<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 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
------------------------
GEOTEL COMMUNICATIONS
CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 04-3194255
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
25 PORTER ROAD
LITTLETON, MASSACHUSETTS 01460
(508) 486-1100
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
------------------------
JOHN C. THIBAULT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GEOTEL COMMUNICATIONS CORPORATION
25 PORTER ROAD
LITTLETON, MASSACHUSETTS 01460
(508) 486-1100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------
Copies to:
<TABLE>
<S> <C>
ANTHONY J. MEDAGLIA, JR., ESQUIRE JOHN A. BURGESS, ESQUIRE
MICHAEL J. RICCIO, JR., ESQUIRE DAVID A. WESTENBERG, ESQUIRE
HUTCHINS, WHEELER & DITTMAR HALE AND DORR
A PROFESSIONAL CORPORATION 60 STATE STREET
101 FEDERAL STREET BOSTON, MASSACHUSETTS 02109
BOSTON, MASSACHUSETTS 02110 (617) 526-6000
(617) 951-6600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT 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, check the following box and
list the Securities Act registration statement number of 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, please check the following box and list the Securities
Act registration 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
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share.......... 2,530,000 shares $10.00 $25,300,000 $7,667
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</TABLE>
(1) Includes 330,000 shares which the Underwriters have the option to purchase
from the Company and the Selling Stockholders solely to cover
over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
------------------------
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, AS AMENDED, 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> 2
GEOTEL COMMUNICATIONS
CORPORATION
------------------------
CROSS-REFERENCE SHEET
(PURSUANT TO ITEM 501 OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE RESPONSES TO THE ITEMS IN PART I OF FORM S-1)
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING OF FORM S-1 LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back Cover
Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Outside Front Cover Page; Underwriting
6. Dilution................................... Risk Factors; Dilution
7. Selling Security Holders................... Principal and Selling Stockholders
8. Plan of Distribution....................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered............................... Capitalization; Description of Capital
Stock
10. Interests of Named Experts and Counsel..... Legal Matters
11. Information with Respect to the
Registrant............................... Outside Front Cover Page; Prospectus
Summary; Risk Factors; Use of Proceeds;
Dividend Policy; Capitalization; Dilution;
Selected Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain Transactions;
Principal and Selling Stockholders;
Description of Capital Stock; Shares
Eligible for Future Sale
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
</TABLE>
<PAGE> 3
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.
SUBJECT TO COMPLETION
DATED OCTOBER 2, 1996
2,200,000 SHARES
LOGO
COMMON STOCK
------------------
All of the shares of Common Stock offered hereby are being sold by GeoTel
Communications Corporation ("GeoTel" or the "Company"). Prior to this 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 the factors to be considered in
determining the initial public offering price. Application has been made to list
the Common Stock on the Nasdaq National Market under the symbol "GEOC."
------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING 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
SECURITIES AND EXCHANGE 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>
<CAPTION>
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PRICE TO PROCEEDS TO
PUBLIC UNDERWRITING COMPANY(1)
DISCOUNTS AND
COMMISSIONS
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<S> <C> <C> <C>
Per Share.............................. $ $ $
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Total(2)............................... $ $ $
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</TABLE>
(1) Before deducting expenses payable by the Company estimated at $600,000.
(2) The Company and certain Selling Stockholders have granted to the
Underwriters a 30-day option to purchase up to 330,000 additional shares of
Common Stock solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to the Selling Stockholders
will be $ , $ , $ and $ , respectively.
See "Principal and Selling Stockholders" and "Underwriting."
------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that the delivery of the shares of Common Stock will be made at the
offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1996.
ALEX. BROWN & SONS WESSELS, ARNOLD & HENDERSON
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 4
[GEOTEL LOGO]
[Screen Shots Showing the Implementation of
GEOTEL'S Intelligent CallRouter Software by Customer Service Representatives]
Enterprise-Wide Call Distribution Creates a Virtual Call Center Network
* Each call is matched with the best answering resource
* Enterprise-wide call monitoring and reporting
* Full integration with AT&T, MCI, Sprint networks, all major ACD/PBX/VRU
equipment
* Open/industry standards -- Microsoft Windows NT
<PAGE> 5
GEOTEL INTELLIGENT CALLROUTER(R)
Managing the interaction between customers and answering resources
The system operates in a fault-tolerant, multi-vendor, multi-carrier, open
telecommunications environment.
Pre-Routing(R) allows intelligence to be applied at the network level before
the call is sent to a destination.
Post-Routing(R) controls the routing of calls among ACDs, PBXs or VRUs.
[DIAGRAM ILLUSTRATING THE PRINCIPAL COMPONENTS OF THE INTELLIGENT CALLROUTER]
EVENT AND THRESHOLD MONITORING
The Intelligent CallRouter contains a comprehensive event monitoring system. It
uses intuitive graphical display elements to immediately notify users of
conditions requiring management intervention.
[SCREEN SHOT OF EVENT MONITORING SYSTEM]
<PAGE> 6
VISUAL SCRIPT EDITOR
A powerful visual object-oriented environment is used to create and monitor
call flow.
The ICR combines real-time call information with customer profile data before
determining a destination for a call.
[SCREEN SHOT OF VISUAL SCRIPT EDITOR]
COMPREHENSIVE MANAGEMENT INFORMATION SYSTEM
Real-time call handling statistics are integrated with consolidated historical
reporting for all calls across attached ACDs, PBXs, and VRUs. Data can be mixed
and matched in any real-time/historical combination.
[SCREEN SHOT OF GRAPHICAL MANAGEMENT REPORT PREPARED BY CUSTOMER]
<PAGE> 7
IN CONNECTION WITH THIS 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 TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus.
THE COMPANY
GeoTel Communications Corporation ("GeoTel" or the "Company") is a leading
provider of telecommunications software solutions focused on enhanced call
routing technology that enables customer-oriented companies to deliver
responsive and cost-effective customer service. The Company's software solutions
are aimed at decentralized or service-oriented corporations that use call
centers, voice response units and other answering resources to interact with
their customers. GeoTel's software solution, the Intelligent CallRouter, is
designed for companies that utilize multiple call centers to handle high volumes
of inbound customer calls and regard their effective handling of customer
interaction through call center technology as a key competitive advantage. The
Company is focused on open, standards-based software solutions for
enterprise-wide call distribution in a multi-vendor, multi-carrier,
fault-tolerant, distributed environment. GeoTel's call routing solutions have
been deployed by a variety of companies, including America Online, American
Express, Fidelity, MCI, Matrixx Marketing, Spiegel and USAir.
Companies are increasingly recognizing that excellent customer service can
be used as a strategic weapon to differentiate their firms from competitors. In
order to remain competitive, corporations must continually evaluate their
product and service offerings to expand market share, lower costs and meet
customer expectations. To improve service quality, companies have invested in
technologies that enable them to concentrate customer service representatives,
or agents, into groups known as call centers. Many large corporations utilize
call centers as the primary method of interfacing with their customers. These
call centers are typically deployed in multiple locations and can be utilized to
provide a prioritized level of services for the most valued customers. Call
centers allow businesses to reduce costs and deliver premium customer service.
The technology utilized by call centers has evolved dramatically over the
past three years. Historically, due to the closed nature of public networks,
corporations installed premises-based switching systems at the end of long
distance or local exchange telephone lines. Reliance on these switching systems
requires corporations to use proprietary closed solutions offered by service
providers where multi-vendor switching system interoperability was not possible.
Consequently, the call center solutions employed by most corporations have been
designed around the technological limits of premises-based switching systems and
the limitations of carrier networks, which prevent corporations from realizing
the potential benefits of virtual call centers. Virtual call centers draw upon
all of the organization's call response resources and utilize open systems-based
applications to enhance the capabilities of the existing call center
infrastructure by integrating it with existing business applications and data.
The Company's Intelligent CallRouter (the "ICR") enables enterprise-wide
call routing and consolidated real-time management information at the network
level. The ICR is an advanced call-by-call routing server that supports multiple
routing clients independent of their location, toll-free carrier or switch
provider. The multi-carrier, multi-vendor capabilities of the ICR allow the user
to focus on delivering premium customer service without the limitations of
proprietary or customer developed solutions. Its open architecture enables
interoperability with other call processing and call volume management systems
within an enterprise and provides a means for integrating these various
stand-alone solutions. The ICR can be interfaced to agent scheduling, workflow
management and other call center management tools. The distributed software
fault tolerance implemented in the ICR provides the mission-critical reliability
required for enterprise-wide call distribution. The Company also offers
consulting and training, installation services and post-sale maintenance and
support services.
3
<PAGE> 9
The Company's objective is to become the leading supplier of
enterprise-wide call distribution software solutions. To achieve this objective,
the Company is pursuing a number of strategies, including extending its
technology leadership in order to expand the value-added call processing
features required by its customers; expanding its call distribution technology
to include all of the answering resources available within a customer's business
environment; leveraging its open architecture to develop interfaces to both
existing and emerging call center technologies; utilizing a multiple-channel
distribution system to cost-effectively address the market for its products; and
providing superior customer service, support and training to ensure customer
satisfaction and the effective deployment of the Company's products.
GeoTel sells its software and services to large corporations with multiple
call center locations that are major users of inbound, toll-free services. The
Company sells primarily through a direct sales force in the United States and is
also developing strategic relationships both domestically and internationally.
The Company has signed agreements with MCI Telecommunications Corporation, Optus
Systems PTY Ltd. and Rockwell International Corporation. To date, the Company
has licensed its software to over 20 companies.
The Company was incorporated in Delaware in June 1993. The Company's
principal executive offices are located at 25 Porter Road, Littleton,
Massachusetts 01460. The Company's telephone number is (508) 486-1100.
------------------------
Intelligent CallRouter, Pre-Routing and Post-Routing are registered
trademarks of the Company and GeoTel is a trademark of the Company. All other
trademarks and trade names referred to in this Prospectus are the property of
their respective owners.
4
<PAGE> 10
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company......................... 2,200,000 shares
Common Stock to be outstanding after the offering........... 13,060,423 shares(1)(2)
Use of proceeds............................................. For working capital and other
general corporate purposes
Proposed Nasdaq National Market symbol...................... GEOC
</TABLE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
INCEPTION
(JUNE 4, 1993) YEAR ENDED SIX MONTHS ENDED
THROUGH DECEMBER 31, JUNE 30,
DECEMBER 31, ------------------- -------------------
1993 1994 1995 1995 1996
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $ -- $ -- $ 1,534 $ -- $ 3,888
Income (loss) from operations.... (401) (3,090) (4,026) (2,350) 65
Net income (loss)................ (377) (2,966) (3,862) (2,277) 150
Pro forma net income (loss) per
common and common equivalent
share(2)....................... $ (0.37) $ 0.01
Pro forma weighted average number
of common and common equivalent
shares(2)...................... 10,365,465 11,559,713
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
---------------------------------------
PRO AS
ACTUAL FORMA(2) ADJUSTED(2)(3)
------- -------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 5,507 $5,507 $ 22,538
Working capital....................................... 4,540 4,540 21,967
Total assets.......................................... 8,466 8,466 25,497
Long-term debt, less current portion.................. 387 387 --
Convertible preferred stock........................... 12,201 -- --
Preferred stock....................................... -- --
Total stockholders' equity (deficit).................. (7,180) 5,021 22,835
</TABLE>
- ---------------
(1) Based upon the number of shares of Common Stock outstanding as of June 30,
1996. Excludes 611,216 shares of Common Stock issuable upon the exercise of
options outstanding on that date, of which options to purchase 6,000 shares
were then exercisable. See "Management -- Stock Plans."
(2) Reflects the conversion of all issued and outstanding shares of Convertible
Preferred Stock into 8,462,086 shares of Common Stock upon the closing of
this offering. See Notes F and G to Financial Statements.
(3) Adjusted to reflect the sale of 2,200,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $9.00 per
share, after deducting estimated underwriting discounts and commissions and
offering expenses. See "Use of Proceeds."
Unless otherwise indicated, all information contained in this Prospectus
reflects (i) the conversion of all outstanding shares of the Company's Series A
Convertible Participating Preferred Stock, Series B Convertible Participating
Preferred Stock and Series C Convertible Participating Preferred Stock
(collectively, the "Convertible Preferred Stock") into an aggregate of 8,462,086
shares of Common Stock upon the closing of this offering, based upon an assumed
initial public offering price of $9.00 per share; (ii) reflects the restatement
of the Company's Certificate of Incorporation, to be filed upon the closing of
this offering, to eliminate the Company's existing series of Convertible
Preferred Stock and to create a class of authorized but undesignated preferred
stock; and (iii) assumes no exercise of the Underwriters' over-allotment option.
See "Description of Capital Stock" and "Underwriting."
5
<PAGE> 11
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of the Common Stock offered by this Prospectus. This Prospectus contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Limited Operating History; Future Operating Results Uncertain. The Company
was incorporated in June 1993 and did not begin shipping products until May
1995. As of June 30, 1996, the Company had an accumulated deficit of $7,059,000.
The Company has experienced substantial revenue growth since product
introduction, and first achieved profitability in the first quarter of 1996.
However, due to the Company's limited operating history there can be no
assurance that such revenue growth and profitability will continue on a
quarterly or annual basis in the future. Future operating results will depend on
many factors, including the demand for the Company's products, the level of
product and price competition, the Company's success in expanding its direct
sales force and indirect distribution channels and the ability of the Company to
develop and market new products and control costs. In order to support the
growth of its business, the Company plans to significantly expand its level of
operations. Due to the anticipated increase in the Company's operating expenses
caused by this expansion, the Company's operating results will be adversely
affected if revenues do not increase. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Potential Fluctuations in Quarterly Operating Results. The Company's
quarterly operating results may in the future vary significantly depending on
factors such as increased competition, the timing of new product announcements
and changes in pricing policies by the Company and its competitors, market
acceptance of new and enhanced versions of the Company's products, the size and
timing of significant orders, order cancellations by customers, the lengthy
sales cycles of the Company's products, changes in operating expenses, changes
in Company strategy, personnel changes and general economic factors. Product
revenues are also difficult to forecast because the market for the Company's
software products is rapidly evolving, and the Company's sales cycle varies
substantially from customer to customer. A significant portion of the Company's
revenues and operating income has been, and is expected to continue to be,
derived from software licensing fees from a limited number of customers.
Variability in the timing of such license fees may cause material fluctuations
in the Company's business, operating results and financial condition. The
Company's products and services generally require capital expenditures by
customers as well as the commitment of resources to implement the Company's
products. Accordingly, the Company is substantially dependent on its customers'
decisions as to the timing and level of such expenditures and resource
commitments. In addition, the Company typically realizes a significant portion
of license revenues in the last month of a quarter. As a result, the magnitude
of quarterly fluctuations may not become evident until late in, or after the
close of, a particular quarter. The Company's expenses are based in part on the
Company's expectations as to future revenue levels and to a large extent are
fixed in the short-term. If revenues do not meet expectations, the Company's
business, operating results and financial condition are likely to be materially
adversely affected. In particular, because only a small portion of the Company's
expenses varies with revenues, net income may be disproportionately affected by
a reduction in revenues. As a result, the Company believes that period-to-period
comparisons of its operating results are not necessarily meaningful and should
not be relied upon as indications of future performance. Due to the foregoing
factors, it is likely that in some future quarter the Company's revenue or
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock could be
materially
6
<PAGE> 12
adversely affected. See "Selected Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Risks Associated with Customer Concentration. A significant portion of the
Company's revenues to date has been derived from a limited number of customers.
Revenues attributable to the Company's five largest customers accounted for
approximately 94.4% and 68.0% of the Company's total revenues in 1995 and the
six months ended June 30, 1996, respectively. Fidelity Investments ("Fidelity"),
Sprint Corporation and America Online accounted for approximately 38.3%, 25.9%
and 20.0%, respectively, of the Company's total revenues in 1995, and GTE
Communication Systems Corporation, Fidelity, MCI Telecommunications Corporation
("MCI"), Optus Systems PTY Ltd. ("Optus") and USAir Corp. accounted for
approximately 14.8%, 14.8%, 14.0%, 12.9% and 11.9%, respectively, of the
Company's total revenues for the six months ended June 30, 1996. The Company
expects that it will continue to be dependent upon a limited number of customers
for a significant portion of its revenues in future periods. None of the
Company's customers, other than MCI and Optus, is contractually obligated to
license or purchase additional products or services from the Company. As a
result of this customer concentration, the Company's business, operating results
and financial condition could be materially adversely affected by the failure of
anticipated orders to materialize or by deferrals or cancellations of orders. In
addition, there can be no assurance that revenues from customers that have
accounted for significant revenues in past periods, individually or as a group,
will continue or, if continued, will reach or exceed historical levels in any
future period. The Company's operating results may in the future be subject to
substantial period-to-period fluctuations as a consequence of such customer
concentration. See "Business -- Customers."
Lengthy Sales and Implementation Cycles. The Company's products are
typically intended for use in applications that may be critical to a customer's
business. The license and implementation of the Company's software products
generally involves a significant commitment of resources by prospective
customers. As a result, the Company's sales process is often subject to delays
associated with lengthy approval processes that typically accompany significant
capital expenditures. For these and other reasons, the sales cycle associated
with the license of the Company's products is often lengthy (recently averaging
approximately six months) and subject to a number of significant delays over
which the Company has little or no control. In addition, the Company does not
recognize license revenues until all significant post-delivery obligations have
been satisfied, including the development of specific product features which, in
certain cases, can take several quarters. The time required to implement the
Company's products can vary significantly with the needs of its customers and is
generally a process that extends for several months. There can be no assurance
that the Company will not experience delays in the future, particularly if the
Company receives orders for large, complex installations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Sales and Marketing" and "-- Customer Service and Support."
Product Concentration; Dependence on Growth in Call Center Market. The
Company currently derives substantially all of its revenues from licenses of the
Intelligent CallRouter and related services. Broad market acceptance of the
Company's product is critical to the Company's future success. As a result, a
decline in demand for or failure to achieve broad market acceptance of the
Intelligent CallRouter as a result of competition, technological change or
otherwise, would have a material adverse effect on the business, operating
results and financial condition of the Company. A decline in sales of the
Intelligent CallRouter could also have a material adverse effect on sales of
other Company products that may be sold to Intelligent CallRouter customers. The
Company's future financial performance will depend in part on the successful
development, introduction and customer acceptance of new and enhanced versions
of the Intelligent CallRouter and other products. There can be no assurance that
the Company will continue to be successful in marketing the Intelligent
CallRouter or any new or enhanced products. See "Business -- Products,"
"-- Product Development" and "-- Competition."
The Intelligent CallRouter is utilized in call centers maintained by
companies in a variety of industries. This product is currently expected to
account for substantially all of the Company's future
7
<PAGE> 13
revenues. Although demand for the Intelligent CallRouter has grown in recent
quarters, the call center market is still an emerging market. The Company's
future financial performance will depend in large part on continued growth in
the number of organizations adopting software applications to enhance their
responsiveness to customers and the number of applications developed for use in
those environments. There can be no assurance that the market for the Company's
products will continue to grow. In addition, changes in the business or pricing
strategies of the interexchange carriers or ACD vendors could adversely affect
demand for the Company's products. If the call center market fails to grow or
grows more slowly than the Company currently anticipates, the Company's
business, operating results and financial condition would be materially
adversely affected. During recent years, segments of the telecommunications
industry have experienced significant economic downturns characterized by
decreased product demand, price erosion, work slowdowns and layoffs. The
Company's operations may in the future experience substantial fluctuations from
period to period as a consequence of such industry patterns, general economic
conditions affecting the timing of orders from major customers, and other
factors affecting capital spending. There can be no assurance that such factors
will not have a material adverse effect on the Company's business, operating
results and financial condition. See "Business -- Industry Background."
Competition. The market for telecommunications software products is
intensely competitive and is subject to rapid technological change. Although to
date the Company has experienced limited competition, the Company expects
competition to increase significantly in the future. Currently, the Company's
principal competitors are the interexchange carriers, particularly AT&T, and to
a lesser extent MCI and Sprint. In addition, a number of other companies have
introduced or announced their intention to introduce products that could be
competitive with the Company's products, including Genesys Telecommunications
Laboratories and IEX Corporation. Additional competitors, including traditional
ACD providers, such as Lucent Technologies, Aspect Telecommunications
Corporation, Northern Telecommunications, Inc. and Rockwell International
Corporation, may enter the market. Increased competition is likely to result in
price reductions, reduced gross margins and loss of market share, any of which
could materially adversely affect the Company's business, operating results and
financial condition. Some of the Company's current, and many of the Company's
potential, competitors have significantly greater financial, technical,
marketing and other resources than the Company. As a result, they may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of their products than the Company. In addition, one or more interexchange
carriers could choose to provide or distribute competitive products and
services. Accordingly, there can be no assurance that the Company will be able
to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not materially adversely affect
its business, operating results and financial condition. See "Business --
Competition."
Dependence on New Products and Rapid Technological Change. The market for
the Company's products is characterized by rapid technological change, frequent
new product introductions and evolving industry standards. The introduction of
products embodying new technologies and the emergence of new industry standards
can render existing products obsolete and unmarketable. The life cycles of the
Company's products are difficult to estimate. The Company's future success will
depend upon its ability to enhance its current products and to develop and
introduce new products on a timely basis that keep pace with technological
developments and emerging industry standards and address the increasingly
sophisticated needs of its customers. There can be no assurance that the Company
will be successful in developing and marketing product enhancements or new
products that respond to technological change or evolving industry standards,
that the Company will not experience difficulties that could delay or prevent
the successful development, introduction and marketing of these products, or
that its new products and product enhancements will adequately meet the
requirements of the marketplace and achieve market acceptance. If the Company is
unable, for technological or other reasons, to develop and introduce new
products or enhancements of existing products in a timely manner in response to
changing market conditions or customer
8
<PAGE> 14
requirements, the Company's business, operating results and financial condition
will be materially adversely affected. In June 1996, the Company released a new
version of its Intelligent CallRouter and the Company plans to introduce
additional enhancements in the near term. These enhancements are subject to
significant technical risks. If these enhancements are delayed or if they do not
achieve market acceptance, the Company's business, operating results and
financial condition will be materially adversely affected. See
"Business -- Product Development."
Risk of Product Defects or Development Delays. Software products as
complex as those offered by the Company frequently contain errors or failures,
especially when first introduced or when new versions are released. Although the
Company conducts extensive product testing, new products and enhancements could
contain software errors and, as a result, the Company could experience delays in
recognizing revenues during the period required to correct these errors. The
Company could in the future lose revenues as a result of software errors or
defects. The Company's products are typically intended for use in applications
that may be critical to a customer's business. As a result, the Company believes
that its current customers and potential customers have a greater sensitivity to
product defects than the market for software products generally. Although the
Company has not experienced material adverse effects resulting from any such
errors to date, there can be no assurance that, despite testing by the Company
and by current and potential customers, errors will not be found in new products
or releases after commencement of commercial shipments, resulting in the loss of
revenue or delay in market acceptance, diversion of development resources,
damage to the Company's reputation, or increased service and warranty costs, any
of which could have a material adverse effect upon the Company's business,
operating results and financial condition.
Management of Growth; Dependence Upon Key Personnel. The Company has
recently experienced a period of rapid growth in revenues that has placed a
significant strain upon its management systems and resources. The Company's
ability to compete effectively and to manage future growth, if any, will require
the Company to continue to improve its financial and management controls,
reporting systems and procedures on a timely basis and expand, train and manage
its employee work force. There can be no assurance that the Company will be able
to do so successfully. The Company's failure to do so could have a material
adverse effect upon the Company's business, operating results and financial
condition. The Company's future performance depends in significant part upon the
continued service of its key technical, sales and senior management personnel,
none of whom is bound by an employment agreement. The loss of the services of
one or more of the Company's executive officers could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company's future success also depends on its continuing ability to attract and
retain highly qualified technical, sales and managerial personnel. Competition
for such personnel is intense, and there can be no assurance that the Company
can retain its key technical, sales and managerial employees or that it can
attract, assimilate or retain other highly qualified technical, sales and
managerial personnel in the future. See "Business -- Sales and Marketing" and
"Management."
Risks Associated with International Expansion. International sales
accounted for approximately 12.9% of the Company's revenues for the six months
ended June 30, 1996. As part of its business strategy, the Company is seeking
opportunities to expand its products into international markets. The Company
believes that such expansion is important to the Company's ability to continue
to grow and to market its products and services. In marketing its products and
services internationally, however, the Company will face new competitors, some
of whom may have established strong relationships with carriers. In addition,
the ability of the Company to enter the international markets will be dependent
upon the Company's ability to integrate its products with local proprietary
networks in foreign countries. There can be no assurance that the Company will
be successful in integrating its products with these proprietary networks or
marketing or distributing its products abroad or that, if the Company is
successful, its international revenues will be adequate to offset the expense of
establishing and maintaining international operations. To date, the Company has
limited experience in marketing and distributing its products internationally.
In addition to the
9
<PAGE> 15
uncertainty as to the Company's ability to establish an international presence,
there are certain difficulties and risks inherent in doing business on an
international level, such as compliance with regulatory requirements and changes
in these requirements, export restrictions, export controls relating to
technology, tariffs and other trade barriers, protection of intellectual
property rights, difficulties in staffing and managing international operations,
longer payment cycles, problems in collecting accounts receivable, political
instability, fluctuations in currency exchange rates and potentially adverse tax
consequences. There can be no assurance that one or more of such factors will
not have a material adverse effect on any international operations established
by the Company and, consequently, on the Company's business, operating results
and financial condition.
Dependence on Proprietary Technology; Risks of Infringement. The Company
is dependent upon its ability to protect its proprietary technology. To protect
its proprietary rights, the Company relies on a combination of patents,
copyrights, trademarks, trade secret laws and confidentiality procedures. The
Company has been issued one United States patent and also has one patent
application pending in the United States and internationally. There can be no
assurance that patents will be issued with respect to the pending or future
patent applications or that the Company's existing or future patents will be
upheld as valid or will prevent the development of competitive products. In
addition, existing patent, copyright, trademark and trade secret laws afford
only limited protection, and many countries' laws do not protect the Company's
proprietary rights to the same extent as do the laws of the United States.
Accordingly, there can be no assurance that the Company will be able to protect
its proprietary rights against unauthorized third-party copying, use or
exploitation, any of which could have a material adverse effect on the Company's
business, operating results and financial condition. Attempts may be made to
copy or reverse engineer aspects of the Company's products, or to obtain, use or
exploit information or methods which the Company deems proprietary.
Additionally, there can be no assurance that the Company's customers and others
will not develop products which infringe upon the Company's rights, or that
compete with the Company's products. Policing the use of the Company's products
is difficult and expensive, and there is no assurance that such efforts would
prove effective. Litigation or other action may be necessary in the future to
enforce the Company's proprietary rights, to seek and confirm patent protection
for the Company's technologies, or to determine the validity and scope of the
proprietary rights of others. Any litigation could be time-consuming and result
in significant costs. The Company expects that its software products may
increasingly be subject to claims as the number of products and competitors in
the Company's markets grows and the functionality of such products overlaps. Any
such claims, with or without merit, could result in substantial costs and
diversions of resources and management's attention, and could cause product
shipment delays or require the Company to enter into royalty or licensing
agreements, any of which could have a material adverse impact on the Company's
business, operating results and financial condition. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company, if at all, which could have a material adverse effect upon the
Company's business, operating results and financial condition. See
"Business -- Intellectual Property and Other Proprietary Rights."
The software and network adapter necessary to enable the Company's
Intelligent CallRouter to interface with the AT&T network is licensed by the
Company from a single vendor under a perpetual, fully-paid license. Although the
Company has access to the source code underlying this software and rights to
manufacture the network adapter, if for any reason the vendor does not make the
software or network adapter available to the Company, there can be no assurance
that the Company will be able to develop these products on a timely basis. See
"Business -- Intellectual Property and Other Proprietary Rights."
Product Liability. The Company's license agreements with its customers
generally contain provisions designed to limit the Company's exposure to
potential product liability claims. However, it is possible that the limitation
of liability provisions contained in the Company's license agreements may not be
effective under the laws of certain jurisdictions. Although the Company has not
experienced any product liability claims to date, the sale and support of
products by the Company
10
<PAGE> 16
may entail the risk of such claims, and there can be no assurance that the
Company will not be subject to such claims in the future. 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.
No Prior Public Market; Determination of Public Offering Price; Potential
Volatility of Stock Price. Prior to this offering there has been no public
market for the Common Stock, and there can be no assurance that an active
trading market will develop or be sustained. The initial public offering price
for the Common Stock will be determined by negotiation between the Company and
the Representatives of the Underwriters. Among the factors to be considered in
determining the initial public offering price are prevailing market and economic
conditions, revenues and earnings of the Company, the market valuations of other
companies engaged in activities similar to those of the Company, estimates of
the business potential and prospects of the Company, the present state of the
Company's business operations, the Company's management and other factors deemed
relevant, and may not be indicative of the market price of the Common Stock
after this offering. In addition, the stock markets in general, and the market
prices for high technology companies in particular, have historically
experienced volatility that at times has been unrelated to the operating
performance of such companies. The trading price of the Common Stock could also
be subject to significant fluctuations in response to variations in quarterly
results of operations, announcements of new products or acquisitions by the
Company or its competitors, governmental regulatory action, other developments
or disputes with respect to proprietary rights, general trends in the industry
and overall market conditions, and other factors. These broad market and
industry fluctuations may adversely affect the market price of the Common Stock
regardless of the Company's operating performance. See "Underwriting" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Shares Eligible for Future Sale; Registration Rights. A substantial number
of outstanding shares of Common Stock and shares of Common Stock issuable upon
exercise of outstanding options will become available for future sale in the
public market at prescribed times or pursuant to the exercise of registration
rights. Sales of substantial amounts of such shares in the public market could
adversely affect the market price of the Common Stock. Approximately 2,111
shares will be immediately eligible for resale in the public market without
restriction in reliance on Rule 144(k) under the Securities Act of 1933, as
amended (the "Securities Act"). An additional 348,331 shares will be eligible
for resale in the public market without restriction in reliance on Rule 144(k)
upon the expiration of certain 180-day lock-up agreements. In addition,
beginning 90 days after the date of this Prospectus, 6,925,250 shares of Common
Stock, all of which are subject to 180-day lockup agreements with the
Representatives of the Underwriters, will be eligible for resale in the public
market subject to the restrictions of Rule 144 under the Securities Act. See
"Shares Eligible for Future Sale." In addition, the Securities and Exchange
Commission has proposed an amendment to Rule 144 which would reduce the holding
period before shares subject to Rule 144 become eligible for sale in the public
market. This proposal, if adopted, would substantially increase the number of
shares of the Company's Common Stock eligible for immediate sale following the
expiration of the lock-up period. Approximately 90 days after the date of this
Prospectus, the Company intends to register on one or more registration
statements on Form S-8 approximately 2,871,119 shares of Common Stock issuable
under its restricted stock purchase plan, stock restriction agreements and stock
option plan. Shares covered by such registration statements will be eligible for
sale in the public market after the effective date of such registration, except
for 1,521,542 shares which are subject to 180-day lockup agreements with
Representatives of the Underwriters.
The executive officers and the directors of the Company and certain
stockholders, who in the aggregate own beneficially approximately 10,918,982
shares of Common Stock (including shares issuable pursuant to the exercise of
stock options), have agreed pursuant to lock-up agreements that they will not,
without the prior written consent of Alex. Brown & Sons Incorporated, sell or
otherwise dispose of any such shares of Common Stock beneficially owned by them
for a period of 180 days from the date of this Prospectus. Upon the expiration
of these lock-up agreements, 8,204,895 of such shares (including shares issuable
pursuant to the exercise of stock options) will
11
<PAGE> 17
become eligible for sale in the public market, subject to the provisions of Rule
144 under the Securities Act.
As of the date of this Prospectus, the holders of 9,674,416 shares of
Common Stock are entitled to certain registration rights with respect to such
shares. If the Company is required to register shares held by any such holder
pursuant to the exercise of its or his registration rights, such sales may have
an adverse effect on the Company's ability to raise needed capital or adversely
affect the Common Stock. See "Management," "Principal and Selling Stockholders,"
"Shares Eligible for Future Sale" and "Underwriting."
Control by Existing Stockholders. Following this offering, the Company's
executive officers, directors and their respective affiliates, in the aggregate,
will beneficially own approximately 44.5% of the Company's outstanding Common
Stock (43.1% of the outstanding Common Stock if the over-allotment option is
exercised in full). As a result, these stockholders, if acting together, would
be able to exert substantial influence over the Company and to effectively
control most matters requiring approval by the stockholders of the Company,
including the election of directors. The voting power of these stockholders
under certain circumstances could have the effect of delaying or preventing a
change in control of the Company. See "Management," "Principal and Selling
Stockholders" and "Description of Capital Stock."
Certain Anti-Takeover Provisions Affecting Stockholders. The Company's
Restated Certificate of Incorporation and Bylaws contain provisions that might
diminish the likelihood that a potential acquiror would make an offer for the
Common Stock, or impede a transaction favorable to the interest of the
stockholders, or increase the difficulty of removing an incumbent Board of
Directors or management. After the closing of this offering, the Company's Board
of Directors will have the authority, without further stockholder approval, to
issue up to 5,000,000 shares of Preferred Stock in one or more series and to
determine the price, rights, preferences and privileges of those shares. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. The issuance of shares of Preferred Stock, while potentially
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock. In
addition, the Company is subject to the anti-takeover provisions of Section 203
of the Delaware General Corporation Law, which will prohibit the Company from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change of control of the Company. Furthermore,
certain provisions of the Company's Restated Certificate of Incorporation,
including provisions that provide for the Board of Directors to be divided into
three classes to serve for staggered three-year terms, may have the effect of
delaying or preventing a change of control of the Company, which could adversely
affect the market price of the Company's Common Stock. Each of the Company's
executive officers is a party to a change in control agreement which provides
for salary continuation and other benefits upon the occurrence of certain events
following a change of control. These agreements could have the effect of
discouraging a change of control of the Company. See "Description of Capital
Stock -- Certain Charter, Bylaw and Statutory Provisions Affecting Stockholders"
and "Management -- Employment Agreements and Change of Control Arrangements."
Dilution. Purchasers in this offering will suffer an immediate and
substantial dilution in the net tangible book value of the Common Stock from the
initial public offering price. Additional dilution is likely to occur upon
exercise of options granted by the Company. See "Dilution."
No Dividends. The Company has never declared or paid cash dividends to its
stockholders and does not anticipate paying cash dividends in the foreseeable
future. See "Dividend Policy."
12
<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,200,000 shares of
Common Stock offered by the Company pursuant to this offering are estimated to
be $17,814,000 ($20,032,000 if the Underwriters' over-allotment option is
exercised in full), assuming an initial public offering price of $9.00 per share
and after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company. The principal purposes of this
offering are to increase the Company's equity capital, to create a public market
for the Common Stock, to increase the visibility of the Company in the
marketplace and to facilitate future access by the Company to public equity
markets.
The Company anticipates using a portion of the net proceeds to repay the
Company's existing bank indebtedness and the balance for general corporate
purposes, including working capital. At June 30, 1996, the Company's bank
indebtedness consisted of equipment lines of credit which amounted to
approximately $783,000, payable in monthly installments. Future principal
payments are $204,000, $323,000, $204,000 and $52,000 for the remainder of 1996
and annually for 1997, 1998 and 1999, respectively. At June 30, 1996, interest
accrued on such loans at the bank's prime rate plus 1% (9.25% at June 30, 1996)
per annum. In September 1996, the interest rate was reduced to the bank's prime
rate. The proceeds of such loans were used by the Company to acquire capital
equipment. The Company may seek acquisitions of businesses, products and
technologies that are complementary to those of the Company, and a portion of
the net proceeds may be used for such acquisitions. While the Company engages
from time to time in discussions with respect to potential acquisitions, the
Company has no plans, commitments or agreements with respect to any such
acquisitions as of the date of this Prospectus, and there can be no assurance
that any such acquisitions will be made. Pending such uses, the Company intends
to invest the net proceeds from this offering in short-term, investment-grade,
interest-bearing securities.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and currently intends to retain all available funds for use in the
operation and expansion of its business. The Company does not, therefore,
anticipate that any cash dividends will be declared or paid in the foreseeable
future. The Company's current loan agreement prohibits the payment of cash
dividends without the bank's consent. See Financial Statements and the related
Notes.
13
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996 on an actual, pro forma and as adjusted basis to give effect to the
sale of 2,200,000 shares of Common Stock offered by the Company in this offering
at an assumed initial public offering price of $9.00 per share, and the
application of the estimated net proceeds therefrom. This table should be read
in conjunction with the Financial Statements and Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, less current portion............... $ 387 $ 387 $ --
Convertible preferred stock, $.01 par value,
7,788,615 shares authorized, issued and
outstanding (actual), no shares (pro forma and pro
forma as adjusted) (aggregate liquidation
preference of $12,847,000)........................ 12,201 -- --
Stockholders' equity (deficit):
Preferred stock, $.01 par value; no shares
authorized, issued and outstanding (actual);
5,000,000 shares authorized, no shares issued and
outstanding (pro forma and pro forma as
adjusted)(3)
Common Stock, $.01 par value; 14,000,000 shares
authorized, 2,599,580 shares issued and 2,398,337
shares outstanding (actual); 40,000,000 shares
authorized, 11,061,666 shares issued and
10,860,423 shares outstanding (pro forma); and
40,000,000 shares authorized, 13,261,666 shares
issued and 13,060,423 shares outstanding (pro
forma as adjusted)(3)(4).......................... 26 111 133
Additional paid-in capital......................... 54 12,170 29,962
Accumulated deficit................................ (7,059) (7,059) (7,059)
Notes receivable from stockholders................. (172) (172) (172)
Less treasury stock, at cost, 201,243 shares....... (29) (29) (29)
------- -------- --------
Total stockholders' equity (deficit).......... (7,180) 5,021 22,835
------- -------- --------
Total capitalization.......................... $ 5,408 $ 5,408 $ 22,835
======= ======== ========
</TABLE>
- ---------------
(1) Reflects the conversion of all issued and outstanding shares of Convertible
Preferred Stock into 8,462,086 shares of Common Stock upon the closing of
this offering, based upon an assumed initial public offering price of $9.00
per share.
(2) Adjusted to give effect to the sale of 2,200,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$9.00 per share, after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company, and the
anticipated application of the net proceeds therefrom.
(3) On September 26, 1996, the Company's Board of Directors and stockholders
approved amendments to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock to 40,000,000 and
to set the number of authorized shares of undesignated Preferred Stock at
5,000,000. See "Description of Capital Stock" and Notes to the Financial
Statements.
(4) Excludes 611,216 shares of Common Stock issuable pursuant to the exercise of
options outstanding at June 30, 1996, of which options to purchase 6,000
shares were then exercisable. See "Management -- Stock Plans."
14
<PAGE> 20
DILUTION
The pro forma net tangible book value of the Company at June 30, 1996,
after giving effect to the automatic conversion of Convertible Preferred Stock
upon the closing of the offering, was approximately $5,021,000, or $0.46 per
share of Common Stock. Net tangible book value per share is equal to the
Company's total tangible assets less total liabilities, divided by the total
number of shares of Common Stock outstanding. Net tangible book value dilution
per share represents the difference between the amount per share paid by
purchasers of shares of Common Stock in the offering made hereby and the net
tangible book value per share of Common Stock immediately after completion of
this offering. After giving effect to the sale by the Company of the 2,200,000
shares of Common Stock offered hereby at an assumed initial public offering
price of $9.00 per share, and after deducting the estimated underwriting
discounts and commissions and offering expenses, the pro forma net tangible book
value of the Company as of June 30, 1996 would have been $22,835,000 or $1.75
per share of Common Stock. This represents an immediate increase in such pro
forma net tangible book value of $1.29 per share to existing stockholders and an
immediate dilution of $7.25 per share to new investors purchasing shares in this
offering. If the initial public offering price is higher or lower, the dilution
to the new investors will be, respectively, greater or less. 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 this offering.... $0.46
Increase per share attributable to new investors.................... 1.29
Pro forma net tangible book value per share after this offering..... 1.75
----
Dilution per share to new investors................................. $7.25
====
</TABLE>
The following table summarizes, on a pro forma basis as of June 30, 1996,
after giving effect to the conversion of all outstanding shares of Convertible
Preferred Stock into 8,462,086 shares of Common Stock upon the closing of this
offering, the number of shares of Common Stock purchased from the Company
(excluding shares repurchased by the Company and held in treasury), the total
consideration paid and the average price per share paid to the Company by
existing stockholders (net of expenses) and by new investors purchasing shares
offered by the Company hereby (at an assumed initial public offering price of
$9.00 per share), respectively, before deducting the underwriting discounts and
commissions and estimated offering expenses:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ----------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 10,860,423 83.2% $12,250,000 38.2% $1.13
New investors.................... 2,200,000 16.8% 19,800,000 61.8% 9.00
---------- ----- ----------- -----
Total.................. 13,060,423 100.0% $32,050,000 100.0%
========== ===== =========== =====
</TABLE>
The foregoing tables assume no exercise of the Underwriters' over-allotment
option or of options to purchase an aggregate of 611,216 shares of Common Stock
that were outstanding at June 30, 1996. To the extent that the Underwriters'
over-allotment option and other options are exercised in the future, there will
be further dilution to new investors. See "Management -- Stock Plans."
15
<PAGE> 21
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the Financial Statements and the Notes thereto and other financial information
included elsewhere in this Prospectus. The selected financial data set forth
below have been derived from, and qualified by reference to, those Financial
Statements and Notes thereto. The selected financial data set forth below have
been derived from Financial Statements of the Company which have been audited,
except for the six months ended June 30, 1995 and 1996, by Coopers & Lybrand
L.L.P., independent accountants, for the year ended December 31, 1995 and by
Arthur Andersen LLP, independent public accountants, from inception (June 4,
1993) through December 31, 1993 and for the year ended December 31, 1994. The
statements of operations data for the six months ended June 30, 1995 and 1996
are unaudited but have been prepared on the same basis as the audited financial
statements and, in the opinion of management, contain all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the operating results for such periods. The operating results
for the six months ended June 30, 1996 are not necessarily indicative of the
results to be expected for any other interim period or the full year.
<TABLE>
<CAPTION>
INCEPTION
(JUNE 4, 1993) YEAR ENDED DECEMBER SIX MONTHS ENDED
THROUGH 31, JUNE 30,
DECEMBER 31, -------------------- --------------------
1993 1994 1995 1995 1996
-------------- ------- ---------- ------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software license.......................... $ 1,360 $ 3,542
Services and other........................ 174 346
---------- ----------
Total revenues............................ 1,534 3,888
---------- ----------
Cost of Revenues:
Cost of software license.................. 264 183
Cost of services and other................ 611 $ 224 615
---------- --------- ----------
Total cost of revenues.................... 875 224 798
---------- --------- ----------
Gross Profit................................ 659 (224) 3,090
---------- --------- ----------
Operating Expenses:
Research and development.................. $ 140 $ 1,879 2,322 1,129 1,388
Sales and marketing....................... -- 570 1,476 654 1,191
General and administrative................ 261 641 887 343 446
------ -------- ---------- --------- ----------
Total operating costs..................... 401 3,090 4,685 2,126 3,025
------ -------- ---------- --------- ----------
Income (loss) from operations............... (401) (3,090) (4,026) (2,350) 65
Interest income, net........................ 24 124 164 73 85
------ -------- ---------- --------- ----------
Net income (loss)........................... $ (377) $(2,966) $ (3,862) $(2,277) $ 150
====== ======== ========== ========= ==========
Pro forma net income (loss) per common and
common equivalent share(1)................ $ (0.37) $ 0.01
========== ==========
Pro forma weighted average number of common
and common equivalent
shares(1)................................. 10,365,465 11,559,713
========== ==========
</TABLE>
16
<PAGE> 22
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1996
---------------------------- ------------------------------------------
1993 1994 1995 ACTUAL PRO FORMA(1) AS ADJUSTED(2)
------ ------- ------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents.......... $ 446 $ 3,793 $ 4,537 $ 5,507 $5,507 $22,538
Working capital........ 2,832 4,249 4,292 4,540 4,540 21,967
Total assets........... 3,011 5,483 6,449 8,466 8,466 25,497
Long-term debt, less
current portion...... 338 408 387 387 --
Convertible preferred
stock................ 3,267 7,937 11,986 12,201 -- --
Preferred stock........ -- --
Total stockholders'
equity (deficit)..... (370) (3,357) (7,312) (7,180) 5,021 22,835
</TABLE>
- ---------------
(1) Reflects the conversion of all issued and outstanding shares of Convertible
Preferred Stock into 8,462,086 shares of Common Stock upon the closing of
this offering, based upon an assumed initial public offering price of $9.00
per share. See Notes F and G to Financial Statements.
(2) Adjusted to give effect to the sale of 2,200,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$9.00 per share, after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company, and the
anticipated application of the net proceeds therefrom.
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<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such a difference include, but are not limited to, those discussed
in "Risk Factors." The following discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
Company's Financial Statements and Notes thereto, and the other financial
information included elsewhere in this Prospectus.
OVERVIEW
The Company was incorporated in June 1993 to develop telecommunications
software solutions that enable enhanced call center applications. From inception
through the first half of 1995, the Company was engaged principally in research
and product development of its Intelligent CallRouter product. The Company's
first customer installation of the Intelligent CallRouter occurred in May 1995
and the Company recognized its first revenue from customer shipments in the
fourth quarter of 1995. The Company initially achieved profitability in the
first quarter of 1996. Unit shipments have grown due to increasing market
acceptance of the Company's product and increases in the size of the Company's
direct sales force. The Company expects that the Intelligent CallRouter product
will account for substantially all of its revenue for the foreseeable future.
The Company believes that its future performance will depend in large part on
its ability to maintain and enhance its current Intelligent CallRouter product
line, develop new products that achieve market acceptance, maintain
technological competitiveness, meet an expanding range of customer requirements
and continue to recruit highly skilled and qualified software professionals. The
Company primarily markets its products in the United States through a direct
sales force which is complemented by strategic sales channels, including MCI,
selected resellers and an international partner.
The Company's revenue is derived from two sources: software licenses and
services. Software license revenue, which has historically represented the
majority of the Company's total revenue, is generally payable within thirty days
of product acceptance. The Company recognizes software license fee revenues upon
shipment unless there are significant post-delivery obligations. When
significant post-delivery obligations exist, revenues are deferred until such
obligations have been satisfied. Service revenues consist primarily of
maintenance, installation and training revenues. Maintenance revenues are
recognized ratably over the term of the support period, which is typically
twelve months. Installation and training revenues are recognized when the
services are performed.
A significant portion of the Company's revenues to date has been derived
from a limited number of customers. Revenues attributable to the Company's five
largest customers accounted for approximately 94.4% and 68.0% of the Company's
total revenues in 1995 and the six months ended June 30, 1996, respectively. The
Company expects that it will continue to be dependent upon a limited number of
customers for a significant portion of its revenues in future periods. See "Risk
Factors -- Risks Associated with Customer Concentration."
The Company's quarterly operating results may in the future vary
significantly depending on factors such as increased competition, the timing of
new product announcements and changes in pricing policies by the Company and its
competitors, market acceptance of new and enhanced versions of the Company's
products, the size and timing of significant orders, order cancellations by
customers, changes in operating expenses, changes in Company strategy, personnel
changes, and general economic factors. The Company's expense levels are based,
in part, on its expectations of future revenues and to a large extent are fixed
in the short-term. If revenue levels are below expectations, the Company's
business, operating results and financial condition are likely to be materially
adversely affected. Net income may be disproportionately affected by a reduction
in revenues because a proportionately smaller amount of the Company's expenses
varies with its
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<PAGE> 24
revenues. As a result, the Company believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. See "Risk Factors -- Potential
Fluctuations in Quarterly Operating Results."
OPERATING RESULTS
The following table presents selected unaudited financial information for
the Company's last three quarters (since the Company began recognizing revenue),
as well as the percentage of the Company's total revenues represented by each
item. The Company has not included quarterly financial information for any
quarter prior to the quarter ended December 31, 1995 as the Company was a
development stage enterprise and expenses in those quarters related primarily to
the research and development of the Company's products and initial marketing
efforts. In the opinion of the Company's management, this unaudited information
reflects all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly this information when read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
The Company's operating results for any one quarter are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, DECEMBER 31, MARCH 31, JUNE 30,
1995 1996 1996 1995 1996 1996
------------ --------- -------- ------------ --------- --------
(IN THOUSANDS) (PERCENTAGE OF TOTAL REVENUE)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Software license........... $1,360 $ 1,705 $1,837 88.6% 92.7% 89.7%
Services and other......... 174 134 212 11.4 7.3 10.3
------ ------ ------ ---- ---- ----
Total revenues............. 1,534 1,839 2,049 100.0 100.0 100.0
------ ------ ------ ---- ---- ----
Cost of Revenues:
Cost of software license... 264 75 108 17.2 4.1 5.3
Cost of services and
other................... 240 278 338 15.6 15.1 16.5
------ ------ ------ ---- ---- ----
Total cost of revenues..... 504 353 446 32.8 19.2 21.8
------ ------ ------ ---- ---- ----
Gross Profit................. 1,030 1,486 1,603 67.2 80.8 78.2
------ ------ ------ ---- ---- ----
Operating Expenses:
Research and development... 601 656 732 39.2 35.7 35.7
Sales and marketing........ 479 621 570 31.2 33.8 27.8
General and
administrative.......... 386 204 241 25.1 11.1 11.8
------ ------ ------ ---- ---- ----
Total operating costs...... 1,466 1,481 1,543 95.5 80.6 75.3
------ ------ ------ ---- ---- ----
Income(loss) from
operations................. (436) 5 60 (28.3) 0.2 2.9
Interest income, net......... 52 40 45 3.3 2.2 2.2
------ ------ ------ ---- ---- ----
Net income (loss)............ $ (384) $ 45 $ 105 (25.0)% 2.4% 5.1%
====== ====== ====== ==== ==== ====
</TABLE>
REVENUES
Revenues consist of software license fees and services. The Company
recorded no revenues until the fourth quarter of 1995. Since the fourth quarter
of 1995, the Company's quarterly revenues have increased sequentially by 19.9%
and 11.4% for the first quarter and second quarter of 1996, respectively. The
increases were due to increases in unit sales. The Company did not record any
revenues from international sales until the first quarter of 1996. International
sales represented 27.2% of revenues for the first quarter of 1996. No
international sales were recorded in the second quarter of 1996. To date, the
Company's international sales have been denominated in U.S. currency.
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<PAGE> 25
Most of the Company's revenues have been from software license and installation
revenues. The Company anticipates that maintenance revenues will increase as a
percentage of revenues as the Company's customer base increases.
COST OF REVENUES
To date, cost of software licenses consists principally of product warranty
costs and costs attributable to a discontinued marketing program offered to the
Company's first five customers. Cost of software licenses as a percentage of
software license revenue were 19.4%, 4.4% and 5.9% for the fourth quarter of
1995, first quarter and second quarter of 1996, respectively. The decreases in
percentage from the fourth quarter of 1995 resulted from a decrease in hardware
costs. As part of the initial introduction of the Company's software products,
the Company purchased and resold certain hardware required by customers in order
to implement the Company's products. This program was discontinued in September
1995 and the Company does not anticipate that hardware costs will represent a
significant portion of cost of revenues in the future.
Cost of services consists principally of the costs incurred to provide
installation, consulting, maintenance and training services. The expenses
incurred to provide these services are comprised primarily of personnel costs,
travel and facility costs. Cost of services as a percentage of services and
other revenues were 137.9%, 207.5% and 159.4% for the fourth quarter of 1995,
first quarter and second quarter of 1996, respectively. The dollar increases
were a result of start-up costs associated with the building of a customer
support infrastructure to handle the anticipated future growth in customers. The
Company anticipates that the cost of services will increase in absolute dollars,
while decreasing as a percentage of services and other revenues in the
foreseeable future. The Company anticipates that services revenues will begin to
exceed the related costs of services and other expenses as the Company begins to
benefit from cost efficiencies anticipated as the customer base and maintenance
customer renewals increase.
OPERATING EXPENSES
Research and Development. Research and development expenses consist
principally of personnel and facility costs. Research and development expenses
as a percentage of total revenues were 39.2%, 35.7% and 35.7% for the fourth
quarter of 1995, first quarter and second quarter of 1996, respectively. The
decrease in percentage from the fourth quarter to the first quarter was the
result of expenses remaining relatively constant during the period while the
Company experienced significant revenue growth. The increase in absolute dollars
from the first quarter to the second quarter of 1996 was a result of an increase
in employees and the associated hiring costs. The Company anticipates that
research and development expenses will continue to increase in absolute dollars,
while decreasing as a percentage of total revenues in the foreseeable future.
Sales and Marketing. Sales and marketing expenses consist principally of
personnel costs, travel, promotional expenses and facility costs. Sales and
marketing expenses as a percentage of total revenues were 31.2%, 33.8% and 27.8%
for the fourth quarter of 1995, first quarter and second quarter of 1996,
respectively. The Company recorded a charge associated with the termination of
an employee in the first quarter of 1996. Excluding this charge, the Company
would have experienced an increase in sales and marketing expenses in absolute
dollars but a decrease as a percentage of total revenues from the preceding
quarter. The increase in sales and marketing expenses was the result of adding
sales personnel to the direct sales force and an increase in commission expense
attributable to higher sales. The Company anticipates that sales and marketing
expenses will increase in absolute dollars and as a percentage of total revenues
in the foreseeable future.
General and Administrative. General and administrative expenses consist
principally of personnel costs for administrative, finance, information systems,
human resources and general management personnel, as well as legal expenses and
facility costs. General and administrative expenses as a percentage of total
revenues were 25.1%, 11.1% and 11.8% for the fourth quarter of
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<PAGE> 26
1995, first quarter and second quarter of 1996, respectively. General and
administrative expenses in the fourth quarter of 1995 were higher than in the
first and second quarters of 1996 principally due to the settlement of
litigation for approximately $127,000. General and administrative expenses
increased in the second quarter of 1996 from the first quarter of 1996 due to an
increase in employees and travel. The Company anticipates that general and
administrative expenses will increase in absolute dollars, while decreasing as a
percentage of total revenues.
INTEREST INCOME, NET
Interest income, net, of $52,000, $40,000 and $45,000 for the fourth
quarter of 1995, first quarter and second quarter of 1996, respectively,
resulted from investments of the Company's cash balances, net of interest
expense incurred on bank term notes.
PROVISION FOR INCOME TAXES
The Company incurred a net loss in each completed year and accordingly did
not provide for an income tax liability. See Financial Statements and Notes
thereto. As of June 30, 1996, the Company had net operating loss carryforwards
and capitalized start-up costs aggregating to approximately $2,447,000 that may
be used to offset future federal income tax, if any. The Company also has
$227,000 of research and development tax credits and state investment tax
credits which expire beginning in the year 2008 if not utilized. An ownership
change, as defined in the Tax Reform Act of 1986, may restrict the utilization
of the carryforwards. A valuation allowance has been recorded for the entire
deferred tax asset as a result of uncertainties regarding the realization of the
asset due to the limited operating history of the Company. See the Financial
Statements and Notes thereto.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had cash and cash equivalents of $5,507,000,
an increase of approximately $970,000 from December 31, 1995. The Company has
financed its operations to date primarily by the private sales of equity
securities pursuant to which the Company received approximately $12,123,000 and
by bank term notes to finance purchases of equipment. Since inception, the
principal uses of cash have been to fund research and development of the
Company's products and initial marketing of the products and to purchase capital
equipment. As of June 30, 1996 the Company had $1,997,000 in accounts
receivable.
At June 30, 1996, the Company's bank indebtedness, consisting of equipment
lines of credit amounted to $783,000, payable in monthly installments. Future
principal payments are $204,000, $323,000, $204,000, and $52,000 for the
remainder of 1996 and annually for 1997, 1998 and 1999, respectively. Interest
accrues on such loans at the bank's prime rate plus 1% (9.25% at June 30, 1996)
per annum. The proceeds of such loans were used by the Company to acquire
capital equipment. In September 1996, the Company negotiated an additional
equipment line in the amount of $800,000 under similar terms. The Company is
prohibited from paying cash dividends without the consent of the bank while
there are outstanding borrowings.
As of June 30, 1996, the Company had no material commitments for capital
expenditures.
The Company believes that the net proceeds from the sale of the Common
Stock in this offering, together with existing cash balances, funds available
under the equipment line and funds generated by operations, will be sufficient
to meet its anticipated liquidity and working capital requirements for at least
the next twelve months.
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<PAGE> 27
BUSINESS
OVERVIEW
GeoTel Communications Corporation ("GeoTel" or the "Company") is a leading
provider of telecommunications software solutions focused on enhanced call
routing technology that enables customer-oriented companies to deliver
responsive and cost-effective customer service. The Company's software solutions
are aimed at decentralized or service-oriented corporations that use call
centers, voice response units and other answering resources to interact with
their customers. GeoTel's software solution, the Intelligent CallRouter, is
designed for companies that utilize multiple call centers to handle high volumes
of inbound customer calls and regard their effective handling of customer
interaction through call center technology as a key competitive advantage. The
Company is focused on open, standards-based software solutions for
enterprise-wide call distribution in a multi-vendor, multi-carrier,
fault-tolerant, distributed environment. GeoTel's call routing solutions have
been deployed by a variety of companies, including America Online, American
Express, Fidelity, MCI, Matrixx Marketing, Spiegel and USAir.
INDUSTRY BACKGROUND
Call Center Market
Companies are increasingly recognizing that excellent customer service can
be used as a strategic weapon to differentiate their firms from competitors. In
order to remain competitive, corporations must continually evaluate their
product and service offerings to expand market share, lower costs and meet
customer expectations. To improve service quality, companies have invested in
technologies that enable them to concentrate customer service representatives,
or agents, into groups known as call centers. Many corporations utilize call
centers as the primary method of interacting with their customers. These call
centers are typically deployed in multiple locations and can be utilized to
provide a prioritized level of services for their most valued customers. Call
centers allow businesses to reduce costs and deliver premium customer service.
While call centers have grown both in size and importance, current
technologies have been focused on stand-alone, call center applications, rather
than the customer interaction requirements of the entire corporation. This has
led to a fragmented environment in businesses that have multiple call centers,
branch offices and divisions, with call centers evolving as technology "islands"
within the corporation. As a result, corporations are unable to provide
solutions that utilize all the customer response resources within the
organization whether they are personnel or systems-based. Increasingly,
successful organizations are seeking solutions to address these strategic
business requirements through the implementation of "virtual call centers."
Virtual call centers utilize all the relevant resources maintained by the
corporation in order to achieve a unified, controllable and adaptable customer
service solution. Enterprise-wide utilization of resources and technology
enables the corporation to maximize levels of customer service while fully
utilizing existing investments in telephony, technology and personnel.
Call Center Technology
In response to customer demand, the telecommunications environment has
changed rapidly with the emergence of new carrier-based, Advanced Intelligent
Network (AIN) services and 800/888 number portability. Most interexchange
carriers (IXCs), including AT&T, MCI and Sprint, have opened network control to
their customers, enabling the development of third party sofware to control the
routing of customer calls within their networks. Corporations can now shop for
the most competitive carrier rates and implement new network-based services
which are not based on proprietary closed solutions, while retaining their
existing telephone numbers. As the era of "open public networking" evolves,
corporations are seeking business solutions that encompass more than
22
<PAGE> 28
the limited, non-integrated, proprietary telecommunication products that have
been dominant in the past.
