintain its end users; and
(ii) Should this Agreement be terminated by Licensee for cause against PUMA,
prepayments, if any, for licenses not already granted by LICENSEE shall be
refunded to LICENSEE within thirty (30) days after the effective date of such
termination.
11.6 ADDITIONAL REMEDIES. Except as expressly limited by this
Agreement, termination of this Agreement shall be without prejudice to any other
remedy which may be available to a party due to default of this Agreement.
Violation of obligations under this Agreement may cause irreparable harm and
damage which may not be recovered at law, and remedies for breach of this
Agreement may be awarded in equity through injunctive relief.
12. MISCELLANEOUS
12.1 RELATIONSHIP. The relationship between parties
shall be that of independent contractors. Nothing contained herein shall be
construed to imply a joint venture, principal or agent relationship, or other
joint relationship, and neither party shall have the rights, power of authority
to create any obligation, express or implied, on behalf of the other.
12.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the substantive laws of the State of California, United States of
America, exclusive of
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its conflicts of laws rules, as applied to agreements entered into in California
between California residents.
12.3 JURISDICTION VENUE AND JURY TRIAL WAIVER. .
(a) If during the term of this Agreement or at any time after its
termination, either LICENSEE or PUMA commences a suit, action, or other legal
proceedings against the other arising out of or in connection with this
Agreement, the breach thereof or to its termination, whether or not other
parties are also named therein, the forum for the same, including, but not
limited to, the forum of the trial, shall take place exclusively in accordance
with this Section. Any action brought against LICENSEE, its officers, agents,
employees and/or ex-employees, shall be brought exclusively in the appropriate
state or federal courts located in the Commonwealth of Massachusetts. Any
action brought by LICENSEE against PUMA shall be brought exclusively in the
appropriate state or federal courts with jurisdiction in PUMA's principal place
of business.
(b) THE PARTIES MUTUALLY ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY
RELATING IN ANY MANNER TO THIS AGREEMENT, ANY BREACH OF THIS AGREEMENT, OR ITS
TERMINATION, MAY INVOLVE DIFFICULT OR COMPLEX ISSUES WHICH MAY BETTER BE
UNDERSTOOD BY A JUDGE RATHER THAN A JURY. ACCORDINGLY, THE PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL IN
CONNECTION WITH ANY SUCH LITIGATION, AND CONSENT TO A TRIAL BEFORE A JUDGE
SITTING WITHOUT A JURY.
12.4 ATTORNEY'S FEES. In the event of any litigation
or arbitration by the parties under this Agreement, the prevailing party shall
be entitled to costs and reasonable attorney's fees.
12.5 ASSIGNMENT. Neither party shall assign or
otherwise transfer any of its rights, obligations or licenses hereunder without
the prior written consent of the other party, which consent shall not be
unreasonably withheld, delayed or conditioned. Subject to the foregoing, the
provisions of this Agreement shall apply to and bind the successors and
permitted assigns of the parties. Notwithstanding the foregoing, Licensee
shall have the right to assign or transfer this Agreement to its parent or
affiliate corporations with the prior written consent of PUMA, which consent
shall not be unreasonably withheld, delayed or conditioned..
12.6 WAIVER. Failure by any party to enforce any
of its rights under this Agreement shall not be deemed a waiver of any right
which that party has under this Agreement.
12.7 NOTICES. All notices, requests, consents and
other communications hereunder shall be in writing and delivered personally, by
mail or by facsimile (with facsimiles to be promptly confirmed in writing). All
such written communications delivered by mail shall be mailed, postage prepaid,
either by certified or registered, first-class mail to the parties at their
respective addresses as set forth on the facing page of this Agreement, subject
to the right of either party to change its address by delivering written notice
to the other. Such notices shall be deemed to be effective upon two (2)
business days following the date of mailing or upon receipt if by facsimile or
personal delivery.
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12.8 SEVERABILITY. Should any provisions of this
Agreement contravene any law or valid regulation of any government having
jurisdiction over the parties, then such provision shall be automatically
terminated and performance thereof by the parties waived, and all other
provisions of this Agreement shall continue in full force and effect.
12.9 EXPORT COMPLIANCE. Licensee shall not export, directly
or indirectly, any Licensed Software to any country for which United States'
laws or regulations require an export license or other governmental approval,
without first obtaining such license or approval.
12.10 GOVERNMENT RESTRICTED RIGHTS. The Licensed
Software is subject to restricted rights as follows. For units of the DoD: Use
duplication or disclosure by the government is subject to restrictions as set
forth in subparagraph (c)(1)(ii) of the Rights in Technical Data and Computer
Software clause at 252.227-7013. PUMA Technology, Inc., 2041 Mission College
Blvd., Suite 200, Santa Clara, CA 95054. For Civilian Agencies: Use,
reproduction, or disclosure is subject to restrictions set forth in
subparagraphs (a) through (d) of the Commercial Computer Software-Restricted
Rights clause at 52.227-19 and the limitations set forth in PUMA's standard
commercial agreement for this Licensed Software. Unpublished - rights reserved
under the copyright laws of the United States.
12.11 LICENSEE'S EXPENSES. Costs and expenses
incurred by Licensee relating to its marketing, distribution, promotion and
advertising of the System Unit or the object code or executable code versions of
the Licensed Software, or any other costs not agreed upon specifically in
writing, shall be the express responsibility of Licensee.
12.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
facing page and all Exhibits) reflects the entire agreement of the parties
regarding the subject matter hereof, and supersedes all prior agreements between
the parties, whether written or oral. This Agreement shall not be amended,
altered or changed, except by written agreement signed by both parties. This
agreement is executed in the English language.
12.13 COMPETITION. Nothing contained in this Agreement shall prevent
LICENSEE from developing either through third parties or through the use of its
own personnel by demonstrably independent means which are not in violation of
PUMA's proprietary rights, or from acquiring from third parties, products
similar to and competitive with the Licensed Software, and nothing herein shall
be construed to grant PUMA any rights to the revenues or any portion thereof
derived by LICENSEE from the use, sale, lease, license, or other distribution of
any such products. Furthermore, nothing herein shall preclude LICENSEE from
marketing such LICENSEE-developed or acquired products to others.
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A
LICENSED SOFTWARE:
TranXit-TM- 1.03 and, upon availability by PUMA, TranXit-TM- 2.01 file transfer
software (collectively "TranXit"), in executable code form, as defined by the
feature set listed below, and including all modifications and updates thereof,
designated by PUMA as a positive increase in either the tenths digit or
hundredths digit after the decimal point. Puma shall make reasonable commercial
efforts to notify Licensee at least thirty (30) days prior to any such new
golden master releases of TranXit for Licensee's planning purposes. Both
parties expressly understand and agree that these specific versions of TranXit,
supplied to Licensee by PUMA under this Agreement, are for Preloading onto
System Units manufactured or marketed by Licensee under its trademarks and
tradenames only. Any other use of Licensed Software by Licensee without the
prior express written consent of PUMA is strictly prohibited, except as set
forth in this Agreement. Both parties agree and understand that TranXit is
distinguished from the retail version of TranXit ("TranXit PowerPro-TM-"), which
is intended for sale directly to end users, and is further distinguished by a
different set of features determined at PUMA's sole discretion.
STANDARD TRANXIT 1.03 FEATURE SET
- [***]
STANDARD TRANXIT 2.01 FEATURE SET
- [***]
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A-CONTINUED
TRANXIT POWERPRO FEATURES (TENTATIVE LIST)
- [***]
The Licensed Software and Software Documentation shall be supplied to Licensee
in U.S. English. Licensee, at its option, may obtain rights to Preload the
Licensed Software in any foreign language translated version commercially
offered by Puma at a flat rate of $[***] per additional language. Any such
additional language versions obtained by Licensee shall be subject to the same
Per Unit Royalty described in Exhibit B and all such shipments made by Licensee
shall cumulatively count toward guaranteed minimum commitments by Licensee.
SOFTWARE DOCUMENTATION:
The Software Documentation defines the features and functionality of the
Licensed Software and may also include promotional material regarding software
upgrades or other PUMA products or third party accessories determined at PUMA's
sole discretion. The Software Documentation is the exclusive property of PUMA.
Licensee agrees to reprint, at its own expense, and include the following
documents with each Preloaded copy of the Licensed Software included with each
System Unit:
- TranXit Quick Reference Guide ( estimate 14 pages )
- TranXit Accessories Flyer ( estimate 4 pages )
- PUMA End User Registration Card ( estimate 1 page )
Notwithstanding the foregoing, Licensee shall have the option to reprint either
the TranXit Quick Reference Guide or the Accessories Flyer; Licensee shall not
be required to reprint both of these documents.
PUMA agrees to provide camera ready copy of each of the documents listed above
to Licensee. Licensee expressly understands that software upgrades and sales of
other PUMA products or third party accessories to end users of System Units via
OEM Fulfillment is an important part of PUMA's business and an integral part of
the Per Unit Pricing structure granted by PUMA in this Agreement, and therefor
agrees to include the above documents with each copy of Licensed Software it
ships.
SUPPORT AND TRAINING RESPONSIBILITIES:
1. Licensee shall provide all Level I and Level II support at its own expense.
For purposes of this Agreement, Level I support shall mean all technical support
and assistance relating to the
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A-CONTINUED
System Unit or Licensed Software given directly to end users, distributors,
OEMs, or customers of System Unit. Level II support shall mean the service
rendered by Licensee relating to the System Unit or Licensed Software given
directly to end users, distributors, OEMs, or customers of System Unit to
analyze or reproduce error(s) in the Licensed Software and to determine if said
error(s) are reproducible. Licensee will further provide training, at its
option and expense, for all personnel associated with the sales and support of
System Unit. PUMA shall provide all Level III support for the Licensed Software
only. For purposes of this Agreement, Level III support shall mean all PUMA
technical support and assistance relating to the Licensed Software given
directly to authorized personnel who are the direct employees of Licensee and
are trained in the usage of Licensed Software. Level III support will be
provided only during PUMA's normal business hours and in the English Language.
2. Upon Licensee's request, PUMA agrees to provide one (1) initial training
course to instruct Licensee's technical support personnel in the support of the
Licensed Software. PUMA shall bear all costs and expenses of the trainer and
any materials made available for such class. Licensee shall bear the cost and
expenses of any facilities and all travel and expenses of all Licensee personnel
attending the course. The training is to be provided at the Licensee's
designated facility in the United States.
3. From time to time, Licensee may request PUMA's Level III support
[***] PUMA shall acknowledge such request within twenty-four (24) hours of such
request for technical assistance and will make a reasonable effort to resolve
the matter by phone, fax or mail within two (2) business days of such request.
AUTHORIZED SUBSIDIARIES:
None
AUTHORIZED AFFILIATES:
NEC Corporation
NEC (UK) Ltd.
NEC Yonozawa, Ltd.
NEC Deutschland Gmbh.
NEC Hong Kong, Ltd.
NEC Europe Ltd.
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B
PER UNIT ROYALTY PRICING:
Licensee agrees to pay PUMA a Per Unit Royalty for each Unit shipment of the
Licensed Software according to the following schedule:
TranXit 1.03 or TranXit 2.01 $[***] per Unit
TranXit 2.01 (specific version for $[***] per Unit
Licensee which contains the Native
Windows Print Redirector)
GUARANTEED MINIMUM PAYMENT:
Licensee agrees to pay PUMA Technology $[***] as a guaranteed minimum
payment toward purchase of between [***] Units (minimum) and [***]
Units (maximum) of Licensed Software, depending on the applicable Per Unit
Royalty noted above. Licensee agrees to make minimum payments according to
the following payment schedule:
9/01/95 $[***]
11/01/95 $[***]
All additional Units purchased above and beyond the Guaranteed Minimum Payment
will be purchased on an "as needed" basis in advance.
PAYMENT TERMS:
All Per Unit Royalties above and beyond the guaranteed minimum may be
purchased on an "as needed" basis by Licensee in advance at the fixed dollar
values noted in the "Per Unit Royalty Pricing" section above in minimum lots
of [***] Units upon issue of purchase order and accompanying payment by
Licensee. If any amount is not paid to PUMA when due hereunder, Licensee
shall pay to PUMA on demand a late fee in an amount not to exceed
[***] percent ([***]%) of such delinquent payment for each
month or part thereof from the due date until the date paid; but Licensee
shall have such grace period as may be required by law and the late fee shall
not exceed the maximum allowed by law.
MINIMUM VALUE OF AGREEMENT:
$[***]
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AMENDMENT NO. 1
TO
SOFTWARE LICENSE AGREEMENT
BY AND BETWEEN
PUMA TECHNOLOGY, INC.
AND
NEC TECHNOLOGIES, INC.
This Amendment (the "Amendment") is made by and between Puma Technology,
Inc. ("Puma") and NEC Technologies, Inc. ("Licensee") to amend the Software
License Agreement by and between Puma and Licensee with an Effective Date of
August 15, 1995 (the "Software License Agreement") under which Licensee obtained
certain licensing rights from Puma with respect to the TranXit software.
NOW, THEREFORE, for and in consideration of the promises and convenants
hereinafter contained, the parties agree as follows:
1. Exhibit A: Authorized Affiliates should be modified to read as follows:
"AUTHORIZED AFFILIATES:
NEC Corporation NEC (UK) Ltd.
NEC Yonezawa, Ltd. NEC Deutschland Gmbh.
NEC Hong Kong, Ltd. NEC Europe Ltd.
NEC Computers Co., Ltd. NEC Technologies Hong Kong Limited
Shanghai NEC Computers Co., Ltd."
2. In all other respects not inconsistent with this Amendment, the Software
License Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have signed this Amendment as of the
day and year written below.
LICENSEE PUMA TECHNOLOGY, INC.
By: /s/ Sheldon Safir By: /s/ Bradley A. Rowe
--------------------------------- --------------------------
Name: SHELDON SAFIR Name: Bradley A. Rowe
------------------------------- --------------------------
Title: Director, 3rd Party Relations Title: President & CEO
TEC Technologies, Inc.
------------------------------ -------------------------
Date: 10/25/95 Date: 10/25/95
------------------------------ -------------------------
<PAGE>
AMENDMENT NO. 2
TO
SOFTWARE LICENSE AGREEMENT
BY AND BETWEEN
PUMA TECHNOLOGY, INC.
AND
NEC TECHNOLOGIES, INC.
This Exhibit C is incorporated into the Software License Agreement between
the parties as set forth in Section 12.12 of the Agreement. The parties
hereby agree to the Agreement as follows:
The existing PER UNIT ROYALTY PRICING section of Exhibit B is deleted and
replaced with the following new section:
"PER UNIT ROYALTY PRICING:
Licensee agrees to pay PUMA a Per Unit Royalty for each Unit shipment
of the Licensed Software according to the following schedule:
LICENSED SOFTWARE PER UNIT ROYALTY
----------------- ----------------
TranXit 1.03 or TranXit 2.01 (A) $[***] per Unit for all
Units Produced prior to
January 1, 1996
(B) $[***] per Unit for the
first [***] Units Produced
on or after January 1, 1996
(C) $[***] per Unit for all
Units Produced after the
[***] Units referred to in
subsection (B) above
TranXit 2.01 (specific version for $[***] per Unit
Licensee which contains the Native
Windows Print Redirector)"
Add the following new section to Exhibit B after the existing GUARANTEED
MINIMUM PAYMENT section:
"ADDITIONAL GUARANTEED MINIMUM PAYMENT:
Licensee agrees to pay PUMA Technology an additional guaranteed
minimum payment in addition to the guaranteed minimum payment of
$[***] described in the directly preceding section toward the
purchase of [***] Units of TranXit
Page 1
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
2.01 (without Print Redirector), based on a Per Unit Royalty of
$[***] for calendar Q4, 1995, where such Units purchased by the
additional guaranteed payment may be Produced at any time on or
after January 1, 1996. Such royalties and additional guaranteed
minimum payment for the TranXit 2.01 (without Print Redirector)
software shall be due net forty-five days after the calendar quarter
in which such royalties were earned."
LICENSEE PUMA TECHNOLOGY, INC.
By: /s/ Sheldon Safir By: /s/ Bradley A. Rowe
------------------------------ -------------------------
Name: Sheldon Safir Name: Bradley A. Rowe
---------------------------- -----------------------
Title: Director, 3rd Party Title: President & CEO
Relations ----------------------
---------------------------
Date: 1/10/96 Date: 1/10/96
---------------------------- -----------------------
Page 2
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
AMENDMENT NO. 3
TO
SOFTWARE LICENSE AGREEMENT
BY AND BETWEEN
PUMA TECHNOLOGY, INC.
AND
NEC TECHNOLOGIES, INC.
This Amendment #2 is incorporated into the Software License Agreement between
the parties as set forth in Section 12.12 of the Agreement executed by the
parties on or around August , 1995.
The parties hereby agree to add EXHIBIT D: TRANXIT FOR WINDOWS NT to the
Agreement, where such new Exhibits shall read as follows:
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT D
TRANXIT FOR WINDOWS NT
NEW PUMA PRODUCT: Both parties agree and understand that as of the execution
date of this Exhibit D, Puma intends to deliver for commercial availability a
[***] (or [***]) designed to run under [***] operating system environment
("New Puma Product") which contains similar, but not identical, features and
functions to Licensed Software as set forth in this Agreement, and as defined
by Puma in its sole discretion, but in no case less than those features and
functions which Puma makes generally available to its OEM customers, at some
time during the [***] calendar quarter of [***]. Such projected production
release date is presented for planning purposes only. Upon completion of
such New Puma Product, if ever, Puma agrees to provide Licensee with beta
code (executable code) for evaluation and final code (executable code) for
evaluation and acceptance by Licensee in U.S. English. Upon such delivery,
if ever, of New Puma Product pursuant to this provision, such New Puma
Product shall be treated as Licensed Software with respect to the licensing
terms and conditions, support obligations, and all other applicable
provisions of this Agreement without limitation, except as expressly set
forth in this Exhibit D. Any software delivered by Puma pursuant to this
Amendment No. 2 shall be subject to Licensee's testing and approval. Such
software shall run in the latest [***] environment. If Puma shall fail to
deliver a fully functional version of the New Puma Product by [***], then
Licensee shall have the right to immediately terminate this Amendment No. 2
without any penalty or cost.
New Puma Product and the Software Documentation regarding New Puma Product shall
be supplied to Licensee in U.S. English. Licensee, at its option may obtain
rights to Preload the Licensed Software in any foreign language translated
version commercially offered by Puma, if any should Puma at its sole option
elect to provide such translated versions, at a flat rate of $[***] per
additional language. Any such additional language versions obtained by Licensee
shall be subject to the same Per Unit Royalty described in this Exhibit D.
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT D
TRANXIT FOR WINDOWS NT-CONTINUED
END USER COUPON: Puma, at its expense and effort agrees to create and print a
low-cost coupon ("End User Coupon"), which Licensee will include with each
System Unit which it distributes with the [***] operating system prior to the
availability of the production release of New Puma Product by Puma. The End
User Coupon will allow such end users of System Unit to purchase New Puma
Product, including associated documentation and backup media, directly from
Puma and/or its authorized fulfillment designee at a cost of $[***], where
such fee will be paid directly to Puma by such end user in the reasonable
manner described by Puma in the End User Coupon. Such end users must
register with Puma via the End User Coupon to qualify to receive New Puma
Product. Upon production release of New Puma Product, Licensee agrees to
cease distributing End User Coupon and commence Preloading New Puma Product
on each such System Unit which includes [***].
PER UNIT ROYALTY PRICING FOR NEW PUMA PRODUCT AND DISTRIBUTION FEE FOR END USER
COUPON:
Licensee agrees to pay PUMA a Per Unit Royalty of $[***] for each Unit shipment
of the New Puma Product upon production delivery of New Puma Product by Puma.
Licensee agrees to pay PUMA a per unit distribution fee of $[***] for each unit
shipment of End User Coupon distributed by Licensee prior to such production
release of New Puma Product.
PAYMENT TERMS FOR NEW PUMA PRODUCT ROYALTIES AND DISTRIBUTION FEES FOR END USER
COUPON:
Licensee may distribute End user Coupon and Preload New Puma Product [***].
Licensee agrees to account for and pay all royalties due for New Puma Product
as set forth in this Exhibit D and Section 2.5 and 2.6 of this Agreement and
such payment shall be due and owing at the date of such royalty reports.
Licensee agrees to account for and pay all Distribution Fees due for End User
Coupon as set forth in this Exhibit D and Section 2.5 and 2.6 of this
Agreement within thirty (30) days following the production release of New
Puma Product. Licensee agrees to clearly define both the number of Units of
New Puma Product produced and units of End User Coupon distributed in all
royalty reports submitted to Puma.
In all other respects not inconsistent with this Amendment, the Software
License Agreement shall remain in full force and effect.
LICENSEE PUMA TECHNOLOGY, INC.
By: /s/ Sheldon Safir By: /s/ Bradley A. Rowe
------------------------- -------------------------
Name: Sheldon Safir Name: Bradley A. Rowe
----------------------- -----------------------
Title: Director, 3rd Party
Relations Title: President & CEO
---------------------- ----------------------
Date: 1/10/96 Date: 1/10/96
----------------------- -----------------------
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
EXHIBIT 10.7
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT
NEC INFORMATION PUMA TECHNOLOGY INFORMATION
NEC Corporation Puma Technology, Inc.
7-1, Shiba 5 chome, 3375 Scott Boulevard, Suite 300
Minato-ku, Tokyo, Japan Santa Clara, CA 95054, USA
Tel (423) 33-1462 Fax (423) 33-1477 Tel (408) 987-0200 Fax (408) 970-8750
-------------- --------------
Contact Contract
Representative: Yoishi Kataoka Representative: Bradley A. Rowe
----------------
This Agreement is entered into by and between Puma Technology, Inc. ("Puma") and
NEC Corporation ("NEC") as of the date executed by both parties ("Effective
Date"). Puma agrees to grant NEC certain licenses to the Licensed Software set
forth in EXHIBIT A of this Agreement, subject to the License Agreement Terms and
Conditions attached and the Exhibits set forth below.
EXHIBITS:
Exhibit A - Licensed Software; Software Documentation; Support and Training
Responsibilities
Exhibit B - Annual Usage Fee; Automatic Annual Royalty Negotiation After [***]
Years; Per Unit Royalty; Annual Usage Fee Payment Terms; Hardware Provided by
NEC; Fee for NEC's Assistance for Marketing of TranXit PowerPro Upgrades;
Source Code Disclosure Fee; Minimum Value of Agreement
NEC ACKNOWLEDGES HAVING READ THE TERMS AND CONDITIONS SET FORTH ON THIS FACING
PAGE AND THE AGREEMENT ATTACHED HERETO, UNDERSTANDS ALL SUCH TERMS AND
CONDITIONS, AND AGREES TO BE BOUND THEREBY.
NEC PUMA TECHNOLOGY, INC.
By: /s/ Yoichi Kataoka By: /s/ Bradley A. Rowe
------------------------------ ------------------------------
Name: Yoichi Kataoka Name: Bradley A. Rowe
---------------------------- ----------------------------
Title: General Manager, Personal Title: President & CEO
Software Div.
--------------------------- ---------------------------
Date: May 23, 1995 Date: May 16, 1995
---------------------------- ----------------------------
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT TERMS AND CONDITIONS
1. DEFINITIONS
1.1 SYSTEM UNIT. "System Unit" shall mean either i.) the single
user system product consisting of a single or multiple central processing unit
which is marketed and distributed under NEC's trademark(s) or product name(s) in
Japan, the type of which shall be determined by NEC, or ii.) the product called
infrared transceiver / receiver unit which is marketed and distributed under
NEC's trademark(s) or product name(s) in Japan.
1.2 SOFTWARE DOCUMENTATION. "Software Documentation" shall mean
the information, in written or electronic form, regarding the executable code
version of the Licensed Software supplied by Puma and reprinted by NEC as
specified in Exhibit A.
1.3 LICENSED SOFTWARE. "Licensed Software" shall mean the Puma
software in executable code form, specified on Exhibit A.
1.4 SUBSIDIARY. "Subsidiary" shall mean any corporation, company
or entity in which fifty percent (50%) or more of the outstanding shares of
stock entitled to vote for the election of directors are owned or controlled,
directly or indirectly, by a party.
1.5 PRELOAD OR PRELOADING. "Preload" or "Preloading" refers to the act
of reproducing and installing a single copy of Licensed Software onto System
Unit or reproducing Licensed Software onto any media selected by NEC, so long as
such media is bundled with a System Unit. Preload also includes the
reproduction and inclusion of Software Documentation with the System Unit.
1.6 UNIT. "Unit" shall mean a single copy of the Licensed
Software.
1.7 PER UNIT ROYALTY. "Per Unit Royalty" shall mean the royalty
price paid by NEC to Puma for each Unit shipped by NEC subject to the terms of
this Agreement. No royalties shall accrue for Units which are i.) made for
replacement of existing Units which are defective in materials, manufacture or
reproduction, ii.) returned with System Unit by NEC's authorized dealer's and
distributors for credit, iii.) made as archival backups for an existing Unit,
iv.) provided as back-up copies to end users by NEC under Section 2.1, or v.)
provided as a bug fix to end users. Payment of Per Unit Royalties is in lieu of
payment of the Annual Usage Fee set forth in Exhibit B.
1.8 ANNUAL USAGE FEE "Annual Usage Fee" shall mean the annual fixed
royalty payment made by NEC to Puma for the right to make Units in unlimited
quantity subject to the terms of this Agreement.
1.9 MANUFACTURING THIRD PARTY. "Manufacturing Third Party" shall mean
a third party designated by NEC to manufacture System Units for marketing and
distribution by NEC, under NEC's trademark and to copy and reproduce Licensed
software and/or Software Documentation for NEC.
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initials initials
<PAGE>
2. LICENSE AND LICENSE FEES
2.1 OBJECT LICENSE. As of the Effective Date Puma grants to NEC and
its Subsidiaries a non-exclusive, non transferable (except as noted in this
Section 2.1) license to Preload, have Preloaded, copy, have copied, use, have
used, reproduce, and have reproduced the Licensed Software (executable code form
only) and Software Documentation and to distribute, lease, and/or rent the
Licensed Software and Software Documentation directly to customers in Japan, or
through its Subsidiaries or its distribution network in Japan only when Licensed
Software is Preloaded and under the terms of this Agreement. In addition to
Preloaded Licensed Software, NEC may i.) distribute one (1) copy of Licensed
Software with each System Unit as a back-up copy or ii.) distribute one (1) copy
of Licensed Software as a backup copy directly from NEC or through its
Subsidiaries as a mail order fulfillment item to end users of Licensed Software.
NEC shall require all Manufacturing Third Parties directly to (i.) abide by all
applicable NEC obligations set forth in this Agreement and (ii.) produce copies
of the Licensed Software and Software Documentation in accordance with the terms
and conditions set forth herein.
2.2 NO SUBLICENSE. NEC shall not have a right to grant any license or
sublicense to any third party (except NEC's Subsidiaries as defined in Section
1.4 and Manufacturing Third Parties as defined in Section 1.10 subject to the
specific limitations set forth in Section 2.1) to use the Licensed Software for
any purpose, except a sublicense to use the copy produced and distributed by NEC
as set forth in Section 2.1.
2.3 MODIFICATIONS. NEC shall have no right to modify all or any part
of the Licensed Software unless NEC pays the Source Code Disclosure Fee
described in Section 7.1. NEC agrees not to take any actions, such as reverse
assembly or reverse compilation, to derive a source code equivalent to the
Licensed Software from the executable code of the Licensed Software.
2.4 SOFTWARE DOCUMENTATION. No license is granted to reproduce the
Software Documentation except when it is included with a copy of the Licensed
Software.
2.5 LICENSE FEES. NEC agrees to pay Puma the Annual Usage Fee shown
in Exhibit B for the rights granted under this Agreement.
2.6 PAYMENTS. All payments made hereunder are non-refundable except
as otherwise set forth in this Agreement. All payments shall be in U.S. Dollars
and be made by wire transfer directly to Puma's bank account as follows:
Silicon Valley Bank
3000 Lakeside Drive
Santa Clara, CA 95054
ABA # 121140399 for benefit of Puma Technology, Inc.
Account # 035175-3570
The amounts indicated on Exhibit B for payments do not include any federal,
state, local or other governmental taxes, excise taxes, tariffs or other
governmental charges that may be imposed on sale, transportation, production,
storage or export of the Licensed Software. NEC shall pay any and all such
taxes and charges (other than taxes imposed upon or measured by Puma's net
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<PAGE>
income) and Puma, its agents and distributors shall have no liability therefor.