The technology utilized by call centers has evolved dramatically over the
past three years. Historically, due to the closed nature of public networks,
corporations installed premises-based switching systems at the end of long
distance or local exchange telephone lines. Reliance on these switching systems
requires corporations to use proprietary closed solutions offered by service
providers where multi-vendor switching system interoperability was not possible.
Consequently, the call center solutions employed by most corporations have been
designed around the technological limits of premises-based switching systems and
the limitations of carrier networks, which prevent corporations from realizing
the potential benefits of virtual call centers. Virtual call centers draw upon
all of the organization's call response resources and utilize open-systems based
applications to enhance the capabilities of the existing call center
infrastructure by integrating it with existing business applications and data.
The primary providers of call center solutions are IXCs and Automatic Call
Distribution (ACD) switching system vendors. Currently, the major IXCs offer
services that can route inbound toll-free calls to more than one call center,
but they have limited visibility as to why the call is being delivered to that
location. These services attempt to distribute calls among multiple call center
locations by relying on percentage allocations based on historical data or call
counting. Since there is no real-time data, these routing schemes are limited
because the system is not aware of what is actually taking place in the
individual call centers. For example, carriers might route 40% of a business'
incoming calls to Boston, 30% to Dallas and 30% to Denver using a set table
based on time of day and origin of call. While this solution is viable as long
as each site is staffed accordingly to handle the inflow of calls, it cannot
dynamically adjust to variances in agent availability, call handling times, and
calls from non-network sources. Furthermore, the customer is unable to benefit
from a multi-carrier environment. Many ACD switching system vendors provide
private networking options that allow calls to flow from one system to another,
but these systems consume network bandwidth and still do not optimize network
resources. They are also ineffective in a multi-vendor ACD environment.
Due to the migration towards open systems by the IXCs, customers are now
able to control connections across interexchange carrier networks based on
resources, customer profiles and other factors as determined by high-end
enterprise-level software applications. ACDs and other customer premises-based
switching systems have also opened control to computer applications. The
evolution of Computer Telephony Integration (CTI) technology allows computer
applications to interface with and control functions of the ACD or Private
Branch Exchange (PBX). These applications are capable of utilizing business
data, legacy systems and client/server systems and integrating them with
existing telecommunications systems.
To date, few organizations have fully realized the potential benefits
offered by virtual call centers due to the lack of enterprise-wide call
distribution. In particular, the need for enterprise-wide call distribution must
be addressed as a prerequisite for a well-managed customer-focused call center.
Traditional carrier services and ACD products have limited flexibility and are
generally not scalable to large enterprises. These solutions do not facilitate
enterprise-wide call distribution since they offer only local routing within a
stand-alone ACD, and do not enable a multi-vendor, multi-carrier solution. As a
result, the Company believes that the need exists for flexible, scalable,
customer premises-based call processing software that will manage the control of
customer-based switching systems, network routing, call queuing and voice
services.
GEOTEL SOLUTION
GeoTel's solution allows companies that utilize call center technology to
deliver cost-effective, premium customer service. The Company's Intelligent
CallRouter (ICR) enables enterprise-wide call routing and consolidated real-time
management information at the network level. These
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<PAGE> 29
capabilities are independent of the manufacturer of the ACD, PBX or key system
to which they are attached. The ICR also provides interfaces to multiple carrier
networks enabling call routing independent of the toll-free network provider.
The following diagram illustrates the deployment of the ICR in a multi-site call
center environment.
[The diagram illustrates the deployment of the Intelligent Call Router in a
multi-site call center]
The ICR extends a corporation's existing public and private network
solutions with enterprise-wide, intelligent call processing directed at
organizations that utilize call center technologies to interact with their
customers. The ICR allows corporations to blend the logic of both the carrier
network and ACDs as well as business applications required to provide high-level
customer service and customer contact support. By integrating all call center
applications, a corporation can achieve large group efficiencies, such as
utilizing available agents regardless of location, instead of physically adding
staff to a specific call center. To achieve enterprise-wide call control, the
ICR has visibility of all call answering resources, enabling the system to route
calls and associated data transactions to the agent or skill group that best
satisfies the rules established by the corporation. The ICR connects all call
centers into a hierarchical, networked system, so that an enterprise routing
application can receive the real-time status information required to control
call transactions throughout the enterprise.
The Company's solutions offer the following advantages:
Virtual Call Center. The ICR transforms geographically dispersed agent
groups connected to different ACDs and VRUs into a single virtual team, reducing
the number of agents required for a given service level, while offering a more
uniform level of service to all callers. Since labor is a significant cost for
service-oriented corporations, the ability to utilize agent resources more
effectively provides a significant cost savings for the Company's customers. In
addition, the ICR allows local ACD capabilities to be extended to the entire
network. Sophisticated enterprise-wide call routing routines, such as those
using customer account numbers or Automatic Number Identification (ANI), can be
developed once and deployed at either the network level or in conjunction with
an ACD or VRU at the customer's premises, or both.
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<PAGE> 30
Multiple Carrier and Switch Interoperability. The Company's open solution
does not require the customer to replace its existing premises-based equipment,
switches or carriers, therefore extending their value in a "plug-and-play"
environment. The Company's customers are also able to select among AT&T, MCI or
Sprint, offering them the ability to leverage new features and cost saving
opportunities from the major 800 providers. In addition, the ICR allows
customers to remain vendor independent by supporting the major ACD
switches -- Lucent DEFINITY(R), Aspect CallCenter(R), Northern Telecom
Meridian(TM), Rockwell Galaxy(TM) and Rockwell Spectrum(TM).
Real-Time Routing. The routing of customer calls is a real-time,
mission-critical application. The ICR's Pre-Routing feature is the application
of ACD-like call routing at the network level, before the caller hears ringing
and before the call is sent to a given destination. Unlike any currently
available call routing service offered by carriers, the Pre-Routing feature can
route calls based on real-time knowledge of agent availability and queue status,
not on a fixed percentage or allocation basis. The ICR recognizes where the call
originates, gathers real-time information about the status of all call centers
and agents, and then routes calls based on best available enterprise-wide
capabilities and resources at the moment the call is received. Post-Routing is
the control of calls already connected to an ACD or PBX, such as the intelligent
transfer of calls from Voice Response Units (VRUs), agent-to-agent transfers and
the overflow of calls between call centers. These capabilities enable the ICR to
route calls on an individual call basis, across different ACDs and multiple
carriers.
Fault Tolerant Open Architecture. The ICR is designed to be fault tolerant
to hardware component failures, communications network failures, asynchronous
software errors and the catastrophic loss of a site supporting the ICR. The
Company's technology utilizes an open architecture and is based on industry
standard software, such as Windows NT, SQL Server and PowerBuilder. The ICR has
been designed to integrate with existing call center applications and facilitate
support of future applications. The Company has defined and published
application programming interfaces for major call center applications such as
workforce management, interactive VRUs and customer databases.
Consolidated Management Reporting. The Company's call routing solution
enables customers to manage their distributed call centers with consolidated,
real-time and historical reporting. The ICR provides the ability to access and
combine data from multiple databases, allowing the user to source best-of-class
applications for call volume forecasting, agent scheduling, workflow management
and screen-synchronization while maintaining an enterprise-wide view of the
performance of their call centers.
STRATEGY
The Company's primary business objective is to become the leading supplier
of enterprise-wide call distribution software solutions. To achieve this
objective, the Company is pursuing the following strategies:
Extend Technology Leadership. Capitalizing on the Company's experience in
call centers, communications and software technologies, the Company was the
first to deliver a client/server-based application solely focused on
enterprise-wide call distribution. The Company intends to continue to utilize
and integrate industry available technologies whenever appropriate and focus its
development resources on expanding the value-added call processing features
required by its customers. The Company believes it distinguishes itself through
its portfolio of supported ACDs, multi-carrier connectivity, product
adaptability to business environments, implementation of industry standards,
open systems platforms, scalability and product integration with most call
center applications.
Expand Enterprise Call Distribution. GeoTel intends to ensure that its
call distribution technology continues to expand to include all of the answering
resources available within a customer's business environment. This will include
high-end production call centers, VRUs and distributed call answering resources
including branch offices, remote agents and professionals,
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<PAGE> 31
network resources and desktop applications. In June 1996, GeoTel delivered and
installed ICR release Version 1.4 which includes support for the integration of
VRUs. By integrating VRU systems, the Intelligent CallRouter extends routing
control to network and premise VRUs, allows the corporation to use VRUs as an
intelligent call answering resource in the virtual call center, and provides
consolidated management information of VRU data. Intelligent CallRouter
applications have been implemented in systems supporting as few as 200 and as
many as 5,000 call center agents.
Leverage Open Architecture. The Company continues to develop interfaces to
both existing and emerging call center technologies provided by the vendors of
market-leading technologies. The Company intends to provide its customers with
the ability to protect their investment in current call center solutions, while
providing value-added services and functionally beyond their existing
infrastructure. This will be accomplished by adhering to open industry standard
interfaces of other vendor products and publishing interfaces to the Company's
call routing software platform for products and services such as ACDs, carrier
networks, interactive VRUs and customer databases.
Utilize Multiple Distribution Channels. The Company has established a
multi-channel distribution system to cost-effectively address the potential
market for its products. To date, the Company has generated the majority of its
revenues through its direct sales force which maintains frequent customer
contact and knowledge of customer applications. The Company's direct sales force
is complemented by strategic sales channels, including its relationship with
MCI, selected resellers and an international partner. The Company intends to
expand both direct and indirect distribution channels and to penetrate
international markets by expanding its relationships with the market leaders of
toll-free services on a country-by-country basis.
Ensure Customer Success. GeoTel believes that superior customer service,
support and training are essential for customer satisfaction and are key to
differentiating its overall product offering. The Company offers consulting and
installation services to assist customers in designing and deploying call
routing applications and also provides training for end-users and distribution
partners. GeoTel intends to expand its own customer service, support and
training activities, as well as to encourage third-party organizations, such as
international partners, to become proficient in deploying the Company's
products.
PRODUCTS
The GeoTel Intelligent CallRouter is an advanced call-by-call routing
server that supports multiple call routing clients independent of their
location, ACD, IXC or VRU. The multi-carrier, multi-vendor capabilities of the
ICR allow the user to focus on delivering premium customer service without the
limitations of proprietary or custom-developed solutions. The ICR combines
real-time call routing capabilities with an extensive management reporting
system. Its open architecture enables interoperability with other call
processing and call volume management systems within an enterprise and provides
a means for integrating those various stand-alone solutions. The ICR can be
interfaced to agent scheduling, workflow management and other call center
management tools. The distributed software fault tolerance implemented in the
Intelligent CallRouter provides the mission-critical reliability required for
enterprise-wide call distribution.
The principal function of the ICR is to route telephone calls among
geographically distributed call centers in a way that optimizes the use of
resources across all call centers or other answering locations. In order to
perform these functions, the ICR determines the caller's motivation for calling
and matches that request with the skills of the available answering resources.
The primary components of the ICR are a central routing controller, a database,
and interfaces to the telephone network and call answering devices such as PBXs,
ACDs and VRUs.
The ICR is an open systems product that has been deployed on
industry-standard platforms. The Company designed the system to support a broad
range of intelligent telecommunications interfaces, industry standard MIS tools,
computer platforms and a growing number of vertical market applications. The ICR
uses Windows NT as the core multitasking operating environment. Windows
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<PAGE> 32
NT allows customers to select from a variety of hardware platforms certified by
the Company on which to deploy the ICR application. The database utilized by the
ICR is Microsoft SQL Server for Windows NT, which provides an advanced,
client/server database management system. The Company provides a monitoring and
reporting system based on PowerBuilder, which is a Windows-based, client-server
application development tool. PowerBuilder allows users to quickly and easily
build sophisticated, graphical applications that can access information stored
in multiple databases. Since the Company utilizes a database technology that is
open database connectivity (ODBC) compliant, the customer may choose a reporting
tool of its preference as an alternative to PowerBuilder. The following diagram
illustrates the principal components of the ICR:
[The Diagram Illustrates the Principal Components of the Intelligent CallRouter]
The major components of the ICR are as follows:
CallRouter. The core of the Intelligent CallRouter is a suite of software
processes called the CallRouter that provides the central intelligence by which
customers translate business goals into call routing decisions. The CallRouter
receives and responds to routing requests from the routing clients (Network
Interface Controllers and Peripheral Gateways), collects call center event
activity from the Peripheral Gateways and communicates with users through
desktop Admin Workstations. The CallRouter provides all the routing choices
available in today's ACDs and applies them at the network level. The
implementation of routing services on an enterprise basis creates a call center
management model where geographically distributed call centers appear as if they
were at one location. The ICR utilizes real-time, event-driven data such as
agent status, queue status, and incoming call volume in making its call-by-call
routing decisions. It allows customers to establish routing decisions for a wide
range of agent and service performance metrics, including agent availability,
the ratio of calls in progress to logged-in/ready agents, and the ratio of calls
in queue to staffed/scheduled agents. The CallRouter makes routing decisions
through user-defined call routing scripts. The logic required to segment
callers, determine their reason for calling, and then forward those requests for
service to the appropriate agent(s) is defined in call routing objects. Having
determined these routing guidelines, business rules are defined to arbitrate
between routing options where the demand for a given skill or service resource
exceeds availability. Threshold parameters
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<PAGE> 33
can be input to allow for the use of backup agents under certain circumstances
or to prioritize call handling of a given class of caller.
Network Interface Controller (NIC). The NIC is the software interface
between the Intelligent CallRouter and the interexchange carrier network. It
communicates with the IXC network through the intelligent network control
interfaces that have recently been made available by the carriers. The NIC
receives call routing requests from the network, forwards them to the
CallRouter, and returns responses to the carrier network. In effect, the NIC
transforms the network into a routing client. This approach allows customers to
control routing decisions at the network level and gain greater flexibility as
they seek to further deploy advanced intelligent network services.
Peripheral Gateway (PG). The PG software provides the interface between
the CallRouter and the call center system (ACD, PBX, or VRU) that is being
monitored and/or controlled by the ICR. The PG connects to the CTI link and/or
ACD's management reporting system and obtains information regarding agent
availability, agent performance, the number of calls in progress, and how they
are being handled. To facilitate Post-Routing, the PG can also exert control
over the ACD, PBX or VRU and instruct it where to route calls.
Database Server. GeoTel's database technology reduces the performance
constraints normally associated with ACD and network data aggregation. Operating
in conjunction with the CallRouter, the ICR's Database Server stores and manages
historical information, including Pre-Routing and Post-Routing records, routing
scripts, and ICR configuration data. The ICR Database Server is a relational
database that can collect and process large amounts of call and transaction
data, including call handling, planning and performance data.
Admin Workstation. The Intelligent CallRouter records call activity on an
enterprise-wide basis and reports on this activity on a real-time basis
utilizing the Admin Workstation. In addition to providing real-time call
handling statistics, the ICR provides consolidated, historical reporting for all
calls across all attached networks, ACDs, PBXs, and VRUs. Using any desktop
workstation within the network, customers can mix and match data in virtually
any combination, allowing analysis of real-time data with historical data. For
example, customers may want to compare current performance to past performance
over the last few minutes, days, or weeks.
Software license fees for the Intelligent CallRouter vary significantly
based on a number of factors, including the functionality of the system, the
number of sites, the number of agents at each site and the level of redundancy
required. The customer list price for software license fees for the Intelligent
CallRouter software typically range from approximately $420,000 for a three site
configuration with some redundancy to approximately $1 million for an eight site
configuration with extensive redundancy. The Company typically provides
discounts based on volume purchases. The Company and its customers generally
enter into maintenance agreements providing for ongoing service and product
upgrades for a fixed annual fee. Maintenance services and installation services,
which are not included in the license fee, amount to an additional 15% and 10%,
respectively, of the list price license fee. Maintenance contracts are renewable
on an annual basis.
TECHNOLOGY
The Company has developed a number of innovative technologies to support
its open strategy:
Real-Time Routing. The ICR's real-time delivery of enterprise-wide call
center data makes use of innovative Local and Wide Area Network (LAN/WAN)
solutions to efficiently distribute information and facilitate connectivity. A
mixed LAN/WAN environment is supplemented by dial capabilities for both casual
access of data from remote premises as well as alarm notification and paging.
All clients are configured with redundant data paths to central services for
both configuring and monitoring the enterprise. The system is designed to run on
single or multiple Windows NT server-class machines. Interprocess communication
is efficient based on native capabilities within Win-
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<PAGE> 34
dows NT integrated with the Company's processes. The architecture can scale to
support very large numbers of agents, small offices, and home agents.
Fault Tolerance. To meet rigorous requirements for system reliability in
the call processing market, the Company has developed innovative industry
standard fault tolerant software solutions to provide not only tolerance of
hardware, software and communications failures, but also for the loss of an
entire site. The Company's software technology relating to virtual time
synchronization provides fault tolerance at the process level and includes
protection against single-point hardware failures. Detection of failures is
immediate and the Company has augmented standard TCP/IP protocols with features
designed to minimize outages due to communications failures.
Remote Support and Diagnostics Technology. The ICR incorporates extensive
system management capabilities, including alarming with automatic "phone home"
and paging capabilities; symmetric database replication; intelligent PC Server
node management; and tools to provide graphical representations of system
status. Consistent with an open architecture, the system will export Simple
Network Management Protocol (SNMP) "traps" to management systems. Fully
redundant communications paths are enhanced with real-time detection of
communications failures with near instantaneous switch-over to redundant links.
Carrier Connectivity. The Company is certified to control calls on all
three of the major U.S. interexchange carrier networks, AT&T, MCI and Sprint, by
interfacing with the SS7, UDP/IP, and X.25 networks, respectively, using the
proprietary protocols of each carrier. The ICR architecture is designed to
support the introduction of other network interfaces as the Telecommunications
Act of 1996 enables the entry of other providers into the toll-free marketplace.
In addition, the Company is developing interfaces for several international
carriers.
Premises-based Switching/Call Processing lnterfaces. The Company has
developed event-based interfaces to all of the major ACDs. The ICR currently
supports five switches: Lucent DEFINITY, Aspect CallCenter, NTI Meridian,
Rockwell Galaxy and Rockwell Spectrum. By developing event-based tracking of the
ACDs (detecting when any event of interest happens at the ACD), the ICR has the
capability to report accurate enterprise-wide statistics and know accurately
which agents are available and skilled to handle incoming calls. The ICR can
also control, via Post-Routing, how calls directed to or from the switch are
subsequently routed and has the ability to deliver CTI information. By designing
the ICR to have the capability to interface to all ACDs, PBXs, VRUs, and other
premises-based equipment, the ICR enables customers to utilize equipment from
multiple vendors allowing effective use of a multi-vendor switching environment.
In contrast, proprietary solutions require all switches to be purchased from the
same vendor.
Visual Script Editor. The ICR uses visual/object-based call routing
scripts controlled and defined by the customer. The Visual Script Editor is used
to describe how calls are to be routed on a call-by-call basis. Each dialed
number can have a unique treatment or can be handled with a collection of other
dialed numbers. Many scripting objects are defined to assist the script designer
in choosing an appropriate algorithm. The Database Lookup and Application
Gateway objects enable the Script editor to import, in real-time, external
database information or arbitrary data that can be used in subsequent script
objects.
CUSTOMERS
The Company provides its software and services to customers in a variety of
industries. The Company's typical customers are large, high volume users of
toll-free services that conduct a significant portion of their interaction with
their customers using the telephone. The Company announced the Intelligent
CallRouter in August 1994. As of June 30, 1996, the Company had licensed its
products to over 20 companies directly or through its distribution partners.
These customers include some of the largest users of toll-free services in the
world. The Company believes
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<PAGE> 35
that the following list is representative of its target customers by virtue of
call volume, industries represented and the required business applications:
<TABLE>
<S> <C>
America Online MCI Telecommunications
American Express Optus Systems
Continental Airlines Private Healthcare Systems
Fidelity Investments Sprint
GTE Spiegel
Household Credit Services USAir
Matrixx Marketing
</TABLE>
Fidelity, Sprint and America Online accounted for approximately 38.3%,
25.9% and 20.0%, respectively, of the Company's total revenues in 1995, and GTE
Communications Systems Corporation, Fidelity, MCI, Optus and USAir accounted for
approximately 14.8%, 14.8%, 14.0%, 12.9% and 11.9%, respectively, of the
Company's total revenues for the six months ended June 30, 1996.
A description of certain customer relationships follows:
MCI. MCI Telecommunications Corporation is one of the largest and fastest
growing diversified communications companies in the world. The Company has
entered into a three-year agreement with MCI, whereby MCI will offer the
Company's products as a network service within MCI's set of call center
solutions. Under the terms of the agreement, MCI's Call Center Division will
deploy the Company's products as an integral component of MCI's expanded
network-based, call center technology offerings. Additionally, the MCI worldwide
sales force offers a call center solution incorporating the Company's products.
Spiegel. Spiegel is a leading multi-channel specialty retailer. While
catalogs remain its primary distribution channel, Spiegel also markets
merchandise through over 400 Eddie Bauer stores. Spiegel's goal is to provide
excellent customer service through more efficient call center management,
increased agent productivity, and improved load balancing across business units.
Spiegel uses the Company's products to route 20 million yearly calls to its
approximately 1,300 agent stations, located in three geographically dispersed
call centers. Spiegel is using the Company's products in a mixed ACD/VRU
environment to reduce its average speed of answer and automatically balance
loads.
USAir. USAir is one of the world's largest airlines with 4,800 daily
flights servicing over 160,000 passengers. It operates 11 call centers, with
4,000 agents who handle between seven to eight million inbound calls each month.
The Company's products are used in a multi-carrier environment to make routing
decisions based on factors such as agent availability, load balancing across
centers, and data contained in USAir's customer database.
SALES AND MARKETING
The Company's distribution strategy is to sell its software products and
services to major corporations who are significant users of inbound toll-free
services, and have multiple locations with resources that respond to incoming
calls. The Company uses a direct sales force in the United States as its primary
distribution channel to market to these companies. There are currently eight
direct sales representatives located in seven offices throughout the U.S. Each
sales representative carries a quota for a defined geographic territory and is
compensated for all sales within the territory. The Company's sales strategy is
based on a consultative sales process, working closely with customers to
understand and define their needs and determine how they can be addressed by the
Company's products. This strategy continues after the initial sale. The Company,
through ongoing sales, support, training, and maintenance, maintains close
contact with its existing customers in order to determine the customers'
evolving requirements for updates and enhancements.
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<PAGE> 36
In addition to the direct sales organization, the Company has signed
agreements with MCI, Optus and Rockwell Switching Systems Division to complement
direct sales and provide international distribution. MCI has signed a three-year
renewable agreement with the Company to offer its products as a service to
customers on a worldwide basis. Optus is a distributor of the Company's products
in the Australian and New Zealand markets. To complement its domestic sales
strategy, the Company intends to develop its sales channels for its products in
the international markets. The Company plans to continue to address
international markets by using its direct sales force and expects to add several
other distribution partners.
The Company supports its distribution strategy with a variety of focused
marketing activities designed to identify qualified prospects and expand the
Company's reputation. The Company attends several industry trade shows, conducts
numerous informational seminars in different cities, regularly speaks at
industry events, publishes articles and white papers, and uses direct mail. In
addition, the telecommunications marketplace is heavily influenced by reference
accounts and, as such, the Company is dependent upon its existing customers for
favorable references.
As part of its marketing and product strategy, the Company cultivates
relationships with the major ACD/PBX vendors and VRU vendors, as well as the
interexchange carriers. Equipment from each of the ACD/PBX vendors is maintained
at the Company's facilities and technical discussions are ongoing to ensure
tight integration with the various switches. The Company intends to continue to
expand the range and number of products it supports based on customer requests
and market opportunities.
CUSTOMER SERVICE AND SUPPORT
The Company believes that high quality customer service and support are
integral components of the solutions it offers. The Company's customer service
and support organization provides customers with technical support, training,
consulting and implementation/installation services. The Company believes that
in order to meet its customers' support expectations it must invest in and
leverage technology to build its service infrastructure. As of June 30, 1996,
the Company had 10 employees in its customer service and support organization.
All of the Company's customers currently have software maintenance agreements
with the Company that provide for one or more of the following services:
Software Maintenance and Support. The Company's support organization
offers a variety of support services to its customers including telephone,
electronic mail and facsimile customer support through its support services
staff. In addition, the product provides a "call home" application which allows
customers to request service on-line. Initial product license fees do not cover
software maintenance. Through its standard customer support package, the Company
provides its customers with 12-hour weekday telephone support and 24-hour
monitoring and quick response through use of the Company's remote support
technology. Periodic product updates and maintenance releases are included with
the annual support fees for the company's standard support package, which is 15%
of the then-current list price of the licensed products.
Documentation and Training. The Company provides each customer with
product design, documentation and training. The product includes an easy-to-use
graphical user applications interface with on-line help. A complete library of
end-user documentation is also provided with each system. The Company offers
comprehensive training courses in all aspects of the product at its facility in
Littleton, Massachusetts, and at the customer's option, provides on-site
customer training upon request. Fees for education and training services, beyond
those services provided as a part of installation services, are in addition to
and separate from the license fees charged for the Company's software products
and are charged per student, per class or on a time and materials basis.
Consulting. The Company's application consultants are available to work
closely with customers to provide assistance concerning application design and
report customization. Fees for consulting services are charged separately from
the Company's software products on a time and materials
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<PAGE> 37
basis. In addition, the Company intends to continue to develop relationships
with third-party consulting organizations in order to support its customer base.
Installation Services. The Company provides customers with comprehensive
installation services, including initial application design, implementation
planning, system design support, project management, initial education and
training, and coordination of third-party software and hardware acquisition. The
Company's fee for installation services is charged separately from the Company's
licensing fees and is based on a percentage of the current list price of the
products being installed. Fees for the Company's standard installation services
are typically 10% of the then-current list price of the licensed products.
PRODUCT DEVELOPMENT
Since its inception, the Company has made substantial investments in
product development. The Company's development organization was built upon a
base of software professionals with extensive experience in operating systems,
communications, fault tolerance, and software quality processes. Customer
experience and direct input to the product planning process is reflected in all
products designed and delivered by the Company.
The Company announced the Intelligent CallRouter in August 1994 and began
customer shipments in May 1995. The Company plans to introduce enhancements to
the Intelligent CallRouter and new products that can be sold to existing and new
customers. The Company is currently working on several strategic projects that
will enhance the ICR product in the areas of desktop integration, computer
telephony integration, and the use of the Internet and Intranets. There is also
a significant emphasis on enhancing the product to work in international
markets.
The Company intends to expand its existing product offerings and introduce
new products for the call processing software market. Although the Company
expects that most of its new products will be developed internally, the Company
may, based on timing and cost considerations, acquire technology and products
from third parties and evaluate third-party applications for inclusion within
its products on an ongoing basis. The Company believes that its future
performance will depend, in large part, on its ability to maintain and enhance
its current product line, develop new products that achieve market acceptance,
maintain technological competitiveness, meet an expanding range of customer
requirements and continue to recruit highly-skilled and qualified software
professionals. See "Risk Factors -- Dependence on New Products and Rapid
Technological Change."
As of June 30, 1996, the Company's product development, quality assurance
and technical writing staff consisted of 24 employees. The Company's total
expenses for research and development for fiscal years 1993, 1994 and 1995 and
the six months ended June 30, 1996 were $140,000, $1,879,000, $2,322,000 and
$1,388,000, respectively. The Company anticipates that it will continue to
commit substantial resources to research and development in the future and that
product development expenses may increase in absolute dollars in future periods.
To date, the Company's development efforts have not resulted in any capitalized
software development costs.
COMPETITION
The market for telecommunications software products is intensely
competitive and is subject to rapid technological change. Although to date the
Company has experienced limited competition, the Company expects competition to
increase significantly in the future. Currently, the Company's principal
competitors are the interexchange carriers, particularly AT&T, and to a lesser
extent MCI and Sprint. In addition, a number of other companies have introduced
or announced their intention to introduce products that could be competitive
with the Company's products, including Genesys Telecommunications Laboratories
and IEX Corporation. Additional competitors, including traditional ACD
providers, such as Lucent Technologies, Aspect Telecommunications Corporation,
Northern Telecommunications, Inc. and Rockwell International Corporation, may
enter this market. This additional competition could adversely affect the
Company's sales and profitability through
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<PAGE> 38
price reductions, reduced gross margins and loss of market share. In particular,
should one or more interexchange carriers choose to provide or distribute
competitive products and services, the Company's business could be materially
adversely affected. Many of the Company's current and potential competitors have
substantially greater financial, marketing and technical resources than the
Company. See "Risk Factors -- Competition."
The Company believes that the principal competitive factors affecting its
market include product performance and functionality, customer service and
support, product reputation, company reputation, carrier support, ACD support,
fault tolerance, adaptability to individual customer call routing requirements,
scalability, ability to integrate with third party products, ease-of-use, price,
and effectiveness of sales and marketing efforts. Although the Company believes
that it currently competes favorably with respect to such factors, there can be
no assurance that the Company can maintain its competitive position against
current and potential competitors, especially those with greater financial,
marketing, service, support, technical, and other resources than the Company.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company relies primarily on a combination of patent, copyright,
trademark and trade secrets laws, as well as confidentiality agreements to
protect its proprietary rights. The Company has been issued one patent relating
to the architecture, operating methodologies and interfaces of the Company's
Intelligent CallRouter. The Company also has one patent application pending in
the United States and internationally. While the Company believes that its
pending patent application relates to a patentable invention, there can be no
assurance that such patent application or any future patent application will be
granted or that any patent relied upon by the Company will not be challenged,
invalidated or circumvented, or that rights granted thereunder will provide
competitive advantages to the Company. Moreover, 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 the use of information that the
Company regards as proprietary. In addition, the laws of some foreign countries
do not protect the Company's proprietary rights to as great an extent as do the
laws of the United States. There can be no assurance that the Company's means of
protecting its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology.
The Company is not aware that any of its products infringes the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim infringement by the Company with respect to current or future
products. 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, resulting in costly litigation, cause product shipment
delays or require the Company to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, if at all, which could have a material adverse effect
upon the Company's business, operating results and financial condition.
The software and network adapter necessary to enable the Company's
Intelligent CallRouter to interface with the AT&T network is licensed by the
Company from a single vendor under a perpetual, fully-paid license. Although the
Company has access to the source code underlying this software and rights to
manufacture the network adapter, if for any reason the vendor does not make the
software or network adapter available to the Company, there can be no assurance
that the Company will be able to develop these products on a timely basis.
EMPLOYEES
As of June 30, 1996, the Company had a total of 55 employees, all of whom
are based in the United States. Of the total, 24 were in research and
development, 10 were in support and support services, 15 were in sales and
marketing and 6 were in administration and finance. The Company's
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<PAGE> 39
future performance depends in significant part upon the continued service of its
key technical, sales and marketing, and senior management personnel and its
continuing ability to attract and retain highly qualified technical, sales and
marketing, and managerial personnel. Competition for such personnel is intense
and there can be no assurance that the Company will be successful in attracting
or retaining such personnel in the future. None of the Company's employees are
represented by a labor union or are subject to a collective bargaining
agreement. The Company has not experienced any work stoppages and considers its
relations with its employees to be good. See "Risk Factors -- Management of
Growth; Dependence Upon Key Personnel."
FACILITIES
The Company's executive offices are located in Littleton, Massachusetts in
a facility consisting of approximately 14,000 square feet, under a lease which
expires in December 1998. In addition, the Company leases office space in the
metropolitan areas of Atlanta, Chicago, Dallas, Phoenix and Washington, D.C.
Management believes that its current facilities will not meet its needs through
the next twelve months. The Company is evaluating alternatives for additional
space and believes that suitable additional space will be available to
accommodate expansion of the Company's operations on commercially reasonable
terms.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, and their ages as of
September 30, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -----------------------------------------------
<S> <C> <C>
John C. Thibault..................... 42 President, Chief Executive Officer and Director
Louis J. Volpe....................... 47 Senior Vice President of Sales and Marketing
Timothy J. Allen..................... 46 Vice President of Finance, Chief Financial
Officer, Treasurer and Assistant Secretary
G. Wayne Andrews..................... 45 Vice President, Chief Technology Officer and
Director
Steven H. Webber..................... 52 Vice President of Engineering
Alexander V. d'Arbeloff(1)(2)........ 68 Director
Gardner C. Hendrie(2)................ 64 Director
W. Michael Humphreys(1)(2)........... 44 Director
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
John C. Thibault has served as President, Chief Executive Officer and
Director of the Company since January 1994. From April 1991 to October 1993, Mr.
Thibault served as President, Chief Executive Officer and Director of Coral
Network Corporation. From April 1988 to April 1991, Mr. Thibault served as an
officer of Motorola, Inc. and Senior Vice President and General Manager of
Motorola's Codex product division. From May 1986 to April 1988, Mr. Thibault was
President and Chief Executive Officer of PBX manufacturer Intecom, Inc., a
subsidiary of Wang Laboratories. Prior to his position at Intecom, he held
several senior management positions over an 11-year period with Wang.
Louis J. Volpe has served as Senior Vice President of Sales and Marketing
of the Company since May 1996. From February 1995 to April 1996, Mr. Volpe
served as Vice President of Marketing of the Company. Mr. Volpe served as Senior
Vice President of Marketing and Operations of Parametric Technology Corporation
from May 1993 to January 1995 and as Vice President of Marketing and Operations
from September 1989 to May 1993. Prior to Parametric, Mr. Volpe was an executive
at Prime Computer. Mr. Volpe is a director of Pure Atria, Inc. and Softdesk
Inc., each of which is a publicly-traded company.
Timothy J. Allen has served as Vice President of Finance, Chief Financial
Officer, Treasurer and Assistant Secretary of the Company since February 1995.
From March 1990 to September 1994, Mr. Allen served as Vice President and Chief
Financial Officer of Object Design, Inc. From July 1988 to October 1990, Mr.
Allen served as Vice President of Finance and Chief Accounting Officer for
Xyvision Inc. From January 1983 to June 1988, Mr. Allen served as Xyvision's
corporate controller. Prior to joining Xyvision, Mr. Allen was Corporate
Controller at Nixdorf Computer Corporation.
G. Wayne Andrews, a co-founder of the Company, has served as a Director of
the Company since June 1993 and as Vice President and Chief Technical Officer of
the Company since January 1994 and served as President of the Company from June
1993 to December 1993. From October 1989 to December 1992, Mr. Andrews was
co-founder and Vice President of Teloquent Communications Corporation. At
Teloquent, Mr. Andrews held positions as Vice President Product Management, Vice
President Engineering and Vice President Customer Support. Prior to co-founding
Teloquent, Mr. Andrews was Director, International Development Center, and
Director, Advanced Switching Systems at Teknekron Infoswitch Corp.
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Steven H. Webber, a co-founder of the Company, has served as Vice President
of Engineering of the Company since October 1993. Prior to joining the Company,
Mr. Webber held a number of key technical and management positions with Stratus
Computer Inc., including Chief Technical Advisor and Director of Strategic
Planning. Prior to Stratus, Mr. Webber held a number of key technical positions
at Honeywell Information Systems, Inc. and Massachusetts Institute of
Technology.
Alexander V. d'Arbeloff has been a Director of the Company since July 1994.
Mr. d'Arbeloff is Chairman and Chief Executive Officer of Teradyne, Inc. He
co-founded Teradyne in 1960 and became President and Chief Executive Officer in
1971. Mr. d'Arbeloff is a life member of the MIT Corporation, Chairman of
Semi/Sematech, a trustee of Partners Health Care System, a trustee of
Massachusetts General Hospital and a trustee of the New England Conservatory. He
is a director of Stratus Computer, Inc., PRI Automation, Inc. and BTU
International Corporation, each of which is a publicly traded company. He also
serves on the boards of several privately-held companies.
Gardner C. Hendrie has been a Director of the Company since October 1993.
Since 1988, Mr. Hendrie has been a general partner of Sigma Partners, a private
venture capital firm. Mr. Hendrie is a director of Stratus Computer, Inc., which
is a publicly-traded company. He also serves on the boards of several
privately-held companies.
W. Michael Humphreys has been a Director of the Company since October 1993.
Mr. Humphreys has been a partner of Matrix Partners, a private venture capital
firm since 1982. Prior to his association with Matrix, he was a general partner
of Hellman, Ferri Investment Associates. Mr. Humphreys is a director of several
privately-held companies.
Each director holds office until that director's successor has been elected
and qualified. Upon the closing of this offering, the Company's Board of
Directors will be divided into three classes. Mr. Andrews will serve in the
class whose term expires in 1997; Messrs. d'Arbeloff and Hendrie will serve in
the class whose term expires in 1998; and Messrs. Humphreys and Thibault will
serve in the class whose term expires in 1999. Upon the expiration of the term
of each class of directors, directors comprising such class will be elected for
a three-year term at the annual meeting of stockholders in the year in which
such term expires.
Certain of the current directors of the Company were nominated and elected
in accordance with a stockholders' agreement, which will terminate upon the
closing of this offering. See "Certain Transactions."
Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve until their successors have been duly elected and
qualified. There are no family relationships among any of the executive officers
or directors of the Company.
COMMITTEES OF THE BOARD
The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company and administers the Company's stock option plans.
The members of the Compensation Committee currently are Messrs. Humphreys,
d'Arbeloff and Hendrie. The Board of Directors also has an Audit Committee,
which reviews the results and scope of the audit and other services provided by
the Company's independent accountants. The members of the Audit Committee
currently are Messrs. Humphreys and d'Arbeloff.
BOARD COMPENSATION
Each non-employee director of the Company serves without compensation.
Directors who are employees of the Company are not paid any separate fees for
serving as directors. In July 1994, in conjunction with his election as a
director, Mr. d'Arbeloff purchased shares of Series A Convertible Participating
Preferred Stock and Common Stock. See "Certain Transactions."
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<PAGE> 42
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was established in
October 1993, and currently consists of Messrs. d'Arbeloff, Hendrie and
Humphreys. Mr. Hendrie and Mr. Humphreys are general partners of private venture
capital firms which purchased shares of Convertible Preferred Stock. Mr.
d'Arbeloff has purchased shares of Convertible Preferred Stock and Common Stock.
See "Certain Transactions."
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation earned in the year ended December 31, 1995 by the Company's Chief
Executive Officer and its five most highly compensated executive officers during
the year ended December 31, 1995 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1)
-------------------------------------------- -------- ------- ---------------
<S> <C> <C> <C>
John C. Thibault............................ $164,583 $26,915 $ 224
President, Chief Executive
Officer and Director
Louis J. Volpe.............................. 101,200 10,571
Senior Vice President of
Sales and Marketing(2)
Timothy J. Allen............................ 100,625 14,071 116
Vice President of Finance,
Chief Financial Officer,
Treasurer and Assistant
Secretary
G. Wayne Andrews............................ 115,000 10,571 122
Vice President,
Chief Technology
Officer and Director
Steven H. Webber............................ 115,000 10,571 302
Vice President of
Engineering
Joseph A. Murphy............................ 112,260 25,500 30,075
Vice President of
Sales(3)
</TABLE>
- ---------------
(1) The Company did not grant any restricted stock awards or stock appreciation
rights to the Named Executive Officers during the year ended December 31,
1995. Other annual compensation in the form of perquisites and other
personal benefits has been omitted because the aggregate amount of such
perquisites and other personal benefits constituted less than $50,000 or 10%
of each executive's total annual salary. Consists of premiums paid on behalf
of named executives for excess life insurance coverage. Consists of amounts
paid to Mr. Murphy for relocation expenses.
(2) Mr. Volpe's annual compensation was paid to Mr. Volpe for his services as a
consultant to the Company prior to his becoming an employee of the Company
in April 1996.
(3) Mr. Murphy's employment was terminated by the Company in April 1996.
37
<PAGE> 43
STOCK PLANS
1993 Restricted Stock Purchase Plan. The 1993 Restricted Stock Purchase
Plan (the "1993 Plan") was adopted by the Board of Directors in October 1993 and
approved by the stockholders of the Company in December 1993. A maximum of
1,324,063 shares of Common Stock may be issued and sold pursuant to the 1993
Plan. Under the 1993 Plan, shares of Common Stock may be sold to directors,
officers, consultants and other key personnel of the Company (collectively
"Participants") at a purchase price determined by the Compensation Committee of
the Board of Directors. As of September 30, 1996, 986,143 shares of Common Stock
were outstanding under the 1993 Plan. All shares sold pursuant to the 1993 Plan
are subject to repurchase by the Company at the original purchase price for up
to a period of five years from the date of purchase, unless the shares become
"vested" under the terms of the 1993 Plan. None of the shares become vested
until the first anniversary of the date of purchase by the Participant. A
Participant vests in twenty percent of the shares on the first anniversary of
the date of purchase and, thereafter, the remaining shares become vested on a
monthly basis through the fifth anniversary of the date of purchase. In the
event of a change in control, if the Participant has been employed by the
Company for at least six months, an additional twenty percent of the shares held
by the Participant pursuant to the 1993 Plan will become vested shares, unless
such change in control has not been approved by the Board of Directors, in which
event all shares held by the Participant pursuant to the 1993 Plan will become
vested shares.
1995 Stock Option Plan. The 1995 Stock Option Plan (the "1995 Plan") was
adopted by the Board of Directors in September 1995 and approved by the
stockholders of the Company in January 1996. A maximum of 1,474,726 shares of
Common Stock may currently be issued pursuant to the 1995 Plan upon exercise of
options. The number of shares of Common Stock available for grants under the
1995 Plan will be increased by the number of shares repurchased by the Company
from time to time under the 1993 Plan. The maximum number of shares will
increase, effective January 1, 1997 and each January 1 thereafter during the
term of the 1995 Option Plan, by an amount equal to four percent of the total
number of shares of Common Stock issued and outstanding as of the close of
business on December 31 of the preceding year. No more than an aggregate of
6,000,000 shares of Common Stock may be issued pursuant to the exercise of
options granted under the 1995 Plan. Under the 1995 Plan, incentive stock
options may be granted to employees and officers of the Company and
non-qualified stock options may be granted to consultants, employees and
officers of the Company.
The 1995 Plan is administered by the Compensation Committee of the Board of
Directors, subject to the supervision and control of the entire Board. Subject
to the provisions of the 1995 Plan, the Compensation Committee has the authority
to select optionees and determine the terms of the options granted, including
(i) the number of shares subject to each option, (ii) when the option becomes
exercisable, (iii) the exercise price of the option (which in the case of an
incentive stock option cannot be less than the fair market value of the Common
Stock on the date of grant, or less than 110% of fair market value in the case
of employees or officers holding 10% or more of the voting stock of the
Company), (iv) the duration of the option, and (v) the time, manner and form of
payment upon exercise of an option.
Options granted under the 1995 Plan vest and become exercisable starting
one year after the date of grant, with twenty percent of the shares subject to
an option becoming exercisable at that time and 1/60th of the shares subject to
the option becoming exercisable each month thereafter. The Option Agreements
governing options granted under the 1995 Plan provide that in the event of a
change in control, if the optionee has been employed by the Company for at least
six months, an additional twenty percent of the options held by the optionee
will vest and become immediately exercisable, unless such change in control has
not been approved by the Board of Directors, in which event all options will
vest and become immediately exercisable.
38
<PAGE> 44
An option is not transferrable by the optionee except by will, by the laws
of descent and distribution or pursuant to a qualified domestic relations order.
Options are exercisable only while the optionee remains in the employ of the
Company or for a short period of time thereafter. If an optionee becomes
permanently disabled or dies while in the employ of the Company, the option is
exercisable prior to the last day of the sixth or twelfth month, respectively,
following the date of termination of employment. If the optionee leaves the
employ of the Company for any other reason, the option is exercisable for only
thirty days following the date of termination of employment, which time period
may be extended by the Compensation Committee. Options which are exercisable
following termination of employment are exercisable only to the extent that the
optionee was entitled to exercise such options on the date of such termination.
As of September 30, 1996, options to purchase 865,966 shares of Common
Stock were outstanding under the 1995 Plan, of which options to purchase 8,400
shares were then exercisable. As of September 30, 1996, the following executive
officers held options to purchase Common Stock in the amounts indicated: John C.
Thibault (98,750 shares); Timothy J. Allen (30,000 shares); G. Wayne Andrews
(28,000 shares); Louis J. Volpe (163,867 shares); and Steven H. Webber (63,000
shares).
1996 Employee Stock Purchase Plan. The 1996 Employee Stock Purchase Plan
(the "1996 Purchase Plan") for employees of the Company was adopted by the Board
of Directors and approved by the stockholders of the Company in September 1996.
The 1996 Purchase Plan authorizes the issuance of a maximum of 250,000 shares of
Common Stock pursuant to the exercise of nontransferable options granted to
participating employees.
The 1996 Purchase Plan is administered by the Compensation Committee of the
Board of Directors. All employees of the Company whose customary employment is
24 hours or more per week and have been employed by the Company for at least six
months are eligible to participate in the 1996 Purchase Plan. Employees who own
5% or more of the Company's stock and directors who are not employees of the
Company may not participate in the 1996 Purchase Plan. To participate in the
1996 Purchase Plan, an employee must authorize the Company in writing to deduct
an amount (not less than 1% nor more than 10% of a participant's base
compensation) from his or her pay commencing on January 1 and July 1 of each
year (each a "Purchase Period"). On the first day of each Purchase Period, the
Company grants to each participating employee an option to purchase up to 1,000
shares of Common Stock. The exercise price for the option for each Purchase
Period is the lesser of 85% of the fair market value of the Common Stock on the
first or last business day of the Purchase Period. The fair market value will be
the closing selling price of the Common Stock as quoted on the Nasdaq National
Market. If an employee is not a participant on the last day of the Purchase
Period, such employee is not entitled to exercise his or her option, and the
amount of his or her accumulated payroll deduction will be refunded to the
employee. An employee's rights under the 1996 Purchase Plan terminate upon his
or her voluntary withdrawal from the Plan at any time or upon termination of
employment.
Common Stock for the 1996 Purchase Plan will be made available either from
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Company, including shares repurchased in the open market.
EXECUTIVE INCENTIVE PROGRAM
The Company has adopted a 1996 Executive Incentive Program (the "Incentive
Program") which is available to executive officers and other management
employees of the Company. Under the Incentive Program, participants may receive
specified bonuses based upon the Company's attainment of certain financial
targets and strategic initiatives in 1996 and job performance evaluations. The
Incentive Program also provides that options to purchase an aggregate of 68,217
shares previously granted to the participants, which would otherwise vest on the
fifth anniversary of the
39
<PAGE> 45
date of grant, will be fully vested on the first anniversary of the date of
grant, subject to the achievement of the foregoing criteria.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
Messrs. Thibault, Allen, Andrews, Volpe and Webber are parties to change in
control agreements with the Company which provide for salary continuation and
other benefits upon the occurrence of certain events following a change of
control. These events will occur if such person is terminated without cause or
constructively terminated following a change of control. Upon the occurrence of
such events, the Company is required to continue to pay such person his base
salary for a period of twelve months after termination and provide medical
benefits to such person for such period.
LIMITATION OF LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation limits the personal
liability of directors to the Company, and the Company's Amended and Restated
Bylaws provide that the Company shall indemnify the Company's directors and
officers, in each case to the full extent permitted by the Delaware General
Corporation Law, including under circumstances in which indemnification is
otherwise discretionary under Delaware law. See "Description of Capital
Stock -- Certain Charter, Bylaw and Statutory Provisions Affecting
Stockholders."
40
<PAGE> 46
CERTAIN TRANSACTIONS
CERTAIN STOCK TRANSACTIONS
On September 30, 1993, the Company issued an aggregate of 3,300,000 shares
of Series A Convertible Participating Preferred Stock for aggregate
consideration of $3,300,000 in a private venture capital financing, at a price
of $1.00 per share. The following 5% or greater stockholders and affiliated
entities were purchasers of the Series A Convertible Participating Preferred
Stock in the amounts indicated: Matrix Partners III, L.P. (1,160,000 shares);
Sigma Partners II, L.P. (985,400 shares); Sigma Associates II, L.P. (74,600
shares); and Atlas Venture Fund II, L.P. (750,000 shares).
On January 5, 1994, the Company issued 410,250 shares of restricted Common
Stock to John C. Thibault, President and Chief Executive Officer, at a price per
share of $0.10. The Company loaned Mr. Thibault $36,922 in order to fund a
portion of the purchase of such shares, which loan bears interest at 5.25% per
year. The loan is required to be repaid on the first anniversary of the closing
of this offering.
On July 29, 1994, the Company entered into a Stock Purchase Agreement with
Alexander d'Arbeloff pursuant to which the Company issued to Mr. d'Arbeloff
100,000 shares of Series A Convertible Participating Preferred Stock at a price
per share of $1.00. On such date, Mr. d'Arbeloff also purchased 50,000 shares of
Common Stock at a price per share of $0.10 pursuant to the 1993 Plan.
On July 29, 1994, the Company issued an aggregate of 2,604,286 shares of
Series B Convertible Participating Preferred Stock for an aggregate
consideration of $4,557,500 in a private venture capital financing, at a price
of $1.75 per share. The following 5% or greater stockholders, affiliated
entities, executive officers and directors were purchasers of the Series B
Convertible Participating Preferred Stock in the amounts indicated: New
Enterprise Associates VI, Limited Partnership (971,429 shares); Matrix Partners
III, L.P. (542,857 shares); Sigma Partners II, L.P. (462,343 shares); Sigma
Associates II, L.P. (34,800 shares); Atlas Venture Fund II, L.P. (351,429
shares); Alexander d'Arbeloff (90,000 shares); G. Wayne Andrews (5,714 shares);
John C. Thibault (5,714 shares); and Steven H. Webber (5,714 shares).
On August 9, 1995, the Company issued an aggregate of 1,712,329 shares of
its Series C Convertible Participating Preferred Stock for an aggregate
consideration of $4,000,000 in a private venture capital financing, at a price
of $2.336 per share. The following 5% or greater stockholders, affiliated
entities, executive officers and directors were purchasers of the Series C
Convertible Participating Preferred Stock in the amounts indicated: Fidelity
Ventures Limited (1,048,801 shares); Matrix Partners III, L.P. (200,946 shares);
Sigma Partners II, L.P. (170,888 shares); Sigma Associates II, L.P. (12,863
shares); Atlas Venture Fund II, L.P. (129,974 shares); New Enterprise Associates
VI, Limited Partnership (114,634 shares); and Alexander d'Arbeloff (22,421
shares).
On January 24, 1996, the Company issued an aggregate of 70,000 shares of
Series C Convertible Participating Preferred Stock to certain executive officers
and other employees at a purchase price of $2.336 for an aggregate consideration
of $163,520. The following executive officers were purchasers of the Series C
Convertible Participating Preferred Stock in the following amounts: Timothy J.
Allen (1,000 shares); G. Wayne Andrews (4,000 shares); and Louis J. Volpe (5,000
shares).
The terms of the Convertible Preferred Stock provided that each share of
Convertible Preferred Stock would automatically convert into one share of Common
Stock immediately prior to this offering and, upon conversion, each holder of
Convertible Preferred Stock would be entitled to receive a cash payment equal to
the original purchase price of the Convertible Preferred Stock. On September 26,
1996, the Board of Directors and stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to provide that, in lieu
of any cash payment in connection with the automatic conversion of the
Convertible Preferred Stock in an initial public offering, the Convertible
Preferred Stock will be converted into an additional number of
41
<PAGE> 47
shares of Common Stock determined by dividing fifty percent of the original
purchase price of the Convertible Preferred Stock by the initial public offering
price. Accordingly, at an assumed initial public offering price of $9.00 per
share, each share of Series A Convertible Participating Preferred Stock, Series
B Convertible Participating Preferred Stock and Series C Convertible
Participating Preferred Stock will automatically convert into 1.0555, 1.0972 and
1.1297 shares of Common Stock, respectively, immediately prior to the closing of
this offering.
The investors who purchased shares of Series A, Series B and Series C
Convertible Participating Preferred Stock, which are convertible into Common
Stock as described above, and certain executive officers have certain
registration rights with respect to the shares of Common Stock. See "Shares
Eligible for Future Sale -- Registration Rights."
The Company is a party to an Amended and Restated Stockholders Agreement
dated August 9, 1995, with certain of its shareholders, including certain of its
executive officers and entities affiliated with certain of its directors,
pursuant to which such stockholders agreed to vote all securities of the Company
owned by them to elect as directors of the Company (i) two persons nominated by
Matrix Partners III, L.P., Sigma Partners II, L.P., Sigma Associates, II, L.P.
and Atlas Venture Fund II, L.P., (ii) one person nominated by certain members of
the Company's management, including Messrs. Thibault, Andrews and Webber, (iii)
the Chief Executive Officer of the Company, and (iv) one person nominated by
Matrix Partners III, L.P., Sigma Associates, L.P., Atlas Ventures Fund II, L.P.,
Sigma Partners II, L.P., Atlas Venture Fund II, L.P., New Enterprise Associates
VI Limited Partnership and Fidelity Ventures Limited. The Stockholders Agreement
will terminate upon the closing of this offering.
OTHER RELATIONSHIPS
W. Michael Humphreys, a director of the Company, is a general partner of
Matrix III Management Company, a general partner of Matrix Partners III, L.P., a
greater than 5% stockholder of the Company. Gardner C. Hendrie, a director of
the Company, is a general partner of Sigma Management II, L.P., the general
partner of Sigma Partners II, L.P., a greater than 5% stockholder of the
Company.
Fidelity Investors Limited Partnership, a greater than 5% stockholder of
the Company, is an affiliate of Fidelity Investments ("Fidelity"), one of the
Company's customers. The Company recognized approximately $587,000 and $574,000
in revenue from Fidelity during the year ended December 31, 1995 and the six
months ending June 30, 1996, respectively, representing approximately 38.3% and
14.8% of the Company's total revenues for such periods. The purchases by
Fidelity for the year ended December 31, 1995 were made through Aspect
Telecommunications Corporation ("Aspect"), a stockholder of the Company. The
Company negotiated this transaction with Fidelity and Aspect on an arms' length
basis.
The Company has adopted a policy pursuant to which all future transactions
between the Company and its officers, directors and affiliates will be on terms
no less favorable to the Company than could be obtained from unrelated third
parties and will be approved by a majority of the disinterested members of the
Company's Board of Directors.
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<PAGE> 48
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 30, 1996, and as
adjusted to reflect the sale of the shares offered hereby by, (i) each person
who is known by the Company to own beneficially more than 5 % of the outstanding
shares of Common Stock, (ii) each director and Named Executive Officer, and
(iii) all directors and current executive officers of the Company as a group.
Unless otherwise indicated below, to the knowledge of the Company, all persons
listed below have sole voting and investment power with respect to their shares
of Common Stock, except to the extent authority is shared by spouses under
applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED AFTER
OFFERING THE OFFERING(1)(2)
--------------------- ----------------------
NUMBER PERCENT NUMBER PERCENT
--------- ------- ---------- -------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS
Matrix Partners III, L.P...................... 2,047,102 19.0% 2,047,102 15.8%
1000 Winter Street
Suite 4500
Waltham, MA 02154
Sigma Partners II, L.P.
Sigma Associates II, L.P.(3)................ 1,871,961 17.4 1,871,961 14.4
2884 Sand Hill Road
Suite 121
Menlo Park, CA 94025
Atlas Venture Fund II, L.P.................... 1,324,102 12.3 1,324,102 10.2
222 Berkeley Street
Suite 1950
Boston, MA 02116
New Enterprise Associates VI,
Limited Partnership......................... 1,195,383 11.1 1,195,383 9.2
1119 St. Paul Street
Baltimore, MD 21202
Fidelity Investors Limited Partnership........ 1,184,912 11.0 1,184,912 9.1
82 Devonshire Street
Boston, MA 02109
NAMED EXECUTIVE OFFICERS AND DIRECTORS
Gardner C. Hendrie(4)......................... 1,871,961 17.4 1,871,961 14.4
W. Michael Humphreys(5)....................... 2,047,102 19.0 2,047,102 15.8
G. Wayne Andrews(6)........................... 486,882 4.5 486,882 3.8
John C. Thibault(7)........................... 444,363 4.1 444,363 3.4
Steven H. Webber.............................. 378,961 3.5 378,961 2.9
Alexander V. d'Arbeloff(8).................... 279,635 2.6 279,635 2.2
Louis J. Volpe(9)............................. 181,922 1.7 181,922 1.4
Timothy J. Allen(10).......................... 81,911 0.8 81,911 0.6
Joseph A. Murphy.............................. 46,019 0.4 46,019 0.3
All Executive Officers and Directors as a
group (8 persons)(4)(5)..................... 5,772,737 53.5% 5,772,737 44.5%
</TABLE>
- ---------------
(1) 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 held by that person that are
currently exercisable, or become exercisable within 60 days following
43
<PAGE> 49
September 30, 1996, are deemed outstanding. However, such shares are not
deemed outstanding for purposes of computing the percentage ownership of
any other person. The number of shares of Common Stock deemed outstanding
prior to this offering includes (i) 2,324,837 shares of Common Stock
outstanding as of September 30, 1996, (ii) an aggregate of 8,462,086 shares
of Common Stock issuable upon conversion of the Convertible Preferred
Stock, based upon an assumed initial public offering price of $9.00 and
(iii) shares issuable pursuant to options held by the respective person or
group which may be exercised within 60 days after September 30, 1996. No
options are presently exercisable within 60 days after September 30, 1996.
The number of shares of Common stock deemed outstanding after this offering
includes an additional 2,200,000 shares of Common Stock that are being
offered for sale by the Company in this offering.
(2) In the event that the Underwriters' over-allotment option is exercised in
full, the following stockholders will sell the following number of shares:
G. Wayne Andrews (50,000 shares) and John C. Thibault (15,000 shares). The
remaining shares subject to the Underwriters' over-allotment option will be
sold by the Company.
(3) Consists of 1,740,502 shares of Common Stock held by Sigma Partners II,
L.P. and 131,459 shares of Common Stock held by Sigma Associates II, L.P.
Sigma Management II, L.P. serves as a general partner for the
aforementioned entities, and as such exercises sole investment and voting
power.
(4) Includes 1,871,961 shares held by Sigma Partners II, L.P. and Sigma
Associates II, L.P. Mr. Hendrie is a general partner of Sigma Management
II, L.P. which is the general partner of each of Sigma Partners II, L.P.
and Sigma Associates II, L.P. and as such may be deemed to beneficially own
all of such shares. Mr. Hendrie disclaims beneficial ownership of such
shares, except to the extent of his proportionate pecuniary interest
therein.
(5) Includes 2,047,102 shares held by Matrix Partners III, L.P. Mr. Humphreys
is a general partner of Matrix III Management Company, the general partner
of Matrix Partners III, L.P. and as such may be deemed to beneficially own
all of such shares. Mr. Humphreys disclaims beneficial ownership of such
shares, except to the extent of his proportionate pecuniary interest
therein.
(6) Includes 8,200 shares of Common Stock held by Mr. Andrews' children under
the Massachusetts Uniform Transfer to Minors Act.