If taxes are required to be withheld by the Japanese government on payments
required under this Agreement, then NEC may deduct such withholding taxes from
the amount owed Puma as will enable Puma to receive a U.S. Foreign Tax Credit;
provided, NEC pays such amounts to the appropriate tax authority. NEC shall
obtain and deliver to Puma a necessary tax receipt and all other documents
necessary for Puma to claim a Foreign Tax Credit.
2.7 NEC'S ASSISTANCE.
(a) NEC will, during the term of this Agreement, copy and contain
in the package of the System Units which NEC sells with Licensed Software,
Puma's advertising tool for the software called "TranXit PowerPro Upgrade" and
upgrades to Licensed Software or equivalent upgrade advertising tools designated
by Puma and included in Software Documentation as described in Exhibit A
manufactured and marketed by Puma or its designee(s) in Japan, collectively
"Puma Products," provided that (i.) Puma shall obtain NEC's prior written
consent regarding the content and specifications of such advertising tool, which
consent shall not be unreasonably withheld by NEC, and (ii.) Puma shall, at its
expense, provide NEC with the electronic and camera ready copy for such
advertising tool in advance.
(b) It is understood that "TranXit PowerPro," TranXit PowerPro
Upgrade, and other Puma Products shall be marketed and sold by Puma or its
designee(s) directly through its distribution channel in Japan under its name
and at its expense, and NEC shall not be responsible for any marketing support
or sales promotion of TranXit PowerPro, TranXit PowerPro Upgrade, and other Puma
Products except as expressly provided in Section 2.7 (a) above.
(c) In consideration of NEC's assistance provided in Section 2.7
(a) above, Puma shall pay to NEC the fee in accordance with the terms and
conditions, as set forth in Exhibit B attached hereto.
(d) It is confirmed and agreed by both parties hereto that NEC
shall assume no liability of any kind for TranXit Power Pro, TranXit PowerPro
Upgrade, or any equivalent upgrade or other Puma Products marketed by Puma or
its designee(s) and Puma shall assume all liability for the same and indemnify
NEC and its Subsidiaries and their respective dealers and distributors from any
claim, action, suit or proceeding regarding such upgrades, at Puma's expense.
3. DELIVERY.
3.1 DELIVERY OF LICENSED SOFTWARE. Within five (5) days after
completion of the engineering work required to release the Licensed Software,
Puma shall deliver the Licensed Software, contained upon a master diskette(s)
and the Software Documentation in both written and electronic form to NEC.
3.2 ACCEPTANCE. The Licensed Software and/or Software
Documentation will be deemed accepted by NEC if Puma is not notified of any
errors in writing within thirty (30) business days after receipt of the Licensed
Software and/or Software Documentation by NEC. NEC shall not unreasonably
withhold its acceptance. In the event NEC notifies Puma of such errors, NEC
shall describe the exact nature of such errors and shall return the Licensed
Software and/or Software Documentation to Puma in the manner agreed upon by both
parties. Upon
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<PAGE>
notification of such errors, NEC agrees, at its sole expense to provide Puma, on
a loan basis, with one (1) or, if necessary, two (2) complete hardware platforms
on which the errors occurred so that Puma may reproduce such errors if such
platforms are not already in Puma's possession, having been provided by NEC.
Puma shall use such platform(s) in accordance with the terms and conditions
imposed by NEC or NEC's licensors, if any. Puma agrees to use such platforms
provided by NEC hereunder solely for the purpose of performing Puma's
obligations hereunder and not to rent, transfer or export them to any other
parties in any manner. Puma also agrees to return to NEC, at its sole expense,
all such platforms provided by NEC hereunder within a reasonable period after
its completion of Puma's obligations hereunder. In the event that Puma is able
to reproduce such errors, Puma shall, at its option, repair or replace the
Licensed Software and/or Software Documentation and return the repaired Licensed
Software and/or Software Documentation or provide the replaced Licensed Software
and/or Software Documentation, as soon as commercially practicable, but no later
than thirty (30) days after the return of the Licensed Software and/or Software
Documentation to Puma. Acceptance of the repaired or replaced Licensed Software
and/or Software Documentation will be subject to the same procedures. If Puma
is unable to repair the Licensed Software and/or Software Documentation after
the second Acceptance Period, then NEC, at its sole option and as its sole
remedy, shall have the right to either i.) add a third Acceptance Period which
will be subject to the same procedures as the second Acceptance Period or ii.)
terminate this Agreement by notifying Puma in writing and in such case shall
have the right to receive a refund of any prepaid royalties, if any, made to
Puma. If NEC has not accepted the Licensed Software and/or Software
Documentation after such third Acceptance Period, if any, then NEC, at its sole
option and as its sole remedy, shall have the right to terminate this Agreement
by notifying Puma in writing and in such case shall have the right to receive a
refund of any prepaid royalties, if any, made to Puma. Commercial shipment of a
single copy of the Licensed Software and/or Software Documentation by NEC or its
Subsidiaries constitutes automatic acceptance of the Licensed Software and/or
Software Documentation by NEC.
4. AUDIT
4.1 AUDIT. If NEC elects to pay to Puma the Per Unit royalty
specified in Section 1.7 above, Puma shall be entitled to, with thirty (30) days
prior notice to NEC, have inspected by an internationally recognized independent
certified public accountant of Puma's election and approved by NEC, whose
approval shall not be unreasonably withheld, NEC's books and records relating to
the number of Units shipped under the terms of this Agreement and under terms of
confidentiality reasonably acceptable to both parties. Puma shall pay the cost
of audits unless there is a discrepancy in the royalty reports furnished to Puma
by NEC and actual number of Units shipped by more than five percent (5%), in
which event NEC shall reimburse Puma for the cost of such audits reasonably
incurred by Puma in addition to immediately paying for any additional Per Unit
Royalties due. Audits shall not unreasonably interfere with NEC's business
activities. Audits shall not be conducted more than once in any twelve month
period unless there is a discrepancy in the royalty reports furnished to Puma by
NEC and actual number of Units shipped by five percent (5%) in which case the
number of allowed audits during this period will be increased to once every six
(6) months. NEC agrees to keep the foregoing books and records for a period of
three (3) years following the date NEC prepares them.
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<PAGE>
5. PROPRIETARY OWNERSHIP RIGHTS.
5.1 OWNERSHIP. Puma shall retain all ownership, right, title and
interest in and to all current and hereafter existing revisions of or
modifications to the Licensed Software (including all copies made hereunder).
5.2 COPYRIGHT NOTICES. All copies of the Licensed Software and
reproductions of the Software Documentation made by NEC shall reproduce Puma's
copyright notice and the copyright notices of any third parties from which Puma
has licensed products which are contained therein, and NEC shall not remove any
copyright notices contained in the Licensed Software or Software Documentation.
No other copyright notice shall appear in, or be associated with, the Licensed
Software or Software Documentation without the prior written permission of Puma.
5.3 TRADEMARKS. Except as specified or required by this Agreement
and its Exhibits, neither party may use the other's name, logo or trademarks
without the other party's prior written consent except as required by this
Agreement.
6. WARRANTY
6.1 LIMITED WARRANTY. Puma warrants that the media upon which the
Licensed Software is placed by Puma will be free from defects in workmanship and
materials, and that the Licensed Software will meet the stated specifications in
the Software Documentation. Puma does not warrant or claim that the software
will run error free. If NEC finds any errors or failure of the Licensed
Software to meet such specifications and provides Puma with a written report
thereof, as NEC's sole remedy, Puma will use reasonable commercial efforts to
correct such errors. Puma's warranty obligation with respect to the Licensed
Software shall extend for a period of one hundred twenty (120) days from the
date the Licensed Software is delivered to NEC and is solely for the benefit of
NEC. NEC has no authority to extend this warranty to any other person. This
warranty shall not apply to any Licensed Software which has been (i) repaired or
altered other than by Puma, (ii) subject to misuse, mishandling, neglect or
accident, or (iii) not maintained in accordance with handling or operating
instructions supplied by Puma.
6.2 WARRANTY EXCLUSION. EXCEPT AS PROVIDED IN SECTION 6.1, PUMA
MAKES NO WARRANTY OF ANY KIND WITH REGARD TO THE LICENSED SOFTWARE. PUMA
EXPRESSLY DISCLAIMS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
WHETHER ARISING IN LAW, CUSTOM, CONDUCT OR OTHERWISE.
7. SOURCE CODE.
7.1 SOURCE CODE DISCLOSURE. Upon request of NEC during the term of
this Agreement, Puma grants to NEC and its Subsidiaries the right to obtain the
disclosure of all portions of the human readable source code contained in the
Licensed Software ("Source Code") for which Puma either i.) owns or ii.) has
sufficient license to provide such disclosure ("Source Code") by payment of
the Source Code Disclosure Fee, as set forth in Exhibit B. Upon payment of the
Source Code Disclosure Fee, NEC and its Subsidiaries have the right to use,
copy, interpret, and modify such Source Code only for the purposes of routine
end-user customer
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<PAGE>
support, routine bug fixing and routine maintenance only. Disclosure of the
Source Code by Puma shall not be interpreted as granting NEC or any of its
Subsidiaries any right to, or ownership of, the Licensed Software or any portion
thereof other than the rights and licenses set forth herein.
7.2 DELIVERY OF SOURCE CODE. Within seven (7) days after receipt of
payment of the Source Code Disclosure Fee by Puma, Puma shall deliver the Source
Code, contained upon a master diskette(s), and related documents thereof, to
NEC. It is expressly understood and agreed by both parties that the Source Code
delivered hereunder shall be treated as the Confidential Information
(hereinafter defined) of Puma During the term of this Agreement, upon NEC's
request, Puma shall provide the Source Code of the then current version of the
Licensed Software, for maintenance purposes only, without any additional fees.
Such Source Code of the then current version shall be treated as the Source Code
originally supplied to NEC hereunder and NEC and its Subsidiaries shall have the
same rights and licenses herein. Puma shall, during the term of this Agreement,
provide the Source Code of the bug-fix version of the Licensed Software made by
Puma. Such bug-fix version of the Licensed Software will be treated as Licensed
Software and NEC and its Subsidiaries shall have the same rights and licenses
set forth herein.
7.3 PROTECTION OF SOURCE CODE. If NEC has obtained rights for
disclosure of Source Code, it will keep all physical copies or forms of the
Source Code, documentation or other information contained in the Source Code in
a secure, locked facility. NEC or any of its Subsidiaries shall not sell,
assign, license, reproduce, distribute, sublicense or otherwise transfer the
Source Code. NEC or any of its Subsidiaries shall not, directly or indirectly,
use or copy the Source Code to obtain, derive or create the structure, methods
or techniques contained in the Licensed Software to create a product which
performs the functions of the Licensed Software or which otherwise competes with
the Licensed Software except as permitted by the terms and conditions of this
Agreement.
7.4 MODIFICATIONS BY NEC OR ANY OF ITS SUBSIDIARIES.
(a) If NEC or any of its Subsidiaries modify the Source Code or
creates new sources which are in some manner linked to or contained within the
original Source Code, in accordance with this Section 7, the ownership right as
to only the new portions actually created by NEC or its Subsidiaries shall vest
in Puma, provided that NEC and its Subsidiaries shall have the same rights and
licenses set forth herein.
(b) Puma shall not be required to maintain or otherwise repair any
Licensed Software that NEC or its Subsidiaries has (i.) modified or changed,
(ii.) caused to be modified or changed, unless the error or defect found can be
consistently reproduced in the Licensed Software that was not so changed or
modified by NEC or its Subsidiaries.
(c) (i.) NEC shall provide Puma with modifications made by NEC or
its Subsidiaries to the Licensed Software promptly upon the creation or
modification thereof, but in no case later than thirty (30) days following such
creation or modification.
(ii.) ALL OF THE DELIVERABLES FURNISHED TO PUMA HEREUNDER
("NEC-FURNISHED DELIVERABLES") WILL BE PROVIDED "AS IS" AND NEC DOES NOT MAKE
ANY WARRANTIES, GUARANTEES OR REPRESENTATIONS
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OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED, OR ARISING BY COURSE OF PERFORMANCE,
CUSTOM OR USAGE IN THE TRADE, WITH RESPECT THERETO, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTY REGARDING EFFICACY OR PERFORMANCE AND ANY IMPLIED WARRANTIES OF
TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
NEC DOES NOT WARRANT THAT THE NEC-FURNISHED DELIVERABLES WILL MEET PUMA'S
REQUIREMENTS OR THOSE OF ANY THIRD PARTY OR THAT THE NEC-FURNISHED DELIVERABLES
WILL PERFORM UNINTERRUPTED OR ERROR-FREE.
(iii.) NEC or its Subsidiaries shall not, directly or
indirectly, use (or permit or direct anyone else to use) the Source Code and
related documentation, or any information contained or derived from any of them,
for the purpose of designing, developing, creating, modifying or upgrading any
software product of any type or description (other than a modification or
upgrade to executable code version of the Licensed Software).
8. LIMITATION OF LIABILITY.
8.1 LIMITATION. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
LOSS OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES
ARISING UNDER THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY DAMAGES ATTRIBUTABLE TO
EITHER PARTY (EXCEPT FOR PUMA'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 9.2
BELOW) EXCEED THE AMOUNT OF PAYMENTS MADE TO PUMA UNDER THIS AGREEMENT.
8.2 FORCE MAJEURE. Nonperformance of either party shall be excused
to the extent that performance is rendered impossible by fire, flood,
governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the control and not caused by the
negligence of the non-performing party.
9. PROPRIETARY RIGHTS INDEMNIFICATION.
9.1 REPRESENTATIONS. Puma represents that it has the right to grant
the license hereunder and that it has no knowledge of any facts which might lead
to a claim of infringement of any United States or Japanese patent, copyright,
trade secret, or other intellectual property right of any third party as a
result of the license to the Licensed Software granted by this Agreement.
9.2 INDEMNIFICATION. If any third-party notice, claim, action,
suit, or proceeding ("Claim") is brought against NEC or its Subsidiaries on the
grounds that the Licensed Software infringes any of United States or Japanese
patents, copyrights, trade secrets, or other intellectual property rights of any
third party Puma shall, subject to the terms and conditions of this section,
defend or settle such Claim or satisfy any final judgments rendered against NEC
and its Subsidiaries and indemnify and hold NEC and its Subsidiaries harmless
from all loss, cost, expense (including but not limited to reasonable attorney's
fees), damage or liability arising out of or in connection with such Claim.
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<PAGE>
9.3 INDEMNIFICATION PROCEDURES.
(a) In the event that NEC and/or its Subsidiaries hereunder shall
receive any Claim or be subject to any Claim as to which indemnification may be
sought hereunder, NEC shall promptly notify Puma in writing of such Claim, and
Puma shall assume all liability for the Licensed Software, the defense,
negotiation or settlement of such Claim. Puma, at its expense, shall defend or
settle such suit and satisfy any final judgments rendered against NEC and/or its
Subsidiaries, and NEC shall provide all reasonable assistance requested by Puma
and deemed necessary and appropriate by NEC, at Puma's expense.
(b) If it shall be finally adjudicated that Licensed Software,
or any part thereof, infringes any patents, copyrights, trade secrets, or
other intellectual property rights of any third party, and NEC and/or its
Subsidiaries is enjoined from using Licensed Software, or if Puma in its
reasonable judgment believes the Licensed Software may be found to infringe a
third party's patent, copyright, trade secret, or other intellectual property
rights, then, in addition to the obligation set forth in paragraph (a) above,
Puma shall, at its expense; (i) procure for NEC and/or its Subsidiaries the
right to continue using the Licensed Software free of any liability of
infringement and/or any payment to such third parties; or (ii) replace such
Licensed Software or part thereof, with a non-infringing substitute
acceptable to NEC; or (iii) (only in case item (i) or (ii) is not reasonably
available) subject to the limitations set forth in Section 9.4 and except for
non-royalty bearing licenses, [***] in the possession of such other party as
[***]
(c) Notwithstanding the foregoing, Puma shall not have any
obligation under this Section 9 with respect to any Claims for infringement
which arise, in whole or in part, from the modification and/or combination of
the Licensed Software or part thereof, unless made by Puma.
9.4 LIMITATION. THIS SECTION 9 STATES THE ENTIRE AND EXCLUSIVE
LIABILITY OF PUMA AND SOLE REMEDY OF NEC FOR THE LICENSED SOFTWARE'S
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET, OR OTHER INTELLECTUAL
PROPERTY RIGHT OF ANY THIRD PARTY AND IS IN LIEU OF ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY IN REGARD THERETO.
10. CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. "Confidential Information" means all
information owned or controlled by a party hereto (including, but not limited
to, all drawings, blueprints, descriptions, specifications, software and data)
disclosed in any form, whether written or oral, or on computer readable media
which if disclosed in documents or other tangible materials is clearly marked
"Confidential" or "Proprietary", or if disclosed orally or in any other
intangible form, is identified at the time of disclosure as confidential and is
reduced to a written summary marked "Confidential" or "Proprietary" and
delivered within thirty (30) days of disclosure. For purposes of this
Agreement, the Licensed Software shall be deemed Confidential Information of
Puma and the NEC Improvements shall be deemed Confidential Information of NEC.
In addition the parties hereby acknowledge and agree that the terms of this
Agreement, including the Exhibits attached hereto, contain valuable trade
secrets which value would be damaged if disclosed to competitors. The terms and
conditions of this Agreement are therefore
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
deemed Confidential Information. Nothing herein shall be construed as
preventing NEC or its Subsidiaries from stating to their customers that NEC and
its Subsidiaries have certain rights and licenses as to Licensed Software.
10.2 GENERAL. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential
Information except as expressly set forth herein or otherwise authorized in
writing, shall implement reasonable procedures to prohibit the disclosure,
unauthorized duplication, misuse or removal of the other party's Confidential
Information and shall not disclose such Confidential Information to any third
party except as may be necessary and required in connection with the rights and
obligations of such party under this Agreement. Without limiting the foregoing,
each of the parties shall use at least the same procedures and degree of care
which it uses to prevent the disclosure of its own confidential information of
like importance to prevent the disclosure of the other party's Confidential
Information, but in no event less than reasonable care. It is expressly
understood and agreed by the parties that NEC and its Subsidiaries may furnish
the Licensed Software, Software Documentation and any copies thereof to their
customers without imposing confidentiality obligations on such customers.
10.3 EXCEPTIONS. Notwithstanding the above, neither party shall
have any obligation to the other with regard to any information which:
(a) was generally known and available in the public domain at the
time it was disclosed or becomes generally known and available in the public
domain through no fault of the receiver;
(b) was known to the receiver at the time of disclosure as shown
by the files of the receiver in existence at the time of disclosure;
(c) is disclosed with the prior written approval of the disclosing
party;
(d) is at anytime independently developed by the receiver without
any use of the disclosing party's Confidential Information and by employees or
other agents of the receiver who have not been exposed to the Confidential
Information., provided that the receiver can demonstrate such independent
development.
(e) becomes known to the receiver from a source other than the
disclosure without breach of this Agreement by the receiver and otherwise not in
violation of the disclosing party's rights.
10.4 DISCLOSURES. Neither party shall be liable for disclosure of
Confidential Information of the other if such Confidential Information is
disclosed pursuant to the order or requirement of a court, administrative
agency, or other governmental body; provided that the receiver shall provide
prompt, advanced notice thereof to enable the disclosing party to seek a
protective order or otherwise protect such Confidential Information.
Notwithstanding the foregoing, NEC may disclose the terms of this Agreement to
the Bank of Japan and the Japanese Government.
10.5 REMEDIES. If either party breaches any of its obligations with
respect to confidential and unauthorized use of Confidential Information
hereunder, the other party shall be
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<PAGE>
entitled to seek equitable relief to protect its interest therein, including but
not limited to injunctive relief, as well as money damages.
11. TERM; TERMINATION
11.1 TERM. (1) This Agreement shall commence on the Effective Date and
continue for three (3) years after such date, unless earlier terminated under
this Section 11. This Agreement will automatically renew for additional one (1)
year term unless either party indicates the other party any intention to
terminate this Agreement by sixty (60) days prior written notice to the other
party.
(2) In the event that this Agreement is automatically renewed
pursuant to Section 11.1 (1) above, the Annual Usage Fee, and other fees for
such renewed period shall be negotiated in good faith by both parties.
Disagreement upon these fees between the parties shall not affect any of NEC's
rights to be licensed hereunder.
11.2 TERMINATION FOR CAUSE. If either party defaults in the
performance of any material provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party that if the default is not
cured within thirty (30) days, then the non-defaulting party may terminate this
Agreement by giving written notice to the defaulting party. Any breach of the
provisions in Sections 2.1, 2.2, 2.3, or 5.2 by NEC will be considered breaches
which cannot be cured and may be the basis for the immediate termination by Puma
of this Agreement.
11.3 BANKRUPTCY. If either party files a petition in bankruptcy or
is adjudicated a bankrupt, or if a petition in bankruptcy is filed against
either party and such petition is not discharged within sixty (60) days of such
filing, or if either party becomes insolvent, or makes an assignment for the
benefit or creditors or an arrangement pursuant to any bankruptcy law, or if
either party discontinues its business or if a receiver is appointed for it or
its business, then the other party may terminate this Agreement by giving
written notice to the other party.
11.4 SURVIVAL The obligations under Sections 4, 5, 6, 7, 8, 9, 10,
11.5, 11.6, 12.2, 12.4, 12.5, and 12.9 shall survive any termination of this
Agreement.
11.5 TERMINATION EFFECT Within thirty (30) days after the
termination of this Agreement, upon written request, each party shall return to
the other party any item embodying any Confidential Information of the other
party which may be entrusted to or created by such party. NEC shall return to
Puma the master copy of the Licensed Software, Source Code, if any, the Software
Documentation, and any other materials delivered to NEC by Puma. NEC shall have
the right to retain one (1) copy of the executable code version of the Licensed
Software and Software documentation each, at NEC's premises only, for purposes
of end user technical support only for a period of one (1) year following such
termination. Termination of this Agreement for any reason shall not affect the
rights of any end user to use the Licensed Software under any sublicense granted
in accordance with this Agreement. Unless this Agreement was terminated by Puma
for cause under Section 11.2, NEC and its Subsidiaries shall retain the right to
sell or otherwise transfer inventory of Licensed Software and Software
Documentation existing as of the effective date of termination by paying the
Annual Usage Fee on a quarterly basis (except in case where Per Unit Royalty is
selected in the third year or the extended (fourth)year) for one hundred eighty
(180) days from the termination of this Agreement or to sell
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<PAGE>
or otherwise transfer such inventory by paying Per Unit Royalty for one hundred
eighty (180) days from the termination of this Agreement. NEC shall have the
right to fulfill its then existing maintenance and warranty obligations for
Licensed Software and Software Documentation already sold or otherwise
transferred by NEC and its Subsidiaries. For the purpose of this Section, NEC
and its Subsidiaries each may retain one (1) set of Licensed Software and
Software Documentation for customer support purposes. No termination of this
Agreement shall affect any sublicenses for the Licensed Software in object code
format and Software Documentation that will have been or will be granted by NEC
and its Subsidiaries pursuant to and under this Agreement to third parties.
11.6 ADDITIONAL REMEDIES. Except as expressly limited by this
Agreement, termination of this Agreement shall be without prejudice to any other
remedy which may be available to a party due to default of this Agreement.
Violation of obligations under this Agreement may cause irreparable harm and
damage which may not be recovered at law, and remedies for breach of this
Agreement may be awarded in equity through injunctive relief.
12. MISCELLANEOUS
12.1 RELATIONSHIP. The relationship between parties shall be that of
independent contractors. Nothing contained herein shall be construed to imply a
joint venture, principal or agent relationship, or other joint relationship, and
neither party shall have the rights, power of authority to create any
obligation, express or implied, on behalf of the other.
12.2 GOVERNING LAW. This Agreement shall be governed in all respects
by the substantive laws of the State of California, United States of America,
exclusive of its conflicts of laws rules, as applied to agreements entered into
in California between California residents.
12.3 ARBITRATION. Any dispute or claim arising out of or in relation
to this Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding arbitration in Santa
Clara County, California., under the Rules of Arbitration of the International
Chamber of Commerce by three (3) arbitrators appointed in accordance with such
rules. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. The parties may apply to any court of
competent jurisdiction for a temporary restraining order, preliminary
injunction, or other interim or conservatory relief, as necessary, without
breach of this arbitration agreement and without any abridgment of the powers of
the arbitrators.
12.4 ATTORNEY'S FEES. In the event of any litigation or arbitration
by the parties under this Agreement, the prevailing party shall be entitled to
costs and reasonable attorney's fees.
12.5 ASSIGNMENT. Neither party shall assign or otherwise transfer
any of its rights, obligations or licenses hereunder without the prior written
consent of the other party. Subject to the foregoing, the provisions of this
Agreement shall apply to and bind the successors and permitted assigns of the
parties.
12.6 WAIVER. Failure by any party to enforce any of its rights under
this Agreement shall not be deemed a waiver of any right which that party has
under this Agreement.
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<PAGE>
12.7 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and delivered personally, by air mail or by
facsimile (with facsimiles to be promptly confirmed in writing). All such
written communications delivered by air mail shall be mailed, postage prepaid,
either by certified or registered, first-class mail to the parties at their
respective addresses as set forth below, subject to the right of either party to
change its address by delivering written notice to the other. Such notices
shall be deemed to be effective upon two (2) business days following the date of
mailing or upon receipt if by facsimile or personal delivery.
to Puma: Puma Technology, Inc.
3375 Scott Boulevard
Suite 300
Santa Clara, CA 95054 USA
fax number: 408-970-8750
Attention: Bradley A. Rowe--President and CEO
to NEC: NEC Corporation
10, Nissincho 1-chome
Fuchu City, Tokyo 183 JAPAN
Planning Department
Personal Software Division
fax number: ###-##-####
12.8 SEVERABILITY. Should any provisions of this Agreement contravene
any law or valid regulation of any government having jurisdiction over the
parties, then such provision shall be automatically terminated and performance
thereof by the parties waived, and all other provisions of this Agreement shall
continue in full force and effect.
12.9 EXPORT COMPLIANCE. At all times during the performance of their
obligations hereunder, the parties shall in all respects comply with any and all
applicable laws, regulations and orders of governmental authorities and the
agencies of the United States, Japan and any other country having competent
jurisdiction. NEC assures Puma that it does not intend to and will not,
directly or indirectly, knowingly export or transmit the Software licensed from
Puma hereunder to People's Republic of China, Iraq, Afghanistan or any group Q,
S, W, Y or Z country specified in Supplement No. 1 to Section 770 of Export
Administration Regulation issued by the U. S. Department of Commerce, without
the prior written consent, if required, of the Office of Export Administration
of the U. S. Department of Commerce, Washington, D. C. 20230. The provisions of
this paragraph shall survive any termination of this Agreement and shall
continue indefinitely.
12.10 NEC'S EXPENSES. Costs and expenses incurred by NEC relating to its
marketing, distribution, promotion and advertising of the System Unit or the
object code or executable code versions of the Licensed Software, or any other
costs not agreed upon specifically in writing, shall be the express
responsibility of NEC.
12.11 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including facing
page and all Exhibits) reflects the entire agreement of the parties regarding
the subject matter hereof, and supersedes all prior agreements between the
parties, whether written or oral (including, but not limited to, the Memorandum
of Intent dated March 10, 1995 between the parties hereto).
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<PAGE>
This Agreement shall not be amended, altered or changed, except by written
agreement signed by both parties. This agreement is executed in the English
language.
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PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A
LICENSED SOFTWARE:
The Japanese versions of i.) TranXit-TM- 1.0 file transfer software for
[***] architecture and upon availability by Puma, ii.) TranXit 2.0 file
transfer software for [***] architecture/[***] architecture, including
all modifications and updates thereof, designated by Puma as a positive
increase in either the tenths digit or hundredths digit after the decimal
point. Puma will provide NEC with such modifications and updates promptly
after release thereof. These two versions of TranXit are collectively and
hereinafter referred to as TranXit, are provided to NEC in executable code
form, as defined by the Software Documentation generated by Puma and the
following feature set:
TRANXIT 1.0
- - [***]
TRANXIT 2.0 (ADDITIONAL FEATURES)
- - [***]
Upon production availability by Puma, NEC may, at its option, convert all or
part of its [***] to TranXit 2.0. NEC may also upgrade its then existing end
users of TranXit 1.0 to TranXit 2.0 at its option and expense. It is
confirmed and agreed by both parties that in the event NEC furnishes its end
users using TranXit 1.0 with an upgrade to TranXit 2.0, [***] shall be due to
Puma from NEC for such upgrade. NEC agrees to provide sufficient security
measures to prevent unauthorized access to either version of TranXit. Upon
mutual written consent of the parties, Puma or one of its designees may
provide such upgrade to such end users, whereby Puma will charge [***]
directly to those end users.