(7) Includes 22,844 shares of Common Stock held by Mr. Thibault's children
under the Massachusetts Uniform Transfer to Minors Act.
(8) Includes 28,333 shares of restricted Common Stock which remain subject to
vesting and the Company's right to repurchase at cost.
(9) Includes 113,085 shares of restricted Common Stock which remain subject to
vesting and the Company's right to repurchase at cost.
(10) Includes (i) 47,833 shares of restricted Common Stock which remain subject
to vesting and the Company's right to repurchase at cost; (ii) 7,000 shares
of Common Stock held by Mr. Allen's children under the Massachusetts
Uniform Transfer to Minor Act; and (iii) 3,782 shares of Common Stock held
jointly by Mr. Allen and his wife.
44
<PAGE> 50
DESCRIPTION OF CAPITAL STOCK
Effective upon the closing of this offering, the authorized capital stock
of the Company will consist of 40,000,000 shares of Common Stock, $.01 par value
per share, and 5,000,000 shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock").
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of the Company's Restated Certificate of
Incorporation as amended and restated upon the closing of this offering (the
"Certificate of Incorporation") which is included as an exhibit to the
Registration Statement, and by the provisions of applicable law.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of Common Stock are entitled to receive ratable dividends when, as and if
declared by the Board of Directors out of funds legally available therefor,
subject to any preferential dividend rights of any then outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, holders
of Common Stock share ratably in the assets of the Company available for
distribution to its stockholders, subject to the preferential rights of any then
outstanding Preferred Stock. The shares of Common Stock outstanding upon the
effective date of this Prospectus are, and the shares offered hereby 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 holders of shares of any Preferred Stock that the
Company may designate in the future.
PREFERRED STOCK
After the closing of this offering, the Company's Board of Directors will
have the authority, without further stockholder approval, to issue up to
5,000,000 shares of Preferred Stock in one or more series and to fix the
relative rights, preferences, privileges, qualifications, limitations and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of the Company, may discourage bids for the Company's Common Stock at a
premium over the market price of the Common Stock and may adversely affect the
market price and the voting and other rights of the holders of the Common Stock.
The Company has no present plans to issue any shares of Preferred Stock.
CERTAIN CHARTER, BYLAW AND STATUTORY PROVISIONS AFFECTING STOCKHOLDERS
Classified Board and Other Matters. The Company's Board of Directors will
be divided into three classes, each of which, after a transitional period, will
serve for three years, with one class being elected each year. Under the
Delaware General Corporation Law, in the case of a corporation having a
classified Board, stockholders may remove a Director only for cause. Advance
notice of stockholder nominations and any other matter to be brought before a
meeting of stockholders will be required to be given in writing to the Secretary
of the Company within the time periods in the Bylaws. The Certificate of
Incorporation provides that special meetings of stockholders of the Company may
be called only by the Board of Directors, the Chairman of the Board of Directors
or the President. The Certificate of Incorporation also provides that no action
required or permitted to be taken at any Annual or Special Meeting of the
Stockholders of the Company may be taken without a meeting, unless the unanimous
consent of stockholders entitled to vote thereon is obtained. The affirmative
vote of the holders of at least 80% of the combined voting power of then
outstanding voting stock of the Company will be required to alter, amend or
repeal the foregoing provisions. The classification of the Board of Directors
and the limitations on the removal of directors and filling of
45
<PAGE> 51
vacancies could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, control of the
Company.
Section 203 of Delaware Law. Following the consummation of this offering,
the Company will be subject to the "business combination" statute of the
Delaware General Corporation Law. In general, such statute prohibits a
publicly-held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) the transaction is approved by the Board of
Directors prior to the date the interested stockholder obtains such status, (ii)
upon the consummation of the transaction which resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by (a) persons who are directors and also
officers and (b) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (iii) on or subsequent to
such date the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the "interested stockholder." A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the stockholder. An "interested stockholder" is a person
who, together with affiliates and associates, owns (or within three years, did
own) 15% or more of a corporation's voting stock. By virtue of the Company's
decision not to elect out of the statute's provision, the statute applies to the
Company. The statute could prohibit or delay the accomplishment of mergers or
other takeover or change of control attempts with respect to the Company and,
accordingly, may discourage attempts to acquire the Company.
Directors Liability. The Certificate of Incorporation of the Company
provides that no director shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for (i) any breach of the director's duty of loyalty to the Company or
its stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct; (iii) acts or omissions in respect of certain unlawful
dividend payments or stock redemptions or repurchases; or (iv) any transaction
from which such director derives improper personal benefit. The effect of this
provision is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
The limitations summarized above, however, do not affect the ability of the
Company or its stockholders to seek non-monetary based remedies, such as an
injunction or rescission, against a director for breach of his fiduciary duty
nor would such limitations limit liability under the Federal Securities Laws.
The Company's Amended and Restated Bylaws provide that the Company shall, to the
full extent permitted by the Delaware General Corporation Law, as amended from
time to time, indemnify and advance expenses to each of its currently acting and
former directors, officers, employees and agents arising in connection with
their acting in such capacities.
Certain provisions described above may have the effect of delaying
shareholder actions with respect to certain business combinations and the
election of new members to the Board of Directors. As such, the provisions could
have the effect of discouraging open market purchases of the Company's Common
Stock because they may be considered disadvantages by a shareholder who desires
to participate in a business combination or elect a new director. The existence
of these provisions may have an adverse effect on the market price of the Common
Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Fleet Bank.
46
<PAGE> 52
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 12,986,923 shares
of Common Stock outstanding (assuming no exercise of outstanding options). Of
these shares, the 2,200,000 shares sold in this offering will be freely tradable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"), except that any shares purchased by "affiliates"
of the Company, as that term is defined in Rule 144 ("Rule 144") under the
Securities Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES
The remaining 10,786,923 shares of Common Stock outstanding upon completion
of this offering will be "restricted securities" as that term is defined in Rule
144 under the Securities Act ("Restricted Shares"). Restricted Shares may be
sold in the public market only if registered or if they qualify for an exemption
from registration under Rule 144 promulgated under the Securities Act, which is
summarized below. Sales of the Restricted Shares in the public market, or the
availability of such shares for sale, could adversely affect the market price of
the Common Stock. Of the Restricted Shares, up to 350,442 may be eligible for
sale in the public market immediately after this offering pursuant to Rule
144(k) under the Securities Act, of which 348,331 shares are subject to lock-up
agreements as described below. An additional 6,925,250 Restricted Shares will be
eligible for resale under Rule 144 commencing 90 days after the effective date
of this offering. All of these 6,925,250 shares are subject to lock-up
agreements as described below (the "Lock-Up Agreements"). Approximately 90 days
after the date of this Prospectus, the Company intends to register on one or
more registration statements on Form S-8 approximately 2,871,119 shares of
Common Stock issuable under its restricted stock purchase plan, stock
restriction agreements and stock option plan. Shares covered by such
registration statements will be eligible for sale in the public market after the
effective date of such registration, except for 1,521,542 shares which are
subject to the Lock-Up Agreements. In addition, 9,674,416 of the Restricted
Shares are entitled to registration rights as described below.
In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of this offering, a person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least two years
(including the holding period of any prior owner except an affiliate) 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 number of shares of Common Stock
then outstanding (which will equal approximately 129,869 shares immediately
after this 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 provisions 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
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 except
an affiliate), is entitled to sell such shares without complying with the manner
of sale, public information, volume limitation or notice provision of Rule 144.
In addition, the Securities and Exchange Commission has proposed an
amendment to Rule 144 which would reduce the holding period by one year before
shares subject to Rules 144 and 144(k) become eligible for sale in the public
market. This proposal, if adopted, would substantially increase the number of
shares of the Company's Common Stock eligible for immediate sale following the
expiration of the lock-up period.
OPTIONS
As of June 30, 1996, options to purchase a total of 611,216 shares of
Common Stock were outstanding. Of the total shares issuable pursuant to such
options, 486,549 are subject to lock-up agreements. An additional 688,788 shares
of Common Stock are available for future grants under the Company's stock option
and employee stock purchase plans. See "Management -- Stock Plans."
47
<PAGE> 53
In general, under Rule 701, as currently in effect, beginning 90 days after
the effective date of this offering, 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. Any employee, officer or director of or
consultant to the Company who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under
Rule 144 without complying with the holding period requirements of Rule 144.
Rule 701 further provides that non-affiliates may sell such shares in reliance
on Rule 144 without having to comply with the public information, volume
limitation or notice provisions of Rule 144. In both cases, a holder of Rule 701
shares is required to wait until 90 days after the date of this Prospectus
before selling such shares.
Prior to this offering, there has been no public market for the Common
Stock of the Company and no predictions can be made as to the effect, if any,
that market sales of shares of Common Stock prevailing from time to time may
have on the price of the Common Stock. Nevertheless, sales of significant
numbers of shares of the Common Stock in the public market could adversely
affect the market price of the Common Stock and could impair the Company's
future ability to raise capital through an offering of its equity securities.
The Company intends to file one or more registration statements on Form S-8
under the Securities Act to register all shares of Common Stock subject to
outstanding stock options and Common Stock issuable pursuant to the Company's
restricted stock purchase plan, stock restriction agreements and employee stock
purchase plan that do not qualify for an exemption under Rule 701 from the
registration requirements of the Securities Act. The Company expects to file
these registration statements 90 days after the date of this Prospectus, and
such registration statements are expected to become effective upon filing.
Shares covered by these registration statements will thereupon be eligible for
sale in the public markets, subject to the lock-up agreements, to the extent
applicable.
LOCK-UP AGREEMENTS
The Company, certain stockholders and all executive officers and directors
of the Company, who in the aggregate hold 10,918,982 shares of Common Stock
(including shares issuable pursuant to the exercise of stock options), have
agreed, pursuant to the lock-up agreements, not to directly or indirectly,
without the prior written consent of Alex. Brown & Sons Incorporated, offer,
sell, offer to sell or otherwise dispose of any shares of Common Stock, options
or warrants to acquire shares of Common Stock, beneficially owned by them for a
period of 180 days after the date of this Prospectus. See "Underwriting."
REGISTRATION RIGHTS
At the completion of this offering, certain stockholders (the
"Rightsholders") will be entitled to require the Company to register under the
Securities Act up to a total 9,674,416 shares of outstanding Common Stock (the
"Registrable Shares") under the terms of agreements among the Company and the
Rightsholders (the "Registration Agreements"). The Registration Agreements
provide that in the event the Company proposes to register any of its securities
under the Securities Act at any time or times, the Rightsholders, subject to
certain exceptions, shall be entitled to include Registrable Shares in such
registration. However, the managing underwriter of any such offering may exclude
for marketing reasons some or all of such Registrable Shares from such
registration. Certain Rightsholders have, subject to certain conditions and
limitations, additional rights to require the Company to prepare and file a
registration statement under the Securities Act with respect to their
Registrable Shares if Rightsholders holding at least a majority of the
Registrable Shares held by all such Rightsholders so request. The Company is
generally required to bear the expenses of all such registrations, except
underwriting discounts and commissions.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the
prevailing market price for the Common Stock. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock and could impair the
Company's future ability to obtain capital through an offering of equity
securities.
48
<PAGE> 54
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated and Wessels, Arnold & Henderson, L.L.C., have
severally agreed to purchase from the Company the following respective numbers
of shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- --------------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated..................................................
Wessels, Arnold & Henderson, L.L.C. .............................................
-------
Total..................................................................
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.
The Company has been advised by the Representatives of the Underwriters
that the Underwriters propose to offer the shares of Common Stock to the public
at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering, the public offering price and other
selling terms may be changed by the Representatives of the Underwriters.
The Company and the Selling Stockholders have granted the Underwriters an
option, exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 330,000 additional shares of Common Stock at the initial public
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to 330,000, and the
Company and such Selling Stockholders will be obligated, pursuant to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on the
same terms as those on which the 2,200,000 shares of Common Stock are being
offered.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholders against certain civil
liabilities, including liabilities under the Securities Act.
The Company and each of its directors and executive officers and certain of
its stockholders, who in the aggregate will hold, following this offering,
10,432,433 shares of Common Stock and options to purchase 486,549 shares of
Common Stock, have agreed that they will not directly or indirectly, without the
prior written consent of Alex. Brown & Sons Incorporated, offer, sell, offer to
sell, contract to sell, or otherwise dispose of any shares of Common Stock for a
period of 180 days after the date of this Prospectus, except that the Company
may issue, and grant options to purchase, shares of Common Stock under its
current stock option and purchase plans and other currently outstanding options.
In addition, the Company may issue shares of Common Stock in connection with
corporate acquisitions. See "Shares Eligible for Future Sale."
49
<PAGE> 55
The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price of the
Common Stock will be determined by negotiations among the Company and the
Representatives of the Underwriters. Among the factors to be considered in such
negotiations will be the prevailing market conditions, the results of operations
of the Company in recent periods, the market capitalizations and stages of
development of other companies which the Company and the Representatives of the
Underwriters believe to be comparable to the Company, estimates of the business
potential of the Company, the present state of the Company's development and
other factors deemed relevant. Application has been made to list the Common
Stock on the Nasdaq National Market under the symbol "GEOC."
The Underwriters have reserved for sale, at the initial public offering
price, up to 7.5% of the shares of Common Stock offered hereby for employees of
the Company and certain other individuals who have expressed an interest in
purchasing such shares of Common Stock in the offering. The number of shares
available for sale to the general public will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters to the general public on the same basis as other
shares offered hereby.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hutchins, Wheeler & Dittmar, A Professional Corporation,
Boston, Massachusetts. Certain legal matters in connection with the offering
will be passed upon for the Underwriters by Hale and Dorr, Boston,
Massachusetts. Anthony J. Medaglia, Jr., a shareholder of Hutchins, Wheeler &
Dittmar, is Secretary of the Company and beneficially owns 39,929 shares of
Convertible Preferred Stock which will convert into 42,697 shares of Common
Stock upon the closing of this offering.
EXPERTS
The balance sheet of the Company as of December 31, 1995 and the statements
of operations, stockholders' deficit and cash flows for the year ended December
31, 1995 included in this Prospectus, have been included herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The balance sheet of the Company as of December 31, 1994 and the statements
of operations, stockholders' deficit and cash flows from inception (June 4,
1993) through December 31, 1993 and for the year ended December 31, 1994
included in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 1995
were audited by Coopers & Lybrand L.L.P. The financial statements for the period
from inception (June 4, 1993) through December 31, 1993 and for the year ended
December 31, 1994 were audited by Arthur Andersen LLP. The Company retained
Coopers & Lybrand L.L.P. as its independent accountants in September 1995, after
the Company's management, in consultation with the Board of Directors of the
Company, decided to replace Arthur Andersen LLP. The audit reports of Arthur
Andersen LLP for the period from inception (June 4, 1993) through December 31,
1993 and for the year ended December 31, 1994 did not contain an adverse opinion
or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or application of accounting principles. During
50
<PAGE> 56
the period from inception (June 4, 1993) through December 31, 1994 and through
the date of replacement, there were no disagreements with Arthur Andersen LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement under the Securities Act (the
"Registration Statement") with respect to the Common Stock offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock, reference is hereby made to the Registration
Statement and the exhibits and schedules filed therewith. Statements contained
in this Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the principal office of the Commission in
Washington, D.C. and copies of all or any part of which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices located at The Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material may be
obtained at prescribed rates by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent accountants and will
make available copies of quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
51
<PAGE> 57
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants -- Coopers & Lybrand L.L.P. ........................ F-2
Report of Independent Accountants -- Arthur Andersen LLP.............................. F-3
Balance Sheets as of December 31, 1994, 1995 and June 30, 1996 (unaudited)............ F-4
Statements of Operations from inception (June 4, 1993) through December 31, 1993, for
the years ended December 31, 1994 and 1995 and for the six months (unaudited) ended
June 30, 1995 and 1996.............................................................. F-5
Statements of Stockholders' Deficit from inception (June 4, 1993) through June 30,
1996 (unaudited for six months ended June 30, 1996)................................. F-6
Statements of Cash Flows from inception (June 4, 1993) through December 31, 1993, for
the years ended December 31, 1994 and 1995, and for the six months (unaudited) ended
June 30, 1995 and 1996.............................................................. F-7
Notes to Financial Statements......................................................... F-8
</TABLE>
F-1
<PAGE> 58
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
GeoTel Communications Corporation:
We have audited the accompanying balance sheet of GeoTel Communications
Corporation (formerly a development stage enterprise) as of December 31, 1995,
and the related statements of operations, stockholders' deficit and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GeoTel Communications
Corporation as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 5, 1996
F-2
<PAGE> 59
REPORT OF INDEPENDENT ACCOUNTANTS
To GeoTel Communications Corporation:
We have audited the accompanying balance sheet of GeoTel Communications
Corporation (a Delaware corporation in the development stage) as of December 31,
1994 and the related statements of operations, stockholders' deficit and cash
flows for the period from inception (June 4, 1993) to December 31, 1993 and for
the year ended December 31, 1994. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GeoTel Communications
Corporation as of December 31, 1994, and the results of its operations and its
cash flows from inception (June 4, 1993) through December 31, 1993 and the year
ended December 31, 1994 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 21, 1995
F-3
<PAGE> 60
GEOTEL COMMUNICATIONS CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY
------------------- JUNE 30, 1996 JUNE 30, 1996
1994 1995 (UNAUDITED) (UNAUDITED)
------- ------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 3,793 $ 4,537 $ 5,507
Marketable securities..................................... 952 -- --
Accounts receivable....................................... -- 749 1,870
Accounts receivable -- Related Party...................... -- 266 127
Prepaid expenses and other current assets................. 69 107 94
------ ------ ------
Total current assets............................... 4,814 5,659 7,598
------ ------ ------
Property and equipment, net................................. 669 790 868
------ ------ ------
Total assets....................................... $ 5,483 $ 6,449 $ 8,466
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................... $ 109 $ 160 $ 212
Accrued expenses.......................................... 187 310 765
Accrued compensation and related accruals................. 155 324 480
Current portion of long-term debt......................... 114 301 396
Deferred revenue.......................................... -- 242 1,066
Deferred revenue -- Related Party......................... -- 30 139
------ ------ ------
Total current liabilities.......................... 565 1,367 3,058
------ ------ ------
Long-term debt.............................................. 338 408 387
------ ------ ------
Commitments (Notes E, F, I)
Convertible preferred stock, $.01 par value, authorized,
issued and outstanding 6,006,286, 7,718,615 and 7,788,615
shares in 1994, 1995 and at June 30, 1996, respectively,
none pro forma (aggregate liquidation preference of
$12,663 and $12,847 at December 1995, and at June 30,
1996, respectively)....................................... 7,937 11,986 12,201 --
------ ------ ------
Stockholders' equity (deficit):
Preferred stock, $.01 par value, authorized 5,000,000
shares pro forma, none issued
Common stock, $.01 par value, authorized 14,000,000 shares
actual, and 40,000,000 shares pro forma, issued
2,072,588, 2,572,580, 2,599,580 and 11,061,666 shares at
December 31, 1994 and 1995 and June 30, 1996 and pro
forma, respectively, outstanding 1,909,377, 2,329,094,
2,398,337 and 10,860,423 shares at December 31, 1994,
and 1995 and June 30, 1996, and pro forma,
respectively............................................ 21 26 26 $ 111
Additional paid-in capital................................ 66 74 54 12,170
Accumulated deficit....................................... (3,347) (7,209) (7,059) (7,059)
Notes receivable from stockholders........................ (94) (180) (172) (172)
------ ------ ------ ------
(3,354) (7,289) (7,151) 5,050
Less treasury stock, at cost, 163,211, 243,486, 201,243
and 201,243 shares at December 31, 1994 and 1995 and
June 30, 1996 and pro forma, respectively............... (3) (23) (29) (29)
------ ------ ------ ------
Total stockholders' equity (deficit)............... (3,357) (7,312) (7,180) $ 5,021
======
------ ------ ------
Total liabilities and stockholders' equity
(deficit)........................................ $ 5,483 $ 6,449 $ 8,466
====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 61
GEOTEL COMMUNICATIONS CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
INCEPTION YEAR ENDED SIX MONTHS ENDED
(JUNE 4, 1993) DECEMBER 31, JUNE 30,
THROUGH DEC. 31, --------------------- ---------------------
1993 1994 1995 1995 1996
------------------ ------- ----------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Software license...................... $ 821 $ 3,046
Services and other.................... 126 268
Related party licenses and services
(Note J)........................... 587 574
----- -----
Total revenues........................ 1,534 3,888
----- -----
Cost of Revenues:
Cost of software license.............. 264 183
Cost of services and other............ 611 $ 224 615
----- ----- -----
Total cost of revenues................ 875 224 798
----- ----- -----
Gross Profit............................ 659 (224) 3,090
----- ----- -----
Operating Expenses:
Research and development.............. $ 140 $ 1,879 2,322 1,129 1,388
Sales and marketing................... -- 570 1,476 654 1,191
General and administrative............ 261 641 887 343 446
---- ----- ----- ----- -----
Total operating costs................. 401 3,090 4,685 2,126 3,025
---- ----- ----- ----- -----
Income (loss) from operations........... (401) (3,090) (4,026) (2,350) 65
---- ----- ----- ----- -----
Other Income:
Interest income....................... 24 141 225 99 119
Interest expense...................... -- 17 61 26 34
---- ----- ----- ----- -----
Total other income.................... 24 124 164 73 85
---- ----- ----- ----- -----
Net income (loss)....................... $ (377) $(2,966) $ (3,862) $(2,277) $ 150
==== ===== ===== ===== =====
Net income (loss) per common and common
equivalent share (Note B).............
Pro forma net income (loss) per common
and common equivalent share........... $ (0.37) $ 0.01
===== =====
Pro forma weighed average number of
common and common equivalent shares... 10,365,465 11,559,713
===== =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 62
GEOTEL COMMUNICATIONS CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
INCEPTION (JUNE 4, 1993) THROUGH JUNE 30, 1996
(UNAUDITED FOR SIX MONTHS ENDED JUNE 30, 1996)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK NOTES TREASURY STOCK
------------------ ADDITIONAL RECEIVABLE ------------------ TOTAL
NUMBER OF PAID-IN ACCUMULATED FROM NUMBER OF STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT STOCKHOLDERS SHARES AMOUNT DEFICIT
--------- ------ ---------- ----------- ------------- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sale of common stock for
cash........................ 1,034,028 $ 10 $ 1 $ 11
Net loss...................... $ (377) (377)
Accretion of Convertible
preferred stock to
redemption value............ (4) (4)
-------- --- --- ----- ----
Balance Dec. 31, 1993......... 1,034,028 10 1 (381) (370)
-------- --- --- ----- ----
Sale of common stock for cash
and notes receivable........ 1,038,560 11 100 $ (94) 17
Acquisition of treasury
stock....................... 163,211 $ (3) (3)
Net loss...................... (2,966) (2,966)
Accretion of Convertible
preferred stock to
redemption value............ (35) (35)
-------- --- --- ----- --- ------ --- ----
Balance Dec. 31, 1994......... 2,072,588 21 66 (3,347) (94) 163,211 (3) (3,357)
-------- --- --- ----- --- ------ --- ----
Sale of common stock for cash,
services and notes
receivable.................. 499,992 5 85 (86) 4
Acquisition of treasury
stock....................... 80,275 (20) (20)
Net loss...................... (3,862) (3,862)
Accretion of Convertible
preferred stock to
redemption value............ (77) (77)
-------- --- --- ----- --- ------ --- ----
Balance Dec. 31, 1995......... 2,572,580 26 74 (7,209) (180) 243,486 (23) (7,312)
-------- --- --- ----- --- ------ --- ----
Sale of common stock and
exercise of stock options... 27,000 34 (101,222 ) 1 35
Acquisition of treasury
stock....................... 8 58,979 (7) 1
Net income.................... 150 150
Accretion of Convertible
preferred stock to
redemption value............ (54) (54)
-------- --- --- ----- --- ------ ---- ----
Balance June 30, 1996......... 2,599,580 $ 26 $ 54 $(7,059) $(172) 201,243 $(29) $(7,180)
======== === === ===== === ====== ==== ====
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 63
GEOTEL COMMUNICATIONS CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION YEAR ENDED SIX MONTHS ENDED
(JUNE 4, 1993) DECEMBER 31, JUNE 30,
THROUGH DEC. ------------------ ------------------
31, 1993 1994 1995 1995 1996
-------------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ (377) $(2,966) $(3,862) $(2,277) $ 150
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating
activities:
Depreciation and amortization................ 1 159 359 169 224
Issuance of common stock in exchange for
services.................................. -- -- 1 -- --
Changes in operating assets and liabilities:
Accounts receivable....................... -- -- (1,015) -- (982)
Prepaid expenses and other current
assets.................................. (53) (17) (38) 1 13
Accounts payable.......................... 50 59 51 30 53
Accrued expenses and accrued
compensation............................ 74 254 292 (26) 611
Deferred revenue.......................... -- -- 272 -- 933
----- ------- ------- ------- -----
Net cash provided by (used for) operating
activities................................... (305) (2,511) (3,940) (2,103) 1,002
----- ------- ------- ------- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of marketable securities... 1,975 3,384 -- -- --
Proceeds from maturities of marketable
securities................................... -- -- 952 -- --
Purchases of marketable securities............. (4,436) (1,875) -- -- --
Purchases of property and equipment............ (57) (757) (480) (323) (302)
----- ------- ------- ------- -----
Net cash provided by (used for) investing
activities................................... (2,518) 752 472 (323) (302)
----- ------- ------- ------- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock............. 11 17 3 -- 35
Proceeds from sale of convertible preferred
stock -- net................................. 3,263 4,635 3,972 -- 161
Proceeds from long-term debt................... -- 467 418 321 214
Principal payments under long-term debt........ -- (15) (161) (72) (141)
Sale (acquisition) of treasury stock........... (3) (20) (2) 1
----- ------- ------- ------- -----
Net cash provided by financing activities:..... 3,274 5,101 4,212 247 270
----- ------- ------- ------- -----
Net change in cash and cash equivalents........ 451 3,342 744 (2,179) 970
Cash and cash equivalents, beginning of
period....................................... -- 451 3,793 3,793 4,537
----- ------- ------- ------- -----
Cash and cash equivalents, end of period....... $ 451 $ 3,793 $ 4,537 $ 1,614 $ 5,507
===== ======= ======= ======= =====
Supplemental disclosures of noncash financing
activities:
Notes received in exchange for common stock.... -- $ 94 $ 86 $ 77 --
===== ======= ======= ======= =====
Supplemental cash flow information:
Interest paid.................................. -- $ 13 $ 60 $ 23 $ 33
===== ======= ======= ======= =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE> 64
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
A. NATURE OF BUSINESS:
GeoTel Communications Corporation (the "Company") develops and markets
telecommunications software solutions, consisting primarily of one product, that
enable enhanced call center applications. The Company engages in a single
business segment.
Principal operations of the Company commenced during 1995. Prior to the
commencement of principal operations, the Company was considered to be a
development stage enterprise. The Company currently derives substantially all of
its revenues from licenses of the Intelligent CallRouter and related services.
B. SIGNIFICANT ACCOUNTING POLICIES:
Use of Accounting Estimates
The preparation of the 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 the
disclosure 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.
Interim Financial Statements (unaudited)
The financial statements of the Company for the six months ended June 30,
1995 and 1996 and related footnote information are unaudited. All adjustments,
consisting only of normal recurring adjustments, have been made which, in the
opinion of management, are necessary for a fair presentation of the interim
financial information. Results of operations for the six months ended June 30,
1996 are not necessarily indicative of the results that may be expected for any
future period.
Subsequent Events
On September 26, 1996, the Company's Board of Directors authorized
management of the Company to file a Registration Statement with the Securities
and Exchange Commission permitting the Company to sell shares of common stock to
the public.
On September 26, 1996, the Company's Board of Directors adopted and the
stockholders approved the following:
- - An increase in the number of authorized shares of capital stock from
21,788,615 shares to 45,000,000 shares, to be effected upon the closing of the
offering, of which 40,000,000 shares have been designated as common stock and
5,000,000 shares have been designated as preferred stock, for which the
Company's Board of Directors will have the authority, without further
stockholder approval, to issue in one or more series and to fix the relative
rights, preferences, privileges, qualifications, limitations and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and
the number of shares constituting any series or the designation of such
series.
- - An amendment to the terms of the Company's outstanding Series A, B and C
Convertible Participating Preferred Stock (collectively, the "Convertible
Preferred Stock") to provide that, in lieu of any cash payment in connection
with the automatic conversion of the Convertible Preferred Stock in an initial
public offering, the Convertible Preferred Stock will be converted into an
additional number of shares of common stock determined by dividing fifty
percent of the original purchase price of the Convertible Preferred Stock by
the initial public offering price. At an assumed initial public offering price
of $9.00 per share, the Convertible Preferred Stock will be converted into an
additional 673,471 shares of Common Stock.
F-8
<PAGE> 65
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
- - The 1996 Employee Stock Purchase Plan ("1996 Purchase Plan"). The Company has
reserved 250,000 shares of common stock for issuance under the 1996 Purchase
Plan. The 1996 Purchase Plan will enable employees to purchase common stock at
85% of the lower of the fair market value of the Company's common stock on the
first or last day of each six-month purchase period.
Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with an original
maturity of 90 days or less to be cash equivalents. The Company classifies its
marketable securities as available-for-sale and states them at amortized cost
plus accrued interest, which approximates fair market value. Marketable
securities include the following at December 31, 1994, December 31, 1995 and
June 30, 1996 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------ ------ --------
<S> <C> <C> <C>
Cash equivalents:
Commercial paper..................................... $3,468 $3,986 $4,463
Money market instruments............................. 134 340 797
Marketable securities:
U.S. Government obligations.......................... 752 -- --
Commercial paper..................................... 200 -- --
------ ------ ------
$4,554 $4,326 $5,260
====== ====== ======
</TABLE>
Income Taxes
The Company provides for income taxes under the liability method, which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax liabilities and assets are determined
based on the difference between the financial statement basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Under this method, a valuation allowance is
required against net deferred tax assets if, based upon the available evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized.
Management evaluates on a quarterly basis the recoverability of the
deferred tax assets and the level of the valuation allowance. At such time as it
is determined that it is more likely than not that deferred tax assets are
realizable, the valuation allowance will be appropriately reduced.
Property and Equipment
Property and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method over their
estimated useful lives as follows:
<TABLE>
<CAPTION>
ASSET CLASSIFICATION ESTIMATED USEFUL LIFE
---------------------------------------------------------- -------------------------
<S> <C>
Computer and lab equipment................................ 3 years
Furniture and fixtures.................................... 3 years
Leasehold improvements.................................... Shorter of lease term or
estimated useful life
</TABLE>
Repairs and maintenance are charged to expense as incurred. Significant
improvements are capitalized and depreciated. Upon retirement or sale, the cost
of the assets disposed of and the related accumulated depreciation are removed
from the accounts and any resulting gain or loss is included in the results of
operations.
F-9
<PAGE> 66
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Revenue Recognition
The Company recognizes license fee revenues upon shipment unless there are
significant post-delivery obligations. When significant post-delivery
obligations exist, revenues are deferred until no such significant obligations
remain. Service and other revenues have consisted primarily of maintenance,
installation and training revenues. Maintenance revenues are recognized ratably
over the term of the support period, which is typically twelve months.
Installation and training revenues generally are recognized when the services
are performed.
Product Warranty Costs
Provision for estimated warranty costs is recorded at the time of sale and
periodically adjusted to reflect actual experience.
Financial Instruments and Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents,
trade accounts receivable and short-and long-term debt which had fair values
that approximate their carrying amounts. The Company invests its excess cash
primarily in highly rated commercial paper and financial institutions.
Accounts receivable at December 31, 1995 and June 30, 1996 consist
principally of three and eight customer balances, respectively (See Note J). To
reduce risk, the Company routinely assesses the financial strength of its
customers and, as a consequence believes that its trade accounts receivable
credit risk exposure is limited.
Based on borrowing rates currently available to the Company for installment
notes with similar terms and maturities, the fair value of long-term debt
instruments approximates their carrying values.
Research and Development
Research and development costs are charged to operations as incurred. The
Company capitalizes eligible software costs incurred after technological
feasibility of the product has been established. The Company achieves
technological feasibility when a working model has been established. To date,
costs eligible for capitalization have been immaterial and no costs have been
capitalized.
Net Income (Loss) Per Common and Common Equivalent Share
The pro forma net income (loss) per common share is computed based upon the
weighted average number of common and common equivalent shares outstanding
(using the treasury stock method) after certain adjustments described below.
Common equivalent shares consist of Convertible Preferred Stock and common stock
options outstanding. In accordance with Securities and Exchange Commission Staff
Accounting Bulletin No. 83 (SAB No. 83), all Convertible Preferred Stock, common
and common equivalent shares issued during the twelve month period prior to the
proposed date of the initial filing of the Registration Statement have been
included in the calculation as if they were outstanding for all periods
presented using the treasury stock method and assuming an initial public
offering price of $9.00 per share. In addition, all outstanding shares of
Convertible Preferred Stock, not subject to SAB No. 83, to be converted into
common stock upon the closing of the initial public offering are treated as
having been converted into common stock at the date of original issuance.
F-10
<PAGE> 67
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Net income (loss) per common share on a historical basis is computed in the
same manner as pro forma net income (loss) per common share, except that all
Convertible Preferred Stock is not assumed to be converted and is included in
the calculation only as a common stock equivalent when its effect is dilutive.
Net income (loss) per common share on a historical basis is as follows
(dollars in thousands):
<TABLE>
<CAPTION>
INCEPTION
(JUNE 4,
1993) YEAR ENDED SIX MONTHS ENDED
THROUGH DECEMBER 31, JUNE 30,
DECEMBER 31, ---------------------- -----------------------
1993 1994 1995 1995 1996
------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net income (loss)........... $ (377) $ (2,966) $ (3,862) $ (2,277) $ 150
Accretion of Convertible
preferred stock to
redemption value.......... (4) (35) (77) (30) (54)
------- ------- ------- ------- --------
Net income (loss) available
(attributable)to common
stockholders.............. $ (381) $ (3,001) $ (3,939) $ (2,307) $ 96
======= ======= ======= ======= ========
Net income (loss) available
(attributable) per common
and common equivalent
share..................... $ (0.20) $ (1.10) $ (1.25) $ (0.75) $ 0.01
======= ======= ======= ======= ========
Weighted average number of
common and common
equivalent shares......... 1,950,088 2,724,895 3,154,729 3,082,841 11,559,713
======= ======= ======= ======= ========
</TABLE>
Fully diluted net income (loss) per share is not presented as it is the
same as the amounts disclosed in historical net income (loss) per share from
inception (June 4, 1993) through December 31, 1993 and for the years ended
December 31, 1994 and 1995, and the six month periods ended June 30, 1995 and
1996.
Pro Forma Presentation (Unaudited)
Upon the closing of a public offering, such as the one contemplated in the
Registration Statement in which the accompanying financial statements have been
included, all of the outstanding series of Convertible Preferred Stock will
automatically convert into 8,462,086 shares of common stock (assuming an initial
public offering price of $9.00 per share), and the Company's existing series of
Convertible Preferred Stock will be removed and a class of authorized but
undesignated preferred stock will be created. The unaudited pro forma
presentation of the June 30, 1996 stockholders' equity has been prepared
assuming such conversion.
New Accounting Pronouncements
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," must be adopted in 1996. The standard
requires that impairment losses be recognized when the carrying value of an
asset exceeds its fair value. The Company regularly assesses all of its
long-lived assets for impairment and, therefore, does not believe the adoption
of the standard will have a material effect on its financial position or results
of operations.
F-11
<PAGE> 68
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
C. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE
---------------- 30,
1994 1995 1996
----- ------ ------
<S> <C> <C> <C>
Computer and lab equipment.............................. $ 799 $1,218 $1,520
Furniture and fixtures.................................. 20 67 67
Leasehold improvements.................................. 10 24 24
---- ------ ------
829 1,309 1,611
Less accumulated depreciation and amortization.......... (160) (519) (743)
---- ------ ------
$ 669 $ 790 $ 868
==== ====== ======
</TABLE>
D. INCOME TAXES:
No income tax provision was recorded for federal income tax purposes from
inception (June 4, 1993) through December 31, 1993 and for the years ended
December 31, 1994 and 1995. The difference between the statutory federal income
tax rate and the Company's effective tax rate for the six months ended June 30,
1996 is principally due to the utilization of net operating losses, capitalized
start-up costs and capitalized research and development cost carryforwards.
The components of deferred taxes were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
Deferred tax assets:
Depreciation...................................... $ 17 $ 110 $ 177
Capitalized start-up costs........................ 1,286 2,725 1,822
Accrued expenses.................................. 17 37 117
Research and development tax credits.............. 134 245 227
Net operating losses.............................. -- -- 625
------- ------- -------
Net deferred tax assets............................. 1,454 3,117 2,968
Valuation allowance................................. (1,454) (3,117) (2,968)
------- ------- -------
Total net deferred tax asset........................ $ 0 $ 0 $ 0
======= ======= =======
</TABLE>
Valuation allowances have been recorded to offset the related net deferred
tax assets as a result of the uncertainty regarding the realization of these
assets due to the limited operating history of the Company.
At June 30, 1996, the Company had net operating loss carryforwards of
$1,513,000 expiring at various dates beginning in 2008. Similarly, research and
development tax credit and state investment tax credit carryforwards of $245,000
and $227,000 were available at December 31, 1995 and June 30, 1996,
respectively, which expire at various dates beginning in 2008. The Tax Reform
Act of 1986 contains provisions which may limit the utilization of net operating
loss and research and development credit carryforwards in any given year upon
the occurrence of certain events, including a significant change in ownership
interests. The difference between the federal net operating loss carryforwards
and the amount of the accumulated deficit results primarily from certain
pre-operating costs and research and development expenses, which have been
capitalized for tax purposes. The Company elected to capitalize start-up costs
and research and development costs for income tax
F-12
<PAGE> 69
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
purposes and amortize them over five and ten years, respectively, for the period
prior to recording product revenue in 1995.
E. LONG-TERM DEBT:
In 1994, the Company entered into an equipment line of credit agreement
with a bank. The agreement allowed the Company to borrow the lesser of $500,000
or a 90% advance rate against the invoice price of approved equipment purchased
after January 1, 1994, as defined. The agreement provided for two borrowing
periods. The first borrowing period began on May 18, 1994 and ended on November
5, 1994. The Company borrowed a total of approximately $319,000 under the line
of credit in the first borrowing period. This outstanding principal balance is
payable monthly, in 30 equal payments of principal plus interest, commencing on
December 5, 1994. The second borrowing period began on November 6, 1994 and
ended on May 5, 1995. The Company borrowed a total of approximately $148,000
under the line of credit in the second borrowing period. This outstanding
principal balance is payable monthly, in 30 equal payments of principal plus
interest, commencing on June 5, 1995.
In 1995, the Company entered into a second equipment line of credit
agreement with the bank. The agreement allows the Company to borrow the lesser
of $600,000 or a 90% advance rate against the invoice price of approved
equipment purchased after November 30, 1994, as defined. The agreement provided
for two borrowing periods. The first borrowing period began on May 1, 1995 and
ended on March 1, 1996. The Company borrowed a total of approximately $385,000
under the line of credit in the first borrowing period. This outstanding
principal balance is payable monthly, in 36 equal payments of principal plus
interest, commencing on April 1, 1996. The second borrowing period began on
April 2, 1996 and ended on May 31, 1996. The Company borrowed a total of
approximately $214,000 under the line of credit in the second borrowing period.
This outstanding principal balance is payable monthly, in 34 equal payments of
principal plus interest, commencing on June 1, 1996.
In September 1996, the Company entered into a third equipment line of
credit agreement with the bank. The agreement allows the Company to borrow the
lesser of $800,000 or a 90% advance rate against the invoice price of approved
equipment purchased after May 31, 1996, as defined. The borrowing period ends on
June 30, 1997.
Borrowings under the above agreements bear interest at the bank's prime
rate plus 1% (9.50% at December 31, 1995 and 9.25% at June 30, 1996). The
interest rate, on all outstanding debt, was reduced to prime rate in September
1996.
The borrowings are collateralized by substantially all of the Company's
assets. These agreements contain restrictive covenants that require certain
levels of equity and liquidity and prohibit the payment of cash dividends
without the bank's consent. At December 31, 1995 and June 30, 1996, the Company
was in compliance with all related covenants.
Principal payments for the last six months of 1996 and for the years 1997,
1998 and 1999 are $204,000, $323,000, $204,000 and $52,000 respectively.
F-13
<PAGE> 70
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
F. CONVERTIBLE PREFERRED STOCK:
The following table reflects Convertible Preferred Stock activity, from
inception through June 30, 1996:
<TABLE>
<CAPTION>
AMOUNT
SHARES --------------
--------- (IN THOUSANDS)
<S> <C> <C>
Shares of Series A issued, September 1993............... 3,302,000 $ 3,263
Accretion to redemption value........................... -- 4
--------- -------
Balance at December 31, 1993............................ 3,302,000 3,267
Shares of Series A issued, July 1994.................... 100,000 100
Shares of Series B issued, July 1994.................... 2,604,286 4,535
Accretion to redemption value........................... -- 35
--------- -------
Balance at December 31, 1994............................ 6,006,286 7,937
Shares of Series C issued, August 1995.................. 1,712,329 3,972
Accretion to redemption value........................... -- 77
--------- -------
Balance at December 31, 1995............................ 7,718,615 11,986
Shares of Series C issued, February 1996................ 70,000 161
Accretion to redemption value........................... -- 54
--------- -------
Balance at June 30, 1996................................ 7,788,615 $ 12,201
========= =======
</TABLE>
Shares of Convertible Preferred Stock are subject to the following rights
and privileges:
Dividends
Preferred stockholders shall be entitled to receive dividends at the same
rate as dividends are paid with respect to the common stock. Such preferred
dividends will be determined by the number of shares of common stock into which
each share of preferred stock could then be converted, as defined. The Company
is prohibited from paying cash dividends under the outstanding equipment lines
unless the Company receives the bank's consent.
Liquidation
In certain events, including liquidation, dissolution or the winding up of
the Company, the holders of the Series A, B and C Convertible Preferred Stock
are entitled to receive an amount equal to $1.00, $1.75 and $2.336 per share,
respectively, plus declared but unpaid dividends, before any payment is made to
the common stockholders. The holders of the Convertible Preferred Stock shall
then share ratably with the common stockholders in the distribution of the
remaining assets distributable to the stockholders as if each share of
Convertible Preferred Stock had been converted, as defined.
Voting
Preferred stockholders are entitled to the number of votes equal to the
number of shares of common stock into which each share of Convertible Preferred
Stock is convertible.
F-14
<PAGE> 71
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
Conversion and Redemption
The holders of a majority of the outstanding shares of Convertible
Preferred Stock shall be entitled, at any time after July 31, 2000, to cause all
such shares to be converted into common stock on a share-for-share basis, as
defined and to receive from the Company their liquidation amount in three equal,
annual installments. In addition, immediately prior to the closing of an initial
public offering of the Company's common stock, which results in proceeds of at
least $10,000,000 and a per share price of a least $4.67, each share of the
Convertible Preferred Stock will automatically convert into one share of common
stock plus an additional number of shares of common stock determined by dividing
fifty percent of the original purchase price of the Convertible Preferred Stock
by the initial public offering price (See Subsequent Events in Note B). Since
the holders of the Convertible Preferred Stock have voting control, such
conversion will result in an increase in common stock and additional paid-in
capital with no impact on net income or earnings per share.
The Convertible Preferred Stock is being accreted to approximately
$12,847,000 which is equal to the sum of (i) the price per share paid for each
share of Convertible Preferred Stock and (ii) the fair value of the common
stock, at the date of the original issuance of the Convertible Preferred Stock,
for which such Convertible Preferred Stock will be converted. The Company has
provided for periodic accretion of the fair value of the common stock using the
effective interest method.
G. STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock
Each share of common stock has full voting rights. The terms of the
Company's existing borrowing arrangements with a bank prohibit the payment of
cash dividends without the prior consent of the bank.
Stock Restriction Agreements
The Company has entered into Stock Restriction Agreements (the "Stock
Restriction Agreements") with certain employees pursuant to which such employees
purchased an aggregate of 1,444,278 shares of Common Stock, of which 1,034,028
were purchased for $.01 per share in 1993 and 410,250 were purchased for $.10
per share in 1994. In connection with the 1994 sale of common stock described
above, the Company received a full recourse note receivable totaling
approximately $37,000 from a certain employee. This note bears interest at 5.25%
and is required to be paid in full upon the earlier to occur of the tenth
anniversary date of issuance or the first anniversary of an initial public
offering or other liquidity event, as defined. All shares purchased under the
Stock Restriction Agreements are subject to repurchase by the Company at the
original purchase price for up to a period of five years from the date of
purchase, unless the shares become vested. An employee vests in twenty percent
of the shares on the first anniversary of the date of purchase and, thereafter,
the remaining shares become vested on a monthly basis through the fifth
anniversary of the date of purchase. In accordance with the terms of a Stock
Restriction Agreement, the Company repurchased 148,211 shares in 1994 at a price
of $.01 per share from an employee whose employment with the Company terminated.
In addition, the Company repurchased 58,595 shares from this employee in 1995 at
a price of $.30 per share. Upon an initial public offering, all shares of Common
Stock purchased under the Stock Restriction Agreements will become vested.
The Stock Restriction Agreements further provide the Company and the
holders of the Convertible Preferred Stock with the right of first refusal to
purchase the shares of such an employee
F-15
<PAGE> 72
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
stockholder if he intends to sell them and has received an offer from a third
party. The Company may exercise its right to purchase the shares at the
offeror's price within 30 days of receipt of written notification of the
stockholder's intent to sell. If the Company elects not to purchase the stock,
the preferred stockholders may exercise their right to purchase their pro rata
share at the offeror's price for a period of 20 days. If the preferred
stockholders do not purchase the shares, then the stockholder is free to
transfer the shares to the offeror, provided the transfer is completed within
three months from the end of the preferred stockholder option period. These
Stock Restriction Agreements terminate upon an initial public offering.
Restricted Stock Purchase Plan
The Company has adopted, and subsequently amended, a 1993 Restricted Stock
Purchase Plan ("the 1993 Plan"), which provides for the issuance of common stock
to directors, officers, consultants and other key personnel at prices determined
by a Committee selected by the Board of Directors. Participants' shares are
subject to repurchase by the Company at the original purchase price for up to
five years after the beginning of the vesting period. At December 31, 1995 and
June 30, 1996, the Company may repurchase up to 868,222 and 666,077 unvested
shares, respectively. Such shares are to be repurchased at the original purchase
price ranging from $0.10 to $0.18 per share. There are no shares available for
further grant under the 1993 Plan.
Information related to the 1993 Plan is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
JUNE 30,
1994 1995 1996
------------------------- ------------------------- -------------------------
NUMBER OF NUMBER OF NUMBER OF
SHARES PRICE SHARES PRICE SHARES PRICE
--------- ------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of
period......... -- -- 613,310 $0.10 -$0.18 1,091,622 $0.10 - $0.18
Issued........... 628,310 $0.10 - $0.18 499,992 0.18 27,000 0.18
Repurchased...... (15,000) 0.10 (21,680) 0.10 (58,979) 0.10 - 0.18
--------- --------- ---------
Outstanding at
end of period.. 613,310 $0.10 - $0.18 1,091,622 $0.10 - $0.18 1,059,643 $0.10 - $0.18
========= ========= =========
</TABLE>
In connection with the sale of common stock under the 1993 Plan described
above, the Company received full recourse notes receivable totaling
approximately $57,000 and $86,000 from certain employees during the years ended
December 31, 1994 and 1995, respectively. These notes bear interest at 5.25% and
are required to be paid in full upon the earlier to occur of the tenth
anniversary of the date of issuance or the first anniversary of an initial
public offering or other liquidity event, as defined. The interest is payable at
the date of maturity. Such notes are collateralized by the common stock
purchased and accordingly are included in stockholders' deficit.
Stock Option Plan
In 1995, the Board of Directors adopted and the stockholders subsequently
approved the Company's 1995 stock option plan (the "1995 Plan"), which provides
for the issuance of incentive stock options and nonqualified stock options to
eligible employees, officers and consultants to the Company. The options can be
granted for periods of up to ten years and generally vest ratably over a
five-year period with initial vesting occurring on the first anniversary from
the grant date and then monthly thereafter. In 1996, the Board of Directors
adopted and stockholders approved an increase in the 1995 Plan of 1,000,000
shares of common stock. In addition, the Board of Directors adopted and
F-16
<PAGE> 73
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
stockholders approved an amendment to the 1995 Plan to automatically increase
the number of common shares reserved under the 1995 Plan by 4% of the
outstanding shares of common stock effective January 1, 1997 and on each January
1 thereafter, subject to the maximum number of shares eligible under the 1995
Plan not exceeding 6,000,000. At December 31, 1995 and June 30, 1996, 426,051
and 1,401,226 shares, respectively, were authorized for issuance under the 1995
Plan.
The option price for stock options granted under the 1995 Plan is
determined by a Committee consisting of two or more members of the Company's
Board of Directors. The option price for the incentive stock options shall be
the fair value at the time the option is granted. In the case of options granted
to a shareholder who at the time of grant owns, directly or indirectly, stock
possessing more than 10% of total combined voting power of any class of stock of
the Company, the exercise price of the options shall not be less than 110% of
the fair value of the common stock as of the date of grant.
Information related to the 1995 Plan is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1996
--------------------------- -----------------------------
WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------ ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of period............... -- -- 64,500 $ 0.24
Granted................... 64,500 $ 0.24 647,938 0.30
Exercised................. -- -- (101,222) 0.30
------ ----- -------- -----
Outstanding at end of
period.................. 64,500 $ 0.24 611,216 $ 0.29
====== ===== ======== =====
</TABLE>
The Company granted options at the per share price, which have ranged from
$0.18 to $0.30 per share, equal to the fair value on the date of each grant. No
options were exercisable as of December 31, 1995 and June 30, 1996. The 101,222
options exercised during the six months ended June 30, 1996, related to merit
grants which included immediate vesting provisions. As of December 31, 1995 and
June 30, 1996, the Company had 361,551 and 688,788, respectively, shares
available for future option grants under the Plan. The outstanding stock options
at June 30, 1996 have a weighted average contractual life of 9.73 years.
Stock-Based Compensation Plans
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees, and related Interpretations in accounting for the
1995 Plan. Accordingly, no compensation expense has been recognized for its
stock-based compensation plan as all options were granted at the fair value of
the common stock. Had compensation cost for the 1995 Plan been determined based
upon the fair value at the grant date for awards consistent with the minimum
value methodology prescribed under Statement of Financial Accounting Standards
No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation," the Company's
net loss would have increased by approximately $1,000 in 1995 and net income
would have decreased by approximately $3,500 for the six months ended June 30,
1996. The pro forma effect of adopting SFAS 123 has no effect on the Company's
net income (loss) per share. In computing these pro forma amounts the Company
has assumed a risk-free interest rate equal to approximately 8% and expected
life of approximately five years. The options granted during 1995 and for the
six months ended June 30, 1996 are equal to the fair value at the time of option
grant. The effects of applying SFAS 123 in this disclosure are not indicative of
future amounts. SFAS 123 does not apply to awards prior to 1995, and additional
awards in future years are anticipated.
F-17
<PAGE> 74
GEOTEL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)
H. RETIREMENT SAVINGS PLAN:
In 1994, the Company adopted a Retirement Savings Plan (the "Savings Plan")
for its employees, which has been qualified under Section 401(k) of the Internal
Revenue Code. Eligible employees are permitted to contribute to the Savings Plan
through payroll deductions within statutory limitations and subject to any
limitations included in the Savings Plan. To date the Company has made no
contributions to the Plan.
I. OPERATING LEASES:
The Company leases certain equipment and office space under operating
leases that expire through 1998. Future minimum annual lease commitments,
including operating costs, under the operating leases for the last six months of
1996, and for the years 1997 and 1998 are $76,000, $158,000 and $145,000,
respectively.
Rent expense was approximately $1,000, $41,000, $124,000, $54,000 and
$91,000 from inception (June 4, 1993) through December 31, 1993 and the years
ended December 31, 1994 and 1995 and for the six month periods ended June 30,
1995 and 1996, respectively.
J. RELATED PARTY TRANSACTIONS AND SIGNIFICANT CUSTOMERS:
In August 1995, the Company sold 1,048,801 shares of Series C Convertible
Participating Preferred Stock to an investor that subsequently became a customer
of the Company. This customer's purchases from the Company represented 38% and
15% of revenue for the year ended December 31, 1995 and the six months ended
June 30, 1996, respectively, and this customer had an outstanding receivable
balance of approximately $266,000 and $127,000 at December 31, 1995 and June 30,
1996, respectively. Gross profit from related party transactions approximated
those realized in similar transactions with unrelated parties. Purchases by this
customer for the year ended December 31, 1995 were made through another
shareholder of the Company.
The following table summarizes sales as a percentage of total revenue to
significant customers for the year ended December 31, 1995 and for the six
months ended June 30, 1996:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Related Party Customer.......................... 38% 15%
Customer A...................................... 20
Customer B...................................... 26
Customer C...................................... 12
Customer D...................................... 13
Customer E...................................... 13
Customer F...................................... 15
---- ----
Percentage of total revenue..................... 84% 68%
==== ====
</TABLE>
Export sales to Australia for the six months ended June 30, 1996 were
approximately 13% of total revenues. No export sales occurred in 1995.
F-18
<PAGE> 75
ENTERPRISE-WIDE CALL DISTRIBUTION
[Diagram illustrating
the deployment of the
Intelligent CallRouter
in a multi-carrier
call center]
- - Provides a software infrastructure that manages the interaction between
customers and agent or automated resources.
- - Interfaces to multiple carriers, multiple switches, VRUs, and customer
profile databases to create a distributed call processing environment.
- - Provides an enterprise-wide call management architecture that integrates
and leverages customers' current and future telecommunications technology.
- - Solutions based on open/industry standards--Microsoft Windows NT,
Powerbuilder, Microsoft SQL Server.
<PAGE> 76
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR
THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 13
Dividend Policy....................... 13
Capitalization........................ 14
Dilution.............................. 15
Selected Financial Data............... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 22
Management............................ 35
Certain Transactions.................. 41
Principal and Selling Stockholders.... 43
Description of Capital Stock.......... 45
Shares Eligible for Future Sale....... 47
Underwriting.......................... 49
Legal Matters......................... 50
Experts............................... 50
Change in Independent Accountants..... 50
Additional Information................ 51
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,200,000 SHARES
[LOGO]
COMMON STOCK
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS INCORPORATED
WESSELS, ARNOLD & HENDERSON
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 77
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses in connection with the sale
and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission registration fee and the NASD filing
fee:
<TABLE>
<S> <C>
Registration fee under the Securities Act................................ $ 7,667
NASD filing fee.......................................................... 3,000
Nasdaq National Market listing fee....................................... 40,000
Legal fees and expenses.................................................. 200,000
Accounting fees and expenses............................................. 200,000
Blue Sky fees and expenses............................................... 18,000
Printing, engraving and mailing expenses................................. 100,000
Transfer agent fees and expenses......................................... 5,000
Miscellaneous............................................................ 26,333
--------
Total.......................................................... $600,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporate Law and the Company's Restated Certificate
of Incorporation and Amended and Restated By-laws, each to be effective upon the
closing of the offering, provide for indemnification of the Company's directors
and officers for liabilities and expenses that they may incur in such
capacities. In general, directors and officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action or proceeding, actions that the indemnitee has no reasonable chance to
believe were unlawful. Reference is made to the Company's Restated Certificate
of Incorporation and Amended and Restated By-laws filed as Exhibits 3.2 and 3.4
hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has issued the following
securities, none of which have been registered under the Securities Act of 1933,
as amended (the "Act"):
(a) On September 30, 1993, the Company issued an aggregate of
3,300,000 shares of Series A Convertible Participating Preferred Stock for
aggregate consideration of $3,300,000 in a private venture capital
financing, at a price of $1.00 per share, to Matrix Partners III, L.P.,
Sigma Partners II, L.P., Sigma Associates II, L.P., Atlas Venture Fund II,
L.P. and certain individuals.
(b) On December 3, 1993, the Company issued 2,000 shares of Series A
Convertible Participating Preferred Stock at a price of $1.00 per share to
an individual.
(c) On January 5, 1994, the Company issued 410,250 shares of
restricted Common Stock to John C. Thibault, President and Chief Executive
Officer, at a price per share of $0.10.
(d) On July 29, 1994, the Company issued to Alexander d'Arbeloff
100,000 shares of Series A Convertible Participating Preferred Stock at a
price per share of $1.00.
(e) On July 29, 1994, the Company issued an aggregate of 2,604,286
shares of Series B Convertible Participating Preferred Stock for an
aggregate consideration of $4,557,500 in a private venture capital
financing, at a price of $1.75 per share, to New Enterprise Associates VI,
II-1
<PAGE> 78
Limited Partnership, Matrix Partners III, L.P, Sigma Partners II, L.P,
Sigma Associates II, L.P, Atlas Venture Fund II, L.P. and certain
individuals.
(f) On August 9, 1995, the Company issued an aggregate of 1,712,329
shares of Series C Convertible Participating Preferred Stock for an
aggregate consideration of $4,000,000 in a private venture capital
financing, at a price of $2.336 per share, to Fidelity Ventures Limited,
Matrix Partners III, L.P., Sigma Partners II, L.P., Sigma Associates II,
L.P., Atlas Venture Fund II, L.P., New Enterprise Associates VI, Limited
Partnership and certain individuals.
(g) On January 24, 1996, the Company sold an aggregate of 70,000
shares of Series C Convertible Participating Preferred Stock to certain
executive officers and other employees of the Company for an aggregate
consideration of $164,000, at a purchase price of $2.336 per share.
(h) Between September 29, 1993 and September 30, 1996, the Company (i)
sold an aggregate of 1,155,302 shares of Common Stock to employees and
directors of the Company pursuant to the 1993 Restricted Stock Purchase
Plan and (ii) granted options to purchase an aggregate of 967,188 shares of
Common Stock to employees of the Company pursuant to the Company's 1995
Stock Option Plan.
No underwriters were involved in any of the foregoing transactions. Such
sales of stock and options were made in reliance upon an exemption from the
registration provisions of the Act set forth in Section 4(2) thereof relative to
sales by an issuer not involving a public offering or the rules and regulations
thereunder, or, in the case of certain shares of Common Stock and options to
purchase Common Stock, Rule 701 of the Act. All of the foregoing securities are
deemed restricted securities for purposes of the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following is a list of exhibits filed as part of the
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- ----------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Company, as amended.
3.2 Form of Amended and Restated Certificate of Incorporation of the Company
3.3 By-Laws of the Company.
3.4 Form of By-Laws of the Company, as amended and restated.
*4.1 Specimen stock certificate representing the shares of Common Stock.
*5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation, as to the
legality of the securities being registered.
10.1 Stock Purchase Agreement between the Company and the Investors named therein,
dated August 9, 1995.
10.2 Amended and Restated Stockholders Agreement between the Company and certain
stockholders of the Company, dated August 9, 1995.