Both TranXit 1.0 and TranXit 2.0 are distinguished from retail versions of
TranXit (i.e. TranXit PowerPro-TM- or TranXit PowerPro for PC98-TM-), which are
intended for sale directly to end users by Puma or its designees. Puma agrees
to provide Japanese localized versions of TranXit 1.0, TranXit 2.0 to NEC as
part of the deliverables.
Puma represents and warrants that the Licensed Software operates on each of
the platforms of (i.) [***] and (ii.) the [***], which communicates with
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A CONTINUED
both [***] series personal computers and [***] architecture machines.
Development, if requested by NEC, of customized versions of Puma's TranXit
Software for [***], [***] and other platforms will be subject to the terms
and conditions, including but not limited to licensing terms and conditions,
to be mutually agreed by both parties.
SOFTWARE DOCUMENTATION:
The Software Documentation defines the features and functionality of the
Licensed Software and will also include promotional material regarding software
upgrades or other Puma products or third party accessories determined at Puma's
sole discretion. The Software Documentation is the exclusive property of Puma.
NEC agrees to reprint, at its own expense, and include the following documents
with each Preloaded copy of the Licensed Software included with each System
Unit:
- - TranXit Quick Reference Guide ( estimate 14 pages )
- - TranXit Accessories Flyer ( estimate 4 pages )
Puma agrees to provide camera ready copy of each of the documents listed above
to NEC. Puma will design an "NEC-specific" "Quick Reference Guide" and TranXit
Accessories brochure and provide camera ready artwork to NEC. NEC expressly
understands that software upgrades and sales of other Puma products or third
party accessories to end users of System Units is an important part of Puma's
business and an integral part of the Per Unit Pricing structure granted by Puma
in this Agreement, and therefor agrees to include the above documents with each
copy of Licensed Software it ships.
SUPPORT AND TRAINING RESPONSIBILITIES:
NEC shall provide all Level I and Level II support at its own expense. For
purposes of this Agreement, Level I support shall mean all technical support and
assistance relating to the System Unit or Licensed Software given directly to
end users, distributors, OEMs, or customers of System Unit. Level II support
shall mean the service rendered by NEC relating to the System Unit or Licensed
Software given directly to end users, distributors, OEMs, or customers of System
Unit to analyze or reproduce error(s) in the Licensed Software and to determine
if said error(s) are reproducible. NEC will further provide training, at its
option and expense, for all personnel associated with the sales and support of
System Unit. Puma shall conduct the analyze of error(s) in the Licensed
Software which is a part of the Level II support specified herein unless NEC
receives the Source Code of the Licensed Software at that time in accordance
with the provisions herein.
Puma shall provide all Level III support for the Licensed Software only. For
purposes of this Agreement, Level III support shall mean all Puma technical
support and assistance relating to the Licensed Software given directly to
authorized personnel who are the direct employees of NEC and are trained in the
usage of Licensed Software. Level III support will be provided only during
Puma's normal business hours and in the English Language.
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B
ANNUAL USAGE FEE:
NEC agrees to pay Puma an Annual Usage Fee of $[***] for the rights and
licenses granted herein for the Licensed Software in [***] subject to the
terms of this Agreement. The Annual Usage Fee is guaranteed for the first
[***] years and as for the [***] year of this Agreement, NEC shall have the
options (i) to pay the amount set forth below or (ii) to pay Per Unit Royalty
subject to the terms and conditions of which shall be negotiated in good
faith and mutually agreed upon by both parties. Disagreement on the terms
and conditions of the Per Unit Royalty shall not be construed as affecting
the right and licenses granted to NEC hereunder, so long as NEC continues to
pay the Annual Usage Fee until such time as such Disagreement is resolved.
NEW PUMA PRODUCT: Both parties agree and understand that Puma intends to
deliver for commercial availability a [***] application designed to run under
the [***] operating system environment ("New Puma Product"). Both parties
agree to negotiate in good faith on the development schedule for New Puma
Product. The development work for New Puma Product shall be conducted
subject to the development schedule agreed upon by both parties in accordance
with the preceding sentence. Upon completion of such releases, if ever, Puma
agrees to provide NEC with beta code (executable code) for evaluation and
final code (executable code) for evaluation and acceptance by NEC in both
English and Japanese. Upon such delivery, if ever, of New Puma Products
pursuant to this provision, such New Puma Products shall be treated as
Licensed Software, except for the provisions as to the Annual Usage Fee
modified by this Exhibit B. Upon occurrence of both i.) delivery of final
version of New Puma Product by Puma and ii.) acceptance of New Puma Product
by NEC, NEC at its option, may elect exactly one of the following two options:
Option 1: Preload either Licensed Software or New Puma Product on System
Units (only one of these Puma products may be Preloaded on any one System
Unit) by continuing to pay the same Annual Usage Fee of $[***] per
quarter described in this Exhibit B.
Option 2: Preload both Licensed Software and New Puma Product on any
System Unit by paying an increased Annual Usage Fee of $[***] per
quarter in place of the previous Annual Usage Fee of $[***] per quarter
described in this Exhibit B. Such increased payment shall be due to Puma
for any quarter in which NEC Preloads New Puma Product on at least one
System Unit.
Payment of the Annual Usage Fee at either the $[***] per quarter rate or the
$[***] per quarter rate is guaranteed for the first [***] years and as for
the [***] year of this Agreement, NEC shall have the options (i) to continue
to pay either rate or (ii) to pay Per Unit Royalty(s) for Licensed Software
and/or New Puma Product subject to the terms and conditions of which shall be
negotiated in good faith and mutually agreed upon by both parties.
Disagreement on the terms and conditions of such Per Unit Royalty(s) shall
not be construed as affecting the right and
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B CONTINUED
licenses granted to NEC hereunder, so long as NEC continues to pay the Annual
Usage Fee until such time as such Disagreement is resolved.
AUTOMATIC ANNUAL ROYALTY NEGOTIATION AFTER [***] YEARS:
Both parties expressly agree that NEC may elect to either i.) Preload
Licensed Software by paying the Annual Usage Fee described herein or ii.) pay
royalties based on a Per Unit Royalty-basis at the conclusion of the [***]
year of this Agreement, by giving Puma written notice of such intent at least
sixty (60) days prior to the [***] year anniversary of this Agreement.
Upon receipt of such notice, both parties agree to make best efforts to
negotiate all applicable terms including but not limited to Per Unit Royalty
pricing, payment terms, and associated minimum purchase guarantees prior to
such anniversary. The parties agree to amend this Agreement to reflect the
new terms and conditions agreed upon by both parties. Such new terms will
become effective only when agreed to by both parties in writing. In the
event that the parties fail to reach agreement on such new terms, NEC may
continue to Preload the Licensed Software under the terms of this Agreement
and pay the Annual Usage Fee on a quarterly basis until the earliest
occurrence of i.) the parties agree to amend this Agreement under mutually
agreeable terms, ii.) expiration of the term of this Agreement, or iii.)
termination of this Agreement under Section 11 herein.
ANNUAL USAGE FEE PAYMENT TERMS:
Years 1-[***] $[***]
(Eight equal payments of $[***] due on (1) net 30 days from
the Effective Date, (2) [***], (3) [***], (4) [***], (5) [***],
(6) [***], (7) [***], (8) [***]
Year [***]
(optional) $[***]
(Four equal payments of $[***] due on [***], [***], if NEC
continues to pay Annual Usage Fee)
If any amount is not paid to Puma when due hereunder, NEC shall pay to Puma on
demand a late fee in an amount not to exceed [***] of such delinquent
payment for each month or part thereof from the due date until the date paid;
but NEC shall have such grace period as may be required by law and the late fee
shall not exceed the maximum allowed by law.
HARDWARE PROVIDED BY NEC:
NEC agrees to provide, on a loan basis, the necessary [***] computer
hardware for Puma engineering to successfully complete the [***] port of
TranXit 2.0 and to provide access to technically trained dedicated NEC
engineering personnel to communicate and support Puma engineering throughout
the project. Puma shall use such hardware in accordance with the terms and
conditions imposed by NEC or NEC's licensors, if any. Puma agrees to use
such hardware provided by NEC hereunder solely for the purpose of performing
Puma's obligations hereunder
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B CONTINUED
and not to rent, transfer or export them to any other parties in any manner.
Puma also agrees to return to NEC, at its sole expense, all such hardware
provided by NEC hereunder within a reasonable period after its completion of
Puma's obligations hereunder.
FEE FOR NEC'S ASSISTANCE FOR MARKETING OF TRANXIT POWERPRO UPGRADES:
In consideration for NEC's assistance set forth in Section 2.7 (a), NEC will
receive [***] percent ([***]%) of the actual software revenues received by
Puma for TranXit PowerPro Upgrades sold by Puma directly or through its
distribution channel to end users of System Units which NEC sold with
Licensed Software. The payment shall be made in United States dollars by
wire transfer to the bank account designated by NEC. Puma shall, within
thirty (30) days of the end of each calendar quarter, submit to NEC the
statement as to the amount of such revenue and the number of copies of
TranXit PowerPro Upgrades sold and shall, within sixty (60) days of the end
of such calendar quarter, pay the fee to NEC. NEC shall be entitled to, with
thirty (30) days prior notice to Puma, have inspected by an internationally
recognized independent certified public accountant of NEC's election and
approved by Puma, whose approval shall not be unreasonably withheld, Puma's
books and records relating to sales of TranXit PowerPro upgrades under terms
of confidentiality reasonably acceptable to Puma, to verify the statement
supplied by Puma to NEC. If the inspection establishes that NEC was
underpaid by more than five percent (5%), Puma shall bear the reasonable cost
paid by NEC to the accountant for such inspection in addition to making
payment of the amount of understated amounts. Audits shall not unreasonably
interfere with Puma's business activities and shall not be conducted more
than once in any twelve month period unless the actual amounts exceed the
reported amounts by more than 5% in which case the number of allowed audits
during this period will be increased to once every six (6) months. PUMA
agrees to keep the foregoing books and records for a period of three (3)
years following the date PUMA prepares them.
SOURCE CODE DISCLOSURE FEE:
NEC, at its option, shall have the right to purchase source code disclosure for
the Licensed Software, whose limited usage is subject to the terms and
conditions described in Section 7 herein, at any time during the term of this
Agreement at a fixed price of $[***].
MINIMUM VALUE OF AGREEMENT:
$[***]
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<PAGE>
AMENDMENT NO. 1
TO
SOFTWARE LICENSE AGREEMENT
BY AND BETWEEN
PUMA TECHNOLOGY, INC.
AND
NEC CORPORATION
This Amendment #1 to the Software License Agreement between NEC Corporation and
Puma Technology, Inc. executed on or around May 23, 1995 (the "Agreement") is
made as of November 23, 1995 ("Effective Date"). The parties hereby agree to
amend the Agreement as follows:
1. The second sentence of Section 2.1 of the Agreement shall be amended to read
as follows:
"In addition to Preloaded Licensed Software, NEC may i.) distribute one (1)
copy of Licensed Software with each System Unit as a back-up copy, ii.)
distribute one (1) copy of Licensed Software as a backup copy directly from
NEC or through its Subsidiaries as a mail order fulfillment item to each
end user of Licensed Software, or iii) distribute copies of TranXit 2.0 and
related Software Documentation, directly to customers or through its
Subsidiaries or its distribution network as an upgrade product for TranXit
1.0 and related Software Documentation (collectively "TranXit Upgrade
Product") pursuant to the section entitled "Special Distribution of TranXit
2.0 Upgrade Product" in Exhibit B"
2. New section entitled "Special Distribution of TranXit 2.0 Upgrade Product"
shall be added to Exhibit B. This new section will be incorporated immediately
following the existing section entitled "FEE FOR NEC'S ASSISTANCE FOR MARKETING
OF TRANXIT POWERPRO UPGRADES" and immediately preceding the existing section
entitled "SOURCE CODE DISCLOSURE FEE". This new section shall read as set forth
below:
"SPECIAL DISTRIBUTION OF TRANXIT 2.0 UPGRADE PRODUCT:
Commencing on November 23, 1995, in addition to rights granted in this
Agreement, Puma hereby grants NEC the right to distribute the TranXit 2.0
Upgrade Product from November 23, 1995 through the term of the Agreement.
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A. NEC will expressly state in writing on the packaging of the TranXit
2.0 Upgrade Product that the Upgrade Product is intended to be distributed
only to NEC end-users who upgrade from TranXit 1.0 to TranXit 2.0.
B. Within sixty (60) days after the end of each semi-annual period ending
March 31 and September 30. NEC shall remit to Puma a per unit royalty
equal to $[***] US for every copy for the TranXit 2.0 Upgrade Product that
is shipped during that semi-annual period. NEC shall also furnish Puma
semi-annual royalty reports concerning the number of shipped copies of the
TranXit 2.0 Upgrade Product and the calculation of royalties due and
payable within sixty (60) days after the each end of such semi-annual
period. It is confirmed that the provisions of Section 2.6 of this
Agreement shall apply to such royalties.
C. NEC shall not be held liable to Puma for end-user customers that
purchase the TranXit 2.0 Upgrade Product without having a license to
TranXit 1.0 so long as NEC provides the written statements described in
subsection A Above."
3. Except as expressly set forth herein, all the terms and conditions of the
Agreement shall remain unchanged.
IN WITNESS WHEREOF, the parties have caused this Amendment #1 to be executed by
their respective authorized representatives.
NEC Corporation Puma Technology, Inc.
7-1, Shiba 5 chome, Minato-ku 2940 North First Street
Tokyo, Japan San Jose, CA 95134
By: /s/ Yoichi Kataoka By: /s/ Bradley A. Rowe
-------------------------- ---------------------------
Name: Yoichi Kataoka Name: Bradley A. Rowe
------------------------ -------------------------
Title: General Manager, Title: President & CEO
Personal Software ------------------------
Division
-----------------------
Date: 2/19/96 Date: 2/9/96
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<PAGE>
Confidential Treatment Requested
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT
NEC INFORMATION PUMA TECHNOLOGY INFORMATION
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NEC Corporation Puma Technology, Inc.
7-1, Shiba 5 chome, 2940 North First Street
Minato-ku, Tokyo, Japan San Jose, CA 95134, USA
Tel 0423-33-1575 Fax 0423-33-1916 Tel (408) 321-7650 Fax (408) 433-2212
Contact Representative AISUKE SEKIKAWA Contract Representative: Bradley A. Rowe
This Agreement is entered into by and between Puma Technology, Inc. ("Puma") and
NEC Corporation ("NEC") as of the date executed by both parties ("Effective
Date"). Puma agrees to grant NEC certain licenses to the Licensed Software set
forth in EXHIBIT A of this Agreement, subject to the License Agreement Terms and
Conditions attached and the Exhibits set forth below.
EXHIBITS:
Exhibit A - Licensed Software; Software Documentation; Support and Training
Responsibilities
Exhibit B - Per Unit Royalty; Guaranteed Minimum Payment; Payment Terms; New
Puma Product; Hardware Provided by NEC; Source Code Disclosure Fee; Minimum
Value of Agreement
NEC ACKNOWLEDGES HAVING READ THE TERMS AND CONDITIONS SET FORTH ON THIS FACING
PAGE AND THE AGREEMENT ATTACHED HERETO, UNDERSTANDS ALL SUCH TERMS AND
CONDITIONS, AND AGREES TO BE BOUND THEREBY.
NEC CORPORATION PUMA TECHNOLOGY, INC.
By: A. Sekikawa By: B. A. Rowe
Name: AISUKE SEKIKAWA Name: Bradley A. Rowe
Title: General Manager of Printers Div. Title: President + CEO
Date: May 20, 1996 Date: May 20, 1996
<PAGE>
PUMA TECHNOLOGY, INC.
SOFTWARE LICENSE AGREEMENT TERMS AND CONDITIONS
1. DEFINITIONS
1.1 PRINTER UNIT. "Printer Unit" shall mean either i.) the computer
printer system product which is marketed and distributed under NEC's
trademark(s) or product name(s) in Japan, whether such printer has infrared
capability or not and is which type shall be determined by NEC, or ii.) the
product called infrared transceiver / receiver unit which is marketed and
distributed under NEC's trademark(s) or product name(s) in Japan and which is
intended to be connected to a computer printer system product to enable infrared
connectivity.
1.2 SOFTWARE DOCUMENTATION. "Software Documentation" shall mean the
information, in written or electronic form, regarding the executable code
version of the Licensed Software supplied by Puma and reprinted by NEC as
specified in Exhibit A.
1.3 LICENSED SOFTWARE. "Licensed Software" shall mean the Puma software
in executable code form, specified on Exhibit A.
1.4 SUBSIDIARY. "Subsidiary" shall mean any corporation, company or
entity in which fifty percent (50%) or more of the outstanding shares of stock
entitled to vote for the election of directors are owned or controlled, directly
or indirectly, by a party.
1.5 PRELOAD OR PRELOADING. "Preload" or "Preloading" refers to the act
of reproducing and installing a single copy of Licensed Software onto Printer
Unit or reproducing Licensed Software onto any media selected by NEC, so long as
such media is bundled with a Printer Unit. Preload also includes the
reproduction and inclusion of Software Documentation with the Printer Unit.
1.6 UNIT. "Unit" shall mean a single copy of the Licensed Software.
1.7 PER UNIT ROYALTY. "Per Unit Royalty" shall mean the royalty price
paid by NEC to Puma for each Unit Distributed by NEC subject to the terms of
this Agreement. No royalties shall accrue for Units which are i.) made for
replacement of existing Units which are defective in materials, manufacture or
reproduction, ii.) returned with Printer Unit by NEC's authorized dealer's and
distributors for credit, iii.) made as archival backups for an existing Unit,
iv.) provided as back-up copies to end users by NEC under Section 2.1, or v.)
provided as a bug fix to end users.
1.8 MANUFACTURING THIRD PARTY. "Manufacturing Third Party" shall mean a
third party designated by NEC to manufacture Printer Units for marketing and
distribution by NEC, under NEC's trademark and to copy and reproduce Licensed
software and/or Software Documentation for NEC.
2. LICENSE AND LICENSE FEES
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2.1 OBJECT LICENSE. As of the Effective Date Puma grants to NEC and
its Subsidiaries a non-exclusive, non transferable (except as noted in this
Section 2.1) license to Preload, have Preloaded, copy, have copied, use, have
used, reproduce, and have reproduced the Licensed Software (executable code form
only) and Software Documentation and to distribute, lease, and/or rent the
Licensed Software and Software Documentation directly to customers in Japan, or
through its Subsidiaries or its distribution network in Japan only when Licensed
Software is Preloaded and under the terms of this Agreement. In addition to
Preloaded Licensed Software, NEC may i.) distribute one (1) copy of Licensed
Software with each Printer Unit as a back-up copy or ii.) distribute one (1)
copy of Licensed Software as a backup copy directly from NEC or through its
Subsidiaries as a mail order fulfillment item to end users of Licensed Software.
NEC shall require all Manufacturing Third Parties directly to (i.) abide by all
applicable NEC obligations set forth in this Agreement and (ii.) produce copies
of the Licensed Software and Software Documentation in accordance with the terms
and conditions set forth herein.
2.2 NO SUBLICENSE. NEC shall not have a right to grant any license or
sublicense to any third party (except NEC's Subsidiaries as defined in Section
1.4 and Manufacturing Third Parties as defined in Section 1.8 subject to the
specific limitations set forth in Section 2.1) to use the Licensed Software for
any purpose, except a sublicense to use the copy produced and distributed by NEC
as set forth in Section 2.1.
2.3 MODIFICATIONS. NEC shall have no right to modify all or any part of
the Licensed Software unless NEC pays the Source Code Disclosure Fee described
in Section 7.1. NEC agrees not to take any actions, such as reverse assembly or
reverse compilation, to derive a source code equivalent to the Licensed Software
from the executable code of the Licensed Software.
2.4 SOFTWARE DOCUMENTATION. No license is granted to reproduce the
Software Documentation except when it is included with a copy of the Licensed
Software. NEC may modify the Software Documentation at its own expense and
effort, so long as the content remains consistent with such Documentation as
delivered to NEC by Puma. Any such modified documentation shall be submitted to
Puma for approval, whose approval shall not be unreasonably withheld.
2.5 LICENSE FEES. NEC agrees to pay Puma the Per Unit Royalty shown in
Exhibit B for the rights granted under this Agreement. NEC agrees to pay PUMA
the fees shown in Exhibit B for the rights granted by this Agreement. NEC
will make [***] payments on [***] of each year during the term of the
Agreement for all Units Distributed during the periods (i) [***] through [***]
and (ii) [***] through [***], respectively. NEC shall account to PUMA for
the Per Unit Royalties due as set forth in Exhibit B based upon distribution
totals for royalty-bearing Units for that [***] period. NEC shall provide
PUMA with a written report that reflects the number of royalty-bearing Units
Distributed upon which the total Per Unit Royalties due was calculated. For
purposes of this Agreement, distribution occurs when Units are shipped by or
for NEC or its Subsidiaries for its or their internal use as an end user or
sales to third parties ("Distribution").
2.6 PAYMENTS. All payments made hereunder are non-refundable except as
otherwise set forth in this Agreement. All payments shall be in U.S. Dollars
and be made by wire transfer directly to Puma's bank account as follows:
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Silicon Valley Bank
3000 Lakeside Drive
Santa Clara, CA 95054
ABA # 121140399 for benefit of Puma Technology, Inc.
Account # 035175-3570
The amounts indicated on Exhibit B for payments do not include any federal,
state, local or other governmental taxes, excise taxes, tariffs or other
governmental charges that may be imposed on sale, transportation, production,
storage or export of the Licensed Software. NEC shall pay any and all such
taxes and charges (other than taxes imposed upon or measured by Puma's net
income) and Puma, its agents and distributors shall have no liability therefor.
If taxes are required to be withheld by the Japanese government on payments
required under this Agreement, then NEC may deduct such withholding taxes from
the amount owed Puma as will enable Puma to receive a U.S. Foreign Tax Credit;
provided, NEC pays such amounts to the appropriate tax authority. NEC shall
obtain and deliver to Puma a necessary tax receipt and all other documents
necessary for Puma to claim a Foreign Tax Credit.
3. DELIVERY.
3.1 DELIVERY OF LICENSED SOFTWARE. Within five (5) days after
completion of the engineering work required to release the Licensed Software,
Puma shall deliver the Licensed Software, contained upon a master diskette(s)
and the Software Documentation in both written and electronic form to NEC.
3.2 ACCEPTANCE. The Licensed Software and/or Software Documentation
will be deemed accepted by NEC if Puma is not notified of any errors in writing
within thirty (30) business days after receipt of the Licensed Software and/or
Software Documentation by NEC. NEC shall not unreasonably withhold its
acceptance. In the event NEC notifies Puma of such errors, NEC shall describe
the exact nature of such errors and shall return the Licensed Software and/or
Software Documentation to Puma in the manner agreed upon by both parties. Upon
notification of such errors, NEC agrees, at its sole expense to provide Puma, on
a loan basis, with one (1) or, if necessary, two (2) complete hardware platforms
on which the errors occurred so that Puma may reproduce such errors if such
platforms are not already in Puma's possession, having been provided by NEC.
Puma shall use such platform(s) in accordance with the terms and conditions
imposed by NEC or NEC's licensors, if any. Puma agrees to use such platforms
provided by NEC hereunder solely for the purpose of performing Puma's
obligations hereunder and not to rent, transfer or export them to any other
parties in any manner. Puma also agrees to return to NEC, at its sole expense,
all such platforms provided by NEC hereunder within a reasonable period after
its completion of Puma's obligations hereunder. In the event that Puma is able
to reproduce such errors, Puma shall, at its option, repair or replace the
Licensed Software and/or Software Documentation and return the repaired Licensed
Software and/or Software Documentation or provide the replaced Licensed Software
and/or Software Documentation, as soon as commercially practicable, but no later
than thirty (30) days after the return of the Licensed Software and/or Software
Documentation to Puma. Acceptance of the repaired or replaced Licensed Software
and/or Software Documentation will be subject to the same procedures. If Puma
is unable to repair the Licensed Software and/or Software Documentation after
the second acceptance procedure described above, then NEC, at its sole option
and as its sole remedy, shall have the right to either i.) add a third
acceptance procedure which will be subject to the same procedures as the second
acceptance procedure or ii.) terminate this Agreement by notifying Puma in
writing and in such case shall have the right to receive a refund
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of any prepaid royalties, if any, made to Puma. If NEC has not accepted the
Licensed Software and/or Software Documentation after such third acceptance
procedure, if any, then NEC, at its sole option and as its sole remedy, shall
have the right to terminate this Agreement by notifying Puma in writing and
in such case shall have the right to [***]. Commercial shipment of a single
copy of the Licensed Software and/or Software Documentation by NEC or its
Subsidiaries constitutes automatic acceptance of the Licensed Software and/or
Software Documentation by NEC.
4. AUDIT
4.1 AUDIT. Puma shall be entitled to, with thirty (30) days prior
notice to NEC, have inspected by an internationally recognized independent
certified public accountant of Puma's election and approved by NEC, whose
approval shall not be unreasonably withheld, NEC's books and records relating to
the number of royalty-bearing Units Distributed under the terms of this
Agreement and under terms of confidentiality reasonably acceptable to both
parties. Puma shall pay the cost of audits unless there is a discrepancy in the
royalty reports furnished to Puma by NEC and actual number of royalty-bearing
Units Distributed by more than five percent (5%), in which event NEC shall
reimburse Puma for the cost of such audits reasonably incurred by Puma in
addition to immediately paying for any additional Per Unit Royalties due. Audits
shall not unreasonably interfere with NEC's business activities. Audits shall
not be conducted more than once in any twelve month period unless there is a
discrepancy in the royalty reports furnished to Puma by NEC and actual number of
royalty-bearing Units Distributed by five percent (5%) in which case the number
of allowed audits during this period will be increased to once every six (6)
months. NEC agrees to keep the foregoing books and records for a period of
three (3) years following the date NEC prepares them.
5. PROPRIETARY OWNERSHIP RIGHTS.
5.1 OWNERSHIP. Puma shall retain all ownership, right, title and
interest in and to all current and hereafter existing revisions of or
modifications to the Licensed Software (including all copies made hereunder).
5.2 COPYRIGHT NOTICES. All copies of the Licensed Software and
reproductions of the Software Documentation made by NEC shall reproduce Puma's
copyright notice and the copyright notices of any third parties from which Puma
has licensed products which are contained therein, and NEC shall not remove any
copyright notices contained in the Licensed Software or Software Documentation.
No other copyright notice shall appear in, or be associated with, the Licensed
Software or Software Documentation without the prior written permission of Puma.
If NEC elects to Preload the Licensed Software on a floppy diskette(s), NEC
shall affix to each diskette or other item containing the Licensed Software
Puma's authorized diskette label, reprinted by NEC, attached in the appropriate
location on the diskette at NEC's expense and effort. Upon NEC's request, Puma
agrees to promptly provide the camera-ready art and/or electronic copy at no
charge to NEC for NEC's creation of such diskette label.
5.3 TRADEMARKS. NEC may use the TranXit and Puma logos in its
reasonable marketing efforts for Printer Unit, so long as such logos are
published in accordance with NEC's quality standards used for publishing its own
marks. Except as specified or required by this Agreement and its Exhibits,
neither party may use the other's name, logo or trademarks without the other
party's prior written consent except as permitted by this Agreement.
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6. WARRANTY
6.1 LIMITED WARRANTY. Puma warrants that the media upon which the
Licensed Software is placed by Puma will be free from defects in workmanship and
materials, and that the Licensed Software will meet the stated specifications in
the Software Documentation. Puma does not warrant or claim that the software
will run error free. If NEC finds any errors or failure of the Licensed
Software to meet such specifications and provides Puma with a written report
thereof, as NEC's sole remedy, Puma will use reasonable commercial efforts to
correct such errors. Puma's warranty obligation with respect to the Licensed
Software shall extend for a period of one hundred twenty (120) days from the
date the Licensed Software is delivered to NEC and is solely for the benefit of
NEC. NEC has no authority to extend this warranty to any other person. This
warranty shall not apply to any Licensed Software which has been (i) repaired or
altered other than by Puma, (ii) subject to misuse, mishandling, neglect or
accident, or (iii) not maintained in accordance with handling or operating
instructions supplied by Puma.
6.2 WARRANTY EXCLUSION. EXCEPT AS PROVIDED IN SECTION 6.1, PUMA MAKES NO
WARRANTY OF ANY KIND WITH REGARD TO THE LICENSED SOFTWARE. PUMA EXPRESSLY
DISCLAIMS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER
ARISING IN LAW, CUSTOM, CONDUCT OR OTHERWISE.