10.3 Amended and Restated Founders Registration Rights Agreement between the Company,
G. Wayne Andrews, John C. Thibault and Steven Webber.
+10.4 Development/License Agreement between the Company and DANAR Corporation, dated
March 4, 1996.
+10.5 Software License and Technical Support Agreement between the Company and MCI
Telecommunications Corporation, dated as of June 17, 1996.
+10.6 Software License and Distribution Agreement between the Company and Optus Systems
PTY Ltd. dated as of March 29, 1996.
10.7 Office lease by and between Nationwide Life Insurance Company and the Company,
dated as of November 22, 1996.
10.8 Loan Modification Agreement between the Company and Silicon Valley Bank, dated
September 11, 1996.
</TABLE>
II-2
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- ----------- ---------------------------------------------------------------------------------
<C> <S>
10.9 Letter Agreement between Silicon Valley Bank and the Company, dated September 11,
1996.
10.10 Letter Agreement between Silicon Valley Bank and the Company, dated May 1, 1995.
10.11 Letter Agreement between Silicon Valley Bank and the Company, dated May 18, 1994.
10.12 Promissory Note executed by the Company in favor of Silicon Valley Bank, dated
March 1, 1996.
10.13 Executive Change in Control Agreement between the Company and Timothy J. Allen,
dated September 26, 1996.
10.14 Executive Change in Control Agreement between the Company and G. Wayne Andrews,
dated September 26, 1996.
10.15 Executive Change in Control Agreement between the Company and John C. Thibault,
dated September 26, 1996.
10.16 Executive Change in Control Agreement between the Company and Louis J. Volpe,
dated September 26, 1996.
10.17 Executive Change in Control Agreement between the Company and Steven H. Webber,
dated September 26, 1996.
10.18 GeoTel Communications Corporation 1995 Stock Option Plan.
10.19 GeoTel Communications Corporation 1993 Restricted Stock Purchase Plan.
10.20 GeoTel Communications Corporation 1996 Employee Stock Purchase Plan.
11.1 Statement Regarding Computation of Net Income (loss) Per Common and Common
Equivalent Share.
16.1 Letter regarding change in certifying accountant.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included in
Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
27.1 Financial Data Schedule 6 months.
27.2 Financial Data Schedule 1 year.
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential Treatment Requested.
(b) Financial Statement Schedules. The financial statement schedules are
not included with this Registration Statement as they are either not applicable
or the information is included in the Financial Statements.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Restated Certificate of Incorporation and Amended and
Restated Bylaws of the Registrant and the laws of the State of Delaware, 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 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 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, 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
II-3
<PAGE> 80
indemnification by it is against public policy as expressed in the 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
of 1933, 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.
2. For the purpose of determining any liability under the Securities
Act of 1933, 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 the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 81
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston,
Commonwealth of Massachusetts on the 2nd day of October, 1996.
GEOTEL COMMUNICATIONS CORPORATION
By:/s/ John C. Thibault
------------------------------------
John C. Thibault
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John C. Thibault and Timothy J. Allen, and each
of them, with the power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or in his name, place and stead, in any and all capacities to sign any
and all amendments or post-effective amendments to this Registration Statement,
and to sign any and all additional registration statements relating to the same
offering of securities as this Registration Statement that are filed pursuant to
Rule 462(b) of the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agents or either of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John C. Thibault President, Chief Executive Officer and October 2, 1996
- ------------------------------ Director (principal executive officer)
John C. Thibault
/s/ Timothy J. Allen Vice President of Finance, Chief October 2, 1996
- ------------------------------ Financial Officer, Treasurer and
Timothy J. Allen Assistant Secretary (principal accounting
and financial officer)
/s/ G. Wayne Andrews Director October 2, 1996
- ------------------------------
G. Wayne Andrews
/s/ Alexander V. d'Arbeloff Director October 2, 1996
- ------------------------------
Alexander V. d'Arbeloff
/s/ Gardner C. Hendrie Director October 2, 1996
- ------------------------------
Gardner C. Hendrie
/s/ W. Michael Humphreys Director October 2, 1996
- ------------------------------
W. Michael Humphreys
</TABLE>
II-5
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- ----------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Company, as amended.
3.2 Form of Amended and Restated Certificate of Incorporation of the Company
3.3 By-Laws of the Company.
3.4 Form of By-Laws of the Company, as amended and restated.
*4.1 Specimen stock certificate representing the shares of Common Stock.
*5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation, as to the
legality of the securities being registered.
10.1 Stock Purchase Agreement between the Company and the Investors named therein,
dated August 9, 1995.
10.2 Amended and Restated Stockholders Agreement between the Company and certain
stockholders of the Company, dated August 9, 1995.
10.3 Amended and Restated Founders Registration Rights Agreement between the Company,
G. Wayne Andrews, John C. Thibault and Steven Webber.
+10.4 Development/License Agreement between the Company and DANAR Corporation, dated
March 4, 1996.
+10.5 Software License and Technical Support Agreement between the Company and MCI
Telecommunications Corporation, dated as of June 17, 1996.
+10.6 Software License and Distribution Agreement between the Company and Optus Systems
PTY Ltd. dated as of March 29, 1996.
10.7 Office lease by and between Nationwide Life Insurance Company and the Company,
dated as of November 22, 1996.
10.8 Loan Modification Agreement between the Company and Silicon Valley Bank, dated
September 11, 1996.
10.9 Letter Agreement between Silicon Valley Bank and the Company, dated September 11,
1996.
10.10 Letter Agreement between Silicon Valley Bank and the Company, dated May 1, 1995.
10.11 Letter Agreement between Silicon Valley Bank and the Company, dated May 18, 1994.
10.12 Promissory Note executed by the Company in favor of Silicon Valley Bank, dated
March 1, 1996.
10.13 Executive Change in Control Agreement between the Company and Timothy J. Allen,
dated September 26, 1996.
10.14 Executive Change in Control Agreement between the Company and G. Wayne Andrews,
dated September 26, 1996.
10.15 Executive Change in Control Agreement between the Company and John C. Thibault,
dated September 26, 1996.
10.16 Executive Change in Control Agreement between the Company and Louis J. Volpe,
dated September 26, 1996.
10.17 Executive Change in Control Agreement between the Company and Steven H. Webber,
dated September 26, 1996.
10.18 GeoTel Communications Corporation 1995 Stock Option Plan.
10.19 GeoTel Communications Corporation 1993 Restricted Stock Purchase Plan.
10.20 GeoTel Communications Corporation 1996 Employee Stock Purchase Plan.
11.1 Statement Regarding Computation of Net Income (loss) Per Common and Common
Equivalent Share.
16.1 Letter regarding change in certifying accountant.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included in
Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
27.1 Financial Data Schedule 6 months.
27.2 Financial Data Schedule 1 year.
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential Treatment Requested.
<PAGE> 1
EXHIBIT 1.1
HALE AND DORR
DRAFT OF 9/27/96
___________ Shares
GEOTEL COMMUNICATIONS CORPORATION
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
October ____, 1996
Alex. Brown & Sons Incorporated
Wessels, Arnold & Henderson, L.L.C.
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
GeoTel Communications Corporation, a Delaware corporation (the
"Company"), proposes to sell to the several underwriters (the
"Underwriters") named in Schedule I hereto for whom you are acting as
representatives (the "Representatives") an aggregate of ___________
shares of the Company's Common Stock, $.01 par value (the "Firm
Shares"). The respective amounts of the Firm Shares to be so purchased
by the several Underwriters are set forth opposite their names in
Schedule I hereto. The Company and certain shareholders of the Company
(the "Selling Shareholders") also propose to sell at the Underwriters'
option an aggregate of up to __________ additional shares of the
Company's Common Stock (the "Option Shares") as set forth below. The
maximum number of Option Shares to be sold by the Company and the
Selling Shareholders are set forth opposite their names on Schedule II
hereto. The Company and the Selling Shareholders are sometimes referred
to herein collectively as the "Sellers."
As the Representatives, you have advised the Company and the
Selling Shareholders (a) that you are authorized to enter into this
Agreement on behalf of the several Underwriters, and (b) that the
several Underwriters are willing, acting severally and not jointly, to
purchase the numbers of Firm Shares set forth opposite their respective
names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part
for the accounts of the
<PAGE> 2
several Underwriters. The Firm Shares and the Option Shares
(to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
In consideration of the mutual agreements contained herein and of
the interests of the parties in the transactions contemplated hereby,
the parties hereto agree as follows:
1. Representations and Warranties of the Company and the
Selling Shareholders.
(a) The Company represents and warrants as follows:
(i) A registration statement on Form S-1 (File No.
333-______) with respect to the Shares has been carefully prepared
by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the Rules and
Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses
(meeting the requirements of the Rules and Regulations) contained
therein and the exhibits, financial statements and schedules, as
finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule
462(b) of the Act, herein referred to as the "Registration
Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, has been declared effective by the
Commission under the Act and no post-effective amendment to the
Registration Statement has been filed as of the date of this
Agreement. For purposes of this Agreement, the term "Prospectus"
means (a) the form of prospectus first filed with the Commission
pursuant to Rule 424(b) or (b) the last preliminary prospectus
included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act
that is delivered by the Company to the Underwriters for delivery
to purchasers of the Shares, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule
424(b)(7) under the Act. Each preliminary prospectus included in
the Registration Statement prior to the time it becomes effective
is herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own or
lease its properties and conduct its
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<PAGE> 3
business as described in the Registration Statement. The Company
is duly qualified to transact business in all jurisdictions in
which the conduct of its business requires such qualification.
There is no corporation, partnership, joint venture or other
entity in which the Company has, directly or indirectly, any
equity interest.
(iii) The outstanding shares of Common Stock of the
Company, including all shares to be sold by the Selling
Shareholders, have been duly authorized and validly issued and are
fully paid and non-assessable; the portion of the Shares to be
issued and sold by the Company have been duly authorized and when
issued and paid for as contemplated herein will be validly issued,
fully paid and non-assessable; and no preemptive rights of
shareholders exist with respect to any of the Shares or the issue
and sale thereof. Neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have
been waived or satisfied, for or relating to the registration of
any shares of Common Stock.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the
Shares conform to the description thereof contained in the
Registration Statement. The form of certificates for the Shares
conforms to the corporate law of the jurisdiction of the Company's
incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed
offering of the Shares nor instituted proceedings for that
purpose. The Registration Statement contains, and the Prospectus
and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and in all
respects conform or will conform, as the case may be, to the
requirements of, the Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain,
and will not contain, any untrue statement of a material fact and
do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any
untrue statement of material fact and do not omit, and will not
omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such
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<PAGE> 4
amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for use
in the preparation thereof.
(vi) The financial statements of the Company, together
with related notes and schedules as set forth in the Registration
Statement, present fairly the financial position and the results
of operations and cash flows of the Company at the indicated dates
and for the indicated periods. Such financial statements and
related schedules have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout
the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made. The
summary financial and statistical data included in the
Registration Statement presents fairly the information shown
therein and such data has been compiled on a basis consistent with
the financial statements presented therein and the books and
records of the Company.
(vii) Each of Coopers & Lybrand L.L.C. and Arthur
Andersen LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the
Act and the Rules and Regulations.
(viii) There is no action, suit, claim or proceeding
pending or, to the knowledge of the Company, threatened against
the Company before any court or administrative agency or otherwise
which if determined adversely to the Company might result in any
material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or prevent the consummation
of the transactions contemplated hereby, except as set forth in
the Registration Statement.
(ix) The Company has good and marketable title to all of
the properties and assets reflected in the financial statements
(or as described in the Registration Statement) hereinabove
described, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement) or
which are not material in amount. The Company occupies its leased
properties under valid and binding leases conforming to the
description thereof set forth in the Registration Statement.
(x) The Company has filed all federal, state, local and
foreign income tax returns which has been required to be filed and
has paid all taxes indicated by said returns
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<PAGE> 5
and all assessments received by it to the extent that such taxes
have become due. All tax liabilities have been adequately provided
for in the financial statements of the Company.
(xi) Since the respective dates as of which information
is given in the Registration Statement, as it may be amended or
supplemented, there has not been any material adverse change or
any development involving a prospective material adverse change in
or affecting the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or
prospects of the Company, whether or not occurring in the ordinary
course of business, and there has not been any material
transaction entered into or any material transaction that is
probable of being entered into by the Company, other than
transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be
amended or supplemented. The Company does not have any material
contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration
Statement.
(xii) The Company is not and with the giving of notice
or lapse of time, or both, will not be in violation of or in
default under its Certificate of Incorporation or By-laws or under
any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it or any of its
properties is bound and which default is of material significance
in respect of the business, management, properties, assets,
rights, operations, condition (financial or otherwise) or
prospects of the Company. The execution and delivery of this
Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which
the Company is a party, or of the Certificate of Incorporation or
By-laws of the Company or any order, rule or regulation applicable
to the Company of any court or of any regulatory body or
administrative agency or other governmental body having
jurisdiction.
(xiii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection
with the execution and delivery by the Company of this Agreement
and the consummation of the transactions herein contemplated
(except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or such
additional
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<PAGE> 6
steps as may be necessary to qualify the Shares for public
offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xiv) The Company holds all material licenses,
certificates and permits from governmental authorities which are
necessary to the conduct of its business; and the Company has not
infringed any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the
Company. The Company knows of no material infringement by others
of patents, patent rights, trade names, trademarks or copyrights
owned by or licensed to the Company.
(xv) Neither the Company, nor to the Company's best
knowledge, any of its affiliates, has taken or may take, directly
or indirectly, any action designed to cause or result in, or which
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
shares of Common Stock to facilitate the sale or resale of the
Shares.
(xvi) The Company is not, and after giving effect to the
issuance of the Shares hereunder will not be, an "investment
company" within the meaning of such term under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules
and regulations of the Commission thereunder.
(xvii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's
general or specific authorization; (B) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xviii) The Company carries, or is covered by, insurance
in such amounts and covering such risks as is adequate for the
conduct of its business and the value of its properties and as is
customary for companies engaged in similar industries.
(xix) The Company confirms as of the date hereof
that it is in compliance with all provisions of Section 1 of
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<PAGE> 7
Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of
doing Business with Cuba, and the Company further agrees that if
it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance
(the "Department"), whichever date is later, or if the information
reported or incorporated by reference in the Prospectus, if any,
concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(xx) The Company owns or possesses adequate licenses or
other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications,
trade names, copyrights, trade secrets and know-how or other
information (collectively "Intellectual Property") described in
the Prospectus as owned or used by it or which is necessary for
the conduct of its business as now conducted or proposed to be
conducted as described in the Prospectus. To the best of the
Company's knowledge, none of the Company's products, services or
Intellectual Property infringes or conflicts with the rights or
claims of others. The Company is not aware of any infringement of
any of the Company's Intellectual Property rights by any third
party which could have a material adverse effect on the business
or financial condition of the Company.
(xxi) Except as otherwise set forth in the Prospectus,
there are no material legal, governmental, regulatory or
administrative proceedings pending to which the Company is a party
or to which any of its property is subject and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated.
(xxii) No contract or document of a character required
to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement is not so
described or filed as required.
(b) Each of the Selling Shareholders severally
represents and warrants as follows:
(i) Such Selling Shareholder now has and at any Option
Closing Date (as such date is hereinafter defined) will have good
and marketable title to any Option Shares to be sold by such
Selling Shareholder, free and clear of any
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<PAGE> 8
liens, encumbrances, equities and claims, and full right, power
and authority to effect the sale and delivery of such Option
Shares; and upon the delivery of and payment for such Option
Shares pursuant to this Agreement, the Underwriters will acquire
good and marketable title thereto, free and clear of any liens,
encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and
authority to execute and deliver this Agreement and the Power of
Attorney and Custodian Agreement referred to below and to perform
such Selling Shareholder's obligations under such documents. The
execution and delivery of this Agreement, the Power of Attorney
and the Custodian Agreement, the consummation by such Selling
Shareholder of the transactions herein and therein contemplated
and the fulfillment by such Selling Shareholder of the terms
hereof and thereof will not require any consent, approval,
authorization or order of or declaration or filing with any court,
regulatory body, administrative agency or other governmental body
(except as may be required under the Act, state securities laws or
Blue Sky laws) and will not result in a breach of any of the terms
and provisions of, or constitute a default under, organizational
documents of such Selling Shareholder, if not an individual, or
any indenture, mortgage, deed of trust or other agreement or
instrument to which such Selling Shareholder is a party, or of any
order, rule or regulation applicable to such Selling Shareholder
of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(iii) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to, or which
has constituted, or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of the
Common Stock of the Company and, other than as permitted by the
Act, the Selling Shareholder will not distribute any prospectus or
other offering material in connection with the offering of the
Shares.
(iv) Without having undertaken to determine
independently the accuracy or completeness of either the
representations and warranties of the Company contained herein or
the information contained in the Registration Statement, such
Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in this
Section 1 are not true and correct, is familiar with the
Registration Statement and has no knowledge of any material fact,
condition or information not disclosed in the Registration
Statement which has adversely affected or may adversely affect the
business of the
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<PAGE> 9
Company; and the sale of any Option Shares by such Selling
Shareholder pursuant hereto is not prompted by any information
concerning the Company which is not set forth in the Registration
Statement. The information pertaining to such Selling Shareholder
under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein
set forth, the Company agrees to sell to the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase, at a
price of $_____ per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule I hereof,
subject to adjustment in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be
made in New York Clearing House funds by certified or bank
cashier's checks drawn to the order of the Company against
delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery
are to be made at the offices of Alex. Brown & Sons Incorporated,
135 East Baltimore Street, Baltimore, Maryland, at 10:00 a.m.,
Baltimore time, on the third business day after the date of this
Agreement or at such other time and date not later than five
business days thereafter as you and the Company shall agree upon,
such time and date being herein referred to as the "Closing Date."
(As used herein, "business day" means a day on which the New York
Stock Exchange is open for trading and on which banks in New York
are open for business and not permitted by law or executive order
to be closed.) The certificates for the Firm Shares will be
delivered in such denominations and in such registrations as the
Representatives request in writing not later than the second full
business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day
prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and
conditions herein set forth, the Company and the Selling
Shareholders listed on Schedule II hereto hereby grant an option
to the several Underwriters to purchase the Option Shares at the
price per share as set forth in the first paragraph of this
Section 2. The maximum number of Option Shares to be sold by the
Company and such Selling Shareholders is set forth opposite their
respective names on Schedule II hereto. The option granted hereby
may be
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<PAGE> 10
exercised in whole or in part by giving written notice (i) at any
time before the Closing Date and (ii) only once thereafter within
30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company and
the Custodian setting forth the number of Option Shares as to
which the several Underwriters are exercising the option, the
names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to
be delivered. If the option granted hereby is exercised in part,
the respective number of Option Shares to be sold by the Company
and each of the Selling Shareholders listed in Schedule II hereto
shall be determined on a pro rata basis in accordance with the
percentages set forth opposite their names on Schedule II hereto,
adjusted by you in such manner as to avoid fractional shares. The
time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not
be earlier than three nor later than 10 full business days after
the exercise of such option, nor in any event prior to the Closing
Date (such time and date being herein referred to as the "Option
Closing Date"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall
set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the
same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such
Underwriter bears to the total number of Firm Shares, adjusted by
you in such manner as to avoid fractional shares. The option with
respect to the Option Shares granted hereunder may be exercised
only to cover over-allotments in the sale of the Firm Shares by
the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its
expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised,
payment for the Option Shares shall be made on the Option Closing
Date in New York Clearing House funds by certified or bank
cashier's check drawn to the order of the Company for the Option
Shares to be sold by it and to the order of " , as Custodian" for
the Option Shares to be sold by the Selling Shareholders listed on
Schedule II against delivery of certificates therefor at the
offices of Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland.
(d) Certificates in negotiable form for the total number of
the Option Shares to be sold hereunder by the Selling Shareholders
have been placed in custody with ___________________ as custodian
(the "Custodian") pursuant to the Custodian Agreement executed by
each Selling Shareholder for delivery of any Option Shares to be
sold
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<PAGE> 11
hereunder by the Selling Shareholders. Each of the Selling
Shareholders specifically agrees that any Option Shares
represented by the certificates held in custody for the Selling
Shareholders under the Custodian Agreement are subject to the
interests of the Underwriters hereunder, that the arrangements
made by the Selling Shareholders for such custody are to that
extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be terminable by any act or deed
of the Selling Shareholders (or by any other person, firm or
corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including the death of an
individual Selling Shareholder or the dissolution of a corporate
Selling Shareholder) or by the occurrence of any other event or
events, except as set forth in the Custodian Agreement. If any
such event should occur prior to the delivery to the Underwriters
of the Option Shares hereunder, certificates for the Option Shares
shall be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such event has not
occurred. The Custodian is authorized to receive and acknowledge
receipt of the proceeds of sale of the Option Shares held by it
against delivery of such Option Shares.
3. Offering by the Underwriters.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representatives
deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price set
forth in the Prospectus. The Representatives may from time to time
thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are
purchased pursuant to Section 2 hereof, the Underwriters will
offer them to the public on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of
the Shares in accordance with a Master Agreement Among
Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company and the Selling Shareholders.
(a) The Company covenants and agrees with the several
Underwriters that:
(i) The Company will (A) use its best efforts to cause
the Registration Statement to become effective or, if the
procedure in Rule 430A of the Rules and Regulations is followed,
to prepare and timely file with the Commission
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<PAGE> 12
under Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information
previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and
Regulations, and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have
reasonably objected in writing or which is not in compliance with
the Rules and Regulations.
(ii) The Company will advise the Representatives
promptly (A) when the Registration Statement or any post-effective
amendment thereto shall have become effective, (B) of receipt of
any comments from the Commission, (C) of any request of the
Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information,
and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
use of the Prospectus or of the institution of any proceedings for
that purpose. The Company will use its best efforts to prevent the
issuance of any such stop order preventing or suspending the use
of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) The Company will cooperate with the
Representatives in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions as the
Representatives may reasonably have designated in writing and will
make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in
any jurisdiction where it is not now so qualified or required to
file such a consent. The Company will, from time to time, prepare
and file such statements, reports and other documents as are or
may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for
distribution of the Shares.
(iv) The Company will deliver to, or upon the order of,
the Representatives, from time to time, as many copies of any
Preliminary Prospectus as the Representatives may reasonably
request. The Company will deliver to, or upon the order of, the
Representatives during the period when delivery of a Prospectus is
required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver
to the Representatives, at or before the Closing Date, four signed
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<PAGE> 13
copies of the Registration Statement and all amendments thereto,
including all exhibits filed therewith, and will deliver to the
Representatives such number of copies of the Registration
Statement (including such number of copies of the exhibits filed
therewith that may reasonably be requested), and of all amendments
thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules
and Regulations, and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder, so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement and
the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any
event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances
existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company
promptly will either (A) prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement
to the Prospectus or (B) prepare and file with the Commission an
appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus, so that the
Prospectus as so amended or supplemented will not, in the light of
the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in
any event not later than 15 months after the effective date of the
Registration Statement, an earning statement (which need not be
audited) in reasonable detail, covering a period of at least 12
consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules
and Regulations and will advise you in writing when such statement
has been so made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual
reports and copies of all other documents, reports and information
furnished by the Company to its shareholders or filed with any
securities exchange pursuant to the requirements of such exchange
or with the Commission
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<PAGE> 14
pursuant to the Act or the Exchange Act. The Company will deliver
to the Representatives similar reports with respect to significant
subsidiaries, as that term is defined in the Rules and
Regulations, which are not consolidated in the Company's financial
statements.
(viii) No offering, sale, short sale or other disposition
of any shares of Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of
Common Stock or derivative of Common Stock (or agreement for such)
will be made for a period of 180 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of Alex. Brown & Sons
Incorporated, except that the Company may, without such consent,
issue shares upon the exercise of options outstanding on the date
of this Agreement issued pursuant to its 1995 Stock Option Plan.
The Company shall not file with the Commission any registration
statements (including without limitation any registration
statements on Form S-8 or any successor form) with respect to any
stock option, stock purchase, restricted stock or other similar
plans until at least 90 days following the date of this Agreement.
(ix) The Company will use its best efforts to have its
Common Stock authorized for inclusion on the Nasdaq National
Market.
(x) The Company has caused each officer and director and
specific shareholders of the Company to furnish to you, on or
prior to the date of this Agreement, a letter or letters, in form
and substance satisfactory to the Underwriters, pursuant to which
each such person shall agree not to offer, sell, sell short or
otherwise dispose of any shares of Common Stock of the Company or
other capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by such person or request the
registration for the offer or sale of any of the foregoing (or as
to which such person has the right to direct the disposition of)
for a period of 180 days after the date of this Agreement,
directly or indirectly, except with the prior written consent of
Alex. Brown & Sons Incorporated ("Lockup Agreements").
(xi) The Company shall apply the net proceeds of its sale
of the Shares as set forth in the Prospectus and shall file such
reports with the Commission with respect to the sale of the Shares
and the application of the proceeds therefrom as may be required
in accordance with Rule 463 under the Act.
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<PAGE> 15
(xii) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in
such a manner as would require the Company to register as an
investment company under the 1940 Act.
(xiii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company,
a registrar for the Common Stock.
(xiv) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization
or manipulation of the price of any securities of the Company.
(b) Each of the Selling Shareholders covenants and
agrees with the several Underwriters that:
(i) No offering, sale, short sale or other disposition
of any shares of Common Stock of the Company or other capital
stock of the Company or other securities convertible,
exchangeable or exercisable for Common Stock or derivative of
Common Stock owned by the Selling Shareholder or request the
registration for the offer or sale of any of the foregoing
(or as to which the Selling Shareholder has the right to
direct the disposition of) will be made for a period of 180
days after the date of this Agreement, directly or
indirectly, by such Selling Shareholder otherwise than
hereunder or with the prior written consent of Alex.
Brown & Sons Incorporated.
(ii) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax
Equity and Fiscal Responsibility Act of 1982 and the Interest
and Dividend Tax Compliance Act of 1983 with respect to the
transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the
Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in
lieu thereof).
(iii) Such Selling Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or
that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any securities of the Company.
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<PAGE> 16
5. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Sellers under this
Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees
and disbursements of counsel for the Company and the Selling
Shareholders; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters'
Invitation Letter, the Listing Application, the Custodian
Agreement and related Power of Attorney, the Blue Sky Survey and
any supplements or amendments thereto; the filing fees of the
Commission; the filing fees and expenses (including legal fees and
disbursements) incident to securing any required review by the
NASD of the terms of the sale of the Shares; the Listing Fee of
the Nasdaq National Market; and the expenses, including the fees
and disbursements of counsel for the Underwriters, incurred in
connection with the qualification of the Shares under state
securities or Blue Sky laws. To the extent, if at all, that any of
the Selling Shareholders engage special legal counsel to represent
them in connection with this offering, the fees and expenses of
such counsel shall be borne by such Selling Shareholders. Any
transfer taxes imposed on the sale of the Shares to the several
Underwriters will be paid by the Sellers pro rata. The Sellers
shall not, however, be required to pay for any of the Underwriters
expenses (other than those related to qualification under NASD
regulation and state securities or Blue Sky laws) except that, if
this Agreement shall not be consummated because the conditions in
Section 6 hereof are not satisfied, or because this Agreement is
terminated by the Representatives pursuant to Section 11 hereof,
or by reason of any failure, refusal or inability on the part of
the Company or the Selling Shareholders to perform any undertaking
or satisfy any condition of this Agreement or to comply with any
of the terms hereof on their part to be performed, unless such
failure to satisfy said condition or to comply with said terms be
due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation
of performing their obligations hereunder; but the Company and the
Selling Shareholders shall not in any event be liable to any of
the several Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Shares.
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<PAGE> 17
6. Conditions to Obligations of the Underwriters.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on
the Option Closing Date are subject to the accuracy, as of the
Closing Date or the Option Closing Date, as the case may be, of
the representations and warranties of the Company and the Selling
Shareholders contained herein, and to the performance by the
Company and the Selling Shareholders of their covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all
filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made, and any request of the
Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to
the Representatives and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have
been issued and no proceedings for that purpose shall have been
taken or, to the knowledge of the Company or the Selling
Shareholders, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a federal
or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance of the
Shares.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion
of Hutchins, Wheeler & Dittmar, A Professional Corporation,
counsel for the Company and the Selling Shareholders, dated the
Closing Date or the Option Closing Date, as the case may be,
addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to
own or lease its properties and conduct its business as
described in the Registration Statement; and the Company is
duly qualified to transact business in each of the
jurisdictions listed on Schedule III attached hereto.
(ii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the
Prospectus; the authorized shares of the Company's Common
Stock have been duly
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<PAGE> 18
authorized; the outstanding shares of the Company's Common
Stock, including the Option Shares to be sold by the Selling
Shareholders, have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares
conform to the description thereof contained in the
Prospectus; the certificates for the Shares, assuming they
are in the form filed with the Commission, are in due and
proper form; the shares of Common Stock, including the Option
Shares, if any, to be sold by the Company pursuant to this
Agreement have been duly authorized and will be validly
issued, fully paid and non-assessable when issued and paid
for as contemplated by this Agreement; and no preemptive
rights of shareholders exist with respect to any of the
Shares or the issue or sale thereof.
(iii) Except as described in or contemplated by the
Prospectus, to the best knowledge of such counsel, there are
no outstanding securities of the Company convertible or
exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and
there are no outstanding or authorized options, warrants or
rights of any character obligating the Company to issue any
shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock; and except as
described in the Prospectus, to the best knowledge of such
counsel, no holder of any securities of the Company or any
other person has the right, contractual or otherwise, which
has not been satisfied or effectively waived, to cause the
Company to sell or otherwise issue to them, or to permit them
to underwrite the sale of, any of the Shares or the right to
have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to
require registration under the Act of any shares of Common
Stock or other securities of the Company.
(iv) The Registration Statement has become effective
under the Act and, to the best knowledge of such counsel, no
stop order proceedings with respect thereto have been
instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the
applicable Rules and Regulations thereunder (except that such
counsel need express no
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<PAGE> 19
opinion as to the financial statements and related
schedules included therein).
(vi) The statements under the captions "Risk Factors --
Shares Eligible for Future Sale; Registration Rights," "Risk
Factors -- Certain Anti-Takeover Provisions Affecting
Stockholders," "Management -- Stock Plans," "Management --
Executive Incentive Program," "Management -- Limitation of
Liability; Indemnification of Directors and Officers,"
"Certain Transactions -- Certain Stock Transactions,"
"Description of Capital Stock" and "Shares Eligible for
Future Sale" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and
correctly summarize and present in all material respects the
information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the
Registration Statement or described in the Registration
Statement or the Prospectus which are not so filed or
described as required, and such contracts and documents as
are summarized in the Registration Statement or the
Prospectus are fairly summarized in all material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the
Company except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do
not and will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation or By-laws of the Company,
or any agreement or instrument listed as an Exhibit to the
Registration Statement.
(x) This Agreement has been duly authorized,
executed and delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by
state securities and Blue Sky laws, as to which such counsel
need
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<PAGE> 20
express no opinion) except such as have been obtained or
made, specifying the same.
(xii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated
by this Agreement, and application of the net proceeds
therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.
(xiii) Each of this Agreement, the Custodian Agreement
and the related Power of Attorney has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Shareholders.
(xiv) Each Selling Shareholder has full legal right,
power and authority, and any approval required by law (other
than as required by state securities and Blue Sky laws, as to
which such counsel need express no opinion), to sell, assign,
transfer and deliver the portion of the Option Shares to be
sold by such Selling Shareholder under this Agreement.
(xv) The Custodian Agreement and the Power of Attorney
executed and delivered by each Selling Shareholder are valid,
binding and irrevocable instruments legally sufficient for
the purposes intended.
(xvi) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code)
have acquired good and marketable title to the Option Shares
being sold by each Selling Shareholder on the Option Closing
Date, free and clear of all liens, encumbrances, equities and
claims.
In rendering such opinion, Hutchins, Wheeler & Dittmar, A
Professional Corporation, may rely as to matters governed by the
laws of states other than the Commonwealth of Massachusetts, the
Delaware General Corporation Law or federal laws on local counsel
in such jurisdictions and as to the matters set forth in
subparagraphs (xiii), (xiv) and (xv) on opinions of other counsel
representing the respective Selling Shareholders, provided that in
each case Hutchins, Wheeler & Dittmar, A Professional Corporation,
shall state that they believe that they and the Underwriters are
justified in relying on the opinions of such other counsel. In
addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the
Act (but after
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<PAGE> 21
giving effect to any modifications incorporated therein pursuant
to Rule 430A under the Act) and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements, in the light of the circumstances under which
they are made, not misleading (except that such counsel need
express no view as to financial statements, schedules and other
financial information included therein). With respect to such
statement, Hutchins, Wheeler & Dittmar, A Professional
Corporation, may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received from Hale and
Dorr, counsel for the Underwriters, an opinion dated the Closing
Date or the Option Closing Date, as the case may be, substantially
to the effect specified in subparagraphs (ii), (iii), (iv) and
(xi) of paragraph (b) of this Section 6, and that the Company is a
duly organized and validly existing corporation under the laws of
the State of Delaware. In rendering such opinion, Hale and Dorr
may rely as to all matters governed other than by the laws of the
Commonwealth of Massachusetts, the Delaware General Corporation
Law or federal laws, and as to matters relating to the Selling
Shareholders, on the opinion of counsel referred to in paragraph
(b) of this Section 6. In addition to the matters set forth above,
such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, or any amendment
thereto, as of the time it became effective under the Act (but
after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act), as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact, necessary in order to
make the statements therein, in the light of the circumstances
under which they are made, not misleading (except that such
counsel need express no view as to financial statements,
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<PAGE> 22
schedules and other financial information included therein). With
respect to such statement, Hale and Dorr may state that their
belief is based upon the procedures set forth therein, but is
without independent check and verification.
(d) The Representatives shall have received at or prior to
the Closing Date from Hale and Dorr a memorandum or summary, in
form and substance satisfactory to the Representatives, with
respect to the qualification for offering and sale by the
Underwriters of the Shares under the state securities or Blue Sky
laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(e) You shall have received, on each of the date hereof, the
Closing Date and the Option Closing Date, as the case may be, a
letter dated the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance
satisfactory to you, of each of Coopers & Lybrand L.L.C. and
Arthur Andersen LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in
all material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations; and
containing such other statements and information as is ordinarily
included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and
statistical information contained in the Registration Statement
and Prospectus.
(f) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate
or certificates of the President and Chief Executive Officer and
the Vice President, Finance and Chief Financial Officer of the
Company to the effect that, as of the Closing Date or the Option
Closing Date, as the case may be, each of them severally
represents as follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness
of the Registrations Statement has been issued, and no
proceedings for such purpose have been taken or are, to his
knowledge, contemplated by the Commission.
(ii) He does not know of any litigation instituted or
threatened against the Company of a character required to be
disclosed in the Registration Statement which is not so
disclosed; he does not know
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<PAGE> 23
of any material contract required to be filed as an exhibit
to the Registration Statement which is not so filed; and the
representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date
or the Option Closing Date, as the case may be.
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made.
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the
effective date of the Registration Statement, the statements
contained in the Registration Statement were true and
correct, and such Registration Statement and Prospectus did
not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein
not misleading, and since the effective date of the
Registration Statement, no event has occurred which should
have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement
or amendment.
(v) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, there
has not been any material adverse change or any development
involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the
Company or the earnings, business, management, properties,
assets, rights, operations, condition (financial or
otherwise) or prospects of the Company, whether or not
arising in the ordinary course of business.
(g) The Company and, in the case of any Option Closing, the
Selling Shareholders shall have furnished to the Representatives
such further certificates and documents confirming the
representations and warranties, covenants and conditions contained
herein and related matters as the Representatives may reasonably
have requested.
(h) The Firm Shares and Option Shares, if any, shall have
been approved for designation upon notice of issuance on the
Nasdaq National Market.
(i) The Lockup Agreements described in Section 4(a)(x) shall
be in full force and effect.
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<PAGE> 24
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof
only if they are in all material respects satisfactory to the
Representatives and to Hale and Dorr, counsel for the
Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, the obligations of the
Underwriters hereunder may be terminated by the Representatives by
notifying the Company and the Selling Shareholders of such
termination in writing or by telegram at or prior to the Closing
Date or the Option Closing Date, as the case may be. In such
event, the Selling Shareholders, the Company and the Underwriters
shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. Conditions to the Obligations of the Sellers.
The obligations of the Sellers to sell and deliver the
portion of the Shares required to be delivered as and when
specified in this Agreement are subject to the conditions that at
the Closing Date or the Option Closing Date, as the case may be,
no stop order suspending the effectiveness of the Registration
Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. Indemnification.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling
person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in the light of the
circumstances under which they were made; and will reimburse each
Underwriter and each such controlling person upon demand for any
legal or other expenses reasonably incurred by such Underwriter
and each such controlling person in connection with investigating
or defending any such loss, claim, damage, liability, action or
proceeding or in responding to a subpoena or governmental
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<PAGE> 25
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any such action or
proceeding; provided, however, that the Company and the Selling
Shareholders will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or
omission or alleged omission, made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof.
In no event, however, shall the liability of any Selling
Shareholder for indemnification under this Section 8(a) exceed the
proceeds received by such Selling Shareholder from the
Underwriters in the offering. This indemnity agreement will be in
addition to any liability which the Company or the Selling
Shareholders may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, the Selling
Shareholders and each person, if any, who controls the Company or
the Selling Shareholders within the meaning of the Act, against
any losses, claims, damages or liabilities to which the Company or
any such director, officer, Selling Shareholder or controlling
person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any
such director, officer, Selling Shareholder or controlling person
in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however,
that each Underwriter will be liable in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in
the Registration Statement, any Preliminary Prospectus, the
Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by
or through the Representatives
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<PAGE> 26
specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 8, such
person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying
party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give
notice as provided in this Section 8(c) if the party to whom
notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice
shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of
Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory
to such indemnified party and shall pay as incurred (or within 30
days of presentation) the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred the fees and expenses of
the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel, (ii) the named parties to
any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them, or (iii) the indemnifying party shall have failed to
assume the defense and employ counsel acceptable to the
indemnified party within a reasonable period of time after notice
of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for
all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to
Section 8(a) and by the Company and the Selling Shareholders in
the case of parties
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<PAGE> 27
indemnified pursuant to Section 8(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected
without its written consent but, if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought
hereunder (whether or not any indemnified party is an actual or
potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative
fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by
the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the
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<PAGE> 28
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders on
the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above
in this Section 8(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to above
in this Section 8(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), (i) no
Underwriter shall be required to contribute any amount in excess
of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter, (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation, and (iii) no
Selling Shareholder shall be required to contribute any amount in
excess of the proceeds received by such Selling Shareholder from
the Underwriters in the offering. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be
sought under this Section 8 hereby consents to the jurisdiction of
any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him
or it by any other contributing party and consents to the service
of such process and agrees that any other contributing party may
join him or it as an additional defendant in any such proceeding
in which such other contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or
contribution under this Section 8 shall be paid by the
indemnifying party to the indemnified party
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<PAGE> 29
as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in
this Section 8 and the representations and warranties of the
Company and the Selling Shareholders set forth in this Agreement
shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors
or officers or any persons controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to any Underwriter,
or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in
this Section 8.
9. Default by Underwriters.
If on the Closing Date or the Option Closing Date, as the
case may be, any Underwriter shall fail to purchase and pay for
the portion of the Shares which such Underwriter has agreed to
purchase and pay for on such date (otherwise than by reason of any
default on the part of the Company or a Selling Shareholder), you,
as Representatives of the Underwriters, shall use your reasonable
efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company
and the Selling Shareholders such amounts as may be agreed upon
and upon the terms set forth herein, the Firm Shares or Option
Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as
such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option
Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate
number of shares with respect to which such default shall occur
does not exceed 10% of the Firm Shares or Option Shares, as the
case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of
Firm Shares or Option Shares, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of shares of Firm Shares or Option Shares, as the
case may be, with respect to which such default shall occur
exceeds 10% of the Firm Shares or Option Shares, as the case may
be, covered hereby, the Company and the Selling Shareholders or
you as the Representatives of the Underwriters will have the
right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement
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<PAGE> 30
without liability on the part of the non-defaulting Underwriters
or of the Company or of the Selling Shareholders except to the
extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may
be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes
in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. Notices.
All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed,
delivered, telecopied or telegraphed and confirmed as
follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 101 Federal Street, Boston, Massachusetts
02110, Attention: R. William Burgess, Jr., with a copy to
Alex. Brown & Sons Incorporated, 135 East Baltimore Street,
Baltimore, Maryland 21202, Attention: General Counsel; and
if to the Company or the Selling Shareholders, to:
GeoTel Communications Corporation
25 Porter Road
Littleton, Massachusetts 01460
Attention: President
11. Termination.
This Agreement may be terminated by you by notice to the
Sellers as follows:
(a) at any time prior to the earlier of (i) the time
the Shares are released by you for sale by notice to the
Underwriters, or (ii) 11:30 a.m. on the first business day
following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, any material adverse change or any development
involving a prospective material adverse change in or affecting
the condition, financial or otherwise, of the Company or the
earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
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<PAGE> 31
Company, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or
international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the
financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Shares or to enforce
contracts for the sale of the Shares, (iii) suspension of trading
in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market or
limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on any such exchange or market,
(iv) the enactment, publication, decree or other promulgation of
any statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and
adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a
banking moratorium by United States or New York State authorities,
(vi) the suspension of trading of the Company's Common Stock by
the Commission on the Nasdaq National Market, or (vii) the taking
of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United
States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. Successors.
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company and the Selling Shareholders and
their respective successors, executors, administrators, heirs and
assigns, and the officers, directors and controlling persons
referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign merely because
of such purchase.
13. Information Provided by Underwriters.
The Company, the Selling Shareholders and the Underwriters
acknowledge and agree that the only information furnished or to be
furnished by any Underwriter to the Company for inclusion in any
Preliminary Prospectus, Prospectus or the Registration Statement
consists of the information set forth in the last paragraph on the
front cover page (insofar as such information relates to the
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<PAGE> 32
Underwriters), legends required by Item 502(d) of Regulation S-K
under the Act and the information under the caption "Underwriting"
in the Prospectus.
14. Miscellaneous.
The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full
force and effect regardless of (a) any termination of this
Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers, and (c) delivery of and
payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding
of our agreement, please sign and return to us the enclosed duplicates
hereof, whereupon it will become a binding agreement among the Selling
Shareholders, the Company and the several Underwriters in accordance
with its terms.
Any person executing and delivering this Agreement as
Attorney-in-Fact for a Selling Shareholder represents by so doing that
he has been duly appointed as Attorney-in-Fact by such Selling
Shareholder pursuant to a validly existing and binding Power of
Attorney which authorizes such Attorney-in-Fact to take such action.
Very truly yours,
GEOTEL COMMUNICATIONS CORPORATION
By____________________________
John C. Thibeault, President
SELLING SHAREHOLDERS LISTED ON SCHEDULE II
By_________________________________
, Attorney-in-Fact
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<PAGE> 33
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
ALEX. BROWN & SONS INCORPORATED
WESSELS, ARNOLD & HENDERSON, L.L.C.
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:
Authorized Officer
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<PAGE> 34
SCHEDULE I
Schedule Of Underwriters
Number of Firm Shares
Underwriter to be Purchased
Alex. Brown & Sons Incorporated
Wessels, Arnold & Henderson, L.L.C.
---------
Total
<PAGE> 35
SCHEDULE II
Schedule of Option Shares
Maximum Number Percentage of
of Option Shares Total Number of
Name of Seller to be Sold Option Shares
------- ---
Total 100%
<PAGE> 36
SCHEDULE III
Foreign Qualifications
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
GEOTEL COMMUNICATIONS CORPORATION
FIRST: The name of this Corporation shall be:
GEOTEL COMMUNICATIONS CORPORATION
SECOND: The Corporation's registered office in the State of Delaware
is to be located at 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801, and its registered agent at such address is THE CORPORATION TRUST
COMPANY.
THIRD: The purpose or purposes of the Corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 200,000 shares of Common Stock,
$.01 par value per share.
FIFTH: The name and mailing address of the Sole Incorporator is as
follows:
NAME MAILING ADDRESS
Michael J. Riccio, Jr. c/o Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
SIXTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly
authorized to adopt, amend, or repeal the By-Laws of the
Corporation.
B. Elections of directors need not be by written ballot unless
the By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within
or without the State of Delaware as the By-Laws of the
Corporation may provide or as
<PAGE> 2
may be designated from time to time by the Board of Directors
of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: Except as stated in Article Ninth of this Certificate of
Incorporation, the Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
NINTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
notwithstanding any provision of law imposing such liability; provided, however,
that, to the extent provided by applicable law, this provision shall not
eliminate the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of Delaware, or
(iv) for any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of this provision shall apply to or have any
effect on the liability or alleged liability of any director for or with respect
to any acts or omissions of such director occurring prior to such amendment or
repeal.
I, the undersigned, for the purpose of forming a corporation pursuant to
the General Corporation Law of the State of Delaware, do make this certificate,
hereby declaring and
2
<PAGE> 3
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 4th day of June, 1993.
/s/ Michael J. Riccio, Jr.
--------------------------
Michael J. Riccio, Jr.
Sole Incorporator
- 3 -
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GEOTEL COMMUNICATIONS CORPORATION
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Geotel Communications Corporation (the "Corporation), organized and
existing under the and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
By vote of the Board of Directors of the Corporation, a resolution was
adopted, pursuant to Section 242 of the General Corporation Law of the State of
Delaware, setting forth an amendment to the Certificate of Incorporation of the
Corporation and declaring said amendment to be advisable. The stockholders of
the Corporation duly approved said proposed amendment by written consent in
accordance with Sections 228 and 242 of the General Corporation Law of the State
of Delaware, and prompt written notice of the taking of the action without a
meeting by less than unanimous written consent has been given in accordance with
section 228(d) to the stockholders who did not consent in writing. The
resolution setting forth the amendment is as follows:
RESOLVED: That Article Fourth of the Certificate of Incorporation of
the Corporation be and hereby is deleted and a new Article
Fourth in the form attached hereto as Exhibit A be inserted
in lieu thereof.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President this 26th day of September, 1996.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
--------------------------------
President
<PAGE> 5
EXHIBIT A
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 40,000,000 shares of Common
Stock, $.01 par value per share ("Common Stock"), and (ii) 7,788,615 shares of
Preferred Stock, $.01 par value per share, of which 3,402,000 shares shall be
designated as Series A Convertible Participating Preferred Stock, $.01 par value
per share (the "Series A Preferred Stock"), 2,604,286 shares shall be designated
as Series B Convertible Participating Preferred Stock, $.01 par value per share
(the "Series B Preferred Stock"), and 1,782,329 shares shall be designated as
Series C Convertible Participating Preferred Stock, $.01 par value per share
(the "Series C Preferred Stock and, together with the Series A Preferred Stock
and the Series B Preferred Stock, the "Preferred Stock").
The following is a statement of the voting powers and the designations,
preferences and other special rights, and the qualifications, limitations or
restrictions in respect of each class of capital stock of the Corporation.
A. Common Stock
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to, and qualified by, the rights of the holders
of the Preferred Stock of any series as may be designated by the Board of
Directors upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written action in lieu of
meetings). There shall be no cumulative voting.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. Preferred Stock
Section 1. Designation and Amount. The series of Preferred Stock of the
Corporation designated as "Series A Convertible Participating Preferred Stock"
shall consist of 3,402,000 shares. The series of Preferred Stock of the
Corporation designated as "Series B Convertible Participating Preferred Stock"
shall consist of 2,604,286 shares. The series of Preferred Stock of the
Corporation designated as "Series C Convertible Participating Preferred Stock"
shall consist of 1,782,329 shares.
<PAGE> 6
Section 2. Dividends. The holders of the Preferred Stock shall be
entitled to receive, out of funds legally available therefor, dividends at the
same rate as dividends (other than dividends paid in additional shares of Common
Stock) are paid with respect to the Common Stock (treating each share of
Preferred Stock as being equal to the number of shares of Common Stock into
which each such share of Preferred Stock could be converted pursuant to the
provisions of Section 5 hereof with such number determined as of the record date
for the determination of holders of Common Stock entitled to receive such
dividend).
Section 3. Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, each holder of outstanding shares
of Preferred Stock and Common Stock shall be entitled to be paid out of the
assets of the Company available for distribution to stockholders, whether such
assets are capital, surplus, or earnings as follows: (i) First, pari passu, to
the holders of the Series A Preferred Stock, the holders of the Series B
Preferred Stock and the holders of the Series C Preferred Stock as follows: the
holders of outstanding shares of Series A Preferred Stock shall receive an
amount equal to $1.00 per share (adjusted appropriately for stock splits, stock
dividends and the like) together with any declared but unpaid dividends to which
the holders of outstanding shares of Series A Preferred Stock are entitled
pursuant to Section 2 hereof (collectively, the "Series A Liquidation Amount"),
the holders of outstanding shares of Series B Preferred Stock shall receive an
amount equal to $1.75 per share (adjusted appropriately for stock splits, stock
dividends and the like) together with any declared but unpaid dividends to which
the holders of outstanding shares of Series B Preferred Stock are entitled to
receive pursuant to Section 2 hereof (collectively, the "Series B Liquidation
Amount"), and the holders of the outstanding shares of Series C Preferred Stock
shall receive an amount equal to $2.336 per share (adjusted appropriately for
stock splits, stock dividends and the like) together with any declared but
unpaid dividends to which the holders of outstanding shares of Series C
Preferred Stock are entitled to receive pursuant to Section 2 hereof
(collectively, the "Series C Liquidation Amount"), before any payment shall be
made to the holders of any class of Common Stock or of any other stock ranking
on liquidation junior to the Preferred Stock; provided, however, that if, upon
any liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Preferred Stock and any other stock ranking as to any such
distribution on a parity with the Preferred Stock are not paid in full, the
holders of the Preferred Stock and such other stock shall share ratably in any
distribution of assets in proportion to the full respective preferential amounts
to which they are entitled; and (ii) Second, the holders of the outstanding
shares of Preferred Stock shall share ratably with the holders of the
outstanding shares of Common Stock in the distribution of the assets of the
Company remaining for distribution to stockholders, whether such assets are
capital, surplus or earnings (the "Residual Assets") as if each share of
Preferred Stock had been converted into the number of shares of Common Stock
issuable upon the conversion of a share of Preferred Stock immediately prior to
any such liquidation, dissolution or winding up of the Company.
- 2 -
<PAGE> 7
(b) A consolidation or merger of the Corporation (except (i) into
or with a wholly-owned subsidiary of the Corporation with requisite shareholder
approval or (ii) a merger in which the beneficial owners of the Corporation's
capital stock immediately prior to such transaction hold no less than fifty-one
percent (51%) of the voting power in the resulting entity) or a sale of all or
substantially all of the assets of the Corporation shall be regarded as a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Section 3; provided, however, that each holder of the
Preferred Stock shall have the right to elect the benefits of the provisions of
Section 5(j) hereof in lieu of receiving payments in liquidation, dissolution or
winding up of the Corporation pursuant to this Section 3.
(c) The Series A Liquidation Amount, Series B Liquidation Amount
and Series C Liquidation Amount shall in all events be paid in cash; provided,
however, that if the Series A Liquidation Amount, the Series B Liquidation
Amount and the Series C Liquidation Amount are payable in connection with a
consolidation or merger of the Corporation, then each holder of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock may, at
its election, receive payments of the Series A Liquidation Amount, Series B
Liquidation Amount or Series C Liquidation Amount, as the case may be, in the
same form of consideration as is payable with respect to the Common Stock.
Wherever a distribution provided for in this Section 3 is payable in property
other than in cash, the value of such distribution shall be the fair market
value of such property as determined in good faith by the Company's Board of
Directors.
Section 4. Voting Power.
Except as otherwise expressly provided herein or as required by law,
the holder of each share of Preferred Stock shall be entitled to vote on all
matters. Each share of Preferred Stock shall entitle the holder thereof to such
number of votes per share as shall equal the number of shares of Common Stock
into which each share of Preferred Stock is then convertible. Except as
otherwise expressly provided herein (including without limitation the provisions
of Section 6 hereof) or as required by law, the holders of shares of the
Preferred Stock and the Common Stock shall vote together as a single class on
all matters.
Section 5. Conversion. The holders of the Preferred Stock have the
following rights:
(a) Voluntary Conversion. The holders of a majority in interest of
the then outstanding shares of Preferred Stock shall be entitled, at any time
after July 31, 2000, to cause all of such shares to be converted into shares of
Common Stock at an initial conversion rate of: 1 share of Common Stock for each
share of Series A Preferred Stock (the "Series A Conversion Ratio"), 1 share of
Common Stock for each share of Series B Preferred Stock (the "Series B
Conversion Ratio") and 1 share of Common Stock for each share of Series C
Preferred Stock (the "Series C Conversion Ratio"); and, in connection therewith,
to receive from the Corporation the Series A Liquidation Amount per share,
Series B Liquidation Amount per share or Series C Liquidation per share, as the
case may be, in three equal annual
- 3 -
<PAGE> 8
installments (the "Conversion Installments"). If the Corporation does not have
sufficient funds legally available to pay a Conversion Installment on any date
when it is due (each an "Installment Date"), then it shall pay the amount
available on a pro-rata basis among the persons or entities entitled to such
Conversion Installment in proportion to the amount they would have received had
such Conversion Installment been paid in full and shall pay the remaining amount
as soon as sufficient funds are legally available. In the event that the
Corporation fails to make the payment of any Conversion Installment, then during
the period from the Installment Date through the date on which such Conversion
Installment payment is made, the unpaid balance of the Conversion Installment
due and payable shall bear interest at a per annum rate of 15%, payable
quarterly in arrears. If any Conversion Installment payment remains unpaid for
greater than 90 days after notice, until such payment is made in full, the
holders of Preferred Stock shall be entitled to call a special meeting of the
Stockholders of the Corporation at which the holders of a majority in interest
of the Preferred Stock represented in person or by proxy at such meeting shall
have the right to elect a sufficient number of directors to the Corporation's
Board of Directors, so that the representatives of the Preferred Stockholders
represent a majority of the Corporation's directors. If the holders of a
majority in interest of the then outstanding shares of Preferred Stock elect to
convert the Preferred Stock at a time when there are any accrued and unpaid
dividends or other amounts due on such shares, such dividends and other amounts
shall be paid in full by the Corporation in connection with such conversion.
(b) Automatic Conversion. Each share of Preferred Stock
outstanding shall automatically be converted into shares of Common Stock,
immediately prior to the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock of the
Corporation to the public in which (i) the aggregate price paid for such shares
by the public shall be at least $10,000,000 and (ii) the price paid by the
public for such shares shall be at least $4.672 per share (appropriately
adjusted to reflect the occurrence of any event of subdivision or combination
under Section 5(g)(I)) (a "Qualified Public Offering"). The number of shares of
Common Stock into which each share of Preferred Stock is convertible under this
Section 5(b) shall equal the sum of (i) the number of shares of Common Stock
issuable upon conversion of the Preferred Stock under Section 5(a), based upon
the respective Conversion Ratio of the series of Preferred Stock, and (ii) the
number of shares equal to the quotient obtained by dividing fifty percent (50%)
of the Series A Liquidation Amount per share, the Series B Liquidation Amount
per share and Series C Liquidation Amount per share, as the case may be, by the
initial public offering price paid by the public for shares of Common Stock in
the Qualified Public Offering.
(c) Conversion Procedures. Upon a voluntary conversion in Section
5(a), the holders of Preferred Stock shall surrender the certificate or
certificates representing the Preferred Stock being converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto), at the principal executive office of the Corporation
or the offices of the transfer agent for the Preferred Stock or such office or
- 4 -
<PAGE> 9
offices in the continental United States of an agent for conversion as may from
time to time be designated by notice to the holders of the Preferred Stock by
the Corporation. Upon surrender of a certificate representing Preferred Stock
for conversion, the Corporation shall issue and send by hand delivery, by
courier or by first class mail (postage prepaid) to the holder thereof or to
such holder's designee, at the address designated by such holder, a certificate
or certificates for the number of shares of Common Stock to which such holder
shall be entitled upon conversion and an amount equal to the initial conversion
installment issued pursuant to Section 5(a).
(d) Effective Date of Conversion. The issuance by the Corporation
of shares of Common Stock upon a conversion of Preferred Stock into shares of
Common Stock shall be effective as of the surrender of the certificate or
certificates for the Preferred Stock, duly assigned or endorsed for transfer to
the Corporation (or accompanied by duly executed stock powers relating thereto).
The issuance by the Corporation of shares of Common Stock upon a conversion of
Preferred Stock into Common Stock pursuant to Section 5(b) hereof shall not be
deemed to be effective until immediately prior to the closing of the Qualified
Public Offering. On and after the effective date of conversion, the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock.
(e) Fractional Shares. The Corporation shall not be obligated to
deliver to holders of Preferred Stock any fractional share of Common Stock
issuable upon any conversion of such Preferred Stock, but in lieu thereof may
make a cash payment in respect thereof in any manner permitted by law.
(f) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion of Preferred Stock as herein
provided, free from any preemptive rights or other obligations, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Preferred Stock then outstanding provided that the shares
of Common Stock so reserved shall not be reduced or affected in any manner
whatsoever so long as any shares of Preferred Stock are outstanding. The
Corporation shall prepare and shall use its best efforts to obtain and keep in
force such governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all requirements as to registration,
qualification or listing of the Common Stock, in order to enable the Corporation
lawfully to issue and deliver to each holder of record of Preferred Stock such
number of shares of its Common Stock as shall from time to time be sufficient to
effect the conversion of all Preferred Stock then outstanding and convertible
into shares of Common Stock.
(g) Adjustments to Conversion Ratio. Each of the Series A
Conversion Ratio, Series B Conversion Ratio and Series C Conversion Ratio in
effect from time to time shall be subject to adjustment as follows:
- 5 -
<PAGE> 10
(I) Stock Dividends, Subdivisions and Combinations. Upon the
issuance of additional shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, the subdivision of
outstanding shares of Common Stock into a greater number of shares of
Common Stock, or the combination of outstanding shares of Common Stock
into a smaller number of shares of the Common Stock, the Series A
Conversion Ratio, Series B Conversion Ratio and Series C Conversion
Ratio shall, simultaneously with the happening of such dividend,
subdivision or split be adjusted by multiplying the then effective
Series A Conversion Ratio, Series B Conversion Ratio and Series C
Conversion Ratio by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event. An adjustment
made pursuant to this Section 5(g)(I) shall be given effect, upon
payment of such a dividend or distribution, as of the record date for
the determination of stockholders entitled to receive such dividend or
distribution (on a retroactive basis) and in the case of a subdivision
or combination shall become effective immediately as of the effective
date thereof.