7. SOURCE CODE.
7.1 SOURCE CODE DISCLOSURE. Upon request of NEC during the term of this
Agreement, Puma grants to NEC and its Subsidiaries the right to obtain the
disclosure of all portions of the human readable source code contained in the
Licensed Software ("Source Code") for which Puma either i.) owns or ii.) has
sufficient license to provide such disclosure by payment of the Source Code
Disclosure Fee, as set forth in Exhibit B. Upon payment of the Source Code
Disclosure Fee, NEC and its Subsidiaries have the right to use, copy, interpret,
and modify such Source Code only for the purposes of routine end-user customer
support, routine bug fixing and routine maintenance only. Disclosure of the
Source Code by Puma shall not be interpreted as granting NEC or any of its
Subsidiaries any right to, or ownership of, the Licensed Software or any portion
thereof other than the rights and licenses set forth herein.
7.2 DELIVERY OF SOURCE CODE. Within seven (7) days after receipt of
payment of the Source Code Disclosure Fee by Puma, Puma shall deliver the
Source Code, contained upon a master diskette(s), and related documents
thereof, to NEC. It is expressly understood and agreed by both parties that
the Source Code delivered hereunder shall be treated as the Confidential
Information (hereinafter defined) of Puma During the term of this Agreement,
upon NEC's request, Puma shall provide the Source Code of the then current
version of the Licensed Software, for maintenance purposes only, [***]. Such
Source Code of the then current version shall be treated as the Source Code
originally supplied to NEC hereunder and NEC and its Subsidiaries shall have
the same rights and licenses herein. Puma shall, during the term of this
Agreement, provide the Source Code of the bug-fix version of the Licensed
Software made by Puma. Such bug-fix version of the Licensed Software will be
treated as Licensed Software and NEC and its Subsidiaries shall have the same
rights and licenses set forth herein.
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7.3 PROTECTION OF SOURCE CODE. If NEC has obtained rights for
disclosure of Source Code, it will keep all physical copies or forms of the
Source Code, documentation or other information contained in the Source Code in
a secure, locked facility. NEC or any of its Subsidiaries shall not sell,
assign, license, reproduce, distribute, sublicense or otherwise transfer the
Source Code. NEC or any of its Subsidiaries shall not, directly or indirectly,
use or copy the Source Code to obtain, derive or create the structure, methods
or techniques contained in the Licensed Software to create a product which
performs the functions of the Licensed Software or which otherwise competes with
the Licensed Software except as permitted by the terms and conditions of this
Agreement.
7.4 MODIFICATIONS BY NEC OR ANY OF ITS SUBSIDIARIES.
(a) If NEC or any of its Subsidiaries modify the Source Code or
creates new sources which are in some manner linked to or contained within the
original Source Code, in accordance with this Section 7, the ownership right as
to only the new portions actually created by NEC or its Subsidiaries shall vest
in Puma, provided that NEC and its Subsidiaries shall have the same rights and
licenses set forth herein.
(b) Puma shall not be required to maintain or otherwise repair any
Licensed Software that NEC or its Subsidiaries has (i.) modified or changed,
(ii.) caused to be modified or changed, unless the error or defect found can be
consistently reproduced in the Licensed Software that was not so changed or
modified by NEC or its Subsidiaries.
(c) (i.) NEC shall provide Puma with modifications made by NEC or
its Subsidiaries to the Licensed Software promptly upon the creation or
modification thereof, but in no case later than thirty (30) days following such
creation or modification.
(ii.) ALL OF THE DELIVERABLES FURNISHED TO PUMA HEREUNDER ("NEC-
FURNISHED DELIVERABLES") WILL BE PROVIDED "AS IS" AND NEC DOES NOT MAKE ANY
WARRANTIES, GUARANTEES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, EXPRESS,
IMPLIED, OR ARISING BY COURSE OF PERFORMANCE, CUSTOM OR USAGE IN THE TRADE, WITH
RESPECT THERETO, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY REGARDING EFFICACY
OR PERFORMANCE AND ANY IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE AND NON-INFRINGEMENT. NEC DOES NOT WARRANT THAT THE NEC-
FURNISHED DELIVERABLES WILL MEET PUMA'S REQUIREMENTS OR THOSE OF ANY THIRD PARTY
OR THAT THE NEC-FURNISHED DELIVERABLES WILL PERFORM UNINTERRUPTED OR ERROR-FREE.
(iii.) NEC or its Subsidiaries shall not, directly or
indirectly, use (or permit or direct anyone else to use) the Source Code and
related documentation, or any information contained or derived from any of them,
for the purpose of designing, developing, creating, modifying or upgrading any
software product of any type or description (other than a modification or
upgrade to executable code version of the Licensed Software).
8. LIMITATION OF LIABILITY.
8.1 LIMITATION. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS
OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES ARISING
UNDER THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS
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BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY DAMAGES
ATTRIBUTABLE TO EITHER PARTY (EXCEPT FOR PUMA'S INDEMNIFICATION OBLIGATIONS
UNDER SECTION 9.2 BELOW) EXCEED THE AMOUNT OF PAYMENTS MADE TO PUMA UNDER THIS
AGREEMENT.
8.2 FORCE MAJEURE. Nonperformance of either party shall be excused to
the extent that performance is rendered impossible by fire, flood, governmental
acts or orders or restrictions, failure of suppliers, or any other reason where
failure to perform is beyond the control and not caused by the negligence of the
non-performing party.
9. PROPRIETARY RIGHTS INDEMNIFICATION.
9.1 REPRESENTATIONS. Puma represents that it has the right to grant the
license hereunder and that it has no knowledge of any facts which might lead to
a claim of infringement of any United States or Japanese patent, copyright,
trade secret, or other intellectual property right of any third party as a
result of the license to the Licensed Software granted by this Agreement.
9.2 INDEMNIFICATION. If any third-party notice, claim, action, suit, or
proceeding ("Claim") is brought against NEC or its Subsidiaries on the grounds
that the Licensed Software infringes any of United States or Japanese patents,
copyrights, trade secrets, or other intellectual property rights of any third
party Puma shall, subject to the terms and conditions of this section, defend or
settle such Claim or satisfy any final judgments rendered against NEC and its
Subsidiaries and indemnify and hold NEC and its Subsidiaries harmless from all
loss, cost, expense (including but not limited to reasonable attorney's fees),
damage or liability arising out of or in connection with such Claim.
9.3 INDEMNIFICATION PROCEDURES.
(a) In the event that NEC and/or its Subsidiaries hereunder shall
receive any Claim or be subject to any Claim as to which indemnification may be
sought hereunder, NEC shall promptly notify Puma in writing of such Claim, and
Puma shall assume all liability for the Licensed Software, the defense,
negotiation or settlement of such Claim. Puma, at its expense, shall defend or
settle such suit and satisfy any final judgments rendered against NEC and/or its
Subsidiaries, and NEC shall provide all reasonable assistance requested by Puma
and deemed necessary and appropriate by NEC, at Puma's expense.
(b) If it shall be finally adjudicated that Licensed Software, or
any part thereof, infringes any patents, copyrights, trade secrets, or other
intellectual property rights of any third party, and NEC and/or its Subsidiaries
is enjoined from using Licensed Software, or if Puma in its reasonable judgment
believes the Licensed Software may be found to infringe a third party's patent,
copyright, trade secret, or other intellectual property rights, then, in
addition to the obligation set forth in paragraph (a) above, Puma shall, at its
expense; (i) procure for NEC and/or its Subsidiaries the right to continue using
the Licensed Software free of any liability of infringement and/or any payment
to such third parties; or (ii) replace such Licensed Software or part thereof,
with a non-infringing substitute acceptable to NEC; or (iii) (only in case item
(i) or (ii) is not reasonably available) subject to the limitations set forth in
Section 9.4 and [***].
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(c) Notwithstanding the foregoing, Puma shall not have any obligation
under this Section 9 with respect to any Claims for infringement which arise, in
whole or in part, from the modification and/or combination of the Licensed
Software or part thereof, unless made by Puma.
9.4 LIMITATION. THIS SECTION 9 STATES THE ENTIRE AND EXCLUSIVE
LIABILITY OF PUMA AND SOLE REMEDY OF NEC FOR THE LICENSED SOFTWARE'S
INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET, OR OTHER INTELLECTUAL
PROPERTY RIGHT OF ANY THIRD PARTY AND IS IN LIEU OF ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY IN REGARD THERETO.
10. CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION. "Confidential Information" means all
information owned or controlled by a party hereto (including, but not limited
to, all drawings, blueprints, descriptions, specifications, software and data)
disclosed in any form, whether written or oral, or on computer readable media
which if disclosed in documents or other tangible materials is clearly marked
"Confidential" or "Proprietary", or if disclosed orally or in any other
intangible form, is identified at the time of disclosure as confidential and is
reduced to a written summary marked "Confidential" or "Proprietary" and
delivered within thirty (30) days of disclosure. For purposes of this
Agreement, the Source Code shall be deemed Confidential Information of Puma and
the NEC-Furnished Deliverables shall be deemed Confidential Information of NEC.
In addition the parties hereby acknowledge and agree that the terms of this
Agreement, including the Exhibits attached hereto, contain valuable trade
secrets which value would be damaged if disclosed to competitors. The terms and
conditions of this Agreement are therefore deemed Confidential Information.
Nothing herein shall be construed as preventing NEC or its Subsidiaries from
stating to their customers that NEC and its Subsidiaries have certain rights and
licenses as to Licensed Software.
10.2 GENERAL. Each party shall treat as confidential all Confidential
Information of the other party, shall not use such Confidential Information
except as expressly set forth herein or otherwise authorized in writing, shall
implement reasonable procedures to prohibit the disclosure, unauthorized
duplication, misuse or removal of the other party's Confidential Information and
shall not disclose such Confidential Information to any third party except as
may be necessary and required in connection with the rights and obligations of
such party under this Agreement. Without limiting the foregoing, each of the
parties shall use at least the same procedures and degree of care which it uses
to prevent the disclosure of its own confidential information of like importance
to prevent the disclosure of the other party's Confidential Information, but in
no event less than reasonable care. It is expressly understood and agreed by
the parties that NEC and its Subsidiaries may furnish the Licensed Software,
Software Documentation and any copies thereof to their customers without
imposing confidentiality obligations on such customers.
10.3 EXCEPTIONS. Notwithstanding the above, neither party shall have any
obligation to the other with regard to any information which:
(a) was generally known and available in the public domain at the
time it was disclosed or becomes generally known and available in the public
domain through no fault of the receiver;
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<PAGE>
(b) was known to the receiver at the time of disclosure as shown by
the files of the receiver in existence at the time of disclosure;
(c) is disclosed with the prior written approval of the disclosing
party;
(d) is at anytime independently developed by the receiver without any
use of the disclosing party's Confidential Information and by employees or other
agents of the receiver who have not been exposed to the Confidential
Information., provided that the receiver can demonstrate such independent
development.
(e) becomes known to the receiver from a source other than the
disclosing party without breach of this Agreement by the receiver and otherwise
not in violation of the disclosing party's rights.
10.4 DISCLOSURES. Neither party shall be liable for disclosure of
Confidential Information of the other if such Confidential Information is
disclosed pursuant to the order or requirement of a court, administrative
agency, or other governmental body; provided that the receiver shall provide
prompt, advanced notice thereof to enable the disclosing party to seek a
protective order or otherwise protect such Confidential Information.
Notwithstanding the foregoing, NEC may disclose the terms of this Agreement to
the Bank of Japan and the Japanese Government and Puma may disclose the terms of
the Agreement to either (a) prospective major investors who are not competitors
of NEC, (b) investment bankers who wish to register Puma's securities for a
public offering or (c) any third party reasonably associated with the activities
of (a) or (b) provided that those parties specified in (a), (b) and (c) each
shall sign a Puma confidentiality agreement.
10.5 REMEDIES. If either party breaches any of its obligations with respect
to confidential and unauthorized use of Confidential Information hereunder, the
other party shall be entitled to seek equitable relief to protect its interest
therein, including but not limited to injunctive relief, as well as money
damages.
11. TERM; TERMINATION
11.1 TERM. (1) This Agreement shall commence on the Effective Date and
continue for three (3) years after such date, unless earlier terminated under
this Section 11. This Agreement will automatically renew for additional one (1)
year term unless either party indicates the other party any intention to
terminate this Agreement by sixty (60) days prior written notice to the other
party.
11.2 TERMINATION FOR CAUSE. If either party defaults in the
performance of any material provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party that if the default is not
cured within thirty (30) days, then the non-defaulting party may terminate this
Agreement by giving written notice to the defaulting party. Any breach of the
provisions in Sections 2.1, 2.2, 2.3, or 5.2 by NEC will be considered breaches
which cannot be cured and may be the basis for the immediate termination by Puma
of this Agreement.
11.3 BANKRUPTCY. If either party files a petition in bankruptcy or is
adjudicated a bankrupt, or if a petition in bankruptcy is filed against either
party and such petition is not discharged within sixty (60) days of such filing,
or if either party becomes insolvent, or makes an
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<PAGE>
assignment for the benefit or creditors or an arrangement pursuant to any
bankruptcy law, or if either party discontinues its business or if a receiver is
appointed for it or its business, then the other party may terminate this
Agreement by giving written notice to the other party.
11.4 SURVIVAL The obligations under Sections 4, 5, 6, 7, 8, 9, 10, 11.5,
11.6, 12.2, 12.4, 12.5, and 12.9 shall survive any termination of this
Agreement.
11.5 TERMINATION EFFECT Within thirty (30) days after the termination of
this Agreement, upon written request, each party shall return to the other party
any item embodying any Confidential Information of the other party which may be
entrusted to or created by such party. NEC shall return to Puma the master copy
of the Licensed Software, Source Code, if any, the Software Documentation, and
any other materials delivered to NEC by Puma. NEC shall have the right to
retain one (1) copy of the executable code version of the Licensed Software and
Software documentation each, at NEC's premises only, for purposes of end user
technical support only for a period of one (1) year following such termination.
Termination of this Agreement for any reason shall not affect the rights of any
end user to use the Licensed Software under any sublicense granted in accordance
with this Agreement. Unless this Agreement was terminated by Puma for cause
under Section 11.2, NEC and its Subsidiaries shall retain the right to sell or
otherwise transfer inventory of Licensed Software and Software Documentation
existing as of the effective date of termination by continuing to pay royalties
based on the Per Unit Royalty for up to one hundred eighty (180) days from the
termination of this Agreement. NEC shall have the right to fulfill its then
existing maintenance and warranty obligations for Licensed Software and Software
Documentation already sold or otherwise transferred by NEC and its Subsidiaries.
For the purpose of this Section, NEC and its Subsidiaries each may retain one
(1) set of Licensed Software and Software Documentation for customer support
purposes. No termination of this Agreement shall affect any sublicenses for the
Licensed Software in object code format and Software Documentation that will
have been or will be granted by NEC and its Subsidiaries pursuant to and under
this Agreement to third parties.
11.6 ADDITIONAL REMEDIES. Except as expressly limited by this
Agreement, termination of this Agreement shall be without prejudice to any other
remedy which may be available to a party due to default of this Agreement.
Violation of obligations under this Agreement may cause irreparable harm and
damage which may not be recovered at law, and remedies for breach of this
Agreement may be awarded in equity through injunctive relief.
12. MISCELLANEOUS
12.1 RELATIONSHIP. The relationship between parties shall be that of
independent contractors. Nothing contained herein shall be construed to imply a
joint venture, principal or agent relationship, or other joint relationship, and
neither party shall have the rights, power of authority to create any
obligation, express or implied, on behalf of the other.
12.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the substantive laws of the State of California, United States of
America, exclusive of its conflicts of laws rules, as applied to agreements
entered into in California between California residents.
12.3 ARBITRATION. Any dispute or claim arising out of or in relation to
this Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding arbitration in Santa
Clara County, California., under the Rules of
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<PAGE>
Arbitration of the International Chamber of Commerce by three (3) arbitrators
appointed in accordance with such rules. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
parties may apply to any court of competent jurisdiction for a temporary
restraining order, preliminary injunction, or other interim or conservatory
relief, as necessary, without breach of this arbitration agreement and without
any abridgment of the powers of the arbitrators.
12.4 ATTORNEY'S FEES. In the event of any litigation or
arbitration by the parties under this Agreement, the prevailing party shall be
entitled to costs and reasonable attorney's fees.
12.5 ASSIGNMENT. Neither party shall assign or otherwise transfer
any of its rights, obligations or licenses hereunder without the prior written
consent of the other party. Subject to the foregoing, the provisions of this
Agreement shall apply to and bind the successors and permitted assigns of the
parties.
12.6 WAIVER. Failure by any party to enforce any of its rights
under this Agreement shall not be deemed a waiver of any right which that party
has under this Agreement.
12.7 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and delivered personally, by air
mail or by facsimile (with facsimiles to be promptly confirmed in writing). All
such written communications delivered by air mail shall be mailed, postage
prepaid, either by certified or registered, first-class mail to the parties at
their respective addresses as set forth below, subject to the right of either
party to change its address by delivering written notice to the other. Such
notices shall be deemed to be effective upon two (2) business days following the
date of mailing or upon receipt if by facsimile or personal delivery.
to Puma: Puma Technology, Inc.
2940 North First Street
San Jose, CA 95134 USA
fax number: 408-433-2212
Attention: Bradley A. Rowe--President and CEO
to NEC: NEC Corporation
10, Nissincho 1-chome
Fuchu City, Tokyo 183 JAPAN
Attention: General Manager
Printers Division
fax number: ###-##-####
12.8 SEVERABILITY. Should any provisions of this Agreement contravene
any law or valid regulation of any government having jurisdiction over the
parties, then such provision shall be automatically terminated and performance
thereof by the parties waived, and all other provisions of this Agreement shall
continue in full force and effect.
12.9 EXPORT COMPLIANCE. At all times during the performance of their
obligations hereunder, the parties shall in all respects comply with any and all
applicable laws, regulations and orders of governmental authorities and the
agencies of the United States, Japan and any other country having competent
jurisdiction. NEC assures Puma that it does not intend to and will not,
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12
<PAGE>
directly or indirectly, knowingly export or transmit the Software licensed from
Puma hereunder to People's Republic of China, Iraq, Afghanistan or any group Q,
S, W, Y or Z country specified in Supplement No. 1 to Section 770 of Export
Administration Regulation issued by the U. S. Department of Commerce, without
the prior written consent, if required, of the Office of Export Administration
of the U. S. Department of Commerce, Washington, D. C. 20230. The provisions of
this paragraph shall survive any termination of this Agreement and shall
continue indefinitely.
12.10 NEC'S EXPENSES. Costs and expenses incurred by NEC relating
to its marketing, distribution, promotion and advertising of the Printer Unit or
the object code or executable code versions of the Licensed Software, or any
other costs not agreed upon specifically in writing, shall be the express
responsibility of NEC.
12.11 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
facing page and all Exhibits) reflects the entire agreement of the parties
regarding the subject matter hereof, and supersedes all prior agreements between
the parties, whether written or oral. This Agreement shall not be amended,
altered or changed, except by written agreement signed by both parties. This
agreement is executed in the English language.
A.S. BR
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<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A
LICENSED SOFTWARE:
The Japanese version TranXit 2.XX file transfer software for [***]
architecture/[***] architecture ("TranXit"), including all modifications and
updates thereof, designated by Puma as a positive increase in either the
tenths digit or hundredths digit after the decimal point and any such
revisions which include [***] support which are licensed by NEC Corporation
under this Agreement and/or the license agreement executed on or around May
16, 1995 between NEC Corporation and Puma Technology, Inc. Puma will provide
NEC with reasonable advance written notice of such modifications and updates
promptly after release thereof. NEC may begin Preloading any such new
releases upon golden master delivery by Puma or may elect to continue
Preloading an existing version at its option. In the event that NEC elects
not to begin Preloading such new release provided by Puma, NEC expressly
disclaims any warranty claims or any and all other remedies provided by this
Agreement regarding those defects, infringements, or other similar problems
which may relate to such previous version, having been corrected by Puma in
such updated version provided that the nature of such defects, infringements,
or other similar problems is described in the written notice referred to in
the second sentence above. TranXit is provided to NEC in executable code
form, as defined by the Software Documentation generated by Puma and the
following feature set:
TRANXIT 2.XX
- ------------
- - [***]
TranXit 2.0 is distinguished from retail versions of TranXit (i.e. TranXit Pro-
TM- or TranXit Pro Connectivity Kit-TM-, for example), which are intended for
sale directly to end users by Puma or its designees. Puma agrees to provide all
Japanese localized versions of TranXit 2.XX to NEC as part of the deliverables.
Puma represents and warrants that the Licensed Software operates on each of
the platforms of (i.) [***] and (ii.) the [***], which communicates with both
[***] personal computers and [***] architecture machines. Development, if
requested by NEC, of customized versions of Puma's TranXit Software for [***]
A.S. BR
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14
[***] Confidential Treatment Requested
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT A CONTINUED
[***] and other platforms will be subject to the terms and conditions,
including but not limited to licensing terms and conditions, to be mutually
agreed by both parties.
SOFTWARE DOCUMENTATION:
The Software Documentation defines the features and functionality of the
Licensed Software and will also include promotional material regarding software
upgrades or other Puma products or third party accessories determined at Puma's
sole discretion. The Software Documentation is the exclusive property of Puma.
NEC agrees to reprint the TranXit Quick Reference Guide, at its own expense and
effort, and include the TranXit Quick Reference Guide with each Preloaded copy
of the Licensed Software included with each Printer Unit:
- - TranXit Quick Reference Guide ( estimate 14 pages )
Puma will design an "NEC-specific" Quick Reference Guide and provide camera
ready artwork to NEC.
SUPPORT AND TRAINING RESPONSIBILITIES:
NEC shall provide all Level I and Level II support at its own expense. For
purposes of this Agreement, Level I support shall mean all technical support and
assistance relating to the Printer Unit or Licensed Software given directly to
end users, distributors, OEMs, or customers of Printer Unit. Level II support
shall mean the service rendered by NEC relating to the Printer Unit or Licensed
Software given directly to end users, distributors, OEMs, or customers of
Printer Unit to analyze or reproduce error(s) in the Licensed Software and to
determine if said error(s) are reproducible. NEC will further provide training,
at its option and expense, for all personnel associated with the sales and
support of Printer Unit. Puma shall conduct the analyze of error(s) in the
Licensed Software which is a part of the Level II support specified herein
unless NEC receives the Source Code of the Licensed Software at that time in
accordance with the provisions herein.
Puma shall provide all Level III support for the Licensed Software only. For
purposes of this Agreement, Level III support shall mean all Puma technical
support and assistance relating to the Licensed Software given directly to
authorized personnel who are the direct employees of NEC and are trained in the
usage of Licensed Software. Level III support will be provided only during
Puma's normal business hours and in the English Language.
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<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B
PER UNIT ROYALTY:
NEC agrees to pay PUMA a $[***] Per Unit Royalty for each Unit shipment of the
Licensed Software. Upon the earlier occurrence of either (i) NEC has
Distributed and reported to Puma a total number of royalty-bearing Units in a
cumulative amount equal to or greater than [***] prior to [***] years from
the Effective Date or (ii) at any time after [***] years following the
Effective Date, NEC has Distributed and reported to Puma a total number of
royalty-bearing Units in a cumulative amount which when divided by the total
elapsed time from the Effective Date at the time of such report equals a rate
of Distribution by NEC of such royalty-bearing Units which averages greater
than [***] per year, the parties agree to [***].
GUARANTEED MINIMUM PAYMENT:
NEC agrees to pay PUMA Technology $[***] as a guaranteed minimum payment
toward purchase of [***] Units of Licensed Software. NEC agrees to make
guaranteed minimum payments according to the following payment schedule:
[***] [***] days following the Effective Date: $[***]
PAYMENT TERMS:
Payment terms are net60. If any amount is not paid to Puma when due hereunder,
NEC shall pay to Puma on demand a late fee in an amount not to exceed two
percent (2%) of such delinquent payment for each month or part thereof from the
due date until the date paid; but NEC shall have such grace period as may be
required by law and the late fee shall not exceed the maximum allowed by law.
NEW PUMA PRODUCT:
Both parties agree and understand that Puma intends to deliver for commercial
availability a [***] application designed to run under the [***] operating
system environment ("New Puma Product"). Both parties agree to negotiate in
good faith on the development schedule for New Puma Product. The development
work for New Puma Product shall be conducted subject to the development
schedule agreed upon by both parties in accordance with the preceding
sentence. Upon completion of such releases, if ever, Puma agrees to provide
NEC with beta code (executable code) for evaluation and final code
(executable code) for evaluation and acceptance by NEC in both English and
Japanese. Upon such delivery, if ever, of New Puma Products pursuant to this
provision, such New Puma Products shall be treated as Licensed Software with
respect to Per Unit Royalties and for all other applicable purposes of this
Agreement.
HARDWARE PROVIDED BY NEC:
NEC agrees to provide, on a loan basis, the necessary [***] computer
hardware and Printer Units necessary for Puma engineering to successfully
complete the [***] port of New Puma Product and to provide access to
technically trained dedicated NEC engineering personnel to communicate and
support Puma engineering throughout the project. Puma shall use such hardware
in accordance with the terms and conditions imposed by NEC or NEC's licensors,
if
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[***] Confidential Treatment Requested
<PAGE>
PUMA TECHNOLOGY, INCORPORATED
SOFTWARE LICENSE AGREEMENT
EXHIBIT B CONTINUED
any. Puma agrees to use such hardware provided by NEC hereunder solely for the
purpose of performing Puma's obligations hereunder and not to rent, transfer or
export them to any other parties in any manner. Puma also agrees to return to
NEC, at its sole expense, all such hardware provided by NEC hereunder within a
reasonable period after its completion of Puma's obligations hereunder.
SOURCE CODE DISCLOSURE FEE:
NEC, at its option, shall have the right to purchase source code disclosure for
the Licensed Software, whose limited usage is subject to the terms and
conditions described in Section 7 herein, at any time during the term of this
Agreement at a fixed price of $[***].
MINIMUM VALUE OF AGREEMENT:
$[***]
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[***] Confidential Treatment Requested
<PAGE>
EXHIBIT 11.1
PUMA TECHNOLOGY, INC.
STATEMENT REGARDING COMPUTATION OF PRO FORMA
NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
YEAR ENDED
7/31/96
-----------
<S> <C>
Net loss............................................................................................. $ (2,401)
-----------
-----------
Weighted average of common stock outstanding......................................................... 2,833
Weighted average of preferred stock outstanding, on an as-if converted basis......................... 4,089
Shares, options and warrants included pursuant to Staff Accounting Bulletin No. 83................... 2,552
-----------
Shares used in pro forma per share computation....................................................... 9,474
-----------
-----------
Pro forma net loss per share......................................................................... $ (0.25)
-----------
-----------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
SUBSIDIARY STATE OF INCORPORATION
IntelliLink Corp. New Hampshire
Puma Ireland California
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 20, 1996, except
for Note 10 which is as of September 4, 1996, relating to the consolidated
financial statements of Puma Technology, Inc., which appears in such Prospectus.
We also consent to the application of such report to the Financial Statement
Schedule for the period from August 27, 1993 (inception) to July 31, 1994 and
the two years in the period ended July 31, 1996 listed under Item 16(b) of this
Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the references to us
under the headings "Experts" and "Selected Consolidated and Pro Forma Combined
Financial Information" in such Prospectus. However, it should be noted that
Price Waterhouse LLP has not prepared or certified such "Selected Consolidated
and Pro Forma Combined Financial Information."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
September 4, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 7, 1996, relating
to the financial statements of IntelliLink Corp., which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
September 4, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 982
<SECURITIES> 0
<RECEIVABLES> 2,021
<ALLOWANCES> 184
<INVENTORY> 165
<CURRENT-ASSETS> 3,098
<PP&E> 767
<DEPRECIATION> 318
<TOTAL-ASSETS> 4,004
<CURRENT-LIABILITIES> 2,390
<BONDS> 982
0
3
<COMMON> 4
<OTHER-SE> 646
<TOTAL-LIABILITY-AND-EQUITY> 4,004
<SALES> 7,716
<TOTAL-REVENUES> 7,716
<CGS> 673
<TOTAL-COSTS> 673
<OTHER-EXPENSES> 9,020<F1>
<LOSS-PROVISION> 184
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> (1,892)
<INCOME-TAX> 509
<INCOME-CONTINUING> (2,401)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,401)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
<FN>
<F1>INCLUDES $2,680 OF IN-PROCESS RESEARCH AND DEVELOPMENT.
</FN>
</TABLE>