(II) Sale of Common Stock. In the event the Corporation shall
at any time or from time to time while the Preferred Stock is
outstanding, issue, sell or exchange any shares of Common Stock
(including shares held in the Corporation's treasury but excluding up
to 3,800,000 shares of Common Stock (the "Pool") issued, reissued, or
sold, to officers, directors, employees, consultants or agents of the
Corporation pursuant to the Corporation's Stock Option Plan, upon the
exercise of options issued pursuant to such Stock Option Plan, or
pursuant to the Corporation's Restricted Stock Purchase Plan or
otherwise to certain executive officers and founders of the Corporation
(the "Excluded Shares")) for a consideration per share less than (x)
$1.00 in the case of the Series A Preferred Stock (the "Series A
Conversion Price"), (y) $1.75 in the case of the Series B Preferred
Stock (the "Series B Conversion Price") or (z) $2.336 in the case of
the Series C Preferred Stock (the "Series C Conversion Price"), with
any such Excluded Shares repurchased or subject to option lapse being
returned to the Pool, then and thereafter successively upon each such
issuance, sale or exchange:
(A) if such issuance, sale or exchange is for a
consideration per share which is less than the Series A Conversion
Price, the Series A Conversion Ratio in effect with respect to the
Series A Preferred Stock immediately prior to the issuance, sale
or exchange of such shares shall forthwith be increased (but not
decreased) to an amount determined by multiplying the Series A
Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but
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<PAGE> 11
including all shares of Common Stock issuable upon conversion or
exercise of any outstanding Preferred Stock, options, warrants,
rights or convertible securities), plus (ii) the number of such
additional shares of Common Stock so issued; and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of shares of Common Stock which
the net aggregate consideration received by the Corporation for
the total number of such additional shares of Common Stock so
issued would purchase at the Series A Conversion Price per share;
(B) if such issuance, sale or exchange is for a
consideration per share which is less than the Series B Conversion
Price, the Series B Conversion Ratio in effect with respect to the
Series B Preferred Stock immediately prior to the issuance, sale
or exchange of such shares shall forthwith be increased (but not
decreased) to an amount determined by multiplying the Series B
Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number of
shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of such additional shares of
Common Stock so issued; and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of shares of Common Stock which
the net aggregate consideration received by the Corporation for
the total number of such additional shares of Common Stock so
issued would purchase at the Series B Conversion Price per share;
and
(C) if such issuance, sale or exchange is for a
consideration per share which is less than the Series C Conversion
Price, the Series C Conversion Ratio in effect with respect to the
Series C Preferred Stock immediately prior to the
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<PAGE> 12
issuance, sale or exchange of such shares shall forthwith be
increased (but not decreased) to an amount determined by
multiplying the Series C Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number of
shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of such additional shares of
Common Stock so issued; and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of shares of Common Stock which
the net aggregate consideration received by the Corporation for
the total number of such additional shares of Common Stock so
issued would purchase at the Series C Conversion Price per share.
(III) Sale of Options, Rights or Convertible Securities. In
the event the Corporation shall at any time or from time to time while
the Preferred Stock is outstanding, issue options, warrants or rights
to subscribe for shares of Common Stock (other than any options for
Excluded Shares), or issue any securities convertible into or
exchangeable for shares of Common Stock, for a consideration per share
(determined by dividing the Net Aggregate Consideration (as determined
below) by the aggregate number of shares of Common Stock that would be
issued if all such options, warrants, rights or convertible securities
were exercised or converted to the fullest extent permitted by their
terms) less than (x) the Series A Conversion Price per share, (y) the
Series B Conversion Price per share or (z) the Series C Conversion
Price per share, then:
(A) if such issuance is for a consideration per share
which is less than the Series A Conversion Price, the Series A
Conversion Ratio in effect immediately prior to the issuance of
such options, warrants or rights or securities shall be increased
(but not decreased) to an amount determined by multiplying the
Series A Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number of
shares of Common Stock of all classes outstanding immediately
prior to the issuance of such such options, warrants or rights or
securities (excluding treasury shares but
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<PAGE> 13
including all shares of Common Stock issuable upon conversion or
exercise of any outstanding Preferred Stock, options, warrants,
rights or convertible securities), plus (ii) the aggregate number
of shares of Common Stock that would be issued if all such
options, warrants, rights or convertible securities were exercised
or converted, and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such such options, warrants or rights or
securities (excluding treasury shares but including all shares of
Common Stock issuable upon conversion or exercise of any
outstanding Preferred Stock, options, warrants, rights or
convertible securities), plus (ii) the number of shares of Common
Stock which the total amount of consideration received by the
Corporation for the issuance of such options, warrants, rights or
convertible securities plus the minimum amount set forth in the
terms of such security as payable to the Corporation upon the
exercise or conversion thereof (the "Net Aggregate
Consideration"), would purchase at the Series A Conversion Price
prior to adjustment;
(B) if such issuance is for a consideration per share
which is less than the Series B Conversion Price, the Series B
Conversion Ratio in effect immediately prior to the issuance of
such options, warrants or rights or securities shall be increased
(but not decreased) to an amount determined by multiplying the
Series B Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number of
shares of Common Stock of all classes outstanding immediately
prior to the issuance of such such options, warrants or rights or
securities (excluding treasury shares but including all shares of
Common Stock issuable upon conversion or exercise of any
outstanding Preferred Stock, options, warrants, rights or
convertible securities), plus (ii) the aggregate number of shares
of Common Stock that would be issued if all such options,
warrants, rights or convertible securities were exercised or
converted, and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such additional shares of Common Stock
(excluding treasury shares but including all shares of Common
Stock issuable upon conversion or exercise of any outstanding
Preferred Stock, options, warrants, rights or convertible
securities), plus (ii) the number of shares of Common Stock which
the Net Aggregate Consideration would purchase at the Series B
Conversion Price prior to adjustment; and
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<PAGE> 14
(C) if such issuance is for a consideration per share
which is less than the Series C Conversion Price, the Series C
Conversion Ratio in effect immediately prior to the issuance of
such options, warrants or rights or securities shall be increased
(but not decreased) to an amount determined by multiplying the
Series C Conversion Ratio by a fraction:
(1) the numerator of which shall be (i) the number of
shares of Common Stock of all classes outstanding immediately
prior to the issuance of such such options, warrants or rights or
securities (excluding treasury shares but including all shares of
Common Stock issuable upon conversion or exercise of any
outstanding Preferred Stock, options, warrants, rights or
convertible securities), plus (ii) the aggregate number of shares
of Common Stock that would be issued if all such options,
warrants, rights or convertible securities were exercised or
converted, and
(2) the denominator of which shall be (i) the number
of shares of Common Stock of all classes outstanding immediately
prior to the issuance of such such options, warrants or rights or
securities (excluding treasury shares but including all shares of
Common Stock issuable upon conversion or exercise of any
outstanding Preferred Stock, options, warrants, rights or
convertible securities), plus (ii) the number of shares of Common
Stock which the Net Aggregate Consideration would purchase at the
Series C Conversion Price prior to adjustment.
(IV) Expiration or Change in Ratio. If the consideration per share
provided for in any options or rights to subscribe for shares of Common Stock or
any securities exchangeable for or convertible into shares of Common Stock,
changes at any time, the Series A Conversion Ratio, Series B Conversion Ratio or
Series C Conversion Ratio, as the case may be, in effect at the time of such
change shall be readjusted to the Series A Conversion Ratio, Series B Conversion
Ratio or Series C Conversion Ratio which would have been in effect at such time
had such options or convertible securities provided for such changed
consideration per share (determined as provided in Section 5(g)(III), hereof),
at the time initially granted, issued or sold; provided, that such adjustment of
the Series A Conversion Ratio, Series B Conversion Ratio and Series C Conversion
Ratio will be made only as and to the extent that the Series A Conversion Ratio,
Series B Conversion Ratio or Series C Conversion Ratio, as the case may be,
effective upon such adjustment remains greater than or equal to the Conversion
Ratio that would be in effect if outstanding Preferred Stock, options, warrants,
rights or convertible securities had not been issued. No adjustment of the
Series A Conversion Ratio, Series B Conversion Ratio or Series C Conversion
Ratio shall be made under this Section 5 upon the issuance of any additional
shares of Common Stock which are issued pursuant to the exercise of any
warrants, options or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any convertible securities if
an adjustment shall previously have been made upon the issuance of such
warrants, options or
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<PAGE> 15
other rights. Any adjustment of the Series A Conversion Ratio, Series B
Conversion Ratio or Series C Conversion Ratio shall be disregarded if, as, and
when the rights to acquire shares of Common Stock upon exercise or conversion of
the warrants, options, rights or convertible securities which gave rise to such
adjustment expire or are canceled without having been exercised, so that the
Series A Conversion Ratio, Series B Conversion Ratio or Series C Conversion
Ratio, as the case may be, effective immediately upon such cancellation or
expiration shall be equal to the respective Conversion Ratio in effect at the
time of the issuance of the expired or canceled warrants, options, rights or
convertible securities, with such additional adjustments as would have been made
to that Conversion Ratio had the expired or canceled warrants, options, rights
or convertible securities not been issued.
(h) Holders Not Entitled to Anti-Dilution Protection.
Notwithstanding anything contained in Section 5(g) to the contrary, a holder of
any shares of Preferred Stock shall not be entitled to the benefits of Section
5(g) with respect to an issuance, sale or exchange of any shares of Common Stock
pursuant to the provisions of Subsection 5(g)(II), or an issuance of options,
warrants or rights to subscribe for shares of Common Stock or an issuance of any
securities convertible into or exchangeable for shares of Common Stock pursuant
to the provisions of Subsection 5(g)(III) (each a "Dilutive Issuance") if (I)
the Corporation has offered such holder the opportunity, exercisable over a
period of not less than 30 days, to purchase securities in such Dilutive
Issuance at a price and on terms no less favorable to such holder than those
generally offered to other persons participating in such Dilutive Issuance, and
(II) such holder has failed to participate in such Dilutive Issuance by
acquiring in such Dilutive Issuance such number of securities as shall at least
equal the lesser of (x) such holder's pro rata share of such Dilutive Issuance
(as determined by dividing the number of shares of Preferred Stock held by such
holder immediately prior to such Dilutive Issuance, by the total number of
shares of Preferred Stock outstanding immediately prior to such Dilutive
Issuance) or (y) the maximum amount which such holder was offered the
opportunity to purchase.
(i) Other Adjustments. In the event the Corporation shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, then and in each such event
lawful and adequate provision shall be made so that the holders of Preferred
Stock shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the number of securities of the
Corporation which they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the Conversion
Date (as that term is hereafter defined), retained such securities receivable by
them as aforesaid during such period, giving application to all adjustments
called for during such period under this Section 5 as applied to such
distributed securities.
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<PAGE> 16
If the Common Stock issuable upon the conversion of the Preferred Stock
shall be changed into the same or different number of shares of any class or
classes of stock, whether by reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in Section 3(b) or in this Section 5), then and in each such event the holder of
each share of Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reclassification or other change, by holders of
the number of shares of Common Stock into which such shares of Preferred Stock
might have been converted immediately prior to such reclassification or change,
all subject to further adjustment as provided herein.
(j) Mergers and Other Reorganizations. If at any time or from time
to time there shall be a capital reorganization of the Common Stock (other than
a subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Section 5) or a merger or consolidation of the Corporation
with or into another Corporation or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a part of and
as a condition to the effectiveness of such reorganization, merger,
consolidation or sale, lawful and adequate provision shall be made so that the
holders of the Preferred Stock shall thereafter be entitled to receive upon
conversion of the Preferred Stock the number of shares of stock or other
securities or property of the Corporation or of the successor Corporation
resulting from such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
provisions shall be made with respect to the rights of the holders of the
Preferred Stock after the reorganization, merger, consolidation or sale to the
end that the provisions of this Section 5 (including without limitation
provisions for adjustment of the Series A Conversion Ratio, Series B Conversion
Ratio and the Series C Conversion Ratio and the number of shares purchasable
upon conversion of the Preferred Stock) shall thereafter be applicable, as
nearly as may be, with respect to any shares of stock, securities or assets to
be deliverable thereafter upon the conversion of the Preferred Stock.
Each holder of Preferred Stock upon the occurrence of a capital
reorganization, merger or consolidation of the Corporation or the sale of all or
substantially all its assets and properties as such events are more fully set
forth in the first paragraph of this Section 5(j), shall have the option of
electing treatment of his shares of Preferred Stock under either this Section
5(j) or Section 3(b) hereof, notice of which election shall be submitted in
writing to the Corporation at its principal offices no later than ten (10) days
before the effective date of such event, provided that any such notice shall be
effective if given not later than fifteen (15) days after the date of the
Corporation's notice, pursuant to Section 8, with respect to such event.
(k) Certificate as to Adjustments. In each case of an adjustment or
readjustment of the Series A Conversion Ratio, Series B Conversion Ratio or
Series C Conversion Ratio, the
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<PAGE> 17
Corporation at its expense will furnish each holder of the series of Preferred
Stock subject to such adjustment or readjustment with a certificate, prepared by
the chief financial officer of the Corporation, showing such adjustment or
readjustment in accordance with the terms hereof, and stating 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
(i) such adjustments and readjustments, (ii) the Series A Conversion Ratio,
Series B Conversion Ratio and Series C Conversion Ratio at the time in effect,
and (iii) the number of shares of Common Stock, the Series A Liquidation Amount,
the Series B Liquidation Amount, the Series C Liquidation Amount and the amount,
if any, of other property which at the time would be received upon the
conversion of Preferred Stock.
Section 6. Restrictions and Limitations.
(a) Except as otherwise provided in clause (v) below, so long as
any shares of the Preferred Stock remain outstanding, the Corporation shall not
without the affirmative vote or written consent of the holders of two-thirds in
interest of the then outstanding shares of the Preferred Stock (adjusted
appropriately for stock splits, stock dividends and the like):
(i) Redeem, purchase or otherwise acquire for value (or pay
into or set aside for a sinking fund for such purpose)
any of the Common Stock of any class or any other
capital stock of the Corporation (other than the
Preferred Stock); provided, however, that this
restriction shall not apply to the repurchase or
redemption of shares of Common Stock issued pursuant to
stock repurchase agreements under which the Company has
the option to repurchase such shares upon the
occurrence of certain events, including the termination
of employment and involuntary transfers by operation of
law, provided that (unless the purchase is approved by
a majority vote of the Board of Directors of the
Corporation) the repurchase price paid by the
Corporation does not exceed the purchase price paid to
the Corporation for such shares;
(ii) Authorize or issue, or obligate itself to issue, any
other equity security senior to or a parity with the
Preferred Stock as to liquidation preferences,
redemptions, or dividend rights or with any special
voting rights;
(iii) Increase or decrease (other than by conversion as
permitted hereby) the total number of authorized shares
of Preferred Stock;
(iv) Authorize any merger or consolidation of the
Corporation with or into any other corporation or
entity (except into or with a wholly-owned subsidiary
of the Corporation with the requisite shareholder
approval), authorize the liquidation, dissolution or
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<PAGE> 18
winding up of the Corporation, or authorize the sale of
substantially all of the assets of the Corporation; or
(v) Amend the Certificate of Incorporation or By-Laws of
the Corporation in a manner that directly or indirectly
adversely affects the rights of holders of the
Preferred Stock, provided, however, that any such
amendment which directly or indirectly adversely
affects the terms of one or more series of Preferred
Stock but would not so affect one or more series of the
Preferred Stock as a class shall require the
affirmative vote or written consent of the holders of
two-thirds in interest of such series.
Section 7. No Reissuance of Preferred Stock. No share of the Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and all such shares shall be canceled, retired,
and eliminated from the shares which the Corporation shall be authorized to
issue. The Corporation may from time to time take such appropriate corporate
action as may be necessary to reduce the authorized number of shares of the
Preferred Stock accordingly.
Section 8. Notices of Record Date. In the event (i) the Corporation
establishes a record date to determine the holders of any class of securities
who are entitled to receive any dividend or other distribution, or (ii) there
occurs any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation, and any transfer of all or substantially all
of the assets of the Corporation to any other corporation, or any other entity
or person, or any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the Corporation shall mail to each holder of Preferred
Stock at least twenty (20) days prior to the record date specified therein, a
notice specifying (a) the date of such record date for the purpose of such
dividend or distribution and a description of such dividend or distribution, (b)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (c) the time, if any, that is to be fixed, as to when the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
Section 9. Other Rights. Except as otherwise provided in this
Certificate of Incorporation, each share of Preferred Stock and each share of
Common Stock shall be identical in all respects, shall have the same powers,
preferences and rights, without preference of any such class or share over any
other such class or share, and shall be treated as a single class of stock for
all purposes.
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<PAGE> 1
EXHIBIT 3.2
RESTATED
CERTIFICATE OF INCORPORATION
OF
GEOTEL COMMUNICATIONS CORPORATION
GEOTEL COMMUNICATIONS CORPORATION, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY
as follows:
The Corporation was originally incorporated under the name of
"GEOTEL COMMUNICATIONS CORPORATION" and the date of filing of its
original Certificate of Incorporation with the Secretary of State of the
State of Delaware was June 4, 1993. The Corporation filed Certificates of
Amendment to its original Certificate of Incorporation on September 29,
1993, December 3, 1993, February 10, 1994, July 28, 1994, March 23, 1995,
June 1, 1995, August 9, 1995, January 23, 1996 , September , 1996 and
September , 1996.
The Board of Directors of the Corporation, at a special meeting
held on September , 1996, duly adopted resolutions setting forth the
Restated Certificate of Incorporation herein contained, declaring its
advisability and directing that such Restated Certificate of
Incorporation be submitted to the holders of the issued and outstanding
Common Stock, $.01 par value, for approval in accordance with the
applicable provisions of Sections 242 and 245 of the General Corporation
Law of the State of Delaware and the Corporation's Certificate of
Incorporation, as previously amended. The Restated Certificate of
Incorporation was duly adopted, after having been declared advisable by
the Board of Directors of the Corporation, by a majority of the
outstanding shares of Common Stock, $.01 par value, of the Corporation,
all in accordance with the applicable provisions of Sections 228, 242 and
245 of the General Corporation Law of the State of Delaware and the
Corporation's Certificate of Incorporation, as previously amended.
The text of the Certificate of Incorporation of the Corporation,
as restated and amended (herein called the "Restated Certificate of
Incorporation") shall read in its entirety as follows:
FIRST: The name of the Corporation shall be:
GeoTel Communications Corporation
<PAGE> 2
SECOND: The registered office of the Corporation in the State of
Delaware is located at 32 Loockerman Square, Suite L-100, City of Dover, County
of Kent, State of Delaware, and its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose or purposes of the Corporation shall be to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is:
45,000,000 shares, consisting of 40,000,000 shares of common
stock with $.01 par value per share (herein called the "Common
Stock"); and 5,000,000 shares of Preferred Stock with $.01 par
value per share (herein called the "Preferred Stock").
A description of the respective classes of stock and a statement of the
designations, preferences, voting powers (or special, preferential or no voting
powers), relative, participating, optional or other special rights and
privileges and the qualifications, limitations and restrictions of the Preferred
Stock and Common Stock are as follows:
A. COMMON STOCK
1. General. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and qualified by the rights of
holders of the Preferred Stock.
2. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
3. Dissolution, Liquidation or Winding Up. In the event of any
dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, each issued and outstanding share of Common
Stock shall entitle the holder thereof to receive an equal portion of the net
assets of the Corporation available for distribution to holders of Common Stock,
subject to any preferential rights of any then outstanding Preferred Stock.
4. Voting Rights. Except as otherwise required by law or this
Restated Certificate of Incorporation, each holder of Common Stock shall have
one vote in respect of each share of stock held by him of record on the books of
the Corporation for the election of directors and on all matters submitted to a
vote of stockholders of the Corporation. Except as otherwise required by law or
provided herein, holders of Common Stock will vote together with holders of the
Preferred Stock as a single class, subject to any special or preferential voting
rights of any then outstanding Preferred Stock. There shall be no cumulative
voting.
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<PAGE> 3
B. PREFERRED STOCK
The Preferred Stock may be issued in one or more series at such time or
times and for such consideration or considerations as the Board of Directors of
the Corporation may determine. Each series shall be so designated as to
distinguish the shares thereof from the shares of all other series and classes.
Except as otherwise provided in this Restated Certificate of Incorporation,
different series of Preferred Stock shall not be construed to constitute
different classes of shares for the purpose of voting by classes.
The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the undesignated Preferred Stock in one or more
series, each with such designations, preferences, voting powers (or special,
preferential or no voting powers), relative, participating, optional or other
special rights and privileges and such qualifications, limitations or
restrictions thereof as shall be stated in the resolution or resolutions adopted
by the Board of Directors to create such series, and a certificate of said
resolution or resolutions shall be filed in accordance with the General
Corporation Law of the State of Delaware. The authority of the Board of
Directors with respect to each such series shall include, without limitation of
the foregoing, the right to provide that the shares of each such series may be:
(i) subject to redemption at such time or times and at such price or prices;
(ii) entitled to receive dividends (which may be cumulative or non-cumulative)
at such rates, on such conditions, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any other class or classes
or any other series; (iii) entitled to such rights upon the dissolution of, or
upon any distribution of the assets of, the Corporation; (iv) convertible into,
or exchangeable for, shares of any other class or classes of stock, or of any
other series of the same or any other class or classes of the Corporation at
such price or prices or at such rates of exchange and with such adjustments, if
any; (v) entitled to the benefit of such limitations, if any, on the issuance of
additional shares of such series or shares of any other series of Preferred
Stock; or (vi) entitled to such other preferences, powers, qualifications,
rights and privileges, all as the Board of Directors may deem advisable and as
are not inconsistent with law and the provisions of this Restated Certificate of
Incorporation.
FIFTH: A. Number, Election and Terms of Directors. The number of
directors shall be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution adopted by the Board of Directors. The number of
Directors may be decreased at any time and from time to time by a majority of
the Directors then in office, but only to eliminate vacancies existing by reason
of the death, resignation, removal or expiration of the term of one or more
Directors. The Directors shall be elected at the Annual Meeting of Stockholders
by such stockholders as have the right to vote on such election. The Directors
of the Corporation shall be divided into three classes: Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the whole number of the Board of Directors. If the Board of Directors is not
evenly divisible by three, the Board of Directors shall determine the number of
Directors to be elected to each class. Each Director shall serve for a term
ending on the date of the third Annual Meeting of Stockholders following the
Annual Meeting of Stockholders at which such Director was elected; provided,
however, that each initial Director in Class I shall
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<PAGE> 4
serve for a term ending on the date of the Annual Meeting of Stockholders to be
held in 1997; each initial Director in Class II shall serve for a term ending on
the date of the Annual Meeting of Stockholders to be held in 1998; and each
initial Director in Class III shall serve for a term ending on the date of the
Annual Meeting of Stockholders to be held in 1999. At each annual election held
commencing with the annual election in 1997, the Directors elected to succeed
those whose terms expire shall be identified as being of the same class as the
Directors they succeed and shall be elected to hold office for a term to expire
at the third Annual Meeting of the Stockholders after their election, and until
their respective successors are duly elected and qualified. If the number of
Directors changes, any increase or decrease in Directors shall be apportioned
among the classes so as to maintain all classes as equal in number as possible,
and any additional Director elected to any class shall hold office for a term
which shall coincide with the terms of the other Directors in such class and
until his successor is duly elected and qualified. A Director elected to fill a
vacancy in the Board of Directors shall be elected from the unexpired term of
his predecessor in office, if applicable. Notwithstanding any provisions to the
contrary contained herein, each Director shall hold office until his successor
is elected and qualified, or until his earlier death, resignation or removal.
B. Removal. Any Director or the entire Board of Directors may be
removed by the holders of a majority of the shares then entitled to vote at an
election of Directors, provided however that shareholders may effect such
removal only for cause.
C. Stockholder Nomination of Director Candidates and Introduction of
Business. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in a manner provided by the
By-Laws of the Corporation.
D. Amendment, Repeal or Alteration. Notwithstanding any other
provisions of this Restated Certificate of Incorporation or the By-Laws of the
Corporation or the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the By-Laws of the Corporation, the
affirmative vote of the holders of at least eighty percent (80%) of the combined
voting power of the outstanding stock of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required to amend, alter, adopt any provision inconsistent with or to repeal
this Article FIFTH.
SIXTH: A. Special Meetings. Special meetings of the stockholders
of the Corporation may be called only by the Chairman of the Board of Directors,
the President or the Board of Directors.
B. Written Consent to Action by Stockholders Without a Meeting.
Until the closing of an underwritten public offering of the Corporation's Common
Stock (a "Public Offering"), any action referred or permitted to be taken at any
annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without vote, if a consent in writing, setting forth
the action so taken, is signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a
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<PAGE> 5
meeting at which all shares entitled to vote on such action were present and
voted. Prompt notice of the taking of corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Effective upon the closing of a Public Offering, any
action required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without
vote, only if all stockholders entitled to vote on the matter consent to the
action in writing and written consents are filed with the records of the
meetings of the stockholders. Such consents shall be treated for all purposes as
a vote at a meeting.
C. Amendment, Repeal or Alteration. Notwithstanding any other
provisions of this Restated Certificate of Incorporation or the By-Laws of the
Corporation or the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the By-Laws of the Corporation, the
affirmative vote of the holders of at least eighty percent (80%) of the combined
voting power of the outstanding stock of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required to amend, alter, adopt any provision inconsistent with or to repeal
this Article SIXTH.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
EIGHTH: The Corporation hereby affirmatively elects in this Restated
Certificate of Incorporation to be governed by Section 203 of the General
Corporation Law of Delaware.
NINTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director notwithstanding any provision of law imposing such liability;
provided that, to the extent provided by applicable law, this provision shall
not eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of
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<PAGE> 6
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director for or with respect to any acts or omissions of such director occurring
prior to such amendment or repeal.
TENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized
to adopt, amend, or repeal the By-laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-laws of the Corporation may provide or
as may be designated from time to time by the Board of Directors of the
Corporation.
* * * * *
IN WITNESS WHEREOF, GEOTEL COMMUNICATIONS CORPORATION has caused
its corporate seal to be hereunto affixed and this Restated Certificate of
Incorporation to be signed by its President, John C. Thibault, who hereby
acknowledges under penalties of perjury that the facts herein stated are true
and that this Restated Certificate of Incorporation is his act and deed, and
attested by its Secretary, Anthony J. Medaglia, Jr., as of the day of
, 1996.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN C. THIBAULT
____________________________
John C. Thibault
President
ATTEST:
By: /s/ ANTHONY J. MEDAGLIA, JR.
_______________________________
Anthony J. Medaglia, Jr.
Secretary
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<PAGE> 1
EXHIBIT 3.3
AS AMENDED THROUGH
AUGUST 9, 1995
BY-LAWS
OF
GEOTEL COMMUNICATIONS CORPORATION
(A Delaware Corporation)
<PAGE> 2
BY-LAWS
OF
GEOTEL COMMUNICATIONS CORPORATION
(A Delaware Corporation)
<TABLE>
<S> <C>
Article 1. Certificate of Incorporation 1
Section 1.1 Contents 1
Section 1.2 Certificate in Effect 1
Article 2. Meetings of Stockholders 1
Section 2.1 Place 1
Section 2.2 Annual Meeting 2
Section 2.3 Special Meetings 2
Section 2.4 Notice of Meetings 2
Section 2.5 Affidavit of Notice 3
Section 2.6 Quorum 3
Section 2.7 Voting Requirements 3
Section 2.8 Proxies and Voting 4
Section 2.9 Action Without Meeting 4
Section 2.10 Stockholder List 5
Section 2.11 Record Date 5
Article 3. Directors 6
Section 3.1 Number; Election and Term of Office 6
Section 3.2 Duties 7
Section 3.3 Compensation 7
Section 3.4 Reliance on Books 7
Article 4. Meetings of the Board of Directors 8
Section 4.1 Place 8
Section 4.2 Annual Meeting 8
Section 4.3 Regular Meetings 8
Section 4.4 Special Meetings 8
Section 4.5 Quorum 8
Section 4.6 Action Without Meeting 9
Section 4.7 Telephone Meetings 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Article 5. Committees of Directors 9
Section 5.1 Designation 9
Section 5.2 Records of Meetings 10
Article 6. Notices 11
Section 6.1 Method of Giving Notice 11
Section 6.2 Waiver 11
Article 7. Officers 11
Section 7.1 In General 11
Section 7.2 Election of President,
Secretary and Treasurer 12
Section 7.3 Election of Other Officers 12
Section 7.4 Salaries 12
Section 7.5 Term of Office 12
Section 7.6 Duties of President and Chairman
of the Board 12
Section 7.7 Duties of Vice President 13
Section 7.8 Duties of Secretary 13
Section 7.9 Duties of Assistant Secretary 14
Section 7.10 Duties of Treasurer 14
Section 7.11 Duties of Assistant Treasurer 15
Article 8. Resignations, Removals and Vacancies 15
Section 8.1 Directors 15
Section 8.2 Officers 16
Article 9. Certificate of Stock 16
Section 9.1 Issuance of Stock 16
Section 9.2 Right to Certificate; Form 17
Section 9.3 Facsimile Signature 17
Section 9.4 Lost Certificates 17
Section 9.5 Transfer of Stock 18
Section 9.6 Registered Stockholders 18
Article 10A. Common Stock Rights of Refusal 18
Section 10A.1 Definitions 18
Section 10A.2 Common Stock Rights of Refusal 20
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 10A.3 Amendment and Waiver 22
Article 10. Indemnification 23
Section 10.1 Third Party Actions 23
Section 10.2 Derivative Actions 24
Section 10.3 Expenses 24
Section 10.4 Authorization 24
Section 10.5 Advance Payment of Expenses 25
Section 10.6 Non-Exclusiveness 25
Section 10.7 Insurance 26
Section 10.8 Constituent Corporations 26
Section 10.9 Additional Indemnification 26
Article 11. Execution of Papers 27
Article 12. Fiscal Year 27
Article 13. Seal 27
Article 14. Offices 27
Article 15. Amendments 28
</TABLE>
<PAGE> 5
GEOTEL COMMUNICATIONS CORPORATION
BY-LAWS
ARTICLE 1
CERTIFICATE OF INCORPORATION
Section 1.1 Contents. The name, location of principal office and
purposes of the Corporation shall be as set forth in its Certificate of
Incorporation. These By-Laws, the powers of the Corporation and of its Directors
and stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in said Certificate of Incorporation. The
Certificate of Incorporation is hereby made a part of these By-Laws.
Section 1.2 Certificate in Effect. All references in these By-Laws to
the Certificate of Incorporation shall be construed to mean the Certificate of
Incorporation of the Corporation as from time to time amended, including (unless
the context shall otherwise require) all certificates and any agreement of
consolidation or merger filed pursuant to the Delaware General Corporation Law,
as amended.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 2.1 Place. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of Directors, the Chairman of the Board of Directors
or the President and stated in the notice of the meeting or in any duly executed
waiver of notice thereof.
<PAGE> 6
Section 2.2 Annual Meeting. Annual meetings of stockholders, shall be
held on the second Tuesday of March in each year, if not a legal holiday, and,
if a legal holiday, then on the next secular day following, at 10:00 A.M., or at
such other date and time as shall be designated from time to time by the Board
of Directors, the Chairman of the Board of Directors or the President and stated
in the notice of the meeting. If such annual meeting has not been held on the
day herein provided therefor, a special meeting of the stockholders in lieu of
the annual meeting may be held, and any business transacted or elections held at
such special meeting shall have the same effect as if transacted or held at the
annual meeting, and in such case all references in these By-Laws, except in this
Section 2.2, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President, the Chairman of
the Board, or by the Board of Directors and shall be called by the President or
Secretary at the request in writing of a majority of the Directors then in
office, or at the request in writing of stockholders owning a majority in amount
of the entire stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting,
which need not be the exclusive purposes for which the meeting is called.
Section 2.4 Notice of Meetings. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the special meeting is
called, shall be given to each stockholder entitled to vote at such meeting.
Except as otherwise provided by law, such notice shall be given not less
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<PAGE> 7
than ten nor more than sixty days before the date of the meeting. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 2.5 Affidavit of Notice. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meeting has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
Section 2.6 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented by proxy at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, except as hereinafter provided, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.7 Voting Requirements. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of any applicable statute or of the Certificate of Incorporation, a
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<PAGE> 8
different vote is required in which case such express provision shall govern and
control the decision of such question.
Section 2.8 Proxies and Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote the pledged shares, unless in the transfer by the pledgor on the books
of the Corporation he shall have expressly empowered the pledgee to vote said
shares, in which case only the pledgee, or his proxy, may represent and vote
such shares. Shares of the capital stock of the Corporation owned by the
Corporation shall not be voted, directly or indirectly.
Section 2.9 Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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<PAGE> 9
Section 2.10 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The original or duplicate stock ledger shall be the only evidence as to
who are the stockholders entitled to examine such list, the stock ledger or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 2.11 Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, 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 change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
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<PAGE> 10
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
ARTICLE 3
DIRECTORS
Section 3.1 Number; Election and Term of Office. There shall be a Board
of Directors of the Corporation consisting of not less than one member, the
number of members to be determined by resolution of the Board of Directors or by
the stockholders at the annual or any special meeting, unless the Certificate of
Incorporation fixed the number of Directors, in which case a change in the
number of Directors shall be made only by amendment of the Certificate. Subject
to any limitation which may be contained within the Certificate of
Incorporation, the number of the Board of Directors may be increased at any time
by vote of a majority of the
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<PAGE> 11
Directors then in office. The Directors shall be elected at the annual meeting
of the stockholders, except as provided in paragraph (c) of Section 8.1, and
each Director elected shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Directors need not be
stockholders.
Section 3.2 Duties. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 3.3 Compensation. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, the Board of Directors shall have
the authority to fix the compensation of Directors. The Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as Directors. No such payment shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 3.4 Reliance on Books. A member of the Board of Directors or a
member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying in
good faith upon other records of the Corporation.
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<PAGE> 12
ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 4.2 Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof, and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting.
Section 4.3 Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section 4.4 Special Meetings. Special meetings of the Board may be
called by the President on two days' notice to each Director either personally
or by mail, facsimile or telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written request
of two Directors unless the Board consists of only one Director, in which case
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of the sole Director.
Section 4.5 Quorum. At all meetings of the Board a majority of the
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the
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<PAGE> 13
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 4.6 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 4.7 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
ARTICLE 5
COMMITTEES OF DIRECTORS
Section 5.1 Designation.
(a) The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the Directors of the Corporation. The Board may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
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<PAGE> 14
(b) In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution
of the Board of Directors designating the committee, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-Laws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 5.2 Records of Meetings. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
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<PAGE> 15
ARTICLE 6
NOTICES
Section 6.1 Method of Giving Notice. Whenever, under any provision of
the law or of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, such notice shall be given
in writing by the Secretary or the person or persons calling the meeting by
leaving such notice with such Director or stockholder at his residence or usual
place of business or by mailing it addressed to such Director or stockholder, at
his address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to Directors may
also be given by telegram.
Section 6.2 Waiver. Whenever any notice is required to be given under
any provision of law or of the Certificate of Incorporation or of these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE 7
OFFICERS
Section 7.1 In General. The officers of the Corporation shall be chosen
by the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors may also choose a Chairman of the Board, one
or more Vice-Presidents, Assistant Secretaries
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<PAGE> 16
and Assistant Treasurers. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these By-Laws otherwise provide.
Section 7.2 Election of President, Secretary and Treasurer. The Board
of Directors at its first meeting after each annual meeting of stockholders
shall choose a President, a Secretary and a Treasurer.
Section 7.3 Election of Other Officers. The Board of Directors may
appoint such other officers and agents as it shall deem appropriate who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board.
Section 7.4 Salaries. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
Section 7.5 Term of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify or until their earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time in the manner specified in Section 8.2.
Section 7.6 Duties of President and Chairman of the Board. The
President shall be the chief executive officer of the Corporation, shall preside
at all meetings of the stockholders and, if he is a Director, at all meetings of
the Board of Directors if there shall be no Chairman of the Board or in the
absence of the Chairman of the Board, shall have general and active management
of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted
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<PAGE> 17
by law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation. The Chairman of the Board, if any,
shall make his counsel available to the other officers of the Corporation, shall
be authorized to sign stock certificates on behalf of the Corporation, shall
preside at all meetings of the Directors at which he is present, and, in the
absence of the President at all meetings of the stockholders, and shall have
such other duties and powers as may from time to time be conferred upon him by
the Directors.
Section 7.7 Duties of Vice President. In the absence of the President
or in the event of his inability or refusal to act, the Vice-President (or in
the event there be more than one Vice-President, the Vice-Presidents in the
order designated by the Directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the President not
otherwise conferred upon the Chairman of the Board, if any, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. The Vice-Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 7.8 Duties of Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record all the proceedings of the meetings of the Corporation and of the Board
of Directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, except as otherwise provided in these By-Laws, and shall perform such
other duties as may be prescribed by the Board of Directors or President, under
whose supervision he shall be. He shall
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<PAGE> 18
have charge of the stock ledger (which may, however, be kept by any transfer
agent or agents of the Corporation under his direction) and of the corporate
seal of the Corporation.
Section 7.9 Duties of Assistant Secretary. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination, then in the order
of their election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 7.10 Duties of Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all of his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of this office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
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<PAGE> 19
Section 7.11 Duties of Assistant Treasurer. The Assistant Treasurer, or
if there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the Treasurer or in
the event of his inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE 8
RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors.
(a) Resignations. Any Director may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
(b) Removals. Subject to any provisions of the Certificate of
Incorporation, the holders of stock entitled to vote for the election of
Directors may, at any meeting called for the purpose, by vote of a majority of
the shares of such stock outstanding, remove any Director or the entire Board of
Directors with or without cause and fill any vacancies thereby created. This
Section 8.1(b) may not be altered, amended or repealed except by the holders of
a majority of the shares of stock issued and outstanding and entitled to vote
for the election of the Directors.
(c) Vacancies. Vacancies occurring in the office of Director and
newly created Directorships resulting from any increase in the authorized number
of Directors shall be filled by a majority of the Directors then in office,
though less than a quorum, unless previously filled by
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<PAGE> 20
the stockholders entitled to vote for the election of Directors, and the
Directors so chosen shall hold office subject to the By-Laws until the next
annual election and until their successors are duly elected and qualify or until
their earlier resignation or removal. If there are no Directors in office, then
an election of Directors may be held in the manner provided by statute.
Section 8.2 Officers.
Any officer may resign at any time by giving written notice to the
Board of Directors or the President or the Secretary. Such resignation shall
take effect at the time specified therein; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. The Board of Directors may, at any meeting called for the purpose, by
vote of a majority of their entire number, remove from office any officer of the
Corporation or any member of a committee, with or without cause. Any vacancy
occurring in the office of President, Secretary or Treasurer shall be filled by
the Board of Directors and the officers so chosen shall hold office subject to
the By-Laws for the unexpired term in respect of which the vacancy occurred and
until their successors shall be elected and qualify or until their earlier
resignation or removal.
ARTICLE 9
CERTIFICATE OF STOCK
Section 9.1 Issuance of Stock. The Directors may, at any time and from
time to time, if all of the shares of capital stock which the Corporation is
authorized by its Certificate of Incorporation to issue have not been issued,
subscribed for, or otherwise committed to be issued, issue or take subscriptions
for additional shares of its capital stock up to the amount authorized in
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<PAGE> 21
its Certificate of Incorporation. Such stock shall be issued and the
consideration paid therefor in the manner prescribed by law.
Section 9.2 Right to Certificate; Form. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a
Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the Corporation, certifying the number of shares owned
by him in the Corporation; provided that the Directors may provide by one or
more resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertified shares. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon shall be
specified.
Section 9.3 Facsimile Signature. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 9.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost,
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<PAGE> 22
stolen or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 9.5 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 9.6 Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE 10A
COMMON STOCK RIGHTS OF REFUSAL
Section 10A.1 Definitions.
(a) Common Stock. "Common Stock" shall mean the common stock, $0.01 par
value per share, of the Corporation.
(b) Corporation Option Period. "Corporation Option Period" shall have
the meaning set forth in Section 10A.2(b).
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<PAGE> 23
(c) Notice. "Notice" shall mean written notice to the principal mailing
address of the person to whom notice is given (and in the case of a corporation,
to the attention of the President thereof); and shall be deemed to have been
given when deposited with the United States Postal Service, first class, postage
prepaid.
(d) Offered Shares. "Offered Shares" shall have the meaning set forth
in Section 10A.2(a).
(e) Permitted Transfer. "Permitted Transfer" shall mean (i) a transfer
of Common Stock between any holder of Common Stock who is a natural person and
such holder's parents, spouse, siblings, children, grandchildren or any trust
for the benefit of any of them, provided that with respect to any Permitted
Transfer to such a trust, the holder retains, as trustee or by some other means,
the sole authority to vote the Common Stock subject to such trust; or (ii) any
transfer by a holder of any shares of Common Stock issued upon conversion of the
Preferred Stock.
(f) Preferred Stock. "Preferred Stock" shall mean the Series A
Convertible Participating Preferred Stock, par value $0.01 per share, of the
Corporation; Series B Convertible Participating Preferred Stock, par value $0.01
per share, of the Corporation; Series C Convertible Participating Preferred
Stock, par value $0.01 per share; any other series or class of Preferred Stock
which is convertible into Common Stock, $0.01 par value per share, of the
Corporation; and any security issued by the Corporation which pursuant to the
terms of such security is convertible upon conversion, exercise or exchange into
the Series A Convertible Participating Preferred Stock, par value $0.01 per
share, of the Corporation, the Series B Convertible Participating Preferred
Stock, par value $0.01, of the Corporation, the Series C Convertible
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<PAGE> 24
Participating Preferred Stock, par value $0.01, of the Corporation or other
series or class of Preferred Stock which is convertible into Common Stock, par
value $0.01 per share of the Corporation.
(g) Preferred Stockholder. "Preferred Stockholder" shall mean any
holder of Preferred Stock.
(h) Preferred Stockholder Option Period. "Preferred Stockholder Option
Period" shall have the meaning set forth in Section 10A.2(c).
(i) Remaining Preferred Stockholders. "Remaining Preferred
Stockholders" shall have the meaning set forth in Section 10A.2(c).
(j) Remaining Shares. "Remaining Shares" shall have the meaning set
forth in Section 10A.2(c).
(k) Transfer. "Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place in trust
(voting or otherwise), assign or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value, any
Common Stock.
(l) Transferor. "Transferor" shall have the meaning set forth in
Section 10A.2(a).
Section 10A.2 Common Stock Rights of Refusal. Any holder of Common
Stock may Transfer all or a portion of the Common Stock held by such person
(subject to compliance with all federal and state securities laws) only upon the
following terms and conditions:
(a) If any holder of Common Stock is offered the opportunity to
Transfer Common Stock other than pursuant to a Permitted Transfer, such holder
(the "Transferor") shall give Notice of such offer to the Corporation and to
each of the holders of the Preferred Stock, setting
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<PAGE> 25
forth in reasonable detail the terms and conditions of such offer, including
without limitation, the name of the prospective purchaser, the proposed per
share purchase price, the payment terms including a description of any proposed
non-cash consideration, the type of disposition and the number of shares of
Common Stock proposed to be Transferred (the "Offered Shares").
(b) For a period of thirty (30) calendar days from the date of Notice
pursuant to Section 10A.2(a) (the "Corporation Option Period"), the Corporation
may, by Notice to the Transferor, elect to purchase all or a portion of the
Offered Shares on substantially identical terms as those set forth in the Notice
given pursuant to Section 10A.2(a).
(c) If the Corporation does not elect to purchase all of the Offered
Shares by the end of the Corporation Option Period the holders of the Preferred
Stock, for a period of twenty (20) calendar days from the end of the Corporation
Option Period (the "Preferred Stockholder Option Period"), may by Notice to the
Transferor, elect to purchase all or a portion of the Offered Shares not
otherwise purchased by the Corporation pursuant to this Article, on
substantially identical terms as those set forth in the Notice given pursuant to
Section 10A.2(a). Each Preferred Stockholder shall have the right to purchase
that number of the Offered Shares as shall be equal to the number of Offered
Shares, multiplied by a fraction, the numerator of which shall be the number of
shares of Preferred Stock then owned by such Preferred Stockholder, and the
denominator of which shall be the aggregate number of shares of Preferred Stock
then issued and outstanding. The Preferred Stockholders shall have a right of
oversubscription such that if any Preferred Stockholder elects not to purchase
the full amount of Offered Shares to which it is entitled to purchase, the
remaining Preferred Stockholders (the "Remaining Preferred Stockholders") shall,
among them, have the right to purchase up to the balance of the Offered
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<PAGE> 26
Shares (the "Remaining Shares"). Each Remaining Preferred Stockholder shall have
the right to purchase that number of the Remaining Shares as shall be equal to
the number of Remaining Shares, multiplied by a fraction, the numerator of which
shall be the number of shares of Preferred Stock then owned by such Remaining
Preferred Stockholder, and the denominator of which shall be the aggregate
number of shares of Preferred Stock then held by all of the Remaining
Stockholders. In the event that any Preferred Stockholder Transfers Preferred
Stock after receiving the Notice contemplated by Section 10A.2(a) but before the
exercise of the right contained in this Section 10A.2(c), the transferee of such
Preferred Stock shall be deemed to have been given such Notice as of the date
first given to its transferor and shall have the rights of such transferor to
the extent of the number of shares of Preferred Stock so transferred.
(d) If the Corporation and/or the Preferred Stockholders do not elect to
purchase all of the Offered Shares by the end of the Preferred Stock Option
Period, then the remaining Offered Shares may be Transferred; provided that such
Transfer is consummated within three (3) months from the end of the Preferred
Stockholder Option Period and provided further that such Transfer is consummated
on substantially identical terms as those set forth in the Notice given to
pursuant to Section 10A.2(a).
Section 10A.3 Amendment and Waiver.
(a) The restrictions on Transfer and rights of refusal contained in this
Article 10A shall apply to the Common Stock of the Corporation until such
restrictions and rights legally are amended or waived to the contrary.
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<PAGE> 27
(b) Individual specific waivers of the Company's and Preferred
Stockholder's rights of refusal, hereinbefore set-forth, shall be effective upon
a vote of the Board of Directors and the vote or written consent of a majority
in interest of the Preferred Stockholders, respectively.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or 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, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
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<PAGE> 28
Section 10.2 Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or 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 against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
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 expenses which the Court of
Chancery or such other court shall deem proper.
Section 10.3 Expenses. To the extent that a Director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Section 10.4 Authorization. Any indemnification under Sections 10.1 and
10.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon
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<PAGE> 29
a determination that indemnification of the Director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 10.1 and 10.2. Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (b) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
Section 10.5 Advance Payment of Expenses. Expenses incurred by an
officer or Director in defending a civil or criminal action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of such officer or
Director to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation as authorized in this Article
10. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
Section 10.6 Non-Exclusiveness. The indemnification provided by this
Article 10 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
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<PAGE> 30
Section 10.7 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or 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 against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 10.
Section 10.8 Constituent Corporations. The Corporation shall have power
to indemnify any person who is or was a director, officer, employee or agent of
a constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in the same manner as hereinabove
provided for any person who is or was a Director, officer, employee or agent of
the Corporation, or 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.
Section 10.9 Additional Indemnification. In addition to the foregoing
provisions of this Article 10, the Corporation shall have the power, to the full
extent provided by law, to indemnify any person for any act or omission of such
person against all loss, cost, damage and expense (including attorney's fees) if
such person is determined (in the manner prescribed in Section 10.4 hereof) to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation.
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<PAGE> 31
ARTICLE 11
EXECUTION OF PAPERS
Except as otherwise provided in these By-Laws or as the Board of
Directors may generally or in particular cases otherwise determine, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by the
President or the Treasurer.
ARTICLE 12
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE 13
SEAL
The Corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the word "Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE 14
OFFICES
In addition to its principal office, the Corporation may have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
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<PAGE> 32
ARTICLE 15
AMENDMENTS
Except as otherwise provided herein, these By-Laws may be altered,
amended or repealed or new By-Laws may be adopted by the stockholders or by the
Board of Directors, when such power is conferred upon the Board of Directors by
the Certificate of Incorporation, at any regular meeting of the stockholders or
of the Board of Directors, or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new By-Laws is contained in the notice of such special meeting, or
by the written consent of a majority in interest of the outstanding voting stock
of the Corporation or by the unanimous written consent of the Directors. If the
power to adopt, amend or repeal by-laws is conferred upon the Board of Directors
by the Certificate of Incorporation, it shall not divest or limit the power of
the stockholders to adopt, amend or repeal by-laws.
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<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BY-LAWS
OF
GEOTEL COMMUNICATIONS CORPORATION
(A Delaware Corporation)
<PAGE> 2
AMENDED AND RESTATED
BY-LAWS
OF
GEOTEL COMMUNICATIONS CORPORATION
(A Delaware Corporation)
<TABLE>
<S> <C>
Article 1. Certificate of Incorporation 1
Section 1.1 Contents 1
Section 1.2 Certificate in Effect 1
Article 2. Meetings of Stockholders 1
Section 2.1 Place 1
Section 2.2 Annual Meeting 1
Section 2.3 Notice of Stockholder Business 2
Section 2.4 Special Meetings 3
Section 2.5 Notice of Meetings 3
Section 2.6 Affidavit of Notice 3
Section 2.7 Quorum 4
Section 2.8 Voting Requirements 4
Section 2.9 Proxies and Voting 4
Section 2.10 Action Without Meeting 5
Section 2.11 Stockholder List 6
Section 2.12 Record Date 6
Article 3. Directors 7
Section 3.1 Number; Election and Term of Office 7
Section 3.2 Duties 9
Section 3.3 Compensation 9
Section 3.4 Reliance on Books 9
Article 4. Meetings of the Board of Directors 9
Section 4.1 Place 9
Section 4.2 Annual Meeting 10
Section 4.3 Regular Meetings 10
Section 4.4 Special Meetings 10
Section 4.5 Quorum 10
Section 4.6 Action Without Meeting 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.7 Telephone Meetings 11
Article 5. Committees of Directors 11
Section 5.1 Designation 11
Section 5.2 Records of Meetings 12
Article 6. Notices 12
Section 6.1 Method of Giving Notice 12
Section 6.2 Waiver 13
Article 7. Officers 13
Section 7.1 In General 13
Section 7.2 Election of President,
Secretary and Treasurer 13
Section 7.3 Election of Other Officers 13
Section 7.4 Salaries 14
Section 7.5 Term of Office 14
Section 7.6 Duties of President and Chairman
of the Board 14
Section 7.7 Duties of Vice President 15
Section 7.8 Duties of Secretary 15
Section 7.9 Duties of Assistant Secretary 16
Section 7.10 Duties of Treasurer 16
Section 7.11 Duties of Assistant Treasurer 17
Article 8. Resignations, Removals and Vacancies 17
Section 8.1 Directors 17
Section 8.2 Officers 18
Article 9. Certificate of Stock 19
Section 9.1 Issuance of Stock 19
Section 9.2 Right to Certificate; Form 19
Section 9.3 Facsimile Signature 19
Section 9.4 Lost Certificates 20
Section 9.5 Transfer of Stock 20
Section 9.6 Registered Stockholders 20
Article 10. Indemnification 21
Section 10.1 Third Party Actions 21
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 10.2 Derivative Actions 21
Section 10.3 Expenses 22
Section 10.4 Authorization 22
Section 10.5 Advance Payment of Expenses 23
Section 10.6 Non-Exclusiveness 23
Section 10.7 Insurance 23
Section 10.8 Constituent Corporations 24
Section 10.9 Additional Indemnification 24
Article 11. Execution of Papers 24
Article 12. Fiscal Year 25
Article 13. Seal 25
Article 14. Offices 25
Article 15. Amendments 25
</TABLE>
<PAGE> 5
GEOTEL COMMUNICATIONS CORPORATION
AMENDED AND RESTATED BY-LAWS
ARTICLE 1
CERTIFICATE OF INCORPORATION
Section 1.1 Contents. The name, location of principal office and
purposes of the Corporation shall be as set forth in its Certificate of
Incorporation. These By-Laws, the powers of the Corporation and of its Directors
and stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in said Certificate of Incorporation. The
Certificate of Incorporation is hereby made a part of these By-Laws.
Section 1.2 Certificate in Effect. All references in these By-Laws to
the Certificate of Incorporation shall be construed to mean the Certificate of
Incorporation of the Corporation as from time to time amended, including (unless
the context shall otherwise require) all certificates and any agreement of
consolidation or merger filed pursuant to the Delaware General Corporation Law,
as amended.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 2.1 Place. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of Directors, the Chairman of the Board of Directors
or the President and stated in the notice of the meeting or in any duly executed
waiver of notice thereof.
Section 2.2 Annual Meeting. Annual meetings of stockholders, shall be
held on such date and time as shall be designated from time to time by the Board
of Directors, the Chairman
<PAGE> 6
of the Board of Directors or the President and stated in the notice of the
meeting. If no annual meeting is held in accordance with the foregoing
provisions, a special meeting of the stockholders in lieu of the annual meeting
may be held, and any business transacted or elections held at such special
meeting shall have the same effect as if transacted or held at the annual
meeting, and in such case all references in these By-Laws, except in this
Section 2.2, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting.
Section 2.3 Notice of Stockholder Business. To be properly brought
before the meeting, business must be of a nature that is appropriate for
consideration at an Annual Meeting and must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, or (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable requirements,
for business to be properly brought before the Annual Meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, each such notice must be given
either by personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not later than (1) with respect to a matter to be
brought before an Annual Meeting of Stockholders or a Special Meeting in Lieu of
an Annual Meeting, sixty (60) days prior to the first anniversary date of the
initial notice referred to in clause (i) above to the previous year's Annual
Meeting of Stockholders or Special Meeting in Lieu of an Annual Meeting, as the
case may be, and (2) with respect to a matter to be brought before a Special
Meeting of the Stockholders not in lieu of an Annual Meeting, the close of
business on the tenth day following the date on which notice of such meeting is
first
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given to stockholders. The notice shall set forth (i) information concerning the
stockholder, including his or her name and address, (ii) a representation that
the stockholder is entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to present the matter specified in the notice,
and (iii) such other information as would be required to be included in a proxy
statement soliciting proxies for the presentation of such matter to the meeting.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be transacted at the Annual Meeting except in accordance with the
procedures set forth in this section; provided, however, that nothing in this
section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the Annual Meeting in accordance with these
By-Laws.
Section 2.4 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President, the Chairman of
the Board, or by the Board of Directors.
Section 2.5 Notice of Meetings. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the special meeting is
called, shall be given to each stockholder entitled to vote at such meeting.
Except as otherwise provided by law, such notice shall be given not less than
ten nor more than sixty days before the date of the meeting. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice.
Section 2.6 Affidavit of Notice. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meeting has been given
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shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
Section 2.7 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented by proxy at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, except as hereinafter provided, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.8 Voting Requirements. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of any applicable statute or of the Certificate of Incorporation, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Section 2.9 Proxies and Voting. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one
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vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period. Persons holding
stock in a fiduciary capacity shall be entitled to vote the shares so held, and
persons whose stock is pledged shall be entitled to vote the pledged shares,
unless in the transfer by the pledgor on the books of the Corporation he shall
have expressly empowered the pledgee to vote said shares, in which case only the
pledgee, or his proxy, may represent and vote such shares. Shares of the capital
stock of the Corporation owned by the Corporation shall not be voted, directly
or indirectly.
Section 2.10 Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, until the closing of an underwritten public
offering of the Corporation's Common Stock (a "Public Offering") any action
referred or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without
vote, if a consent in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote on such action were present and voted. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing. Effective upon the closing of a Public Offering, any
action required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without
vote, only if all stockholders entitled to vote on the matter consent to the
action in writing and written consents are filed with the records of the
meetings of the stockholders. Such consents shall be treated for all purposes as
a vote at a
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meeting.
Section 2.11 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The original or duplicate stock ledger shall be the only evidence as to
who are the stockholders entitled to examine such list, the stock ledger or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 2.12 Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, 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 change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record
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entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
ARTICLE 3
DIRECTORS
Section 3.1 Number; Election and Term of Office. There shall be a Board
of Directors of the Corporation consisting of not less than one member, the
number of members to be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by the Board of Directors. The number
of Directors may be decreased at any time and from time to time by a majority of
the Directors then in office, but only to eliminate vacancies existing by reason
of the death, resignation, removal or expiration of the term of one or more
Directors.
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The Directors of the Corporation shall be divided into three classes: Class I,
Class II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the whole number of the Board of Directors. If the Board of
Directors is not evenly divisible by three, the Board of Directors shall
determine the number of Directors to be elected to each class. Each Director
shall serve for a term ending on the date of the third Annual Meeting of
Stockholders following the Annual Meeting of Stockholders at which such Director
was elected; provided, however, that each initial Director in Class I shall
serve for a term ending on the date of the Annual Meeting of Stockholders to be
held in 1997; each initial Director in Class II shall serve for a term ending on
the date of the Annual Meeting of Stockholders to be held in 1998; and each
initial Director in Class III shall serve for a term ending on the date of the
Annual Meeting of Stockholders to be held in 1999. At each annual election held
commencing with the annual election in 1997, the Directors elected to succeed
those whose terms expire shall be identified as being of the same class as the
Directors they succeed and shall be elected to hold office for a term to expire
at the third Annual Meeting of the Stockholders after their election, and until
their respective successors are duly elected and qualified. If the number of
Directors changes, any increase or decrease in Directors shall be apportioned
among the classes so as to maintain all classes as equal in number as possible,
and any additional Director elected to any class shall hold office for a term
which shall coincide with the terms of the other Directors in such class and
until his successor is duly elected and qualified. Notwithstanding any
provisions to the contrary contained herein, each Director shall hold office
until his successor is elected and qualified, or until his earlier death,
resignation or removal.
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Nominations for the election of Directors may be made by the Board of Directors
or a committee appointed by the Board of Directors or by any stockholder
entitled to vote generally in the election of Directors. However, any
stockholder entitled to vote generally in the election of Directors may nominate
one or more persons for election as Directors at a meeting only if written
notice of such stockholder's intent to make such nomination or nominations has
been given, either by personal delivery or by United States mail, postage
prepaid, to the Clerk of the Corporation not later than (1) with respect to an
election to be held at an annual meeting of stockholders or special meeting in
lieu of an annual meeting, sixty (60) days prior to the date for the annual
meeting set forth in the By-Laws and (2) with respect to an election to be held
at a special meeting of stockholders not in lieu of an annual meeting, the close
of business on the tenth (10th) day following the date on which notice of such
meeting is first given to stockholders. Each such notice to the Secretary shall
set forth (i) the name and address of the stockholder and each of his or her
nominees; (ii) a representation that the stockholder is entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (iii) a description of all
arrangements or understandings between the stockholder and each such nominee;
(iv) such other information as would be required to be included in a proxy
statement soliciting proxies or the election of the nominees of such
stockholder; and (v) the consent of each nominee to serve as a Director of the
Corporation if so elected. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such proposed nominee to serve as a Director of
the Corporation. The presiding officer of the meeting may, if the facts warrant,
determine that a nomination was not made in
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accordance with the foregoing procedure, and if such officer should so
determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.
No Director need be a stockholder. Any election of Directors by the
stockholders shall be by ballot if so requested by any stockholder entitled to
vote thereon.
Section 3.2 Duties. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 3.3 Compensation. Unless otherwise restricted by the Certificate
of Incorporation or these By-Laws, the Board of Directors shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Directors. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.4 Reliance on Books. A member of the Board of Directors or a
member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying in
good faith upon other records of the Corporation.
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ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 4.2 Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof, and no notice of such
meeting shall be necessary to the newly elected Directors in order legally to
constitute the meeting.
Section 4.3 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 4.4 Special Meetings. Special meetings of the Board may be
called by the President on two days' notice to each Director either personally
or by mail, telegram, telecopier or telephone, personally speaking to the
Director; special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two Directors unless the
Board consists of only one Director, in which case special meetings shall be
called by the President or Secretary in like manner and on like notice on the
written request of the sole Director.
Section 4.5 Quorum. At all meetings of the Board a majority of the
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
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Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 4.6 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 4.7 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
ARTICLE 5
COMMITTEES OF DIRECTORS
Section 5.1 Designation.
(a) The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the Directors of the Corporation. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
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(b) In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution
of the Board of Directors designating the committee, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-Laws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 5.2 Records of Meetings. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
ARTICLE 6
NOTICES
Section 6.1 Method of Giving Notice. Whenever, under any provision of
the law or of
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the Certificate of Incorporation or of these By-Laws, notice is required to be
given to any Director or stockholder, such notice shall be given in writing by
the Secretary or the person or persons calling the meeting by leaving such
notice with such Director or stockholder at his residence or usual place of
business or by mailing it addressed to such Director or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Notice to Directors may also be
given by telegram, telecopier or telephone, personally speaking to the Director;
Section 6.2 Waiver. Whenever any notice is required to be given under
any provision of law or of the Certificate of Incorporation or of these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE 7
OFFICERS
Section 7.1 In General. The officers of the Corporation shall be chosen
by the Board of Directors and shall include a President or a Chief Executive
Officer, or both, a Secretary and a Treasurer. The Board of Directors may also
choose a Chairman of the Board, one or more Vice-Presidents, Assistant
Secretaries and Assistant Treasurers. Any number of offices may be held by the
same person, unless the Certificate of Incorporation or these By-Laws otherwise
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provide.
Section 7.2 Election of President, Secretary and Treasurer. The Board of
Directors at its first meeting after each annual meeting of stockholders shall
choose a President or a Chief Executive Officer, or both, a Secretary and a
Treasurer.
Section 7.3 Election of Other Officers. The Board of Directors may
appoint such other officers and agents as it shall deem appropriate who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board.
Section 7.4 Salaries. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
Section 7.5 Term of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify or until their earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time in the manner specified in Section 8.2.
Section 7.6 Duties of President and Chairman of the Board. Unless the
Board of Directors has appointed a Chief Executive Officer, the President shall
be the Chief Executive Officer of the Corporation, shall preside at all meetings
of the stockholders and, if he is a Director, at all meetings of the Board of
Directors if there shall be no Chairman of the Board or in the absence of the
Chairman of the Board, shall have, subject to the direction of the Board of
Directors, general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. If the Board of Directors appoints a Chief Executive Officer, the
Chief Executive Officer shall
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perform the duties and shall have the powers of the President set forth in the
preceding sentence and the President, if any, shall perform such duties and
shall have such powers as the Board of Directors may from time to time
prescribe. In the event that the office of the President is vacant, the Chief
Executive Officer shall assume the duties of the President as required by law
and by these By-Laws. The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation. The
Chairman of the Board, if any, shall make his counsel available to the other
officers of the Corporation, shall be authorized to sign stock certificates on
behalf of the Corporation, shall preside at all meetings of the Directors at
which he is present, and, in the absence of the President at all meetings of the
stockholders, and shall have such other duties and powers as may from time to
time be conferred upon him by the Directors.
Section 7.7 Duties of Vice President. In the absence of the President or
the Chief Executive Officer or in the event of his inability or refusal to act,
the Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Directors, or in the absence of
any designation, then in the order of their election) shall perform the duties
of the President or the Chief Executive Officer not otherwise conferred upon the
Chairman of the Board, if any, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President and the Chief
Executive Officer. The Vice-Presidents shall perform such other duties and have
such other powers as the Board of
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Directors may from time to time prescribe.
Section 7.8 Duties of Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, except as otherwise provided in these By-Laws, and shall perform such
other duties as may be prescribed by the Board of Directors or President, under
whose supervision he shall be. He shall have charge of the stock ledger (which
may, however, be kept by any transfer agent or agents of the Corporation under
his direction) and of the corporate seal of the Corporation.
Section 7.9 Duties of Assistant Secretary. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination, then in the order
of their election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 7.10 Duties of Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
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ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all of his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of this office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 7.11 Duties of Assistant Treasurer. The Assistant Treasurer, or
if there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the Treasurer or in
the event of his inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE 8
RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors.
(a) Resignations. Any Director may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
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(b) Removals. Subject to any provisions of the Certificate of
Incorporation, the holders of stock entitled to vote for the election of
Directors may, at any meeting called for the purpose, by vote of a majority of
the shares of such stock outstanding, remove any Director or the entire Board of
Directors, provided, however, that stockholders may effect such removal only for
cause. This Section 8.1(b) may not be altered, amended or repealed except by the
holders of at least eighty percent (80%) of the shares of stock issued and
outstanding and entitled to vote for the election of the Directors.
(c) Vacancies. Vacancies occurring in the office of Director and
newly created Directorships resulting from any increase in the authorized number
of Directors shall be filled by a majority of the Directors then in office,
though less than a quorum, unless previously filled by the stockholders entitled
to vote for the election of Directors, and the Directors so chosen shall hold
office subject to the By-Laws until the next annual meeting of Stockholders at
which the term of office of the class to which they have been elected expires
and until their successors are duly elected and qualified or until their earlier
resignation or removal. If there are no Directors in office, then an election of
Directors may be held in the manner provided by statute.
Section 8.2 Officers. Any officer may resign at any time by giving
written notice to the Board of Directors or the President or the Secretary. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. The Board of Directors may, at any meeting
called for the purpose, by vote of a majority of their entire number, remove
from office any officer of the Corporation or any member of a committee, with or
without cause.
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Any vacancy occurring in the office of Secretary or Treasurer shall be filled by
the Board of Directors and the officers so chosen shall hold office subject to
the By-Laws for the unexpired term in respect of which the vacancy occurred and
until their successors shall be elected and qualify or until their earlier
resignation or removal.
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ARTICLE 9
CERTIFICATE OF STOCK
Section 9.1 Issuance of Stock. The Directors may, at any time and from
time to time, if all of the shares of capital stock which the Corporation is
authorized by its Certificate of Incorporation to issue have not been issued,
subscribed for, or otherwise committed to be issued, issue or take subscriptions
for additional shares of its capital stock up to the amount authorized in its
Certificate of Incorporation. Such stock shall be issued and the consideration
paid therefor in the manner prescribed by law.
Section 9.2 Right to Certificate; Form. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a
Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the Corporation, certifying the number of shares owned
by him in the Corporation; provided that the Directors may provide by one or
more resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertified shares. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon shall be
specified.
Section 9.3 Facsimile Signature. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
- 21 -
<PAGE> 26
Section 9.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 9.5 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 9.6 Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
- 22 -
<PAGE> 27
ARTICLE 10
INDEMNIFICATION
Section 10.1 Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or 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 (each an
"Indemnitee"), against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding.
Section 10.2 Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or 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 against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit.
Section 10.3 Expenses. To the extent that a Director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter
- 23 -
<PAGE> 28
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 10.4 Authorization and Request for Indemnification.
(a) Any indemnification requested by the Indemnitee under
Section 10.1 hereof shall be made no later than ten (10) days after receipt of
the written request of the Indemnitee, unless it shall have been adjudicated by
a court of final determination that the Indemnitee did not act in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
(b) Any indemnification requested by the Indemnitee under
Section 10.2 hereof shall be made no later than ten (10) days after receipt of
the written request of the Indemnitee, unless it shall have been adjudicated by
a court of final determination that the Indemnitee did not act in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, the Indemnitee shall have been finally adjudged to
be liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of the Indemnitee's duty to
the Corporation unless and only to the extent that any 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 expenses as
such court shall deem proper.
Section 10.5 Advance Payment of Expenses. Subject to Section 10.4 above,
the Corporation shall advance all expenses incurred by the Indemnitee in
connection with the investigation, defense,
- 24 -
<PAGE> 29
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 Corporation. The Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the
Corporation. The advances to be made hereunder shall be paid by the Corporation
to or on behalf of the Indemnitee within 30 days following delivery of a written
request therefor by the Indemnitee to the Corporation. Section 10.6
Non-Exclusiveness. The indemnification provided by this Article 10 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any by-law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 10.7 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or 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 against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 10.
Section 10.8 Constituent Corporations. The Corporation shall have power
to indemnify any person who is or was a director, officer, employee or agent of
a constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of such constituent
- 25 -
<PAGE> 30
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, in the same manner as
hereinabove provided for any person who is or was a Director, officer, employee
or agent of the Corporation, or 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.
ARTICLE 11
EXECUTION OF PAPERS
Except as otherwise provided in these By-Laws or as the Board of
Directors may generally or in particular cases otherwise determine, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by the
President or the Treasurer.
ARTICLE 12
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE 13
SEAL
The Corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
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<PAGE> 31
ARTICLE 14
OFFICES
In addition to its principal office, the Corporation may have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE 15
AMENDMENTS
Except as otherwise provided herein, these By-Laws may be altered,
amended or repealed or new By-Laws may be adopted by the stockholders or by the
Board of Directors, when such power is conferred upon the Board of Directors by
the Certificate of Incorporation, at any regular meeting of the stockholders or
of the Board of Directors, or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new By-Laws is contained in the notice of such special meeting, or
by the written consent of a majority in interest of the outstanding voting stock
of the Corporation or by the unanimous written consent of the Directors. If the
power to adopt, amend or repeal by-laws is conferred upon the Board of Directors
by the Certificate of Incorporation, it shall not divest or limit the power of
the stockholders to adopt, amend or repeal by-laws.
Notwithstanding anything contained in the preceding paragraph of this
Article 15 to the contrary, either (i) the affirmative vote of the holders of at
least eighty percent (80%) of the votes entitled to be cast by the holders of
all shares of the Corporation entitled to vote generally in the election of
Directors, voting together as a single class, or (ii) the affirmative vote of
the majority of the entire Board of Directors shall be required to alter, amend
or repeal or adopt any provision
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<PAGE> 32
inconsistent with Article 2, Article 3, Section 3.1, Article 8, Section 8.1(b),
Article 10 and this paragraph of this Article 15.
- 28 -
<PAGE> 1
EXHIBIT 10.1
GEOTEL COMMUNICATIONS CORPORATION
1,712,329 Shares of
Series C Convertible Participating Preferred Stock
------------------
STOCK PURCHASE AGREEMENT
------------------
August 9, 1995
Geotel Communications Corporation
Stock Purchase Agreement
August , 1995
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 TERMS OF PURCHASE............................. 1
1.1 Description of Securities..................... 1
1.2 Reserved Shares............................... 2
1.3 Sale and Purchase............................. 2
1.4 Closing....................................... 2
1.5 Prior Purchase Agreement...................... 2
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY....................................... 3
2.1 Organization and Corporate Power.............. 3
2.2 Authorization................................. 3
2.3 Capitalization................................ 4
2.4 Subsidiaries; Investments..................... 4
2.5 Financial Statements.......................... 4
2.6 Absence of Undisclosed Liabilities............ 5
2.7 Absence of Certain Developments............... 5
2.8 Title to Properties........................... 5
2.9 Tax Matters................................... 5
2.10 Contracts and Commitments..................... 6
2.11 Proprietary Rights; Employee Restrictions..... 6
2.12 Effect of Transactions........................ 8
2.13 Litigation.................................... 8
2.14 Offerees...................................... 8
2.15 Business; Compliance with Laws................ 8
2.16 Information Supplied to Investors............. 9
2.17 Investment Banking; Brokerage................. 9
2.18 Distribution on Capital Stock................. 9
2.19 Environmental Matters......................... 9
2.20 Employees..................................... 10
2.21 Insurance..................................... 11
2.22 Retirement Obligations, etc................... 11
2.23 Transactions with Affiliates.................. 11
SECTION 3 CONDITIONS OF PURCHASE........................ 11
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
3.1 Satisfaction of Conditions......................... 11
3.2 Opinion of Company Counsel.................... 11
3.3 Authorization................................. 11
3.4 Effectiveness of Preferred Stock Terms........ 12
3.5 Stock Restriction Agreements.................. 12
3.6 Non-Competition, Nondisclosure and
Developments Agreements..................... 12
3.7 Shareholders Agreement; Election
of Directors................................ 12
3.8 Founders Registration Rights Agreement........ 12
3.9 All Proceedings Satisfactory.................. 12
3.10 Delivery of Documents......................... 12
SECTION 4 COVENANTS OF THE COMPANY...................... 13
4.1 Financial Statements; Minutes................. 13
4.2 Budget and Operating Forecast................. 14
4.3 Conduct of Business........................... 14
4.4 Payment of Taxes, Compliance with Laws, etc... 15
4.5 Adverse Changes............................... 15
4.6 Insurance..................................... 15
4.7 Life Insurance................................ 15
4.8 Maintenance of Properties..................... 15
4.9 Affiliated Transactions....................... 16
4.10 Management Compensation....................... 16
4.11 Use of Proceeds............................... 16
4.12 Inspection.................................... 16
4.13 Board of Directors Meetings................... 16
4.14 Right to Participate in Sales of
Additional Securities....................... 17
4.15 Stock Restriction Agreement, Nondisclosure
and Developments Agreements and
Non-Competition Agreements.................. 18
4.16 Distributions on, and Redemptions of,
Capital Stock............................... 18
4.17 Merger, Consolidation, Sale of Assets,
Acquisitions and Other Actions.............. 18
4.18 No Amendments to Certificate of
Incorporation............................... 19
4.19 Capital Expenditures.......................... 19
4.20 Indebtedness.................................. 19
4.21 Restrictions on Other Agreements.............. 20
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
4.22 Compliance with Stock Restriction Agreement... 20
SECTION 5 REPRESENTATIONS OF INVESTORS.................... 20
SECTION 6 REGISTRATION RIGHTS............................. 21
6.1 Optional Registrations........................ 21
6.2 Required Registrations........................ 22
6.3 Form S-3...................................... 23
6.4 Registrable Securities........................ 24
6.5 Market Stand Off Agreement.................... 24
6.6 Further Obligations of the Company............ 25
6.7 Indemnification; Contribution................. 26
6.8 Rules 144 and 144A Reporting.................. 27
6.9 Transfer of Registration Rights............... 28
SECTION 7 GENERAL....................................... 28
7.1 Amendments, Waivers and Consents.............. 28
7.2 Survival of Covenants; Assignability of
Rights...................................... 29
7.3 Governing Law................................. 29
7.4 Section Headings.............................. 29
7.5 Counterparts.................................. 29
7.6 Notices and Demands........................... 29
7.7 Severability.................................. 30
7.8 Expenses...................................... 30
7.9 Integration................................... 30
7.10 Confidentiality............................... 30
7.11 Shares Owned by Affiliates.................... 30
</TABLE>
EXHIBITS
Exhibit A - List of Investors
Exhibit B - Terms of Capital Stock
Exhibit C - Form of Company Counsel Opinion
Exhibit D - Form of Amendment No. 2 to Stock Restriction Agreement
Exhibit E-1 - Form of Key Employee Non-Competition,
Nondisclosure and Developments Agreement
Exhibit E-2 - Form of Nondisclosure and Developments Agreement
Exhibit F - Form of Amended and Restated Stockholders Agreement
Exhibit G - Form of Amended and Restated Founders Registration Rights
Agreement
(iii)
<PAGE> 5
SCHEDULES
Schedule 2.3 - Capitalization
Schedule 2.5 - Financial Statements
Schedule 2.6 - Liabilities
Schedule 2.7 - Developments
Schedule 2.8 - Title Matters
Schedule 2.9 - Tax Matters
Schedule 2.10 - Contracts and Commitments
Schedule 2.11 - Proprietary Rights
Schedule 2.13 - Litigation
Schedule 2.15 - Compliance with Laws
Schedule 2.19 - Environmental Matters
Schedule 2.20 - Employee Matters
Schedule 2.21 - Insurance
Schedule 2.22 - Retirement Obligations
Schedule 2.23 - Transactions with Affiliates
(iv)
<PAGE> 6
STOCK PURCHASE AGREEMENT
AGREEMENT made as of this 9th day of August, 1995 by and among (i)
Geotel Communications Corporation, a corporation incorporated under the laws of
the State of Delaware (the "Company"); (ii) Fidelity Ventures Limited
("Fidelity"), New Enterprise Associates VI, Limited Partnership, a Delaware
limited partnership ("NEA"), MATRIX Partners III, L.P., a Delaware limited
partnership ("Matrix"), Sigma Partners II, L.P. ("Sigma"); Sigma Associates II,
L.P. ("Sigma Associates"); Atlas Venture Fund II, L.P., a Delaware limited
partnership ("Atlas"); Steven Finn of Framingham, Massachusetts ("Finn");
Anthony J. Medaglia, Jr. of West Newton, Massachusetts ("Medaglia"); and
Alexander d'Arbeloff of Brookline, Massachusetts ("d'Arbeloff"); Fidelity, NEA,
Matrix, Sigma, Sigma Associates, Atlas, Finn, Medaglia and d'Arbeloff being
hereinafter sometimes referred to collectively as the "Investors" and each
individually as an "Investor"); and (iii) those several investors (being
hereinafter referred to collectively as the "Prior Investors" and each
individually as a "Prior Investor") named in Exhibit A to the Company's Series A
Convertible Participating Preferred Stock Purchase Agreement dated as of
September 30, 1993 (the "Series A Purchase Agreement") and Exhibit A to the
Company's Series B Convertible Participating Preferred Stock Stock Purchase
Agreement dated as of July 29, 1994 (the "Series B Purchase Agreement" and,
together with the Series A Purchase Agreement, the "Prior Purchase Agreements").
WHEREAS, the Investors wish to purchase from the Company, and the
Company wishes to sell to the Investors, [1,712,329] shares of the Company's
Series C Convertible Participating Preferred Stock; and
WHEREAS, the Prior Investors and the Company desire to cancel and
terminate the provisions of Sections 4, 6 and 7 of the Series B Purchase
Agreement in their entirety and to replace said provisions of the Series B
Purchase Agreement with the corresponding provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
SECTION 1. TERMS OF PURCHASE
1.1 Description of Securities. The Company has authorized the issuance
and sale to the Investors of 1,712,329 shares (the "Preferred Shares") of its
authorized but unissued Series C Convertible Participating Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), for a purchase price of
$2.336 per Preferred Share.
<PAGE> 7
1.2 Reserved Shares. The Company has authorized and has reserved and
covenants to continue to reserve, a sufficient number of shares of its Common
Stock, par value $.01 per share (the "Common Stock"), to satisfy the rights of
conversion of the holders of the Series C Preferred Stock. Any shares of Common
Stock or any successor class of capital stock of the Company hereafter issued or
issuable upon conversion of the Preferred Shares are herein referred to as
"Conversion Shares."
1.3 Sale and Purchase. Subject to the terms and conditions herein set
forth, the Company shall issue and sell to each of the Investors, and each
Investor shall purchase from the Company, the number of Preferred Shares set
forth opposite the name of such Investor in Column 2 of Exhibit A hereto for the
aggregate purchase price set forth in the corresponding row of Column 3 of said
Exhibit A.
1.4 Closing. A closing (the "Closing") of the sale and purchase of the
Preferred Shares shall take place at the offices of Hutchins, Wheeler & Dittmar,
A Professional Corporation, 101 Federal Street, Boston, Massachusetts, at 10:00
A.M., on August , 1995, or such other date, time and place as shall be mutually
agreed upon by the Company and a majority in interest of the Investors (the
"Closing Date"). At the Closing, the Company will deliver the Preferred Shares
being acquired by each Investor in the form of a certificate issued in such
Investor's name or in the name of its nominee (of which the Investor shall
notify the Company not less than two business days prior to the Closing),
against payment of the full purchase price therefor by or on behalf of each
Investor to the Company by check or by wire transfer of immediately available
funds.
1.5 Prior Purchase Agreements.
(a) By their respective execution of this Agreement, the
Company and the Prior Investors (including those Prior Investors who are signing
as Investors hereunder), constituting the requisite parties in interest, agree
as follows:
(i) the provisions of Sections 4, 6 and 7 of the Series B
Purchase Agreement are hereby terminated and of no further
force and effect and shall be superseded and replaced in
their entirety by the corresponding provisions of this
Agreement; and
(ii) each Prior Investor hereby waives any and all of its rights
of first refusal under Section 4.14 of the Series B
Purchase Agreement with respect to the issuance by the
Company of the Preferred Shares and the Conversion Shares
as contemplated by this Agreement, with such waiver to
include the waiver of any rights of such Prior Investor
arising from the Company's noncompliance with the notice
provisions of said Section 4.14.
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<PAGE> 8
(b) By their respective execution of this Agreement, the parties
hereto agree that solely for purposes of Sections 4, 6, 7.1, 7.2, 7.6 and 7.10
of this Agreement and to the extent necessary to give full force and effect to
the intent of this Section 1.5, (i) the term "Investor" and "Investors" shall
include each Prior Investor individually and the Prior Investors in the
aggregate as if each such Prior Investor has purchased shares of Series A
Convertible Participating Preferred Stock, par value $.01 per share (the "Series
A Preferred Stock") or Series B Convertible Participating Preferred Stock, par
value $.01 per share (the "Series B Preferred Stock"), as the case may be, as of
the date hereof pursuant to this Agreement, (ii) the shares of Series A
Preferred Stock issued by the Company under the Series A Purchase Agreement and
the shares of Series B Preferred Stock issued by the Company under the Series B
Purchase Agreement shall be deemed to be "Preferred Shares" hereunder, (iii) the
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
issued under the Series A Purchase Agreement and the Series B Preferred Stock
issued under the Series B Purchase Agreement shall be deemed to be "Conversion
Shares" hereunder, and (iv) the term "Preferred Stock" shall mean the shares of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
collectively.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Investors to enter into this Agreement, the
Company represents and warrants to the Investors, that as of the date hereof:
2.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is qualified to do business as a foreign corporation in each
jurisdiction in which such qualification is required. The Company has all
required corporate power and authority to own its property, to carry on its
business as presently conducted or contemplated, to enter into and perform this
Agreement and the agreements contemplated hereby, and generally to carry out the
transactions contemplated hereby and thereby. The copies of the Certificate of
Incorporation and By-laws of the Company, as amended to date, which have been
furnished to counsel for the Investors by the Company, are correct and complete
at the date hereof. The Company is not in violation, in any material respect, of
any term of its Certificate of Incorporation or By-laws, or in violation, in any
material respect, of any term of any agreement, instrument, judgment, decree,
order, statute, rule or government regulation applicable to the Company.
2.2 Authorization. This Agreement and all documents and instruments
executed pursuant hereto are valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms. The execution,
delivery and performance of this Agreement and all documents and instruments
contemplated hereby and the issuance of the Preferred Shares and, upon
conversion thereof, the Conversion Shares have been duly authorized by all
necessary corporate or other action of the Company. Based in part on the
representations and warranties of the Investors set forth in Article 5 hereof,
no consent, approval or authorization of, or designation, declaration or filing
with any governmental authority is required of the Company in connection with
the execution, delivery and performance of this Agreement, or the
- 3 -
<PAGE> 9
issuance and delivery of the Preferred Shares in accordance with the terms of
this Agreement, and the Conversion Shares upon conversion of the Preferred
Shares in accordance with the terms of the Certificate of Incorporation of the
Company setting forth the rights and preferences of the Preferred Stock, or the
performance or consummation of any other transaction contemplated hereby.
2.3 Capitalization. The authorized and issued capital stock of the
Company is as set forth in Schedule 2.3 attached hereto. Except as disclosed in
Schedule 2.3, the Company has not issued any other shares of its capital stock
and there are no outstanding warrants, options or other rights to purchase or
acquire any of such shares, nor any outstanding securities convertible into such
shares or outstanding warrants, options or other rights to acquire any such
convertible securities. As of the Closing, all of the outstanding shares of
capital stock of the Company will have been duly and validly authorized and
issued and will be fully paid and nonassessable and will have been offered,
issued, sold and delivered in compliance with applicable federal and state
securities laws. The Preferred Shares have been duly and validly authorized and,
when delivered and paid for pursuant to this Agreement, will be validly issued,
fully paid and nonassessable. The relative rights, preferences, restrictions and
other provisions relating to the Preferred Shares are as set forth in Exhibit B
attached hereto. The Company has authorized and reserved for issuance upon
conversion of the Preferred Shares not less than 1,712,329 shares of its Common
Stock and the Conversion Shares issuable upon such conversion will be, when
issued in accordance with the Certificate of Incorporation of the Company, duly
and validly authorized and issued, fully paid and nonassessable. Except as set
forth on Schedule 2.3, there are no preemptive rights or rights of first refusal
with respect to the issuance or sale of the Company's capital stock, other than
rights to which holders of the Preferred Shares are entitled as set forth in
paragraph 4.14 hereof. Except as disclosed in Schedule 2.3, there are no
restrictions on the transfer of the Company's capital stock other than those
arising from federal and state securities laws or under this Agreement, the
Stock Restriction Agreement referred to in paragraph 3.5 hereof or Article 10A
of the Company's By-Laws. The outstanding shares of the Common Stock are held of
record and beneficially by the persons identified in Schedule 2.3 in the amounts
indicated therein.
2.4 Subsidiaries; Investments. The Company has no subsidiaries. The
Company does not own or have any direct or indirect interest in or control over
any corporation, partnership, joint venture or other entity of any kind.
2.5 Financial Statements. Included in Schedule 2.5 are the following
financial statements of the Company, all of which fairly present the financial
position of the Company on the dates of such statements and the results of its
operations for the periods covered thereby: (i) the audited balance sheet of the
Company as of December 31, 1994 and the related audited statements of income and
cash flow for the year then ended (the "Audited Financial Statements"), and (ii)
balance sheet of the Company as of June 30, 1995 and the related statements of
income and cash flow for the six month period ended June 30, 1995. The Audited
Financial Statements have been prepared in accordance with generally accepted
accounting principles and present fairly,
- 4 -
<PAGE> 10
in all material respects, the financial condition and results of operations of
the Company as of December 31, 1994 and for the year ended December 31, 1994.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent
disclosed in Schedule 2.6 and to the extent reflected or reserved against in the
balance sheet of the Company as of June 30, 1995 included in Schedule 2.5
(including the footnotes and schedules thereto) (the "Base Balance Sheet"), the
Company does not have any material accrued or contingent liability or
liabilities arising out of any transaction or state of facts existing prior to
the date hereof and arising other than in the ordinary course of business
(whether such liability is accrued, to become due, contingent, or otherwise),
except for liabilities or obligations incurred pursuant to this Agreement and
the transactions contemplated hereby.
2.7 Absence of Certain Developments. Except as disclosed in Schedule
2.7, since June 30, 1995 there has been (i) no material adverse change in the
condition, financial or otherwise, of the Company or in the assets, liabilities,
properties or business of the Company, (ii) no declaration, setting aside or
payment of any dividend or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any of the capital stock of the Company,
(iii) no waiver of any valuable right of the Company or cancellation of any debt
or claim held by the Company, (iv) no loan by the Company to any officer,
director, employee or stockholder of the Company, or any agreement or commitment
therefor, except for loans made to employees pursuant to the Company's
Restricted Stock Purchase Plan, (v) no increase, direct or indirect, in the
compensation paid or payable to any officer or director of the Company, (vi) no
material loss, destruction or damage to any property of the Company, whether or
not insured, (vii) no labor trouble involving the Company and no material change
in the personnel of the Company or the terms and conditions of their employment,
and (viii) no acquisition or disposition of any assets (or any contract or
arrangement therefor) nor any other transaction by the Company otherwise than
for fair value in the ordinary course of business.
2.8 Title to Properties. The Company has good and marketable title to
all of its properties and assets, free and clear of all liens, restrictions or
encumbrances except as disclosed in Schedule 2.8. All machinery and equipment
included in such properties which is necessary to the business of the Company is
in good condition and repair and all leases of real or personal property to
which the Company is a party are fully effective and afford the Company peaceful
and undisturbed possession of the subject matter of the lease. The Company is
not in violation of any material zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned or leased properties, nor has it received any notice of violation
with which it has not complied.
2.9 Tax Matters. Except as set forth in Schedule 2.9, all foreign,
federal, state and local taxes owed by the Company have been paid. Except as set
forth on said Schedule 2.9, the provision for taxes on the Base Balance Sheet in
Schedule 2.5 are sufficient for the payment of all accrued and unpaid foreign,
federal, state, county and local taxes of any nature of the Company, whether or
not assessed or disputed as of the date of said balance sheet. Except as set
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forth on Schedule 2.9, there exist no unpaid assessments or basis for the
assessment of additional taxes on the Company for any fiscal period. All taxes
and other assessments and levies which the Company is required to withhold or
collect have been withheld and collected and have been paid over to the proper
governmental authorities. With regard to the federal income tax returns of the
Company, the Company has never received notice of any audit or of any proposed
deficiencies from the Internal Revenue Service. There are in effect no waivers
of applicable statutes of limitations with respect to any taxes owed by the
Company for any year. Neither the Internal Revenue Service nor any other taxing
authority is now asserting or, to the knowledge of the Company, threatening to
assert against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith.
2.10 Contracts and Commitments. Except as set forth in Schedule 2.10,
the Company is not a party to any contract, obligation or commitment which
involves a potential commitment in excess of $20,000.00 or which is otherwise
material and not entered into in the ordinary course of business, and does not
have any employment contracts; stock redemption or purchase agreements;
financing agreements; licenses; distributor, sales representative or OEM
agreements; agreements with officers, directors, employees or stockholders of
the Company or persons or organizations related to or affiliated with any such
persons; leases; agreements relating to the licensing, distribution,
development, purchase or sale of software; material agreements with customers of
the Company; or pension, profit-sharing, retirement or stock option plans,
except in each case as are described in Schedule 2.10 and copies of which have
been delivered to counsel for the Investors. The Company does not know of any
basis for the termination, expiration or modification of any such agreements
within one year from the date hereof, which termination, expiration or
modification may have a material adverse effect on the Company. The Company is
not in default under any contract, obligation or commitment, and to the best
knowledge of the Company, there is no state of facts which upon notice or lapse
of time or both would constitute such a default. The Company is not a party to
any contract or arrangement which under circumstances now foreseeable is likely
to have a material adverse effect on the business, properties or prospects of
the Company. The Company does not have any liability for renegotiation of
government contracts or subcontracts.
2.11 Proprietary Rights; Employee Restrictions. Set forth in Schedule
2.11 is a list and brief description of all patents, patent rights, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names and copyrights, and all applications for such which
are in the process of being prepared, owned by or registered in the name of the
Company, or of which the Company is a licensor or licensee or in which the
Company has any right, and in each case a brief description of the nature of
such right. The Company owns or possesses adequate licenses to use, free and
clear of claims or rights of any other person, all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names, copyrights, manufacturing processes, programming processes and
software, algorithms, formulae, trade secrets and know how (collectively
"Intellectual Property") necessary to the conduct of its business as presently
conducted and as proposed to be conducted. All Intellectual Property that is
used or incorporated into the
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Company's products or contemplated products and which is unique or proprietary
to the Company was developed by or for the Company by the employees or
consultants of the Company and is owned exclusively by the Company free and
clear of claims or rights of any other person. The Company is not aware of any
infringement by any other person of any rights of the Company under any
Intellectual Property. No claim is pending or threatened against the Company,
nor has the Company received any notice from any third parties, to the effect
that any Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, or the operation or products or services
of the Company infringe upon or conflict with the asserted rights of any other
person under any Intellectual Property, and, to the best knowledge of the
Company, there is no basis for any such claim (whether or not pending or
threatened). No claim is pending or threatened against the Company, nor has the
Company received any notice from any third parties to the effect that any
Intellectual Property owned or licensd by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company, and,
to the best knowledge of the Company, there is no basis for any such claim
(whether or not pending or threatened).
All technical information developed by or belonging to the Company and
which is material to the business of the Company which has not been patented has
been kept confidential. The Company is not making unlawful use of any
Intellectual Property of any other person, including without limitation any
former employer of any past or present employees of the Company. Except as
disclosed in Schedule 2.11, neither the Company nor, to the knowledge of the
Company, any of the Company's employees or consultants has any agreements or
arrangements with former employers of such employees or consultants relating to
any Intellectual Property of such employers, which interfere or conflict with
the performance of such employee's or consultant's duties for the Company or
results in any former employers of such employees and consultants having any
rights in, or claims on, the Company's Intellectual Property. To the knowledge
of the Company, the activities of the Company's employees and consultants on
behalf of the Company do not violate any agreements or arrangements which any
such employees have with former employers. The Company has taken all commercial
reasonable steps required to establish and preserve its ownership of all of the
Intellectual Property; each current and former employee of the Company, and each
of the Company's consultants and independent contractors involved in development
of any of the Intellectual Property, has executed an agreement regarding
confidentiality, proprietary information and assignment of inventions to the
Company substantially in the form of either Exhibit E-1 or Exhibit E-2 hereto,
and, to the knowledge of the Company, all such employees, consultants and
independent contractors are not in violation of such agreements.
Without limitation of any of the foregoing and except as otherwise
expressly disclosed in Schedule 2.11 hereto: (a) no part of any software
belonging to any third parties was included in the Company's products, whether
pursuant to any license arrangement or otherwise, and no use was made of any
trade secrets or proprietary information of any third party in developing such
products; (b) the Company has not at any time licensed or otherwise authorized
any person to manufacture, have manufactured, assemble, reproduce, sell or
otherwise distribute or modify the
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Company's products or any part or modified version thereof; (c) the Company has
not at any time provided to any person the specific parameters, system
architecture and information which defines.the scope, objectives and processes
of operations for the Company's products or any part thereof; (d) the Company
has affixed appropriate copyright notices and notices prohibiting unlicensed use
to all copies of the Company's products and related documentation which the
Company has distributed to any person; (e) the Company has taken reasonable
security measures to guard against unauthorized disclosure or use any of its
Intellectual Property; and (f) the Company has no reason to believe that any
person (including without limitation any former employee of the Company) has
unauthorized possession of any of its Intellectual Property, or any part
thereof, or that any person has obtained unauthorized access to any of its
Intellectual Property.
2.12 Effect of Transactions. The execution, delivery and performance by
the Company of this Agreement and the agreements and transactions contemplated
hereby will not conflict with or result in any default under any material
contract, obligation or commitment of the Company, or any charter provision,
by-law or corporate restriction of the Company, or result in the creation of any
lien, charge or encumbrance of any nature upon any of the properties or assets
of the Company except pursuant to this Agreement. The Company's execution and
delivery of this Agreement and its performance of the transactions contemplated
thereby will not violate any instrument, agreement, judgment, decree, order,
statute, rule or regulation of any federal, state or local government or agency
applicable to the Company or to which the Company is a party.
2.13 Litigation. Except as disclosed in Schedule 2.13, there is no
litigation or governmental proceeding or investigation pending or, to the best
knowledge of the Company, threatened against the Company affecting any of its
properties or assets, or against any officer or key employee of the Company in
his capacity as such, or which may call into question the validity or hinder the
enforceability or performance of this Agreement or the agreements and
transactions contemplated hereby; nor, to the best knowledge of the Company, has
there occurred any event nor does there exist any condition on the basis of
which any litigation, proceeding or investigation might properly be instituted.
2.14 Offerees. Neither the Company nor anyone acting on its behalf has
in the past sold, offered for sale or solicited offers to buy any securities of
the Company so as to bring the offer, issuance or sale of the Preferred Shares
as contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act of 1933 and the rules and regulations promulgated thereunder, as
amended (the "Securities Act"), unless such offer, issuance or sale was or will
be within the exemptions of Section 4 thereof. The Company has and will comply
with all applicable state "blue-sky" or securities laws in connection with the
issuance and sale of its Common Stock, Preferred Shares and other securities
heretofore issued and to be issued upon the closing of the Agreement.
2.15 Business; Compliance with Laws. Except as disclosed in Schedule
2.15, the Company has all necessary franchises, permits, licenses and other
rights and privileges necessary
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to permit it to own its property and to conduct its business as it is presently
or contemplated to be conducted. The Company is not in violation, in any
material respect, of any law, regulation, authorization or order of any public
authority relevant to the ownership of its properties or the carrying on of its
business as it is presently conducted. The Company is in compliance, in all
material respects, with all federal, state and local laws and regulations
(including all applicable environmental laws and regulations) relating to its
business as presently conducted, except as disclosed in Schedule 2.15.
2.16 Information Supplied to Investors. Neither this Agreement, nor the
Schedules attached hereto or any document referenced therein, nor any
certificate, projection or statement prepared by the Company and furnished in
writing to the Investors by or on behalf of the Company, contains any untrue
statement of a material fact, and none of this Agreement, the Schedules attached
hereto or such other documents, certificates, projections or statements
referenced therein omits to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no material fact directly relating to the
business, operations or condition of the Company (other than facts which relate
to general economic trends or conditions) that materially adversely affects or
in the future may in the reasonable business judgment of the Company (so far as
the officers of the Company may now foresee based upon material facts of which
they are now aware) materially adversely affect the same that has not been set
forth in this Agreement or in the Schedules attached hereto. Notwithstanding the
foregoing, no representation or warranty is made that the Company can achieve
any of the projections or goals described in the information furnished to the
Investors.
2.17 Investment Banking; Brokerage. No broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby and there are no brokerage
commissions, finders fees or similar fees or commissions payable in connection
therewith.
2.18 Distribution on Capital Stock. Except as set forth on Schedule
2.7 hereto, the Company has not declared, set aside or paid any dividends or
made any distributions with respect to any shares of its Common Stock or any
other class of its stock.
2.19 Environmental Matters. Except as disclosed in Schedule 2.19, (i)
the Company has never generated transported, used, stored, treated, disposed of,
or managed any Hazardous Waste (as hereinafter defined) and the operations of
the Company or, to the knowledge of the Company, any other party located at the
Company's facilities have not resulted in the release of any Hazardous Material
(as hereinafter defined) in violation of any Environmental Law (as hereinafter
defined), (ii) no lien has ever been imposed by any governmental agency on any
property, facility, machinery, or equipment owned, operated, leased, or used by
the Company in connection with the presence of any Hazardous Material. Except as
disclosed in said Schedule 2.19; (i) the Company has no material liability under
nor has it ever violated any Environmental Law in any material fashion; (ii) the
Company, all property owned, operated, leased, or used by the
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<PAGE> 15
Company, and all facilities and operations thereon are presently in material
compliance with all applicable Environmental Laws; (iii) the Company has never
entered into or been subject to any judgment, consent decree, compliance order,
or administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) the Company has no reason to believe that any of the
items enumerated in clause (iii) of this sentence will be forthcoming. To the
best knowledge of the Company, except as disclosed in said Schedule 2.19, no
site owned, operated, leased, or used by the Company contains any asbestos or
asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment
containing PCBs, or any urea formaldehyde foam insulation or, to the knowledge
of the Company, any underground storage tanks. The Company has provided to the
Investors copies of all documents, records, and information available to the
Company concerning any environmental or health and safety matter relevant to the
Company, whether generated by the Company or others, including, without
limitation, environmental audits, environmental risk assessments, site
assessments, documentation regarding off-site disposal of Hazardous Materials,
spill control plans, and reports, correspondence, permits, licenses, approvals,
consents, and other authorizations related to environmental or health and safety
matters issued by any governmental agency. For purposes of this paragraph, the
following definitions shall apply: "Hazardous Material" shall mean and include
any hazardous waste, hazardous material, hazardous substance, petroleum product,
oil, toxic substance, pollutant, contaminant, or other substance which may pose
a threat to the environment or to human health or safety, as defined or
regulated under any Environmental Law. "Hazardous Waste" shall mean and include
any hazardous waste as defined or regulated under any Environmental Law.
"Environmental Law" shall mean any environmental or health and safety-related
law, regulation, rule, ordinance, or by-law at the foreign, federal, state, or
local level, whether existing as of the date hereof, previously enforced, or
subsequently enacted. "Company" shall mean and include the company, any
subsidiaries, affiliates, and all other entities for whose conduct the Company
is or may be held responsible under any Environmental Law.
2.20 Employees. Except as set forth on Schedule 2.13, there are no
controversies or labor troubles pending, or to the knowledge of the Company,
threatened between it and its employees. Except as set forth in Schedule 2.20,
to the Company's knowledge: (a) no officer or key employee has any present
intention of terminating his employment with the Company; and (b) the Company
has complied in all material respects with all applicable state and federal laws
and regulations respecting employment and employment practices, terms and
conditions of employment, wages and hours and other laws related to employment,
and there are no arrears in the payments of wages, withholding or social
security taxes, unemployment insurance premiums or other similar obligations.
Except as set forth in Schedule 2.20, the Company is not a party to any written
agreement or oral agreement which obligates the Company to retain the services
of any employee for more than 120 days, with any of its officers or employees
with respect to such person's employment with the Company.
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2.21 Insurance. The Company maintains in full force such types and
amounts of insurance issued by insurers of recognized responsibility insuring
the Company with respect to its respective business and properties, in such
amounts and against such losses and risks as are listed in Schedule 2.21.
2.22 Retirement Obligations, etc. Except as disclosed in Schedule 2.22,
the Company does not have any pension, retirement or similar plan or obligation,
whether of a legally binding nature or in the nature of informal understandings.
The Company is not a party to any collective bargaining agreement and, to the
Company's knowledge, no organizational efforts are presently being made with
respect to any of its employees. Schedule 2.22 lists the employee benefit plans
of the Company.
2.23 Transactions with Affiliates. Except as disclosed in Schedule 2.23
or as provided in the agreements contemplated by this Agreement and the Exhibits
hereto, no stockholder, officer or director of the Company nor any "affiliate"
or "associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act) (herein, a "Related Party") is
a party to any transaction with the Company, including, without limitation, any
contract, agreement or other arrangement providing for the rental of real or
personal property from, or otherwise requiring payments to, any Related Party
other than the making of employee loans under the Company's Restricted Stock
Purchase Plan to fund the purchase price of shares issued thereunder.
SECTION 3. CONDITIONS OF PURCHASE
The Investors' obligation to purchase and pay for the Preferred Shares
shall be subject to compliance by the Company with its agreements herein
contained and to the fulfillment to the Investors' satisfaction on or before and
at the Closing Date of the following conditions:
3.1 Satisfaction of Conditions. The representations and warranties of
the Company contained in this Agreement including but not limited to the
representation and warranties made in Section 2 hereof, shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 3 shall have been satisfied or waived in writing; and on the Closing
Date, certificates to such effect executed by the President of the Company shall
be delivered to the Investors.
3.2 Opinion of Company Counsel. The Investors shall have received from
counsel for the Company, a favorable opinion, dated the Closing Date,
substantially in the form attached hereto as Exhibit C.
3.3 Authorization. The Board of Directors and the stockholders of the
Company shall have duly adopted resolutions in form reasonably satisfactory to
the Investors authorizing the Company to consummate the transactions
contemplated hereby in accordance with the terms
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<PAGE> 17
hereof, and the Investors shall have received a duly executed certificate of the
Secretary of the Company setting forth a copy of such resolutions and the
Certificate of Incorporation and By-laws of the Company and such other matters
as may be requested by the Investors.
3.4 Effectiveness of Preferred Stock Terms. The Board of Directors of
the Company shall have adopted a resolution establishing the terms of the
Preferred Stock as set forth in Exhibit B hereto, and such action shall have
been made effective by approval thereof by the stockholders and the filing of a
Certificate of Amendment with the Secretary of State of Delaware.
3.5 Stock Restriction Agreements. The Company, the Investors, the
Prior Investors and Wayne Andrews, John Thibault and Steve Webber (the
"Founders") shall have executed and delivered an Amendment No. 2 to Stock
Restriction Agreement in the form of Exhibit D hereto.
3.6 Non-Competition, Nondisclosure and Developments Agreements. Each of
the Company's "key employees" (including without limitation each of Messrs.
Andrews, Thibault, Webber, Allen, Murphy and Volpe) shall have delivered to the
Investors an executed copy of a Key Employee Non-Competition, Nondisclosure and
Developments Agreements with the Company, substantially in the forms attached as
Exhibit E-1 hereto.
3.7 Stockholders Agreement; Election of Directors. The Company, the
Investors, the Prior Investors and the Founders shall have executed and
delivered an Amended and Restated Stockholders Agreement (the "Stockholders
Agreement") in the form of Exhibit F hereto.
3.8 Founders Registration Rights Agreement. The Company and each of
the Founders shall have executed and delivered an Amended and Restated Founders
Registration Rights Agreement in the form of Exhibit G hereto.
3.9 All Proceedings Satisfactory. All corporate and other proceedings
taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to each of the
Investors, and each of the Investors shall receive such copies thereof and other
materials (certified, if requested) as they may reasonably request in connection
therewith. The issuance and sale of the Preferred Shares to the Investors shall
be made in conformity with all applicable state and federal securities laws.
3.10 Delivery of Documents. The Company shall have executed and
delivered to the Investors (or shall have caused to be executed and delivered to
the Investors by the appropriate persons) the following:
(a) Certificates for the Preferred Shares;
(b) Certified copies of resolutions of the Board of Directors
(and, if necessary, the stockholders) of the Company authorizing the execution
and delivery of this Agreement, the
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<PAGE> 18
Stock Restriction Agreement, the Stockholders Agreement, the Certificate of
Amendment creating the Preferred Shares and the issuance of the Preferred
Shares;
(c) A copy of the Company's corporate charter, as amended by the
Certificate of Amendment, certified as of a recent date by the appropriate
Secretary of State and the Secretary of the Company;
(d) A copy of the by-laws of the Company certified by the
Secretary of the Company;
(e) A certificate issued by the appropriate Secretary of State of
the state of incorporation of the Company certifying that the Company is in good
standing in such state;
(f) A true and correct copy of each agreement referred to in
Sections 3.5, 3.6, 3.7 and 3.8 hereof;
(g) A true and correct copy of the amendment to Section 10A of
the Company's By-laws; and
(h) Such other supporting documents and certificates as the
Investors may reasonably request.
SECTION 4. COVENANTS OF THE COMPANY
The Company (which term shall be deemed to include, for purposes of
this Section 4, any subsidiary or subsidiaries of the Company formed after the
date of this Agreement) shall comply with the following covenants until the
consummation of the first Qualified Public Offering (as defined in Section 5 of
the Preferred Stock terms attached as Exhibit B hereto) except as shall
otherwise be expressly agreed pursuant to a written consent or consents executed
by holders of a majority in interest (or, in the case of Section 4.17,
two-thirds in interest and, in the case of Section 4.18, two-thirds in interest
of each series) of the Preferred Shares; provided that Sections 4.1, 4.2 and
4.12 may not be amended in a manner adverse to an Investor without the consent
of such Investor; provided, further, that Section 4.14 may only be so amended
provided that in connection with such amendment all Investors are treated
equally. Notwithstanding anything to the contrary contained in this Section 4,
no Investor shall be entitled to the information referred to in Sections 4.1 and
4.2 or to the inspection or visitation rights referred to in Section 4.12 if the
Board of Directors determines that a competitive conflict would exist by
providing such information or inspection or visitation rights to the Investor.
In the event of such a competitive conflict, the information, inspection and
visitation rights of the Investor shall be limited so as to avoid the
competitive conflict.
4.1 Financial Statements; Minutes. The Company will maintain a
comparative system of accounts in accordance with generally accepted accounting
principles, keep full and complete
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financial records and furnish to the Investors, so long as such Investor
continues to hold (or have the right to hold) at least 200,000 Conversion
Shares, the following reports: (a) within 90 days after the end of each fiscal
year, a copy of the consolidated balance sheet of the Company as at the end of
such year, together with a consolidated statement of income and retained
earnings of the Company for such year, audited and certified by independent
public accountants of recognized national standing reasonably satisfactory to
the Investors, prepared in accordance with generally accepted accounting
principles and practices consistently applied; (b) within 45 days after the end
of each quarter, a consolidated unaudited balance sheet of the Company as at the
end of such quarter and a consolidated unaudited statement of income and
retained earnings for the Company for such quarter and for the year to date; (c)
within 30 days after the end of each month, a consolidated unaudited balance
sheet of the Company as at the end of such month and an unaudited statement of
income and retained earnings for the Company for such month and for the year to
date, each of the foregoing balance sheets and statements of earnings and
retained earnings to set forth in comparative form the corresponding figures for
the prior fiscal period and, with respect to financial information delivered to
the Investors, to include a brief written discussion and analysis by management
of such annual and quarterly financial statements; (d) within 30 days after the
end of each month, a historical statement of cash flows for the preceding month
and a projected statement of cash flows for the 90 day period following the end
of such month; and (e) such other financial information as a majority in
interest of the Investors may reasonably request, including without limitation
certificates of the principal financial officer of the Company concerning
compliance with the covenants of the Company under this Section 4; provided,
however, that the above-referenced obligation to furnish various financial
statements shall terminate once the Company becomes subject to, and commences
reporting under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and provided, further, however, that prior to December 31, 1996 Aspect
Telecommunications, Inc. ("Aspect") and its transferees shall only be entitled
to receive the information required to be delivered to the Investors under
clauses (a) and (b) of this Section 4.1.
4.2 Budget and Operating Forecast. The Company will prepare and submit
to the Board of Directors of the Company a budget for the Company for each
fiscal year of the Company at least 30 days prior to the beginning of such
fiscal year, together with management's written discussion and analysis of such
budget. The budget shall be accepted as the budget for such fiscal year when it
has been approved by a majority of the full Board of Directors of the Company
and, thereupon, a copy of such budget promptly shall be sent to each Investor
who holds (or has the right to hold) in excess of 200,000 of the Conversion
Shares. The Company shall review the budget periodically and shall advise the
Board of Directors and the Investors of all changes therein and all material
deviations therefrom. The Company shall not be required to deliver any budget to
Aspect or its transferees or advise Aspect or its transferees of any changes
therein or deviations therefrom prior to December 31, 1996.
4.3 Conduct of Business. The Company will continue to engage
principally in the business now conducted by the Company or a business or
businesses similar thereto or reasonably compatible therewith, including such
research and development activities as the Board of Directors
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<PAGE> 20
may from time to time approve. The Company will keep in full force and effect
its corporate existence and all intellectual property rights useful in its
business (except such rights as the Board of Directors has reasonably determined
are not material to the Company's continuing operations) and shall use its best
efforts to cause each employee who has access to confidential and proprietary
information to execute a Nondisclosure and Developments Agreements substantially
in the form of Exhibit E-2 attached hereto with such reasonable changes as may
be deemed appropriate by the Board of Directors.
4.4 Payment of Taxes, Compliance with Laws, etc. The Company will pay
and discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that the Company shall not be required to pay
and discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof is being contested by the Company in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
The Company will comply with all applicable laws and regulations in the conduct
of its business, including, without limitation, all applicable federal and state
securities laws in connection with the issuance of any shares of its capital
stock.
4.5 Adverse Changes. The Company will promptly advise the Investors of
any event which represents a material adverse change in the condition or
business, financial or otherwise, of the Company, and of each suit or proceeding
commenced or threatened against the Company which, if adversely determined,
would result in such a material adverse change. The Company will also promptly
notify the Investors of any facts which, if such facts had existed at the
Closing, would have constituted a material breach of the representations and
warranties contained herein.
4.6 Insurance. The Company will keep its insurable properties insured,
upon reasonable business terms, by financially sound and reputable insurers
against liability, and the perils of casualty, fire and extended coverage in
amounts of coverage at least equal to those customarily maintained by companies
in the same or similar business as the Company. The Company will also maintain
with such insurers insurance against other hazards and risks and liability to
persons and property to the extent and in the manner customary for companies
engaged in the same or similar business.
4.7 Life Insurance. The Company will obtain and maintain, and continue
to pay the premiums on, "key-man" term life insurance from financially sound and
reputable insurers on the life of the Founders as a group in the face amount of
$3,000,000.00, and the Company shall be named as the sole and exclusive
beneficiary. The Company hereby agrees that such policy shall not be assigned,
borrowed against or pledged.
4.8 Maintenance of Properties. The Company will maintain all
properties used or useful in the conduct of its business in good repair, working
order and condition, ordinary wear
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<PAGE> 21
and tear excepted, as necessary to permit such business to be properly and
advantageously conducted.
4.9 Affiliated Transactions. All transactions by and between the
Company and any officer, key employee or stockholder of the Company or persons
controlling, controlled by, under common control with or otherwise affiliated
with such officer, key employee or stockholder, shall be conducted on an
arm's-length basis, shall be on terms and conditions no less favorable to the
Company than could be obtained from nonrelated persons and shall be approved in
advance by a majority of the Investor Representatives after full disclosure of
the terms thereof, for which purpose the interested party, if an Investor
Representative, and any affiliate of the interested party who is an Investor
Representative, shall not be entitled to vote, except that such approval shall
not be required in connection with the making of employee loans under the
Company's Restricted Stock Purchase Plan to fund the purchase price of shares
issued thereunder.
4.10 Management Compensation. Compensation paid by the Company to its
management will be comparable to compensation paid to management in companies in
the same or similar businesses of similar size and maturity and with comparable
financial performance. In furtherance of the foregoing, the Company hereby
agrees that, except as set forth in Schedule 2.10 hereto, no compensation or
other remuneration shall be paid to, nor shall any capital stock of the Company
be issued to, or options to purchase any of its capital stock granted to, any
director, officer or key employee of, or any consultant to, the Company or any
of its subsidiaries, without the approval of a majority of members of the
Compensation Committee of the Company's Board of Directors.
4.11 Use of Proceeds. The Company will use the proceeds from the sale
of the Preferred Shares to fund the Company's working capital. Pending use for
the above described purpose, said proceeds shall be temporarily invested in
short-term, interest bearing securities, including U.S. Government securities,
certificates of deposit and similar instruments, and money market mutual funds.
4.12 Inspection. The Company will, upon reasonable prior notice to the
Company, permit authorized representatives of the Investors, so long as the
Investors continue to hold (or have the right to hold) at least 200,000
Conversion Shares, to visit and inspect any of the properties of the Company,
including its books of account (and to make copies thereof and take extracts
therefrom), and to discuss its affairs, finances and accounts with its officers,
administrative employees and independent accountants, all at such reasonable
times and as often as may be reasonably requested, provided that Aspect shall
not be entitled to any such visitation or inspection rights prior to December
31, 1996. In addition, upon reasonable prior notice, the management of the
Company will be available at least quarterly to meet with an authorized
representative of NEA to review the Company's business environment and market
opportunities.
4.13 Board of Directors Meetings. The Company will ensure that
meetings of its Board of Directors are held at least four times each year and at
intervals of not more than three months
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and will reimburse Directors for their reasonable travel expenses incurred in
connection with attending meetings of the Board of Directors or performing such
other business on behalf of the Company as may be approved by the Company in
advance. The Company will allow an authorized representative of each of Atlas,
NEA and Fidelity to have certain observer rights in connection with such Board
of Directors meetings, as set forth in the Stockholders Agreement or the letter
agreement dated as of July 29, 1994 between the Company and NEA (the "Management
Rights Letter"). The Certificate of Incorporation or By-laws of the Company will
at all times during which any nominee of the Investors serves as director of the
Company provide for indemnification of the directors and limitations on the
liability of the directors to the fullest extent permitted under applicable
state law. Upon the reasonable request of the Investor Representatives (as
defined in Section 4.14(b)), the Company will use its best efforts to obtain and
maintain on reasonable business terms directors and officers liability insurance
coverage of at least $1,000,000.00 per occurrence, so long as such insurance may
be obtained and maintained on commercially reasonable terms.
4.14 Right to Participate in Sales of Additional Securities.
(a) The Company covenants and agrees that it will not sell or
issue any shares of capital stock of the Company, or bonds, certificates of
indebtedness, debentures or other securities convertible into or exchangeable
for capital stock of the Company, or options, warrants or rights carrying any
rights to purchase capital stock or convertible or exchangeable securities of
the Company, other than in connection with a Qualified Public Offering (as
defined in Section 5 of the Preferred Stock terms attached as Exhibit B hereto)
or as otherwise provided in Section 4.14(b) hereof, unless (i) the Company shall
have received a bona fide arm's-length offer to purchase such stock, bonds,
certificates of indebtedness, debentures, securities, options, warrants or
rights from a third party, and (ii) the Company first submits a written offer to
the Investors identifying the third party to whom such stock, bonds,
certificates of indebtedness, debentures, securities, options, warrants or
rights are proposed to be sold and the terms of the proposed sale, and offering
to the Investors the opportunity to purchase their proportionate share of such
securities on terms and conditions, including price, not less favorable than
those on which the Company proposes to sell such securities to the third party.
Each Investor shall have the right to purchase its proportionate share (relative
to the other Investors) of the total number of securities proposed to be
purchased by such third party based on the ratio of the Preferred Shares issued
to such Investor to the Preferred Shares issued to all of the Investors. The
Investors shall have a right of over-allotment pursuant to this Section 4.14
such that to the extent an Investor does not exercise its right of first refusal
hereunder, such additional securities which such Investor did not elect to
purchase may be purchased by the other Investors in proportion to the total
number of Preferred Shares which each such other Investor holds compared to the
total number of Preferred Shares held by all Investors who elect to participate
in the right of over-allotment hereunder. Any Investor may transfer its right to
be offered any such opportunity to any transferee of in excess of 200,000 shares
of its Preferred Shares (other than a competitor of the Company). The Company's
offer to the Investors shall remain open and irrevocable for a period of at
least 45 days. Any securities so offered to the Investors which are not
purchased pursuant to such offer
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(after giving effect to the over-allotment option) may be sold by the Company to
the third party originally named in the offer to the Investors on terms and
conditions, including price, not more favorable to the third party than those
set forth in such offer at any time within 75 days following the date of such
offer, but may not be sold to any other person or on terms and conditions,
including price, that are more favorable to the purchaser than those set forth
in such offer or after such 75-day period without renewed compliance with this
paragraph 4.14.
(b) Notwithstanding the foregoing, the Company may (i) issue up to
an aggregate of 2,768,341 shares of its Common Stock (including, and not in
addition to, 2,318,689 shares which are issued and outstanding on the date of
this Agreement), or grant options exercisable therefor, to officers, directors,
employees, consultants or agents of the Company pursuant to the terms of the
Company's Stock Option Plan or Restricted Stock Purchase Plan, provided that
such shares or options shall vest over a five year period (unless a shorter
vesting schedule is approved by the designees of Matrix and Sigma to the
Company's Board of Directors (herein referred to, together with any successors
or replacements, collectively, as the "Investor Representatives"), (ii) declare,
make or issue a dividend or other distribution payable in shares of the Common
Stock in respect of outstanding shares of the Common Stock or the Preferred
Stock in accordance with the Company's Certificate of Incorporation, as amended,
(iii) issue shares of its Common Stock or other securities in connection with
the acquisition of any other corporation or business concern, whether by
acquisition of assets, or capital stock merger, consolidation or other
reorganization as long as the beneficial owners of the Company's outstanding
capital stock immediately prior to such transaction hold no less than fifty-one
percent (51%) of the voting power of the outstanding capital stock of the
Company immediately after such transaction, (iv) with the prior consent of a
majority of the Investor Representatives, issue, or issue options, warrants or
rights to subscribe for, shares of its Common Stock in connection with any debt,
capital lease or other similar financing transaction, or (v) issue shares of
Common Stock pursuant to a Qualified Public Offering (as defined in Exhibit B)
without offering the Investors the opportunity to purchase their proportionate
share of such shares or options under this paragraph 4.14.
4.15 Stock Restriction Agreement, Nondisclosure and Developments
Agreements and Non-Competition Agreements. The Company will diligently enforce
all of its rights under the Stock Restriction Agreement described in paragraph
3.5 hereof and the Nondisclosure and Developments Agreements and Non-Competition
Agreements described in paragraph 3.6 hereof. The Company will not waive or
release any rights under, or consent to the amendment of, any such agreement
without the written consent of the Investor Representatives.
4.16 Distributions on, and Redemptions of, Capital Stock. Except as
otherwise expressly provided in this Agreement or in Exhibit B hereto, the
Company will not declare or pay any dividends or make any distributions of cash,
property or securities of the Company with respect to any shares of its Common
Stock or any other class of its capital stock, or directly or indirectly redeem,
purchase, or otherwise acquire for consideration any shares of its Common Stock
or any other class of its capital stock; provided, however, that this
restriction shall not apply
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to the redemption of Preferred Shares or the repurchase of shares of the Common
Stock pursuant to stock repurchase agreements under which the Company has the
option to repurchase such shares upon the occurrence of certain events,
including the termination of employment and involuntary transfers by operation
of law, provided that (unless the purchase is approved by a vote of the
disinterested members of the Board of Directors) the repurchase price paid by
the Company does not exceed the purchase price paid to the Company for such
shares. Any redemption, repurchase or other acquisition by the Company of any
shares of its capital stock shall be made in compliance with all laws, including
but not limited to federal and state securities laws.
4.17 Merger, Consolidation, Sale of Assets, Acquisition and Other
Actions. The Company will not without the prior written consent of holders of
two-thirds in interest of the Preferred Shares: (a) sell, lease or otherwise
dispose of (whether in one transaction or a series of related transaction) all
or substantially all of its assets, (b) merge with or into or consolidate with
another entity, (except into or with a wholly-owned subsidiary of the Company
with the requisite shareholder approval), (c) acquire any other corporation or
business concern, whether by acquisition of assets, capital stock or otherwise,
and whether in consideration of the payment of cash, the issuance of capital
stock or otherwise, (d) voluntarily liquidate or wind up its operations or (e)
issue any shares of its capital stock which are senior to or on a parity with
the Preferred Shares with respect to dividends liquidation or redemptions or
with any special voting rights.
4.18 No Amendments to Certificate of Incorporation. The Company will
not make any amendment to its Certificate of Incorporation or make any amendment
to its By-laws that directly or indirectly adversely affects the terms of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
without the prior written consent of two-thirds in interest of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting
together as a separate class. If any amendment to the Certificate of
Incorporation would adversely affect one or more series of Preferred Stock but
would not so affect one or more series of Preferred Stock as a class, then the
prior written consent of two-thirds in interest of such series shall be required
to effect any such amendment.
4.19 Capital Expenditures. The Company will not, without the prior
approval of a majority of the Investor Representatives, make any expenditures
for fixed or capital assets, or any commitments for such expenditures, exceeding
an amount of $250,000 for any one such expenditure or series of related
expenditures.
4.20 Indebtedness. The Company will not become indebted for or create,
incur, assume or be liable in any manner in respect of, or suffer to exist,
without the prior approval of a majority of the Investor Representatives, any
new or additional long-term indebtedness, bonding or other similar commitment,
standby letter of credit or similar loan which, for any one such borrowing or
series of related borrowings, is in excess of $250,000
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<PAGE> 25
4.21 Restrictions on Other Agreements. The Company will not enter into
any agreement with any party which by its terms (i) restricts the payments due
the holders of Preferred Shares pursuant to Exhibit B hereto or (ii) other than
as set forth in the Amended and Restated Founders Registration Rights Agreement
by and among the Company and the Founders (the "Founders Registration Rights
Agreement"), which grants any right relating to the registration of its Common
Stock superior to or on a parity with the rights granted to the Investors
pursuant to Section 6 hereof. For purposes of this paragraph 4.21, loan
agreements approved by the Board of Directors of the Company which provide that
no redemption may be made and/or no dividends may be paid while there is a
continuing default shall be deemed not to restrict such payments.
4.22 Compliance with Stock Restriction Agreement. The Company will not
effect any transfer of any of the outstanding capital stock of the Company on
the stock record books of the Company unless such transfer does not violate the
terms of the Stock Restriction Agreement referred to in paragraph 3.5 hereof.
SECTION 5. REPRESENTATIONS OF INVESTORS
It is the understanding of the Company, and each Investor hereby
severally represents with respect to such Investor's purchase of Preferred
Shares hereunder, that:
(a) The execution of this Agreement has been duly authorized by
all necessary action on the part of the Investor, has been duly executed and
delivered, and constitutes a valid, binding and enforceable agreement of the
Investor.
(b) The Investor is acquiring the Preferred Shares for its own
account, for investment, and not with a view to any distribution thereof within
the meaning of the Securities Act. The Investor was not formed or organized for
the purpose of acquiring the Preferred Shares.
(c) The Investor understands that because the Preferred Shares
have not been registered under the Securities Act, it cannot dispose of any or
all of the Preferred Shares unless the Preferred Shares are subsequently
registered under the Act or exemptions from such registration are available. The
Investor understands that each certificate representing the Preferred Shares
will bear the following legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). These
securities have been acquired for investment and not with a
view to distribution or resale, and may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such
securities under the Act or the availability of an exemption
from such registration requirements.
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<PAGE> 26
(d) The Investor is sufficiently knowledgeable and experienced in
the making of venture capital investments so as to be able to evaluate the risks
and merits of its investment in the Company, and is able to bear the economic
risk of loss of its investment in the Company. The Investor is an accredited
investor as such term is defined in Rule 501 promulgated under the Securities
Act.
(e) The Investor has been advised that the Preferred Shares have
not been and are not being registered under the Securities Act or under the blue
sky laws of any jurisdiction and that the Company in issuing the Preferred
Shares is relying upon, among other things, the representations and warranties
of the Investors contained in this Section 5.
(f) No broker, finder, agent or similar intermediary has acted on
behalf of the Investor in connection with this Agreement or the transactions
contemplated hereby and there are no brokerage commissions, finder's fees or
similar fees or commissions payable in connection therewith.
SECTION 6. REGISTRATION RIGHTS
6.1 Optional Registrations. If at any time or times after the date
hereof, the Company shall determine to register any shares of its Common Stock
or securities convertible into or exchangeable or exercisable for shares of the
Common Stock under the Securities Act (whether in connection with a public
offering of securities by the Company (a "primary offering"), a public offering
of securities by stockholders (a "secondary offering"), or both, but not in
connection with a registration effected solely to implement an employee benefit
plan or a transaction to which Rule 145 or any other similar rule of the
Securities and Exchange Commission (the "Commission" ) under the Securities Act
is applicable), the Company will promptly give written notice thereof to the
holders of Registrable Securities (as hereinafter defined in paragraph 6.4
below) then outstanding (the "Holders"). In connection with any such
registration, if within 30 days after their receipt of such notice any Holder of
the Registrable Securities requests the inclusion of some or all of the
Registrable Securities owned by it in such registration, the Company will notify
all of the Holders of its receipt of such request, and will use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which such Holders may request in a writing delivered to the Company
within 30 days after the notice given by the Company with respect to its receipt
of such request; provided, however, that in the case of the registration of
shares of the Common Stock by the Company in connection with an underwritten
public offering, if the underwriter determines that a limitation on the number
of shares to be underwritten is required, and (i) if such registration is the
first registered offering of the Company's securities to the public, the
underwriter may (subject to the allocation priority set forth below) exclude
from such registration and underwriting some or all of the Registrable
Securities which would otherwise be underwritten pursuant to the notice
described herein, and (ii) if such registration is other than the first
registered offering of the sale of the Company's securities to the public, the
underwriter may (subject to the allocation priority set forth below) limit the
number of Registrable Securities to be
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<PAGE> 27
included in the registration and underwriting to not less than fifty percent
(50%) of the securities included therein (based on aggregate market values). The
Company shall advise all Holders of Registrable Securities promptly after such
determination by the underwriter, and the number of shares of securities that
are entitled to be included in the registration and underwriting (other than
those to be sold for the account of the Company) shall be allocated in the
following manner: The securities of the Company other than Registrable
Securities shall be excluded from such registration and underwriting to the
extent required by such limitation (except to the extent that the Founders are
entitled to certain registration rights pursuant to the Founders' Registration
Rights Agreement), and if a limitation of the number of shares is still
required, the number of shares that may be included in the registration and
underwriting shall be allocated among all Holders of Registrable Securities and
the Founders (to the extent that the Founders are entitled to include shares
under the Founders Registration Rights Agreement) in proportion, as nearly as
practicable, to their respective holdings of Registrable Securities and shares
of Common Stock. All expenses of the registration and offering (including
transfer taxes on shares being sold by the Holders) and the reasonable fees and
expenses of one independent counsel for the Holders shall be borne by the
Company, except that the Holders shall bear underwriting discounts and selling
commissions attributable to their Registrable Securities being registered.
Without in any way limiting the types of registrations to which this paragraph
6.1 shall apply, in the event that the Company shall effect a shelf registration
under Rule 415 promulgated under the Securities Act, or any other similar rule
or regulation (Rule 415), the Company shall take all necessary action,
including, without limitation, the filing of post-effective amendments, to
permit the Holders to include their shares in such registration in accordance
with the terms of this paragraph 6.1.
6.2 Required Registrations. If on any one (1) occasion on or after the
earlier of (i) September 30, 1996 or (ii) six months after an initial public
offering, one or more of the Holders of a majority of the Registrable Securities
then outstanding shall notify the Company in writing that he or they intend to
offer or cause to be offered for public sale all or any portion of his or their
Registrable Securities having an aggregate proposed offering price of not less
than $5,000,000, the Company will notify all of the Holders of Registrable
Securities who would be entitled to notice of a proposed registration under
paragraph 6.1 above of its receipt of such notification from such Holder or
Holders. Upon the written request of any such Holder delivered to the Company
within 15 days after receipt from the Company of such notification, the Company
will use its best efforts to cause such of the Registrable Securities as may be
requested by any Holders (including the Holder or Holders giving the initial
notice of intent to register hereunder) to be registered under the Securities
Act in accordance with the terms of this paragraph 6.2; provided, however that
unless such registration becomes effective, the Holders of the Registrable
Securities shall be entitled to require an additional registration pursuant to
this paragraph 6.2. All expenses of such registration and offering and the
reasonable fees and expenses of one independent counsel for the Holders shall be
borne by the Company. The Company may postpone the filing of any registration
statement required hereunder for a reasonable time not to exceed 90 days during
any twelve month period, if the Company has been advised by legal counsel, which
counsel shall be acceptable to the Holders of Registrable Securities, that such
filing would require the disclosure of a material transaction or other matter
and the Company determines reasonably and
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<PAGE> 28
in good faith that such disclosure would have a material adverse effect on
the Company. The Company shall not be required to cause a registration statement
requested pursuant to this paragraph 6.2 to become effective prior to 90 days
following the effective date of a registration statement initiated by the
Company, if the request for registration has been received by the Company
subsequent to the giving of written notice by the Company, made in good faith,
to the Holders of Registrable Securities to the effect that the Company is
commencing to prepare a Company-initiated registration statement (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 or any other similar rule of the Commission under
the Securities Act is applicable); provided, however, that the Company shall use
its best efforts to achieve such effectiveness promptly following such 90-day
period if the request pursuant to this paragraph 6.2 has been made prior to the
expiration of such 90-day period. If so requested by any Holder in connection
with a registration under this paragraph, the Company shall take such steps as
are required to register such Holder's Registrable Securities for sale on a
delayed or continuous basis under Rule 415, and also take such steps as are
required to keep any registration effective until all of such Holder's
Registrable Securities registered thereunder are sold. The obligation of the
Company hereunder shall be deemed satisfied only when a registration statement
covering all shares of Registrable Securities specified in notices received as
aforesaid shall have become effective and, if the method of disposition is a
firm commitment underwritten public offering, all such shares have been sold
pursuant thereto.
If the method of disposition is an underwritten public offering, the
holders of a majority of the Registrable Securities to be sold in such offering
may designate the managing underwriter of such offering, subject to approval of
the Company, which approval shall not be unreasonably withheld or delayed.
6.3 Form S-3. If the Company becomes eligible to use Form S-3 under the
Securities Act or a comparable successor form, the Company shall use its best
efforts to continue to qualify at all times for registration of its capital
stock on Form S-3 or such successor form. One or more of the Holders of
Registrable Securities shall have the right from time to time to request and
have effected registrations of shares of Registrable Securities on Form S-3 or
such successor form for a public offering of shares of Registrable Securities
having an aggregate proposed offering price of not less than $1,000,000.00 (such
requests shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of such
shares by such Holder or Holders). The Company shall give notice to all of the
Holders of Registrable Securities of the receipt of a request for registration
pursuant to this paragraph 6.3 and shall provide a reasonable opportunity for
such Holders to participate in such a registration. Subject to the foregoing,
the Company will use its best efforts to effect promptly the registration of all
shares of Registrable Securities on Form S-3 or such successor form to the
extent requested by the Holder or Holders thereof. If so requested by any Holder
in connection with a registration under this paragraph 6.3, the Company shall
take such steps as are required to register such Holder's Registrable Securities
or sale on a delayed or continuous basis under Rule 415, and to keep such
registration effective until all of such Holder's Registrable Securities
registered thereunder are sold. All expenses incurred in connection with a
registration requested pursuant
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<PAGE> 29
to this paragraph 6.3 and the reasonable fees and expenses of independent
counsel for the Holders shall be borne by the Company. The Company may postpone
the filing of any registration statement required hereunder for a reasonable
period of time, not to exceed 90 days, if the Company has been advised by legal
counsel, which counsel shall be acceptable to the Holders of Registrable
Securities, that such filing would require the disclosure of a material
transaction or other factor and the Company determines reasonably and in good
faith that such disclosure would have a material adverse effect on the Company.
The Company shall not be required to cause a registration statement requested
pursuant to this paragraph 6.3 to become effective prior to 90 days following
the effective date of a registration statement initiated by the Company, if the
request for registration has been received by the Company subsequent to the
giving of written notice by the Company, made in good faith, to the Holders of
Registrable Securities to the effect that the Company is commencing to prepare a
Company-initiated registration statement (other than a registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the Commission under the Securities Act is
applicable); provided, however, that the Company shall use its best efforts to
achieve such effectiveness promptly following such 90-day period if the request
pursuant to this paragraph 6.3 has been made prior to the expiration of such
90-day period. If so requested by any Holder in connection with a registration
under this paragraph, the Company shall take such steps as are required to
register such Holder's Registrable Securities for sale on a delayed or
continuous basis under Rule 415, and also take such steps as are required to
keep any registration effective until all of such Holder's Registrable
Securities registered thereunder are sold.
6.4 Registrable Securities. For the purposes of this Section 6, the
term Registrable Securities shall mean any Conversion Shares and any Common
Stock issued or issuable with respect to the Conversion Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
6.5 Market Stand-Off Agreement. Each Holder agrees, if requested by
the Company and an underwriter of Common Stock of the Company, not to sell or
otherwise transfer or dispose of stock held by it during the 90-day period
following the effective date of a registration statement of the Company filed
under the Securities Act, except for the sale of stock registered pursuant to
such registration statement, provided that:
(a) Such agreement only applies to the first such registration
statement of the Company including securities to be sold on its behalf to the
public in an underwritten offering; and
(b) All other principal shareholders, officers and directors of
the Company enter into similar agreements.
Such agreement shall be in writing in a form satisfactory to the
Holder, the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of the 90-day period.
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6.6 Further Obligations of the Company. Whenever under the preceding
paragraphs of this Section 6 the Company is required hereunder to register any
Registrable Securities, it agrees that it shall also do the following:
(a) Use its best efforts to diligently prepare and file with the
Commission a registration statement and such amendments and supplements to said
registration statement and the prospectus used in connection therewith as may be
necessary to keep said registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale of securities covered
by said registration statement for the period necessary to complete the proposed
public offering;
(b) Furnish to each selling Holder such copies of each preliminary
and final prospectus and such other documents as such Holder may reasonably
request to facilitate the public offering of his Registrable Securities;
(c) Enter into any reasonable underwriting agreement required by
the proposed underwriter for the selling Holders, if any;
(d) Use its best efforts to register or qualify the securities
covered by said registration statement under the securities or blue-sky laws of
such jurisdictions as any selling Holder may reasonably request, provided that
the Company shall not be required to register or qualify the securities in any
jurisdictions which require it to qualify to do business or subject itself to
general service of process therein;
(e) Immediately notify each selling Holder, at any time when a
prospectus relating to his Registrable Securities is required to be delivered
under the Securities Act, of the happening of any event as a result of which
such prospectus contains an untrue statement of a material fact or omits any
material fact necessary to make the statements therein not misleading, and, at
the request of any such selling Holder, prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(f) Cause all such Registrable Securities to be listed on or
included in each securities exchange or quotation system on which similar
securities issued by the Company are then listed.
(g) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders, in each case as soon as practicable, but not later than 30
days after the close of the period covered thereby an earnings statement of the
Company which will satisfy the provisions of Section 11(a) of the Securities
Act; and
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(h) Obtain and furnish to each selling Holder, immediately prior
to the effectiveness of the registration statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable Securities
sold pursuant thereto), a cold comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request.
6.7 Indemnification; Contribution.
(a) Incident to any registration statement referred to in this
Section 6, and subject to applicable law, the Company will indemnify and hold
harmless each underwriter, each Holder of Registrable Securities (including its
respective partners, directors, officers, employees and agents) so registered,
and each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act of 1934 and the rules and
regulations promulgated thereunder (the "Exchange Act"), from and against any
and all losses, claims, damages, expenses and liabilities, joint or several
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses claims damages or
liabilities arise out of or are based on (i) any untrue statement or alleged
true statement of a material fact contained in such registration statement
(including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or blue sky
laws or any rule or regulation thereunder in connection with such registration,
provided that the Company will not be liable to the extent that such loss,
claim, damage, expense or liability arises from and is based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information furnished in writing to the Company by
such underwriter, Holder or controlling person expressly for use in such
registration statement. With respect to such untrue statement or omission or
alleged untrue statement or omission in the information furnished in writing to
the Company by such Holder expressly for use in such registration statement,
such Holder will indemnify and hold harmless each underwriter, the Company
(including its directors, officers, employees and agents), each other Holder of
Registrable Securities (including its respective partners directors, officers,
employees and agents) so registered, and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, expenses and
liabilities, joint or several, to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise to the same extent provided in the
immediately preceding sentence. In no event, however, shall the liability of a
Holder for indemnification under this subparagraph 6.7(a) exceed the proceeds
received by such Holder from its sale of Registrable Securities under such
registration statement.
- 26 -
<PAGE> 32
(b) If the indemnification provided for in subparagraph 6.7(a)
above for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims, damages,
expenses or liabilities referred to therein, then each indemnifying party under
this paragraph 6.7, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the other selling Holders and the underwriters from the offering of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the other selling Holders and the underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
selling Holders and the underwriters shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and the selling Holders and the underwriting
discount received by the underwriters, in each case as set forth in the table on
the cover page of the applicable prospectus, bear to the aggregate public
offering price of the Registrable Securities. The relative fault of the Company,
the selling Holders and the underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the selling Holders or the underwriters and
the parties relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Holders, and the
underwriters agree that it would not be just and equitable if contribution
pursuant to this subparagraph 6.7(b) were determined by pro rata or per capita
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
In no event, however, shall a Holder be required to contribute any amount under
this subparagraph 6.7(b) in excess of the proceeds received by such Holder from
its sale of Registrable Securities under such registration statement. No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(c) The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in this paragraph 6.7
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. The
indemnification and contribution provided for in this paragraph 6.7 will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified parties or any officer, director, employee, agent or controlling
person of the indemnified parties.
6.8 Rules 144 and 144A Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Registrable Securities to the public without registration the
Company agrees to: (i) register its Common Stock
- 27 -
<PAGE> 33
under the Exchange Act concurrently with, or immediately following the effective
date of the first registration statement under the Securities Act filed by the
Company for an offering of its securities to the public and at all times from
and after the 90th day thereafter, make and keep public information available as
those terms are understood and defined in Rule 144 under the Securities Act (and
any successor rule to Rule 144); (ii) file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements; (iii) so long as a holder owns at least 200,000
shares of Registrable Securities, furnish to the holder as promptly as possible
upon its request a written statement by the Company confirming its compliance
with the reporting requirements of Rule 144 (at any time from and after 90 days
following the effective date of the first registration statement filed by the
Company for an offering of its securities to the public), and of the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly report of
the Company, and any other reports and documents so filed as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such securities without registration;
and (iv) comply, in connection with any resales by the Investors, pursuant to
Rule 144A, with the informational requirements of Rule 144A(d)(4) (and any
successor rule to Rule 144A(d)(4)).
6.9 Transfer of Registration Rights. The registration rights of the
Holders under this Section 6 may be transferred to any transferee of 30,000
shares (adjusted appropriately for stock splits, stock dividends and the like)
of Registrable Securities or to any partner or shareholder of any Investor
regardless of the number of shares held by such transferee; provided, however,
that the registration rights may not be transferred to any transferee reasonably
deemed by a majority of the Board of Directors to be a competitor of the
Company. Each such transferee shall be deemed to be a Holder for purposes of
this Section 6.
SECTION 7. GENERAL
7.1 Amendments, Waivers and Consents. For the purposes of this
Agreement and all agreements, documents and instruments executed pursuant
hereto, except as otherwise specifically set forth herein or therein, no course
of dealing between the Company and any Investor and no delay on the part of any
party exercising any rights hereunder or thereunder shall operate as a waiver of
the rights hereof and thereof. No covenant or other provision hereof or thereof
may be waived otherwise than by a written instrument signed by the party so
waiving such covenant or other provision; provided, however, that except as
otherwise provided herein or therein, changes in or additions to, and any
consents required by, this Agreement may be made, and compliance with any term,
covenant, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) by a consent or consents in writing signed by the holders of a
majority of the Preferred Shares and (in the case of any such change or
addition) the Company. Any waivers or changes or additions to Sections 2 and 3
shall only require the consent of the Investors holding a majority of the shares
of Series C Preferred Stock and the Company. Any amendment or waiver effected in
accordance
- 28 -
<PAGE> 34
with this paragraph 7.1 shall be binding upon each holder of Preferred Shares
purchased under this Agreement at the time outstanding, each future holder of
all such securities and the Company.
7.2 Survival of Covenants; Assignability of Rights. All covenants,
agreements, representations and warranties of the Company made herein and to be
performed prior to or at the Closing and in the certificates, lists, exhibits,
schedules or other written information delivered or furnished by or on behalf of
the Company to any Investor in connection herewith shall be deemed material and
to have been relied upon by such Investor, and, except as otherwise provided in
this Agreement, shall survive the delivery of the Preferred Shares and shall
bind the Company's successors and assigns, whether so expressed or not, and,
except as otherwise provided in this Agreement, all such covenants, agreements,
representations and warranties shall inure to the benefit of the Investors'
successors and assigns and to transferees of the Preferred Shares, whether so
expressed or not; provided, however, that the rights which inure to the benefit
of Aspect under this Agreement may not be assigned to any transferee reasonably
deemed by a majority of the Board of Directors to be a competitor of the
Company. The representations and warranties made by the Investors in Section 5
of this Agreement shall survive the delivery of the Preferred Shares and shall
bind the Investors' successors and assigns and shall inure to the benefit of the
Company's successors and assigns.
7.3 Governing Law. This Agreement shall be deemed to be a contract made
under, and shall be construed in accordance with, the laws of the Commonwealth
of Massachusetts.
7.4 Section Headings. The descriptive headings in this Agreement have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provision thereof or hereof.
7.5 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
7.6 Notices and Demands. Any notice or demand which, by any provision
of this Agreement or any agreement, document or instrument executed pursuant
hereto or thereto, except as otherwise provided therein, is required or provided
to be given shall be deemed to have been sufficiently given or served and
received for all purposes when delivered or 5 days after being sent by certified
or registered mail, postage and charges prepaid, return receipt requested, or by
express delivery providing receipt of delivery as of the date of receipt, to the
following addresses: if to the Company, 25 Porter Road, Littleton, Massachusetts
01469, Attention: President, or at any other address designated by the Company
to each of the Investors in writing; if to an Investor, at its mailing address
as shown on Exhibit A hereto, or at any other address designated by such
Investor to the Company and the other Investors in writing; and if to an
assignee of an Investor, at its address as designated to the Company and the
other Investors in writing.
- 29 -
<PAGE> 35
7.7 Severability. Whenever possible each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law but if any provision of this Agreement shall be deemed prohibited
or invalid under such applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity and such prohibition or invalidity
shall not invalidate the remainder of such provision or the other provisions of
this Agreement.
7.8 Expenses. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation execution, delivery and performance of
this Agreement and the agreements, documents and instruments contemplated hereby
or executed pursuant hereto, and the Investors shall pay all costs and expenses
that they incur with respect to the negotiation execution, delivery and
performance of this Agreement and the agreements, documents and instruments
contemplated hereby or executed pursuant hereto, except that on the Closing
pursuant to this Agreement, the Company shall reimburse the Investors for up to
$10,000.00 in legal fees and expenses for the professional services of Ropes &
Gray, special counsel for the Investors, incurred in connection with the
negotiation, execution, delivery and performance of this Agreement and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto.
7.9 Integration. This Agreement including the exhibits documents and
instruments referred to herein or therein constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
7.10 Confidentiality. Each of the Investors agrees to keep confidential
(and to use reasonable efforts to cause its directors, officers, partners,
employees and agents to keep confidential) all information furnished to it by
the Company under this Agreement which the Company identifies as confidential or
proprietary, except for information which (a) is in the public domain, or enters
the public domain other than by such Investor's breach of this Agreement, (b)
was known to such Investor prior to its disclosure by the Company, (c) is
required to be disclosed by applicable laws or regulations or by order of any
governmental agency or authority having competent jurisdiction or (d) in the
case of the Investors, constitutes summary financial or descriptive business
information disclosed by an Investor which is an investment fund as part of its
regular reports to its partners, partner committees or other Investors.
7.11 Shares Owned by Affiliates. For the purpose of applying all
provisions of this Agreement which condition the receipt of information or
access to information upon ownership of a specified number of Conversion Shares,
the Conversion Shares owned by any affiliate of an Investor shall be deemed to
be owned by such Investor.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument as of the day and year first above written.
- 30 -
<PAGE> 36
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
--------------------------------
Name:
Title:
PURCHASERS SIGNING IN THEIR CAPACITY
AS BOTH PRIOR INVESTORS AND INVESTORS:
MATRIX PARTNERS III, L.P.
By: /s/ W. Michael Humphreys
---------------------------------
Name:
Title: General Partner
SIGMA PARTNERS II, L.P.
By: /s/ Gardner C. Hendrie
---------------------------------
Name:
Title: General Partner
SIGMA ASSOCIATES II, L.P.
By: /s/ Gardner C. Hendrie
--------------------------------
Name:
Title: General Partner
ATLAS VENTURE FUND II, L.P.
By: Atlas Venture Associates II, L.P.
By: /s/ Barry Fidelman
--------------------------------
Name:
Title: General Partner
- 31 -
<PAGE> 37
NEW ENTERPRISE ASSOCIATES VI,
LIMITED PARTNERSHIP
By: NEA Partners VI, Limited
Partnership
By: /s/ PETER F. BANNIN
-----------------------
Name:
Title: General Partner
/s/ ALEXANDER D'ARBELOFF
---------------------------
Alexander d'Arbeloff
/s/ STEVEN FINN
---------------------------
Steven Finn
/s/ ANTHONY J. MEDAGLIA, JR.
----------------------------
Anthony J. Medaglia, Jr.
PERSONS SIGNING IN THEIR
CAPACITY AS INVESTORS ONLY:
FIDELITY VENTURES LTD.
By: /s/ ROBERT KETTERSON
------------------------
- 32 -
<PAGE> 38
PERSONS SIGNING IN THEIR
CAPACITY AS PRIOR INVESTORS ONLY:
ASPECT TELECOMMUNICATIONS, INC.
By: /s/ EDWARD M. CLUSS, JR.
---------------------------
/s/ G. WAYNE ANDREWS
-------------------------------
G. Wayne Andrews
/s/ JOHN C. THIBAULT
-------------------------------
John C. Thibault
/s/ STEVEN WEBBER
-------------------------------
Steven Webber
- 33 -
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AGREEMENT, made as of the 9th day of August, 1995, by and among GEOTEL
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), those
persons listed on Schedule I hereto as Management Stockholders (each a
"Management Stockholder" and collectively the "Management Stockholders"), John
C. Thibault ("Thibault"), those persons listed on Schedule I hereto as Existing
Investors (each an "Existing Investor" and collectively the "Existing
Investors"), and those persons listed on Schedule I hereto as New Investors
(each a "New Investor" and collectively the "New Investors" and with the
Existing Investors, collectively, the "Investors"). The Management Stockholders,
Thibault and the Investors are collectively referred to herein as the
"Stockholders".
WHEREAS, the Management Stockholders and Thibault own shares of common
stock, $.01 par value per share, of the Company (the "Common Stock");
WHEREAS, the Existing Investors own an aggregate of 3,400,000 shares of
the Company's Series A Convertible Participating Preferred Stock, $.01 par value
per share (the "Series A Preferred Stock") and 2,604,286 shares of the Company's
Series B Convertible Participating Preferred Stock, $.01 par value per share
(the "Series B Preferred Stock");
WHEREAS, certain of the Management Stockholders and certain of the
Existing Investors have previously entered into a Stockholders Agreement dated
as of September 30, 1993, which agreement was amended and restated by the
execution of an Amended and Restated Stockholders Agreement dated as of July 29,
1994 (the "Prior Agreement");
WHEREAS, the New Investors have agreed to acquire an aggregate of
1,712,329 shares of the Company's Series C Convertible Participating Preferred
Stock, $.01 par value per share (the "Series C Preferred Stock"), pursuant to
the terms of a Stock Purchase Agreement dated as of the date hereof among the
Company, the Existing Investors and the New Investors (the "Purchase
Agreement"); and
WHEREAS, it is a condition to the obligations of the New Investors under
the Purchase Agreement that this Agreement be executed by the parties hereto in
order to amend and restate in its entirety the Prior Agreement, and the parties
are willing to execute this Agreement and to be bound by the provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to further the interests of the Company and
its present and future stockholders, the parties hereby agree with each other as
follows:
<PAGE> 2
1. Definition of Shares. As used in this Agreement, "Shares" shall
mean and include all shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Common Stock now owned or hereafter acquired
by the Stockholders.
2. Board of Directors
2.1 Size of Board of Directors. Each Stockholder agrees that it will,
at each meeting of the Company's stockholders held for the purpose of electing
the Board of Directors and at each other taking of action by the stockholders
for such purpose, vote all of its Shares to fix the size of the Company's Board
of Directors at not less than three (3) nor more than five (5) members to be
comprised as set forth in this Agreement.
2.2 Designation of Nominees. The Board of Directors following the
execution and delivery of this Agreement shall be comprised of five (5) members
as follows: (A) so long as 50% of the Shares held by Matrix Partners III, L.P.
("Matrix"), Sigma Partners II, L.P. ("Sigma"), Sigma Associates II, L.P. and
Atlas Venture Fund II, L.P. (collectively the "Original Investors") on the date
hereof remain outstanding, the Original Investors (acting by a majority in
interest) shall have the right to designate two nominees for election as
Directors; provided, that: (i) so long as Matrix shall hold in the aggregate at
least 50% of the Shares held by it on the date hereof, Matrix shall have the
right to designate one (1) nominee for election as a Director; and (ii) so long
as Sigma shall hold in the aggregate at least 50% of the Shares held by it on
the date hereof, Sigma shall have the right to designate one (1) nominee for
election as a Director; (B) so long as the Management Stockholders shall hold in
the aggregate at least 50% of the Shares held by them on the date hereof, the
Management Stockholders (acting by a majority in interest) shall have the right
to designate one (1) nominee for election as a Director; (C) the Chief Executive
Officer of the Company shall have the right to designate one (1) nominee for
election as a Director; and (D) Matrix, Sigma, Atlas Venture Fund II, L.P.
("Atlas"), New Enterprise Associates VI, Limited Partnership ("NEA") and
Fidelity Ventures Limited ("Fidelity") (acting by a majority in interest) shall
have the right to designate one (1) nominee for election as a Director, which
nominee shall not be an affiliate (as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934) of any Investor and shall
not be an employee of the Company. As of the date hereof, the respective
nominees of the Stockholders shall be as follows: Michael Humphreys (as the
nominee of Matrix), Gardner Hendrie (as the nominee of Sigma), G. Wayne Andrews
(as the nominee of the Management Stockholders), John Thibault (as nominee of
the Chief Executive Officer of the Company), and Alexander d'Arbeloff (as the
nominee of the Investors under clause (D) above). At least ten (10) days prior
to any meeting (or written action in lieu of a meeting) of stockholders of the
Company at or by which Directors are to be elected by the holders of Common
Stock, the Management Stockholders and each Investor entitled to designate one
or more Directors shall notify the others in writing of its nominee. In the
absence of any such notification, it shall be presumed that its then incumbent
representative (if any) has been redesignated.
- 2 -
<PAGE> 3
2.3 Election of Directors. At any and all meetings (including any
written action in lieu of a meeting) of stockholders of the Company at which
Directors are to be elected, each Stockholder shall vote all of its Shares to
elect, as Directors of the Company, the respective representatives designated in
the manner provided in Section 2.2.
2.4 Vacancies. In the event the representative of any Stockholder or
the Chief Executive Officer shall cease to serve as a Director of the Company
for any reason, the person or entity who initially designated such
representative as a nominee for election to the Board of Directors of the
Company shall have the right to designate a successor representative (provided
that the person or entity designating such representative, continues to hold the
requisite percentage of its Shares so as to entitle them or it to designate a
representative pursuant to Section 2.2). The Stockholders shall vote all of
their Shares and otherwise use their best efforts to ensure that the successor
representative of any Stockholder or the Chief Executive Officer, as the case
may be, is duly appointed or elected to the Board of Directors.
2.5 Observer Rights. In addition to any representatives of the
Investors who serve as Directors of the Company, one representative of each of
Atlas and Fidelity shall be entitled to attend and observe all meetings of the
Company's Board of Directors in a non-voting observer capacity and shall be
entitled to receive at least 14 days notice of all such meetings, whenever
possible, and to receive information furnished by the Company to its Directors
as such and copies of the minutes of all meetings, so long as Atlas or Fidelity,
as the case may be, shall hold at least 50% of the Shares held by it on the date
hereof. One representative of NEA shall be entitled to attend and observe all
meetings of the Company's Board of Directors in the manner provided in the
letter dated July 29, 1994 executed by the Company in favor of NEA.
Notwithstanding anything to the contrary contained in this Section 3 or the
letter with NEA, none of Atlas, Fidelity or NEA will be entitled to attend and
observe meetings of the Company's Board or to receive the information or minutes
furnished to the Directors in connection therewith if the Board determines that
a competitive conflict would exist by affording such Stockholder such rights, in
which event such rights will be limited so as to avoid the competitive conflict.
3. Term. This Agreement shall terminate (a) immediately prior to the
consummation of the first firm commitment underwritten public offering of Common
Stock pursuant to an effective registration statement on Form S-1 (or its then
equivalent) under the Securities Act of 1933, as amended, or (b) on the tenth
anniversary of the date of this Agreement, whichever occurs first.
4. Specific Enforcement. Each Stockholder expressly agrees that the
other Stockholders and the Company will be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by a Stockholder, the other
Stockholders and the Company, shall, in addition to all other remedies, each be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions hereof.
- 3 -
<PAGE> 4
5. Legend. Each certificate evidencing any of the Shares shall bear
a legend substantially as follows:
"The shares represented by this certificate are subject to the
terms and conditions of a certain Stockholders Agreement dated
as of September 30, 1993, as amended and restated on July 29,
1994 and on August 9, 1995, a copy of which the Company will
furnish to the holder of this certificate upon request and
without charge."
6. Notices. Notices given hereunder shall be deemed to have been duly
given on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on Schedule I hereto or such other
address as the addressee may subsequently notify the other parties of in
writing.
7. Entire Agreement and Amendments. This Agreement amends and
restates in its entirety the Prior Agreement and supersedes the Prior Agreement.
This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and neither this Agreement nor any provision hereof
may be waived, modified, amended or terminated except by a written agreement
signed by the parties hereto; provided, however, that Investors owning at least
a majority of the Shares owned by all Investors may effect any such waiver,
modification, amendment or termination on behalf of all the Investors and,
provided, further, that Management Stockholders owning at least a majority of
the Shares owned by all Management Stockholders may effect any such waiver,
modification, amendment or termination on behalf of all the Management
Stockholders. This Agreement is the sole agreement to which the Management
Stockholders are parties regarding the subject matter hereof and supersedes any
prior agreements between the Management Stockholders and the Company as to such
subject matter.
8. Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of Delaware and shall bind and inure to the
benefit of the heirs, personal representatives, executors, administrators,
successors and assigns of the parties. Without limiting the generality of the
foregoing, all covenants and agreements benefiting the Investors shall bind and
inure to the benefit of any and all subsequent holders from time to time of the
Shares, except to the extent otherwise provided in this Agreement.
9. Waivers. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
10. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
- 4 -
<PAGE> 5
11. Captions. Captions are for convenience only and are not deemed to
be part of this Agreement.
12. Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * * * * * * * * * * * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
------------------------------
Title: President
[Corporate Seal]
Attest:
_________________ ____________________
Secretary John C. Thibault
MANAGEMENT STOCKHOLDERS:
/s/ G. Wayne Andrews
---------------------------------
G. Wayne Andrews
/s/ Steven Webber
---------------------------------
Steven Webber
PERSONS SIGNING IN THEIR CAPACITY AS
BOTH EXISTING INVESTORS AND NEW
INVESTORS:
- 5 -
<PAGE> 6
NEW ENTERPRISE ASSOCIATES VI,
LIMITED PARTNERSHIP
By: NEA Partners VI,
Limited Partnership
By: /s/ Peter F. Bannin
-----------------------
General Partner
MATRIX PARTNERS III, L.P.
By: /s/ W. Michael Humphreys
------------------------
General Partner
SIGMA PARTNERS II, L.P.
By: /s/ Gardner C. Hendrie
------------------------
General Partner
SIGMA ASSOCIATES II, L.P.
By: /s/ Gardner C. Hendrie
------------------------
General Partner
ATLAS VENTURE FUND II, L.P.
By: Atlas Venture Associates II, L.P.
By: /s/ Barry Fidelman
-------------------------
General Partner
- 6 -
<PAGE> 7
/s/ Steven Finn
------------------------------------
Steven Finn
/s/ Anthony J. Medaglia, Jr.
------------------------------------
Anthony J. Medaglia, Jr.
/s/ Alexander d'Arbeloff
------------------------------------
Alexander d'Arbeloff
PERSONS SIGNING IN THEIR CAPACITY AS
NEW INVESTORS ONLY:
FIDELITY VENTURES LTD.
By: /s/ Robert Ketterson
-------------------------------
Robert Ketterson
PERSONS SIGNING IN THEIR CAPACITY
AS EXISTING INVESTORS ONLY:
ASPECT TELECOMMUNICATIONS, INC.
By: /s/ Edward M. Cluss
-------------------------------
Edward M. Cluss
/s/ G. Wayne Andrews
----------------------------------
G. Wayne Andrews
/s/ John C. Thibault
----------------------------------
John C. Thibault
/s/ Steven Webber
----------------------------------
Steven Webber
- 7 -
<PAGE> 8
SCHEDULE I
I. COMPANY
Geotel Communications Corporation
25 Porter Road
Littleton, MA 01469
Attn: President
II. MANAGEMENT STOCKHOLDERS
G. Wayne Andrews
21 Oak Hill Drive
Amherst, NH 03031
Steven Webber
48 Hemlock Park Drive
Groton, MA 01450
III. JOHN THIBAULT
John Thibault
4 Ashley Road
Southborough, MA 01772
IV. EXISTING INVESTORS
Matrix Partners III, L.P.
c/o Matrix III Management Company
One International Place, Suite 3250
Boston, MA 02110
Attn: Michael Humphreys
Sigma Partners II, L.P.
300 Commercial Street, No. 705
Boston, MA 02109
Attn: Gardner Hendrie
Atlas Venture Fund II, L.P.
222 Berkeley Street
Boston, MA 02116
Attn: Barry Fidelman
- 8 -
<PAGE> 9
Aspect Telecommunications, Inc.
1730 Fox Drive
San Jose, CA 95131
Attn: Edward M. Cluss, Jr.
Steven Finn
2 Barry Drive
Framingham, MA 01701
Anthony J. Medaglia, Jr.
15 Ruane Circle
West Newton, MA 02165
V. NEW INVESTORS
Fidelity Ventures Limited
82 Devonshire Street, R25D
Boston, MA 02109-3614
Attn: Robert Ketterson
New Enterprise Associates VI, Limited Partnership
1119 St. Paul Street
Baltimore, MD 21202
Attn: Nora Zeitz
Matrix Partners III, L.P.
c/o Matrix III Management Company
One International Place, Suite 3250
Boston, MA 02110
Attn: Michael Humphreys
Sigma Partners II, L.P.
300 Commercial Street, No. 705
Boston, MA 02109
Attn: Gardner Hendrie
Atlas Venture Fund II, L.P.
222 Berkeley Street
Boston, MA 02116
Attn: Barry Fidelman
Steven Finn
2 Barry Drive
- 9 -
<PAGE> 10
Framingham, MA 01701
Anthony J. Medaglia, Jr.
15 Ruane Circle
West Newton, MA 02165
Alexander d'Arbeloff
20 Dudley Street
Brookline, MA 02146
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Exhibit 10.3
AMENDED AND RESTATED
FOUNDERS REGISTRATION RIGHTS AGREEMENT
AGREEMENT, made as of the 9th day of August, 1995, by and among GEOTEL
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), and those
persons listed on Schedule I as Founders (the "Founders").
WHEREAS, the Founders own shares of the Company's Common Stock, $.01 par
value per share (the "Common Stock"); and
WHEREAS, the Company and certain of the Founders have previously entered
into a Founders Registration Rights Agreement dated as of September 30, 1993 and
an Amended and Restated Founders Registration Rights Agreement dated as of July
29, 1995 (collectively, the "Prior Agreement"); and
WHEREAS, the Company and the Founders wish to enter into this Agreement
in order to amend and restate in its entirety the Prior Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act
(as defined below).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Investors" shall mean, collectively, the purchasers of the
Company's Series A Preferred Stock pursuant to that certain Stock
Purchase Agreement dated as of September 30, 1993, the purchasers of the
Company's Series B Preferred Stock pursuant to that certain Stock
Purchase Agreement dated as of July 29, 1994 and the purchasers of the
Company's Series C Preferred Stock pursuant to that certain Stock
Purchase Agreement dated as of August 9, 1995.
"Permitted Transfer" shall mean the sale, assignment or other
transfer of any shares of Common Stock held by a Founder (a) by way of
gift to any member of his family or to any trust for the benefit of any
such family member or the Founder, or (b) by will or the laws of descent
and distribution. As used herein, the word "family" shall include any
spouse, lineal ancestor or descendant, brother or sister.
<PAGE> 2
"Permitted Transferee" shall mean any person or entity who shall
have acquired and who shall hold shares of Common Stock pursuant to a
Permitted Transfer.
"Preferred Stock" shall mean, collectively, the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred
Stock.
"Registration Expenses" shall mean the expenses so described in
Section 8.
"Registrable Shares" shall mean all shares of Common Stock held
by a Founder from time to time (whenever and however acquired),
excluding shares of Common Stock which have been (a) registered under
the Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration statement
covering them, (b) publicly sold pursuant to Rule 144 under the
Securities Act, or (c) sold, assigned or otherwise transferred to a
person who is not a Permitted Transferee.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Selling Expenses" shall mean the expenses so described in
Section 8.
"Series A Preferred Stock" shall mean the Series A Convertible
Participating Preferred Stock, $.01 par value per share, of the Company.
"Series B Preferred Stock" shall mean the Series B Convertible
Participating Preferred Stock, $.01 par value per share, of the Company.
"Series C Preferred Stock" shall mean the Series C Convertible
Participating Preferred Stock, $.01 par value per share, of the Company.
2. Incidental Registration. If the Company at any time proposes to
register any of its securities under the Securities Act for sale to the public,
whether for its own account or for the account of other security holders or both
(except with respect to registration statements on Form S-4, Form S-8, their
respective successor forms, or another form not available for registering the
Registrable Shares for sale to the public), each such time it will give written
notice to all holders of outstanding Registrable Shares of its intention so to
do. Upon the written request of any such holder, received by the Company within
20 days after the giving of any such notice by the Company, to register any of
its Registrable Shares (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Registrable Shares as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company all to the extent requisite to permit the sale or
other disposition by the holder (in accordance
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with its written request) of such Registrable Shares so registered. In the event
that any registration pursuant to this Section 2 shall be, in whole or in part,
an underwritten public offering of Common Stock, the number of shares of Common
Stock to be included in such an underwriting by the Founders may be reduced (pro
rata among the Founders based upon the number of shares of Common Stock owned by
the Founders) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein.
In addition, if the underwriter advises the Company that marketing
considerations require a limitation on the number of shares offered pursuant to
any registration statement, then the Company shall include in such registration
statement the maximum amount of such securities (including Registrable Shares)
(the "Maximum Amount") that the underwriter considers saleable in accordance
with the following order of priority: (x) first the securities the Company
proposes to register for its own account; (y) second, provided that the
aggregate number of securities to be included pursuant to clause (x) is less
than the Maximum Amount, the securities to be included in such registration
statement on behalf of the Investors until the aggregate net proceeds received
or to be received by the Investors from the conversion of their Preferred Stock
or sale to the public of any Common Stock (including proceeds to be received in
connection with the requested registration at issue) equals the sum of (i)
$3,300,000 plus a return thereon from the original issue date of the Series A
Preferred Stock through the date of such registration of 20% per annum,
compounded annually, (ii) $4,557,600 plus a return thereon from the original
issue date of the Series B Preferred Stock through the date of such registration
of 20% per annum, compounded annually, and (iii) $4,000,000 plus a return
thereon from the original issue date of the Series C Preferred Stock through the
date of such registration of 20% per annum, compounded anually, and (y) third,
provided that the aggregate number of securities to be included pursuant to
clauses (x) and (y) is less than the Maximum Amount, the remaining securities
requested to be included (including Registrable Shares), on a pro rata basis
among the holders of Registrable Shares and other securities according to the
number of Registrable Shares and other securities each such holder requested to
be included in such registration (excluding for the purposes of such allocation,
those securities already included in the registration pursuant to clause (y)).
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 2 without thereby incurring
any liability to the holders of Registrable Shares (other than as provided in
Section 5).
3. Registration Procedures. If and whenever the Company is required
by the provisions of Section 2 to use its best efforts to effect the
registration of any Registrable Shares under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and
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remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Shares
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Registrable Shares and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Shares covered by such registration statement;
(d) use its best efforts to register or qualify the Registrable
Shares covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Registrable Shares or, in the case
of an underwritten public offering, the managing underwriter reasonably shall
request; provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
(e) use its best efforts to list the Registrable Shares covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed; and
(f) immediately notify each seller of Registrable Shares and
each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
For purposes of Section 3(a) and 3(b), the period of distribution of
Registrable Shares in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Shares
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Shares covered thereby and 90 days after the effective
date thereof.
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<PAGE> 5
In connection with each registration hereunder, the sellers of
Registrable Shares will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Section 2 covering an
underwritten public offering, the Company and each selling holder of Registrable
Shares agree to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
5. Expenses. All expenses incurred by the Company in complying with
Section 2, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, costs of insurance and fees and disbursements of
one counsel for the sellers of Registrable Shares, but excluding any Selling
Expenses, are called "Registration Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Shares are called
"Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Section 3. All Selling Expenses in connection with
each registration statement under Section 2 shall be borne by the participating
sellers in proportion to the number of Registrable Shares sold by each, or by
such participating sellers other than the Company (except to the extent the
Company shall be a seller) as they may agree.
6. Indemnification and Contribution. (a) In the event of a
registration of any of the Registrable Shares under the Securities Act pursuant
to Section 2, the Company will indemnify and hold harmless each seller of
Registrable Shares thereunder, each underwriter of such Registrable Shares
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (x) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Registrable Shares were registered under the
Securities Act pursuant to Section 2, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or (y)
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (z) arise out or are based upon any
violation or alleged violation by the Company of the Securities Act or the
Exchange Act or any state securities laws or any
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<PAGE> 6
regulation promulgated under any of them, and will reimburse each such seller,
each such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such seller, any such
underwriter or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any Registrable Shares
under the Securities Act pursuant to Section 2, each seller of such Registrable
Shares thereunder, severally and not jointly, will indemnify and hold harmless
the Company, each person if any, who controls the Company within the meaning of
the Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Shares were
registered under the Securities Act pursuant to Section 2, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus; and provided,
further, however, that the liability of each seller hereunder shall be limited
to the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold by
such seller under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the
proceeds received by such seller from the sale of Registrable Shares covered by
such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any
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<PAGE> 7
liability which it may have to such indemnified party other than under this
Section 6 and shall only relieve it from any liability which it may have to such
indemnified party under this Section 6 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 6 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 6; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
so that such holder is responsible for the portion represented by the percentage
that the public offering price of its Registrable Shares offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no such holder
will be required to contribute any amount in excess of the public offering price
of all Registrable Shares offered by it pursuant to such registration statement;
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
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<PAGE> 8
7. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Shares to the public without registration, at all
times after 90 days after any registration statement covering a public offering
of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Registrable Shares forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Registrable Shares without
registration.
8. Representations and Warranties of the Company. The Company
represents and warrants to the Founders as follows:
(a) The execution, delivery and performance of this Agreement by
the Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
9. Miscellaneous.
(a) All covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto (including without
limitation transferees of any Registrable Shares), whether so expressed or not;
provided, however, that registration rights conferred
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<PAGE> 9
herein on the Founders shall only inure to the benefit of the Founders and their
respective Permitted Transferees.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or telecopied or sent by other
facsimile method addressed as follows:
if to the Company or any other party hereto, at the address of
such party set forth on Schedule I hereto or the most recent address as
is shown on the stock records of the Company;
if to any subsequent holder of Registrable Shares, to it at such
address as may have been furnished to the Company in writing by such
holder; or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of a holder
of Registrable Shares) or to the holders of Registrable Shares (in the
case of the Company) in accordance with the provisions of this
paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
(d) This Agreement amends and restates in its entirety the Prior
Agreement and supersedes the Prior Agreement. This Agreement may not be amended
or modified, and no provision hereof may be waived, without the written consent
of the Company and the holders of at least a majority of the outstanding
Registrable Shares. The Founders and the Company acknowledge that the Investors
are third party beneficiaries to the provisions set forth in the second
paragraph of Section 2 and, therefore, no amendment or waiver of the provisions
of such paragraph shall be valid without the consent of those Investors who hold
a majority of the shares of Preferred Stock (together with the shares of Common
Stock issued upon conversion thereof).
(e) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of
Registrable Shares who is a party to this Agreement shall agree not to sell
publicly any Registrable Shares or any other shares of Common Stock (other than
Registrable Shares or other shares of Common Stock being registered in such
offering), without the consent of such underwriters, for a period of not more
than 90 days following the effective date of the registration statement relating
to such offering; provided, however, that all persons entitled to registration
rights with respect to shares of Common Stock who are not parties to this
Agreement, all other persons selling shares of Common Stock in such offering and
all executive officers and directors of the Company shall
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<PAGE> 10
also have agreed not to sell publicly their Common Stock under the circumstances
and pursuant to the terms set forth in this Section 9(f).
(g) Notwithstanding the provisions of Section 3(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 12-month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Company, should not be disclosed.
(h) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
* * * * * *
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
COMPANY:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN C. THIBAULT
_____________________________
Name: John C. Thibault
Title:
FOUNDERS:
/s/ G. WAYNE ANDREWS
_____________________
G. Wayne Andrews
/s/ JOHN C. THIBAULT
_____________________
John C. Thibault
/s/ STEVEN WEBBER
_____________________
Steven Webber
Schedule I
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Founders
Name and Address
- ----------------
G. Wayne Andrews
21 Oak Hill Drive
Amherst, NH 03031
John R. Hart
1042 Farmington Avenue
West Hartford, CT 06107
John C. Thibault
4 Ashley Road
Southborough, MA 01772
Steven Webber
48 Hemlock Drive
Groton, MA 01450
Company
Geotel Communications Corporation
25 Porter Road
Littleton, MA 01469
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<PAGE> 1
EXHIBIT 10.4
DEVELOPMENT/LICENSE AGREEMENT
-----------------------------
Agreement made this 4th day of March 1994 between GeoTel Communications
Corporation, a corporation with its principal place of business at 25 Porter
Road, Littleton, Massachusetts 01460 ("Licensee") and DANAR Corporation, a
corporation with its principal place of business at 1608 NE 179th Street,
Seattle, Washington 98155 ("Licensor").
In consideration of the mutual covenants contained herein, the parties
agree as follows:
1. LICENSE GRANT. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee a perpetual, worldwide,
non-exclusive license to use the software program(s) (the "Program") identified
on Exhibit A attached hereto. Licensee will receive all machine readable source
code for the Program and may modify the Program or combine it with other
software, provided that the portions of such derivative software incorporating
the Program shall remain subject to the provisions hereof. Usage of the Program
by Licensee will be limited to any application developed by licensee that
incorporates the Program in a value added manner and where the Program does not
constitute the predominant/primary market focus of the application. Licensee has
the right to enter into licensing and/or sub-licensing agreements with
customers, vars, distributors and strategic partners for Licensee's developed
applications that contain the Program, without restriction so long as usage of
the Program by such entities is as defined herein and the Programs source code
is not disclosed.
2. MATERIALS FURNISHED. Licensor shall furnish Licensee with one (1)
copy of the machine readable source code for the Program and one (1) copy of
Licensor's standard user documentation for the Program (the "Documentation").
Licensee shall have the right to duplicate, in whole or in part, the Program or
the Documentation in either its original form or incorporated within Licensee's
products or documentation. Licensor shall also furnish Licensee with source code
for Licensor's entire portfolio of SS7 software for possible future use by
Licensee under the terms herein.
3. CONFIDENTIALITY. Licensee acknowledges that the Program and the
Documentation (collectively the "Licensed Material") constitute valuable and
proprietary information of Licensor and that the entire right, title and
interest in and to the Licensed Material, together with all copyright and other
rights related thereto, shall at all time reside with Licensor. Licensee may
disclose the functionality and architecture of the Licensed Materials in
conjunction with its normal business operations. Licensee will not disclose
source code. Release of source code by licensee to any third party either
intentionally or otherwise constitutes a preach of this agreement Licensor may,
upon such violation terminate this agreement without recourse if violation is
not remedied within 30 days. Licensee has the right to remove or revise any
legends or notices affixed to the Licensed Material.
4. DEVELOPMENT SCOPE AND PAYMENT SCHEDULE. Licensor agrees to commence
a best efforts development program that delivers the following by May 1, 1994:
a.) a modified version of the Program consisting of ANSI MTP, ANSI SCCP
and CCITT TCAP as required by the AT&T document dated May 1, 1993 titled AT&T
Intelligent Call Processing Service - SS7 Network Interface Specifications for a
two-link combined linkset implementation, including co-operative interface
design with Licensee's engineers for the interface between the SS7 stack and the
TCP/IP stack for Licensee's application.
b.) Provide one week of on-site testing and integration support for
AT&T qualification and certification testing of the Licensee's application at a
to-be-defined AT&T location.
c.) Provide complete documentation for the modified Program.
d.) Provide training at DANAR Corporation on system design and
capabilities for a period not to exceed two (2) weeks. (training can be on
Licensee's site if agreement is reached on expenses.)
<PAGE> 2
In consideration for the deliverables defined above, the Licensee agrees to the
following payment schedule:
*
5. ROYALTY FEE AND PAYMENT. *
This one time royalty represents the entire amount paid for the perpetual
License described in Paragraph 1. Licensee has no limitations to the number of
copies it may distribute. These payments will not be made if deliverables
described in Paragraph 4 are not completely accepted by 12/31/94.
6. INFRINGEMENT. Licensor shall defend Licensee against a claim that
the modified Program, when used within the scope of the License granted herein,
infringes a U.S. patent, copyright or right to license. Licensor shall pay all
costs and damages finally awarded as a result of such a claim, provided that (a)
Licensee immediately notifies Licensor of such claim, (b) Licensor has sole
control on the defense and settlement thereof, and (c) such claim does not arise
as a result of Licensee's modification of the Program or use of the Program in
connection with other software. If such a claim occurs or in Licensor's opinion
is likely to occur, Licensor will obtain for Licensee the right to continue to
use the Program or modify the Program so that it becomes non-infringing.
Licensor warrants that it has the right to enter into this agreement and can
deliver clear title to grant the License rights described herein.
7. WARRANTY AND LIMITATION OF WARRANTY AND REMEDY. Licensor warrants
that for a period of six (6) months starting on January 1, 1995 for the modified
Program and for a period of three (3) years from date of receipt by Licensee for
each CCS7 Attachment card (the "Hardware") shall comply with Licensor's
specifications as defined in Appendix B. Upon receipt of notice from Licensee
during such period that the Program fails to comply with such specifications,
Licensor shall make best efforts to provide programming and related services to
correct such errors and defects in a timely manner. Upon receipt of notice from
Licensee during such period that the Hardware fails to comply with such
specifications, Licensor shall repair or replace the defective component within
45 days of receipt of such failed component. Any and all shipment costs will be
paid by Licensee.
8. LIMITATION OF LIABILITY. LICENSOR'S LIABILITY FOR DAMAGES HEREUNDER,
WHETHER FOR BREACH OF WARRANTY OR CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
* Portions have been omitted for confidential treatment.
2
<PAGE> 3
OTHERWISE, BUT EXCLUDING INFRINGEMENT, SHALL IN NO EVENT EXCEED THE AMOUNT OF
THE LICENSE FEE PAID BY LICENSEE. IN NO EVENT WILL LICENSOR HAVE ANY LIABILITY
FOR SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES OR FOR LOST
PROFITS OR SAVINGS, EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY
THEREOF.
9. MAINTENANCE. *
Licensee will provide a four (4) quarter non-binding forecast to Licensor on a
quarterly basis. Licensee will place non-cancelable purchase orders on a
quarterly calendar basis. Lead time will be 90 days. Licensor will deliver to
Licensee a version of the Hardware and Program that conforms with the IBM AT bus
specification which requires no modifications to the Licensee's software
application external to the supplied SS7 program no latter than June 1, 1995.
Pricing is FOB Seattle, WA exclusive of taxes, insurance, shipping and duties.
11. MANUFACTURING RIGHTS. Licensee will be granted full and complete
manufacturing rights and License to the Hardware upon the following occurrence:
a.) A change of the majority ownership of Licensor occurs. In the event
Licensee evokes this clause upon change of ownership, Licensee will pay to
Licensor a royalty of $200.00 per card for the first quantity of 500 Hardware
cards the Licensee produces. Licensee retains the right to continue product
procurement of Hardware product through new majority ownership upon change of
ownership
b.) Licensor files or has filed against it court action for the purpose
of bankruptcy or liquidation.
c. Licensor fails to meet delivery of Hardware against an accepted
purchase order within the 90 day lead time for delivery.
All of Licensor's related documentation, bill of materials, vendor listings,
mechanical drawings and schematics for the Hardware will be on file at Licensees
premises. These documents will be delivered to Licensee no latter than 12/31/94.
Release of these documents by licensee to any third party either intentionally
or otherwise constitutes a preach of this agreement. Licensor may, upon such
violation terminate this agreement without recourse if violation is not remedied
within 30 days.
12. MISCELLANEOUS PROVISIONS.
a.) Licensee shall have the right to assign the rights granted
hereunder if a change in the majority ownership in Licensee occurs or upon the
sale of all or substantially all of the assets of Licensee.
* Portions have been omitted for confidential treatment.
3
<PAGE> 4
b.) Licensor shall have the right to assign the rights granted
hereunder if a change in the majority ownership in Licensor occurs or upon the
sale of all or substantially all of the assets of Licensor. Licensee retains
the rights defined in section 11(a).
c.) Licensee shall have until April 1, 1994 to evaluate the
Product. If Licensee determines the Product does not perform to specification or
meet the requirements of Licensee's application then this entire agreement will
be void. Any payments made to Licensor will be forfeited by Licensee.
d.) All notices given hereunder shall be in writing addressed to
the other party at its address set forth in the preamble hereof, to the
attention of its President in the case of Licensee and to its President in the
case of Licensor.
e.) If any provision hereof is held to be unenforceable for any
reason, such determination shall not affect the validity or enforceability of
the remaining provision hereof. Licensor shall not be responsible for any
failure to fulfill its obligations hereunder due to reasons beyond its control.
f.) This Agreement (i) shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, (ii) shall be
binding upon and insure to the benefit of the parties and their respective
successors and assigns, subject to the restriction on transfer set forth in
Subparagraph 12 (a) hereof, (iii) constitutes the entire agreement between the
parties concerning the subject matter hereof and supersedes any prior or
contemporaneous agreements, understandings, proposals, promises and
representations in connection therewith, and (iv) may be amended, modified,
waived or revoked only by a written instrument executed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal in duplicate originals as of the date first written above.
GEOTEL COMMUNICATIONS CORPORATION DANAR CORPORATION
By: By:
------------------------------- ------------------------------------
Title: Title:
------------------------------- ------------------------------------
4
<PAGE> 5
5
<PAGE> 1
EXHIBIT 10.5
GEOTEL COMMUNICATIONS CORPORATION
AGREEMENT # 20-810816
---------
SOFTWARE LICENSE AND TECHNICAL SUPPORT AGREEMENT
This Agreement is entered into between GeoTel Communications Corporation, a
Delaware corporation with its principal place of business at 25 Porter Road,
Littleton, MA 01460 ("GeoTel") and MCI Telecommunications Corporation, a
Delaware Corporation with a principal place of business at 1801 Pennsylvania
Avenue, NW, Washington, DC 20036 ("Licensee") as of June 17, 1996 (the
"Effective Date").
WHEREAS, GeoTel is in the business of licensing software and related
documentation that provide and support call management services, and further
makes available related technical support, configuration and installation
services, and other support services; and
WHEREAS, GeoTel and Licensee desire to establish the terms and conditions,
including without limitation pricing, pursuant to which Licensee as well as
Licensee Affiliates and Alliance Partners, as such terms are defined below, can
elect to obtain licenses to copies of such GeoTel software and documentation and
further obtain such services, all on a worldwide basis.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises set forth below, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS
As used throughout this Agreement, the following terms shall have the meanings
set forth below unless otherwise indicated:
1.1 "ACCELERATION FEE" shall have the meaning set forth in Section 11.3 E
(iii).
1.2 "ACCEPTANCE PERIOD" shall have the meaning set forth in Section 7.1.
1.3 "ADDITIONAL ACCEPTANCE PERIOD" shall have the meaning set forth in
Section 7.2.
1.4 "ADDITIONAL SERVICES" shall have the meaning set forth in
Section 11.4.
1.5 "AFFILIATE" of a named party or other entity shall mean a corporation,
partnership, joint venture or other entity controlling, controlled by or under
common control with such party or other entity. Licensee's Affiliates as of the
Effective Date are set forth on Exhibit A ("Affiliates and Alliance Partners")
attached hereto and incorporated herein by this reference.
1.6 "ALLIANCE PARTNER" shall mean any person or legal entity (i) in which
Licensee or
<PAGE> 2
an Affiliate thereof has an equity ownership of at least twenty percent (20%) or
(ii) with which Licensee or an Affiliate thereof has an agreement requiring or
permitting (x) the large-scale licensing of technology to such person or entity
or (y) the exclusive distribution of one or more products or services by such
person or entity. Licensee's Alliance Partners as of the Effective Date are set
forth on Exhibit A.
1.7 "AUTHORIZED PLATFORM" shall mean a central processing unit certified by
GeoTel as capable of running the Programs in conformity with the applicable
Specifications.
1.8 "COMMENCEMENT DATE" shall mean the date on which Licensee receives the
applicable Installation Certificate, as defined below, from GeoTel pursuant to
Section 11.2A.2 in connection with GeoTel's installation of Programs and/or
Designated Computers hereunder.
1.9 "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
8.1 A.
1.10 "CONTRACT YEAR" shall have the meaning set forth in Section 2.4.
1.11 "CORRECTION PERIOD" shall have the meaning set forth in
Section 7.1.
1.12 "CRITICAL SITUATION" shall have the meaning set forth in Section 11.1
B 1(i).
1.13 "CURRENT RELEASE" shall have the meaning set forth in
Section 11.1 D.
1.14 "CUSTOMER" shall mean a third party which obtains products and/or
services provided by Licensee which utilize the Program(s).
1.15 "DEFICIENCY ORDER" shall have the meaning set forth in Section 2.4 C1.
1.16 "DEPOSIT AGREEMENT" shall have the meaning set forth in Section 9.2 A
(ix).
1.17 "DESIGNATED COMPUTER" shall mean the central processing unit(s)
designated by Licensee on an Order, whether such central processing unit is
owned, leased or otherwise available for use by Licensee or a Customer, provided
that each such central processing unit is an Authorized Platform.
1.18 "ELIGIBLE PURCHASES" shall have the meaning set forth in Section 2.4
B.
1.19 "ERROR" shall mean any malfunction, error, bug or other deficiency in
a copy of a Program which prevents it from performing substantially in
accordance with the applicable Specifications.
1.20 "ESCROW AGENT" shall have the meaning set forth in Section 13.1.
1.21 "EXTENSION PERIODS" shall have the meaning set forth in
Section 4.1.
<PAGE> 3
1.22 "GEOTEL PERSONNEL" shall mean any and all GeoTel employees, agents,
servants, and subcontractors performing Services hereunder for Licensee, whether
or not the Services are provided on the premises of Licensee, a Customer or a
third party, provided that in no event or for any purpose will these persons be
considered employees of Licensee.
1.23 "INITIAL TERM" shall have the meaning set forth in Section 4.1.
1.24 "INSTALLATION CERTIFICATE" shall have the meaning set forth in Section
11.2 A 2.
1.25 "INSTALLATION DEPOSIT" shall have the meaning set forth in
Section 6.1.
1.26 "LIQUIDATED DAMAGES" shall have the meaning set forth in Section 11.1
B 2.
1.27 "MODERATE SITUATION" shall have the meaning set forth in Section 11.1
B 1(ii).
1.28 "MODIFICATIONS" shall have the meaning set forth in Section
11.3 A.
1.29 "NEW PRODUCTS" shall mean new software products that are separately
priced by GeoTel on its price list published to all existing GeoTel customers
and to potential customers.
1.30 "NORTH AMERICA" shall mean Canada, the fifty states of the United
States, Puerto Rico and the U.S. Virgin Islands, and Mexico.
1.31 "OBJECT CODE" shall mean the Programs assembled or compiled in
magnetic or electronic binary form on software media, which are readable and
usable by machines, but not generally readable by humans without reverse
assembly, reverse compiling, or reverse engineering.
1.32 "ORDER" shall mean the standard purchase order form as utilized from
time to time by Licensee, a Licensee Affiliate or an Alliance Partner, as
applicable, which has been properly signed by a representative of the
procurement function of the purchasing entity authorized to execute such
purchase order on behalf of the entity and shall include all exhibits and
attachments incorporated as part of the purchase order. The term "Order" shall
further include change orders thereto and delivery orders.
1.33 "ORDER ACCEPTANCE" shall have the meaning set forth in Section
6.2.
1.34 "PERFORMANCE CRITERIA" shall mean as to a given Program the applicable
requirements for system availability and through-put, i.e. calls per second in a
given environment, and such other performance criteria or requirements as
specified on Exhibit B ("Performance Criteria") attached hereto and incorporated
herein by this reference.
1.35 "PROGRAM(S)" shall mean the computer software that is owned or
distributed by GeoTel from time to time during the Term, including specifically
but without limitation such
<PAGE> 4
computer software specified on Exhibit C ("Programs and Services Pricing")
attached hereto and incorporated herein by this reference, and in any event
listed in a completed and signed Order referencing this Agreement by number, and
the related User Documentation, and any subsequent Updates and Releases
furnished by GeoTel, whether in printed or machine readable form.
1.36 "RDG" shall have the meaning set forth in Section 3.1 E.
1.37 "RELEASE" shall mean a new version of a Program that contains
significant new functionality and/or features for which there is a published fee
charged to all commercial customers not under Technical Support and which is
identified by the numeral(s) to the right of the first decimal point from the
left of the designation for such Release or as otherwise mutually agreed by the
Parties, with the latest Release having the larger numeral. A Release shall also
include any new or modified related User Documentation.
1.38 "SERVICE BUREAU PROGRAMS" shall have the meaning set forth in Section
11.3 E.
1.39 "SERVICES" shall mean, collectively, the Technical Support, Support
Services and any other services available and/or obtained by Licensee from time
to time pursuant to this Agreement.
1.40 "SEVERITY LEVELS" shall have the meaning set forth in Section
11.1 B 1.
1.41 "SOFTWARE DEVELOPMENT SERVICES" shall have the meaning set forth in
Section 11.3 A.
1.42 "SOURCE CODE" shall mean the Programs written in programming
languages, such as C and FORTRAN, including all comments and procedural code
such as job control language statements, in a form intelligible to trained
programmers and capable of being translated into Object Code for operation on
computer equipment through assembly or compiling, and accompanied by
documentation, including without limitation flow charts, schematics, statements
of principles of operations, and architecture standards, describing the data
flows, data structures, and control logic of the Programs.
1.43 "SOURCE CODE ESCROW AGREEMENT" shall have the meaning set forth in
Section 13.1.
1.44 "SOURCE CODE MATERIALS" shall mean, collectively, the Source Code for
the Programs, and any other materials as agreed by the Parties, required to be
on deposit with the Escrow Agent as of the Effective Date pursuant to Section
9.2 A (x) and from time to time on deposit with the Escrow Agent pursuant to
Section 13.2.
1.45 "SPECIFICATIONS" shall mean as to a given Program, collectively the
applicable User Documentation and the Performance Criteria.
<PAGE> 5
1.46 "SUPPORT SERVICES" shall mean the installation, training and other
services more specifically described in Section 11.2.
1.47 "TECHNICAL SPECIFICATIONS" shall have the meaning set forth in Section
11.3 B.
1.48 "TECHNICAL SUPPORT" shall mean the software maintenance and other
related services more specifically described in Section 11.1.
1.49 "TERM" shall have the meaning set forth in Section 4.1.
1.50 "TRANSFEREE CUSTOMER" shall have the meaning set forth in Section
3.2 C.
1.51 "TRUE-UP NOTICE" shall have the meaning set forth in Section
2.4 C 1.
1.52 "UPDATES" shall mean a modification to a Program intended to resolve
any Error in the Program but that does not necessarily include additional
capacity or functionality for the Program and is identified by the numeral(s)
two places to the right of the first decimal point from the left in the
designation for such Update or as otherwise mutually agreed by the Parties, with
the latest Update having the larger numeral. An Update shall also include any
new or modified related User Documentation
1.53 "USER DOCUMENTATION" shall mean any user guides, manuals, operator
guides, installation guides, and other similar materials generally made
available by GeoTel to its licensee end-users of the Programs to facilitate
their use.
1.54 "WARRANTY PERIOD" shall have the meaning set forth in Section 9.2 B.
<PAGE> 6
2. SCOPE; PURCHASES BY AFFILIATES AND ALLIANCE PARTNERS
2.1 SCOPE OF AGREEMENT.
------------------
A. During the Term, any division, segment or other business unit or
group within Licensee, as well as any Licensee Affiliate or Alliance Partner as
provided in this Section 2.1, shall be entitled to license Programs and/or
obtain Technical Support, Support Services, or any other Services available
hereunder from GeoTel on a worldwide basis pursuant to, and subject to, the
terms and conditions of this Agreement, including specifically but without
limitation the volume discounts and pricing afforded hereunder, and the
limitation of liability set forth in Article 10, by issuing Orders for such
Programs and/or Services pursuant to Article 6, but as to any such Order
submitted by an Alliance Partner, subject to the Licensee consent requirement
specified in Section 2.2 A.
B. Exhibit A sets forth a list of Licensee Affiliates and Alliance
Partners as of the Effective Date. Licensee may from time to time notify GeoTel
of changes to said Exhibit A which shall promptly be amended accordingly by the
Parties; provided, however, that the addition of any entity as an Alliance
Partner by virtue of such entity complying with the requirements of Subitems
(ii) (x) or (ii)(y) of Section 1.2 shall be subject to the prior consent of
GeoTel, which consent shall not be unreasonably withheld or delayed. GeoTel
acknowledges and agrees that since Exhibit A may not be a complete list of all
Licensee Affiliates and Alliance Partners at any given time during the Term,
Licensee shall be entitled at any given time to certify in writing to GeoTel
that one or more additional entities not then listed on Exhibit A are Licensee
Affiliates or Alliance Partners and GeoTel shall afford such additional entities
the right to purchase Programs and/or Services as otherwise provided under this
Article 2 pending amendment of Exhibit A, but subject as to any such Alliance
Partner to the Licensee consent specified in Section 2.2 A.
2.2 ORDERS BY AFFILIATES AND ALLIANCE PARTNERS.
A. 1. GeoTel shall not accept any Order submitted against this
Agreement by an Alliance Partner unless: (i) such Order expressly references
this Agreement and this Article 2, and (ii) GeoTel receives the prior express
written consent of Licensee, which consent specifically refers to the proposed
Order, the ordering Alliance Partner, and this Section 2 of this Agreement, and
is signed on behalf of Licensee by both a Senior Vice President of Licensee and
Licensee's Chief Technology Counsel, provided that such consent of Licensee may
be granted or withheld at the sole discretion of Licensee. Under no
circumstances shall Licensee be deemed to be a party to, to have any liability
or obligation whatsoever in connection with, or to be a guarantor of the
obligations under, any Order submitted by an Alliance Partner against this
Agreement as to which Licensee has not provided to GeoTel the prior written
consent required by this Section and which otherwise fails to comply with
Subitem (i) of this Section.
2. Any conforming Order submitted by an Alliance Partner as to
which
<PAGE> 7
Licensee has consented as required pursuant to Section 2.2 A shall be accepted
by GeoTel pursuant to Section 6.2 but subject to Section 2.2 C below.
B. 1. Software programs and services obtained by an Alliance
Partner from GeoTel pursuant to agreement separately negotiated between such
Alliance Partner and GeoTel and not resulting from Section 2.1 A, shall not
accrue to the benefit of, or be credited to, Licensee for purposes of this
Agreement, including without limitation for purposes of Licensee's volume
discount, pricing or Purchase Commitment hereunder, nor shall such Alliance
Partner be afforded the benefit under such separate agreement of the volume
discounts and pricing otherwise available hereunder unless otherwise agreed to
between the Alliance Partner and GeoTel.
2. Software programs and services obtained by a Licensee
Affiliate from GeoTel pursuant to agreement separately negotiated between such
Affiliate and GeoTel and not resulting from Section 2.1 A, shall nonetheless
accrue to the benefit of, and be credited to, Licensee for purposes of
Licensee's volume discount, pricing and Purchase Commitment hereunder, and such
Affiliate shall be entitled to the pricing and volume discounts available
hereunder as to any purchases pursuant to such separate agreement but shall
otherwise not be afforded the benefit of any other terms and conditions
hereunder unless expressly agreed by the Affiliate and GeoTel.
3. Under no circumstances shall Licensee be deemed to be a party
to, to have any liability or obligation whatsoever in connection with, or to be
a guarantor of the obligations of any Alliance Partner or Licensee Affiliate
under any such separate agreement between such Alliance Partner or Affiliate
with GeoTel as referred to in Sections 2.2 B 1 and 2.
C. Notwithstanding the provisions of Sections 2.2 A 2 and 6.2, GeoTel
may nonetheless reject the Order of a Licensee Affiliate or the Order of an
Alliance Partner otherwise consented to by Licensee as required pursuant to
Section 2.2 A 1, where the site of the Designated Computer for use of Programs
is located outside of North America and GeoTel has a reasonable basis to believe
that it will be unable to adequately provide Technical Support for such Programs
in such location, provided that such rejection and reasonable basis are
communicated by GeoTel in writing to the ordering party promptly after receipt
of the Order.
2.3 ACCRUAL OF PURCHASES. All Programs licensed to, and Services
obtained by, any Affiliate or Alliance Partner resulting from Sections 2.1 A or
2.2 B 2 shall accrue to the benefit of, and be credited to, Licensee for
purposes of (i) determining pricing and volume discounts under this Agreement,
and (ii) fulfillment by Licensee of the Purchase Commitment, as defined in
Section 2.4. Nothing herein shall limit the right of Licensee or any Affiliate
or Alliance Partner from obtaining at any time from any third party the same or
similar software and/or services as may be obtained or available hereunder or
obtaining from GeoTel more favorable pricing than the pricing otherwise
available hereunder.
<PAGE> 8
2.4 PURCHASE COMMITMENT; NO OTHER MINIMUM COMMITMENTS.
-------------------------------------------------
A. REDACTED MATERIAL
B. REDACTED MATERIAL
C. REDACTED MATERIAL
3. PROGRAM LICENSES
3.1 LICENSES GRANTED.
-----------------
A. Upon GeoTel's acceptance of an Order for Programs pursuant to
Article 6, GeoTel grants to Licensee a non-exclusive, fully paid-up (subject to
payment of the applicable license fees as determined pursuant to Article 5),
worldwide, nontransferable (except as otherwise herein provided), license to use
the copies of the Programs covered by such Order and related User Documentation
pursuant to this Agreement, including without limitation as follows:
(i) to use the Programs on the Designated Computer referenced
in the relevant Order or on a backup computer on a temporary basis if the
Designated Computer is inoperative, and in either event on Licensee's premises
or the premises of a Customer:
(x) for Licensee's own internal telecommunications
operations, and in connection with such operations to process the information of
Licensee;
(y) to provide telecommunications and related services to,
and access by Customers, as required during the normal course of providing
Licensee products and/or services, and to process Customer information in
connection therewith; and
(z) to cause or permit a third party to use or operate the
Programs solely for the benefit of Licensee and its Customers, including without
limitation for the purposes set forth in (x) and (y) immediately above, and in
such event on said third party's premises;
(ii) to locate and allow a Customer to use the Programs,
including pursuant to item (iii) immediately below, at its customer call center
locations on the Designated Computer(s) referenced in the relevant Order (or on
a backup computer on a temporary basis if the Designated Computer is
inoperative) solely in connection with such Customer's use of products and/or
services provided by Licensee which in turn utilize the Program(s), provided
that Licensee shall use its reasonable best efforts to ensure compliance by such
Customer with the requirements of Article 8 of this Agreement;
(iii) to copy the Program for archival or backup purposes,
provided that all such archival and backup copies of the Program are subject to
the provisions of this Agreement, and all titles, trademarks, and copyright and
restricted rights notices appearing on the copies of the Programs as received by
Licensee from GeoTel shall be reproduced in such copies;
<PAGE> 9
and
(iv) to use the User Documentation as reasonably necessary in
connection with Licensee's use of the Programs and to further distribute copies
of the User Documentation, including as may be modified by GeoTel at Licensee's
request pursuant to Section 11.2 D, to Customers for use solely in connection
with their use of the Programs and any related Licensee products and/or
services, all at no additional cost or expense to Licensee and/or such
Customers.
B. LIMITED RIGHTS. By virtue of this Agreement, Licensee acquires
only the right to use the Programs as provided in this Article 3 and does not
acquire any other rights or ownership therein.
C. NO DISTRIBUTION RIGHTS. Licensee acknowledges that it is not a
distributor of GeoTel for the Programs, that it has no right to sublicense or
otherwise locate elsewhere any copies of the Programs other than as explicitly
set forth herein, and that it has no right to permit third parties to resell any
Licensee services based upon the Programs.
D. LICENSE TERM. The term of each license for Programs granted
hereunder shall remain in effect perpetually (if not otherwise specified on the
Order), unless terminated as provided in Article 4.
E. CHANGES TO RDG. Upon any change in Licensee's 800 remote data
gateway interface or its commercially available equivalent (the "RDG"), Licensee
will use its reasonable efforts to provide to GeoTel: (i) early notice of such
change to the RDG, (ii) a copy of the changed specifications to the changed RDG
promptly after such specifications become generally commercially available, and
(iii) engineering and technical support to facilitate access by GeoTel to
Licensee's certification lab for purposes of GeoTel obtaining and maintaining
during the Term certification from Licensee that all of the Programs, at the
then most Current Release level, and/or Update level being utilized by Licensee
during the Term, shall function in conformity with the Specifications when
operating and interacting with all Authorized Platforms and Licensee networks.
3.2 TRANSFER.
--------
A. GENERAL RIGHT TO TRANSFER LOCATION. Subject to Section 3.2 B, a
Program may be transferred to a different Designated Computer of like
configuration or the Designated Computer may be transferred to another location,
whether within Licensee's organization, within a Customer's organization, or
among Licensee and its Customers, and in any event without incurring any
additional license fee or other cost directly related to the transfer, provided
that in each case Licensee shall give timely written notice thereof to GeoTel,
and subject to Section 14.7, and provided further that Licensee shall remain
responsible for payment for any Support Services required in connection with any
such transfer.
B. REDACTED MATERIAL
<PAGE> 10
C. REDACTED MATERIAL
D. NO OTHER TRANSFER OR ASSIGNMENT OF COPIES. Except as otherwise
provided in this Article 3 and Section 14.5, the rights granted herein as to
Program copies are restricted for use solely by Licensee and may not be assigned
or transferred to a third party.
4. TERM; TERMINATION
4.1 TERM. This Agreement shall have an initial term of three (3) years
from the Effective Date (the "Initial Term") after which Initial Term this
Agreement shall automatically renew for consecutive one (1) year periods
("Extension Periods") based upon the terms and conditions then contained in this
Agreement (other than the provisions of Section 2.4 regarding the Purchase
Commitment which shall not be automatically renewed), unless either Party
provides written notice to the other no later than ninety (90) days prior to the
end of the Initial Term or the then-current Extension Period of its intent to
terminate this Agreement in which event this Agreement shall terminate as of the
end of such Initial Term or Extension Period, as applicable. The Initial Term
and any Extension Periods may be collectively referred to in this Agreement as
the "Term".
4.2 TERMINATION OF AGREEMENT. Upon thirty (30) days' prior written notice,
either Party may terminate this Agreement in the event:
(i) that the other Party breaches any of its material obligations
hereunder and fails to cure such breach by the end of such thirty-day period; or
(ii) of either Party's application for or consent to the
appointment of or the taking of possession by a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property; its
general assignment for the benefit of creditors; its commencement of a voluntary
case under the Federal Bankruptcy Code (as now or hereinafter in effect); its
failure to contest in a timely or appropriate manner, or its acquiescence in
writing to, any petition filed against it in an involuntary case under such
Bankruptcy Code, or its liquidation, reorganization or dissolution;
provided, however, that GeoTel agrees that any termination by GeoTel of this
Agreement shall not affect any licenses for Programs previously granted to
Licensee hereunder pursuant to Article 3 unless the underlying breach of this
Agreement provides a separate basis for termination of one or more such licenses
pursuant to Section 4.3 below.
4.3 TERMINATION OF PROGRAM LICENSES.
--------------------------------
A. TERMINATION BY GEOTEL. Upon thirty (30) days' prior written
notice, GeoTel may terminate a license to a copy of a Program granted to
Licensee hereunder only in the event Licensee breaches any of its material
obligations pursuant to Sections 3.1,5.3, 8.1 or 8.2 specifically as to such
copy and Licensee fails to cure such breach by the end of such thirty-day
period; provided, however, that GeoTel agrees that any termination by GeoTel of
the license to
<PAGE> 11
a copy of a Program pursuant to this Section 4.3 A shall not constitute a basis
for termination of either (i) any other license to a Program copy as to which
such breach does not specifically apply or (ii) this Agreement pursuant to
Section 4.2.
B. TERMINATION BY LICENSEE. Licensee may terminate a license to a
copy of a Program granted to License hereunder as provided in Sections 7.2 and
9.2 B.
4.4 EFFECT OF TERMINATION.
----------------------
A. AVAILABLE REMEDIES. Termination of this Agreement or any license
granted hereunder shall not limit either party from pursuing any other remedies
available to it, including injunctive relief.
B. NO EFFECT ON LICENSES. Neither the expiration nor the
termination of this Agreement shall serve to terminate, modify or otherwise
affect any licenses for Programs granted to Licensee hereunder, all of which
licenses shall remain in full force and effect after any such termination or
expiration.
<PAGE> 12
C. REDACTED MATERIAL
-----------------
4.5 RETURN OF PROGRAM UPON TERMINATION. If this Agreement or a license as
to a copy of a Program granted pursuant to this Agreement expires or is
otherwise terminated, each Party shall as to this Agreement or such license, as
applicable: (i) pay to the other Party any related moneys then due and owing,
(ii) cease using the affected Confidential Information of the other Party, and
(iii) certify to the other Party within one month after such expiration or
termination that the Party has destroyed or has returned all affected
Confidential Information; provided, however, that the foregoing shall not apply
to any Program copies and related User Documentation or other Confidential
Information of GeoTel related to the use of such Program copies, and the right
of Licensee and its Customers to continue using the same, under licenses
surviving any expiration or termination of this Agreement pursuant to Section
4.4 B. The foregoing provision applies to the Confidential Information of either
Party and all copies thereof in all forms, partial and complete, in all types of
media and computer memory, and whether or not modified or merged into other
materials.
4.6 SURVIVAL OF PROVISIONS. The Parties agree that the provisions of
Articles 3, 6, 8, 9, 10, 12, and 13, and Sections 4.3, 4.4, 4.5, 4.6, 5.3, 5.4,
5.5, 11.1, 11.2, 11.5, 11.6, 11.7, 11.8 and 14.4 shall survive the expiration or
any earlier termination of this Agreement, along with such other provisions as
would reasonably be expected to survive such expiration or termination.
5. PRICE AND PAYMENT PROVISIONS
5.1 PRICING Licensee shall pay to GeoTel for licenses for Programs,
Technical Support, Support Services and other Services obtained pursuant to this
Agreement the applicable prices determined pursuant to the pricing and discounts
set forth in Exhibit C, but subject to the other requirements of this Article 5.
The pricing and discounts for both the Programs and Services set forth in said
Exhibit C shall be firm for the Term of this Agreement, provided that on any
anniversary of the Effective Date during the Term of this Agreement, GeoTel may,
by providing written notice of the same to Licensee no less than one hundred
twenty (120) days prior to said anniversary date, increase the then-current
license fees for the Programs set forth in Exhibit C by the lesser of (i) five
percent (5%) or (ii) the difference between the then-current license fee for a
Program set forth in Exhibit C and the commercially available list price for
such Program that will be in effect as of said anniversary date. Should GeoTel
at any time make any of the Programs or Services generally commercially
available at a lower price than as then listed in Exhibit C prior to application
of any available discount, then the Exhibit C pricing shall be reduced
accordingly retroactive to the effective date of such lower generally
commercially available prices.
5.2 MOST FAVORED CUSTOMER. GeoTel agrees that the prices charged, and
discounts available, hereunder from time to time for license(s) for the
Programs, or for Technical Support, Support Services or any other materials or
Services provided under this Agreement are and shall be no less favorable than
the prices charged, and discounts made available, to any other customer of
GeoTel for substantially similar volumes of such licenses, services or other
materials under
<PAGE> 13
similar business arrangements. Where GeoTel breaches the foregoing obligation,
the more favorable prices and/or discounts shall apply to Licensee from the date
that the same were made available to such other customer of GeoTel.
5.3 INVOICING. GeoTel's invoices for Programs will be forwarded after the
applicable Commencement Date and, subject to acceptance of Program copies
pursuant to Article 7, are then due and payable net forty five (45) days from
receipt of invoice by Licensee's Vendor Services Department. Unless otherwise
expressly provided herein, GeoTel invoices for Services will be forwarded after
the completion of the applicable Service and the invoices will then be due and
payable net forty five (45) days from receipt of invoice by Licensee's Vendor
Services Department; provided, however, that invoices for Technical Support will
be forwarded to Licensee after commencement of the applicable month of Technical
Support and the invoices will then be due and payable net forty five (45) days
from receipt of invoice by Licensee's Vendor Services Department.
5.4 TAXES. The prices listed in this Agreement are exclusive of sales,
use, value-added, or other federal, state or local taxes or import duties or
tariffs imposed on a purchaser or licensee of by law, which Licensee agrees to
pay. In the event that Licensee provides GeoTel with an applicable direct
payment permit, sale for resale exemption certificate, sales tax exemption
certificate or other applicable exemption certificate, GeoTel agrees that it
will not invoice taxes for any licenses granted in this Agreement, the Support
Services, Technical Support or on Licensee's use of Programs or other materials
or services subject to this Agreement.
5.5 DUTIES. Licensee shall pay any import duties and tariffs incurred as a
result of shipment by GeoTel at Licensee's direction of Programs and User
Documentation to a destination outside the United States.
6. ORDERING; DELIVERY; TITLE AND RISK OF LOSS
6.1 ORDERING.
---------
A. ORDERS. Licensee shall order Programs, Technical Support,
Support Services and any other Services available hereunder by means of
individual Orders. Each such Order shall specify, as applicable, quantity,
price, ship date, delivery date, shipping destination, ship method, and other
details pertaining to the products and services ordered thereunder. The terms of
this Agreement shall be expressly referred to in the Order. The printed
provisions on Orders or attached to Orders shall be deemed deleted with respect
to the Orders placed hereunder.
B. INSTALLATION DEPOSIT. When copies of Programs are being ordered,
License shall further, within forty five (45) days after Order Acceptance
pursuant to Section 6.2, forward to GeoTel a prepayment of one hundred percent
(100%) of the applicable Installation Services fees for such copy, such
prepayment hereinafter being referred to as the "Installation Deposit".
<PAGE> 14
6.2 ORDER ACCEPTANCE. Except as otherwise provided in Section 2.2C as to
certain Affiliate and Alliance Partner Orders, GeoTel shall within fifteen (15)
days after the receipt of an Order from Licensee hereunder accept such Order
("Order Acceptance") by signing and returning the "Vendor Acknowledgment" copy
of the Order to Licensee's Vendor Services Department. In the event GeoTel fails
to so return the Acknowledgment copy of the Order within thirty (30) days from
receipt, Order Acceptance shall nonetheless be deemed to have occurred as of
such thirtieth (30th) day from receipt of the Order by GeoTel.
6.3 ORDER CANCELLATION
------------------
A. RIGHT TO CANCEL. Licensee shall be entitled to cancel any Order
submitted hereunder, in whole or in part, without any penalty, cancellation fee
or other liability of any kind, except as expressly provided in the following
sentence, by providing written notice up until, as to line items in Orders for
the providing of Services, the start of the provision of such Services, and for
line items for copies of Programs in Orders, the applicable Commencement Date.
As to cancellation of line items for copies of Programs in Orders only, GeoTel
shall be entitled to retain the lesser of (i) actual charges incurred by GeoTel
in performing Installation Services up until the effective date of cancellation,
or (ii) the percentage of any applicable Installation Deposit determined as
follows:
<PAGE> 15
Receipt of Cancellation Notice % Installation
- ------------------------------ --------------
by GeoTel Deposit Retained
- --------- ----------------
Before Order Acceptance 0
After Order Acceptance, but before
receipt of Designated Computer
by GeoTel 25
After receipt of Designated Computer
by GeoTel, but before shipment to
installation site 50
After shipment of Designated Computer
by GeoTel but before Commencement Date 75
After Commencement Date 100
B. PORTIONS OF INSTALLATION DEPOSITS RETURNED. Any portion of an
Installation Deposit that GeoTel is not permitted to retain in the event of
cancellation of an Order as to Program copies pursuant to this Section 6.3 shall
be repaid to Licensee within thirty (30) days after the effective date of
cancellation.
C. PORTIONS OF INSTALLATION DEPOSITS RETAINED. Any portion of an
Installation Deposit retained by GeoTel in connection with the cancellation of
any line item for copies of Programs in an Order pursuant to this Section 6.3
shall nonetheless be deemed an "Eligible Purchase" and credited against any
applicable Purchase Commitment. Any portion of an Installation Deposit refunded
to Licensee in connection with any such cancellation, shall not be so credited.
6.4 DELIVERY; TITLE/RISK OF LOSS. Delivery by GeoTel of the combined
Programs/Designated Computers pursuant to Section 11.2 A 3, or of separate
Program, Update or Release copies, shall be made FOB the applicable Licensee or
Customer site as specified in the Order or as otherwise designated by Licensee.
Risk of loss of, or damage to, any of the foregoing items, and title to the
media for any uninstalled Program, Update or Release copies shall pass to
Licensee upon delivery to such applicable Licensee or Customer site.
7. ACCEPTANCE
7.1 ACCEPTANCE PERIOD. Licensee may test Program copies during a thirty
(30) day period (the "Acceptance Period") beginning on the date of receipt by
Licensee of the GeoTel Installation Certificate, as defined in Section 11.2 A.
Licensee may reject the Program copy within the Acceptance Period, or any such
period as extended by mutual agreement of Licensee and GeoTel, for reasons of
the presence of Errors or the failure of the Program copy to perform
<PAGE> 16
in accordance with such other test and acceptance criteria as may be mutually
agreed by the Parties in writing, provided that failure of Licensee to accept or
reject a Program copy within the applicable Acceptance Period shall be deemed
acceptance.
7.2 REJECTION OF PROGRAM COPIES. If any copy of the Programs is rejected,
GeoTel shall have fifteen (15) days from receipt of notice of rejection to
correct the Errors or other nonconformity's at no additional cost to Licensee
(the "Correction Period") and Licensee shall have a new acceptance period of
thirty (30) days from Licensee's receipt of the corrected copy of the Program to
accept or reject the Program as provided above (the "Additional Acceptance
Period"). Should GeoTel either be unable to correct the Errors or other
nonconformity's within such Correction Period or should Licensee again reject
the corrected Program during the Additional Acceptance Period, then Licensee, at
its sole option, shall be entitled to either:
(i) a full refund of any payments made to GeoTel, including but not
limited to any related Installation Deposit, Support Services or other Services,
in connection with the rejected copy, provided, that (x) the full value of the
Eligible Purchases as to which the refunds applied as determined pursuant to
Section 2.4 B shall nonetheless continue to be credited against any applicable
Purchase Commitment, and (y) as of the second time within any rolling sixth
month period that Licensee rejects any Program copy after the Additional
Acceptance Period pursuant to this Section 7.2, Licensee shall further be
entitled, in addition to such refund, to treat such second failure to correct as
a material breach of this Agreement pursuant to Section 4.2 (but without the
further right of GeoTel to cure as otherwise set forth therein), and to
immediately terminate this Agreement by written notice to GeoTel pursuant to
said Section 4.2; or
(ii) prompt replacement of the rejected Program copy with a substitute
acceptable to, and at no additional cost to, Licensee.
7.3 ABATEMENT OF PAYMENT. Licensee's obligation to pay an invoice issued
by GeoTel pursuant to Section 5.3 in connection with any Program copy rejected
pursuant to Section 7.1 shall be abated during the Correction Period and
Additional Acceptance Period provided pursuant to Section 7.2.
8. PROTECTION OF PROGRAMS: CONFIDENTIAL INFORMATION, ENFORCEMENT
8.1 CONFIDENTIALITY.
----------------
A. CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
Parties may have access to, or exchange, information that is confidential to one
another. As used in this Agreement, the term "Confidential Information" shall
mean only such information which: (i) if disclosed in writing or other tangible
form bears an appropriate legend indicating its confidential or proprietary
nature; or (ii) if initially disclosed orally, visually or in other nontangible
form, is identified as confidential or proprietary at the time of disclosure.
Notwithstanding the foregoing, Licensee agrees that any Programs licensed by
GeoTel hereunder, any User Documentation
<PAGE> 17
provided by GeoTel hereunder and any Source Code that may be provided by GeoTel
to Licensee hereunder pursuant to Article 13, shall be deemed the Confidential
Information of Licensor to be treated by Licensee in conformity with the
requirements of this Article 8. Notwithstanding the foregoing, GeoTel agrees
that the existence and terms and conditions of this Agreement, as well as all
Customer information which GeoTel may obtain in the course of performance under
this Agreement, including without limitation in the course of performing any of
the Services, shall be deemed the Confidential Information of Licensee to be
treated by GeoTel in conformity with the requirements of this Article 8.
B. OBLIGATIONS. Each of the Parties agrees that as to any
Confidential Information disclosed to it hereunder:
(i) to use such Confidential Information only in the performance
of this Agreement or as otherwise expressly permitted by this Agreement or by
the disclosing Party (the "Discloser");
(ii) not to make copies of any such Confidential Information or
any part thereof except to the extent otherwise expressly permitted by this
Agreement or by the Discloser;
(iii) not to disclose any such Confidential Information to any
third party using the same degree of care used to protect the confidential or
proprietary information of like importance of the receiving Party ("Recipient"),
but in any case using no less than a reasonable degree of care; provided,
however, that Recipient may disclose Confidential Information received hereunder
to (x) its Affiliates who are bound to protect the received Confidential
Information from unauthorized use and disclosure under the terms of a written
agreement, and (y) to its employees, consultants and agents, and its Affiliates'
employees, consultants and agents, who have a need to know to perform or
exercise rights under this Agreement, and who are bound to protect the received
Confidential Information from unauthorized use and disclosure under the terms of
a written agreement. GeoTel expressly agrees that Licensee shall further be
entitled to disclose the Confidential Information of GeoTel received hereunder
to Customers and prospective Customers and their respective employees,
consultants and agents who have a need to know in connection with the exercise
of the rights set forth in Section 3.1 above or otherwise in connection with use
or the prospective use of Licensee services and products based on use of the
Programs. Confidential Information shall not otherwise be disclosed to any
person without the prior written consent of the Discloser; and
(iv) to return or destroy such Confidential Information and any
copies thereof upon the expiration or earlier termination of this Agreement, or
Program license, as applicable, to the extent, and as required pursuant to,
Section 4.5.
C. EXCEPTIONS. The restrictions set forth in this Article 8 on use
and disclosure of Confidential Information shall not apply to information that:
(i) was publicly known at the time of Discloser's communication
thereof to Recipient;
<PAGE> 18
(ii) becomes publicly known through no fault of Recipient
subsequent to the time of Discloser's communication thereof to Recipient;
(iii) is in Recipient's possession free of any obligation of
confidence at the time of Discloser's communication thereof to Recipient;
(iv) is developed by Recipient independently of and without use
of any of Discloser's Confidential Information or other information that
Discloser disclosed in confidence to any third party;
(v) is rightfully obtained by Recipient from third parties
authorized to make such disclosure without restriction; or
(vi) is identified by Discloser in writing as no longer
proprietary or confidential.
D. DISCLOSURE PER ORDER. In the event Recipient is required by law,
regulation or court order to disclose any of Discloser's Confidential
Information, Recipient will promptly notify Discloser in writing prior to making
any such disclosure in order to facilitate Discloser seeking a protective order
or other appropriate remedy from the proper authority. Recipient agrees to
cooperate with Discloser in seeking such order or other remedy. Recipient
further agrees that if Discloser is not successful in precluding the requesting
legal body from requiring the disclosure of the Confidential Information, it
will furnish only that portion of the Confidential Information which is legally
required and will exercise all reasonable efforts to obtain reliable assurances
that confidential treatment will be accorded the Confidential Information.
E. PUBLICITY. No news, media or other informational releases,
public announcements, public disclosures, advertising or marketing materials
concerning any part or terms and conditions of this Agreement or any of GeoTel's
or Licensee's respective performances hereunder shall be made, issued or
distributed by either Party without the prior written consent of the other
Party, which consent shall not be unreasonably withheld or delayed.
F. SURVIVAL. The provisions of this Article 8 shall survive for a
period of five (5) years beyond the effective date of any expiration or earlier
termination of this Agreement.
<PAGE> 19
8.2 OWNERSHIP OF PROGRAMS.
----------------------
A. Licensee acknowledges that GeoTel claims that: (i) GeoTel is
the owner of the Programs and any copies thereof, and of all copyright, trade
secret, patent, trademark, or other intellectual property rights therein, and
(ii) the ideas and the expressions thereof contained in the Programs are the
confidential and proprietary information and trade secrets of GeoTel.
B. Licensee agrees that physical copies of the Programs, in
firmware, diskette, tape, paper, or other form provided by GeoTel shall remain
the property of GeoTel, and such copies shall be deemed to be on loan to
Licensee during the term of the licenses granted pursuant to this Agreement.
C. Licensee agrees that it will not decompile, disassemble or
attempt in any way to reverse engineer the Programs.
8.3 ENFORCEMENT. Each Party acknowledges that the Confidential Information
of the other Party, including without limitation the Programs and User
Documentation, is valuable and unique to such Party and that disclosure, use or
treatment of the same in breach of the provisions of this Article 8, will result
in irreparable injury to the disclosing Party for which monetary damages alone
would not be an adequate remedy. Therefore, each Party agrees that, in the event
of a breach or threatened breach of the confidentiality or restricted use
provisions of this Article 8 by the other Party, the disclosing Party shall be
entitled to seek specific performance and injunctive or other equitable relief
from a court of competent jurisdiction as a remedy for any such breach or
anticipated breach, and the disclosing Party shall further have no obligation to
post bond or other surety in connection therewith. Any such relief shall be in
addition to and not in lieu of any appropriate available relief in the way of
monetary damages and shall not otherwise limit such Party's other available
rights and remedies.
9. INDEMNITY RE INFRINGEMENT; WARRANTIES; DISCLAIMERS
9.1 WARRANTY OF OWNERSHIP; INDEMNITY RE INFRINGEMENT.
-------------------------------------------------
A. GeoTel warrants and represents that it is the sole owner of all
patent, copyright, trade secret, trademark and other intellectual property
rights in the Programs and User Documentation or, if the Programs or User
Documentation contains third party software or other materials, GeoTel has the
unrestricted right to grant to Licensee all of the licenses and other rights
necessary for complying with this Agreement, and in any event has the full power
and authority to sell, convey, license, and deliver copies of the Programs and
User Documentation free from any liens and encumbrances of all kinds.
B. GeoTel shall at its expense defend or, at its option, settle,
any claim, action or proceeding brought against Licensee and/or any Customer
that any Program, the User Documentation or any services provided by Licensee
and/or any Customer based on the use of the Programs, or the use of any of the
foregoing, infringes a patent, copyright, trade secret,
<PAGE> 20
trademark or other intellectual property right, and shall indemnify and hold
Licensee and its Customers harmless against all losses, damages, liabilities,
expenses and costs incurred and/or awarded against or by Licensee and/or any
Customers in connection with any such claim, action or proceeding. Licensee
shall: (i) notify GeoTel in writing of any such claim promptly after Licensee
becomes aware of the same, (ii) give GeoTel such information and assistance as
reasonably required in connection therewith but at the expense of GeoTel, and
(iii) give GeoTel sole control of the defense of such claim and all negotiations
for the compromise or settlement thereof; provided, however, that the failure of
Licensee to undertake any of the foregoing actions shall not relieve GeoTel of
any liability or obligation it may have under this Section 9.1 except to the
extent that GeoTel has been adversely affected thereby. Notwithstanding Subitem
(iii) in the preceding sentence:
(i) Licensee shall have the right to participate in the
investigation and defense of any such claim, action or proceeding, with separate
counsel chosen and paid for by Licensee; and
(ii) at any time, Licensee may at its own cost and expense
purchase intellectual property or rights thereto from any third party.
C. Without limiting the rights of Licensee pursuant to Section
9.1 F, if the use of any Program, the User Documentation or any service based on
the use of the Programs or User Documentation or any part thereof, is enjoined
in connection with a claim of infringement of any patent, copyright, trade
secret right or other intellectual property right, GeoTel shall, at its sole
expense, take the following actions listed in the order of requirement (but in
no event shall GeoTel be relieved of any obligations of defense and indemnity
hereunder):
(i) obtain for Licensee a license permitting the continued use
of the Program, User Documentation and/or service or such part thereof pursuant
to the terms of this Agreement;
(ii) replace or modify the affected Program, user Documentation
or part thereof, so that it becomes non-infringing, while still complying with
the applicable Specifications and other requirements of this Agreement; or
(iii) if neither of the foregoing can be accomplished without
impacting the economic viability of GeoTel, terminate the license for the
affected Program(s) or User Documentation and promptly refund to Licensee: (x)
the license or other fees paid for the same under this Agreement amortized over
a seven (7) year period commencing as of the Commencement Date for the
applicable Program, and (y) the pro-rated unused portion of any Technical
Support fees paid in connection with the same; provided, however, that the full
value of the Eligible Purchases as to which any refunds pursuant to Subitems (x)
and (y) of this sentence relate, as determined pursuant to Section 2.4 B, shall
nonetheless continue to be deemed "Eligible Purchases" and credited against any
applicable Purchase Commitment pursuant to Section 2.4 C.
<PAGE> 21
D. GeoTel shall have no liability under Section 9.1B for any costs
of defense incurred, or settlement entered into, by Licensee as to an
indemnifiable claim hereunder without GeoTel's prior written consent.
E. GeoTel shall have no liability under this Section 9.1 to the
extent that any claim of infringement is based upon (i) the combination of a
Program with other products, equipment or materials that are either not
furnished or approved by GeoTel, not an Authorized Platform, or where GeoTel
should not reasonably have anticipated such combined use, and provided that in
any event the claim of infringement would not have occurred but for such
combination, (ii) any addition to or modification to the Program, including
without limitation to any new Release of the Program, by any person or entity
other than GeoTel made without GeoTel's consent or concurrence, if such claim of
infringement would not have occurred but for such addition or modification,
(iii) GeoTel furnishing to Licensee any information, data, service or
applications assistance, other than the Services, Programs and the related User
Documentation, if the claim of infringement would not have occurred but for such
information, data, service or applications assistance, or (iv) use of a
superseded Release of the Program beyond the time frame specified in Section
11.1D, provided that a replacement Release has been made available to Licensee
within such timeframe specified in Section 11.1D, that such replacement Release
still complies with the applicable Specifications, and that the claim of
infringement would not have occurred but for Licensee continuing to use such
superseded Release of the Program as opposed to the replacement Release.
F. Upon the receipt by Licensee or any Customer within a Contract
Year of either notice by or on behalf of a third party alleging or asserting any
claims of infringement within the scope of this Section 9.1, service upon
Licensee or any Customer of any legal action or other proceeding instituted by
or on behalf of a third party alleging in whole or in part an infringement
within the scope of this Section 9.1, or the imposition of a temporary
restraining order, or temporary or permanent injunction on Licensee or any
Customer based in whole or in part upon a claim by or on behalf of a third party
of infringement within the scope of this Section 9.1, then, in addition to, and
without limiting any of the other obligations of GeoTel pursuant to this Section
9.1 in connection with any of the foregoing, the Purchase Commitment shall from
the date of receipt of such notice, service of process, or imposition as to
Licensee or any Customer, be waived, and Licensee shall be released from and
have no further obligation or liability in connection therewith, on a day to
day, pro rata basis until such time as such claim, action or other proceeding is
finally resolved, or such temporary restraining order, or temporary or permanent
injunction is finally lifted or dissolved, as applicable, provided that from and
after the ninetieth day without such final resolution, Licensee shall be
entitled, at its option, to then or at any time while such situation continues
unresolved, to treat such failure to resolve any of such events as a material
breach of this Agreement pursuant to Section 4.2 (but without the further right
of GeoTel to cure as otherwise set forth therein), and to immediately terminate
this Agreement by written notice to GeoTel pursuant to said Section 4.2.
G. THE PROVISIONS OF THIS SECTION 9.1 STATE THE EXCLUSIVE LIABILITY
OF GEOTEL, AND THE EXCLUSIVE REMEDY OF LICENSEE, WITH RESPECT TO ANY BREACH OF
THE WARRANTY SET FORTH IN SECTION 9.1 A OR
<PAGE> 22
ANY CLAIM OF INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET, TRADEMARK OR
OTHER INTELLECTUAL PROPERTY RIGHT BY THE PROGRAMS, THE USER DOCUMENTATION, OR
ANY SERVICES PROVIDED BY LICENSEE AND/OR ANY CUSTOMER BASED ON THE USE OF THE
PROGRAMS, OR THE USE OF ANY OF THE FOREGOING.
9.2 OTHER WARRANTIES
----------------
A. GeoTel warrants and represents that:
(i) the Programs delivered hereunder will provide substantially
fault free performance in the processing of date and date dependent data
(including, but not limited to calculating, comparing, and sequencing
operations) from the Effective Date through the year 2100. Upon request, GeoTel
shall provide sufficient evidence to demonstrate adequate testing of the
Programs to meet this requirement;
(ii) it has full power and authority to enter into and perform
this Agreement, and the person signing this Agreement on behalf of GeoTel has
been properly authorized and empowered to enter into this Agreement;
(iii) disputes over specific named Programs or copies thereof
will not interfere with Technical Support or any other Services for Programs or
copies thereof separately licensed and paid for by Licensee;
(iv) no material portion of the Programs is or will be intended,
other than under documented control of Licensee:
(x) at some specific time or on a specific instruction or
occurrence of a given event, to stop, limit or interfere with the operation of
the Programs in conformity with the applicable Specifications, or;
(y) to damage or materially alter or render inaccessible the
Programs, or any other hardware, software or data which the Programs are
designed to process or use, or any other hardware, programs or data attached to,
resident on, or accessible to the system on which the Programs are executed or
stored; and
GeoTel shall be responsible for, indemnify and hold Licensee harmless from any
damages, costs, liabilities, and/or expenses, including attorneys' fees and
other legal costs, arising out of the breach of the foregoing Subitems (x) and
(y);
(v) the Programs licensed hereunder do not contain any feature
which would impair in any way the operation of the Programs including, but not
limited to, software locks or drop-dead devices, date/time expiration codes, or
serial number dependent passwords, and GeoTel further warrants that GeoTel will
not impair the operation of the Programs in any way;
<PAGE> 23
(vi) the Programs, at the then most Current Release level
and/or Update level being utilized by Licensee during the Term, shall at all
times function in conformity with the Specifications when operating and
interacting with all Authorized Platforms and Licensee networks, provided,
however, that where Licensee makes a change in the RDG, then this warranty shall
be abated for a period of ninety (90) days commencing with the effective date of
such change and, subject to Licensee fulfilling its obligation pursuant to
Section 3.1 E, commencing with the ninety first (91st) day from the effective
date of the change to the RDG this warranty shall once again be in full force
and effect as to GeoTel, the Parties expressly agreeing that the foregoing
warranty is intended as a warranty separate from that set forth in Section 9.2
B;
(vii) during the Term, the Programs, at the then most current
Update level and then most Current Release level, will remain competitive with
respect to software made available by other vendors of call routing software;
(viii) it may lawfully grant the licenses for the Programs;
(ix) as of the Effective Date the Deposit Agreement between
GeoTel and Data Securities International, Inc. dated August 25, 1995, in the
form attached hereto as Exhibit G for information purposes only (the "Deposit
Agreement"), is in full force and effect; and
(x) as of the Effective Date, full and complete copies of
GeoTel's then-current Source Code for all of the Programs either then being
licensed to Licensee or otherwise available to Licensee pursuant to this
Agreement along with any other documentation or materials as agreed by the
Parties are held by Data Securities International, Inc. as provided for by, and
subject to, the Deposit Agreement.
B. ADDITIONAL PROGRAM LICENSE WARRANTIES. GeoTel warrants and
represents that for a period of ninety (90) days following the acceptance of a
copy of any Program by Licensee pursuant to Article 7 (the "Warranty Period"),
the copy will be free of Errors when operated on the Authorized Platforms for
such Program. Without limiting any rights or remedies that Licensee may have for
GeoTel's breach of any other warranties set forth in this Section 9.2, in the
event of breach of the foregoing warranty GeoTel shall correct the Error(s)
pursuant to the requirements of Section 11.1 at no additional cost to Licensee,
including without limitation payment to Licensee of Liquidated Damages as
defined and provided in Section 11.1 B 2. Should GeoTel fail to resolve a
Critical Situation in a copy of a Program, as required by Section 11.1 B 1 (i),
by the tenth (10th) day after receipt of notification of the same from Licensee
during the applicable Warranty Period, Licensee can elect, in its sole
discretion either to:
(i) continue to receive such Liquidated Damages until the
Critical Situation is so resolved; or
(ii) at any time from and after the twentieth (20th) day while
such Critical Situation remains unresolved, elect to immediately terminate the
license for such copy and GeoTel shall immediately refund to Licensee all
license fees plus any other moneys paid to GeoTel in
<PAGE> 24
connection with such copy, including but not limited to any fees paid for
Technical Support, Installation Services (including such fees paid as an
Installation Deposit) or other Services in connection therewith, provided,
however, that (x) the full value as determined pursuant to Section 2.4 B of the
Eligible Purchases as to which any refunds pursuant to this Subitem (ii) relate,
including without limitation the terminated license for the Program copy and any
related Services, shall nonetheless continue to be deemed Eligible Purchases and
credited against any applicable Purchase Commitment pursuant to Section 2.4 C,
and (y) as of the second instance within any rolling six (6) month period that
Licensee terminates any license to a copy of a Program pursuant to this Subitem
(ii), Licensee shall further be entitled at its option, and in addition to such
rights of termination, refund and continued crediting against the Purchase
Commitment, to treat such second failure to resolve a Critical Situation as a
material breach of this Agreement pursuant to Section 4.2 (but without the
further right of GeoTel to cure as otherwise set forth therein), and to
immediately terminate this Agreement by written notice to GeoTel pursuant to
said Section 4.2.
C. MEDIA WARRANTY. GeoTel warrants the tapes, diskettes or other
media of the Program copies to be free of defects in materials and workmanship
under normal use during the applicable Warranty Period. During such Warranty
Period, Licensee may return defective media to GeoTel and it will be replaced
without charge within twelve (12) business days of receipt by GeoTel.
D. SERVICES WARRANTY. GeoTel warrants that its Technical Support,
Support Services and any other Services provided hereunder will be performed in
a workmanlike manner and in conformity with the professional standards for
comparable services in the industry, and in compliance with the requirements of
this Agreement. This warranty shall be valid for ninety (90) days from the
completion of the Service. In the event of breach of the foregoing warranty,
GeoTel shall immediately reperform the deficient Service and correct the breach
at no additional cost to Licensee.
<PAGE> 25
9.3 OTHER LIMITATIONS ON WARRANTIES.
--------------------------------
A. No employee or agent of GeoTel is authorized to give a greater
or different warranty than those set forth herein, unless provided by way of an
amendment to this Agreement pursuant to Section 14.11.
B. Portions of the Programs are derived from third-party software
licensed to GeoTel for integration into GeoTel Programs and sublicensing. No
such third party warrants the Programs or any such portion, assumes any
liability regarding use of such portion or the Programs, or undertakes to
furnish any support or information relating to such portion or the Programs,
provided that the foregoing shall not in any manner limit the applicability of
any obligations as to the Programs undertaken by GeoTel pursuant to this
Agreement as to the Programs in their entirety.
C. DISCLAIMERS. THE EXPRESS WARRANTIES SET FORTH IN SECTION 9.1
AND 9.2 ARE THE ONLY WARRANTIES MADE BY GEOTEL WITH RESPECT TO THE PROGRAMS,
SUPPORT SERVICES AND TECHNICAL SUPPORT. GEOTEL MAKES NO OTHER WARRANTIES,
EXPRESS, IMPLIED OR ARISING BY CUSTOM OR TRADE USAGE, AND SPECIFICALLY MAKES NO
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
10. LIMITATION OF LIABILITY
10.1 REDACTED MATERIAL
-----------------
10.2 MORE FAVORABLE LIMITATIONS. GeoTel agrees that the foregoing
limitations of liability, both separately and in the aggregate, afforded to
Licensee hereunder shall from time to time and at all times during the Term, be
no less favorable than any limitations of liability, offered to, or agreed to,
by GeoTel with any third party. Where GeoTel offers, or agrees to, any such more
favorable limitation(s) of liability with a third party, GeoTel shall
immediately notify Licensee in writing of the same, such more favorable
limitation(s) shall apply retroactively to Licensee from the date that the same
were offered, or otherwise agreed to, and the Parties shall promptly amend this
Agreement accordingly.
10.3 ALLOCATION OF RISKS. The provisions of this Article 10 allocate the
risks under this Agreement between GeoTel and Licensee. GeoTel's pricing
reflects this allocation of risk and the limitations of liability specified
herein.
11. SERVICES
11.1. TECHNICAL SUPPORT SERVICES.
---------------------------
A. During the applicable Warranty Period, GeoTel will provide
Licensee for each copy of the Programs obtained by License hereunder without
additional charge the technical
<PAGE> 26
support as specified in this Section 11.1 and Section 4 of Exhibit D
("collectively the "Technical Support"), provided, that in the event of conflict
between the terms and conditions of this Section 11.1 and those of said Section
4 of Exhibit D, the terms and conditions of this Section 11.1 shall prevail.
Thereafter, during the Term and after any expiration or earlier termination of
this Agreement during such period as Licensee desires to continue, or obtain,
the same as to each such copy, Licensee shall be entitled to purchase Technical
Support, in its sole discretion, and GeoTel shall be obligated to provide such
Technical Support, upon payment by Licensee pursuant to Article 5 of the
applicable Technical Support fee as determined pursuant to Exhibit C, provided
that where Licensee elects to purchase Technical Support after the expiration or
termination of this Agreement, the applicable Technical Support fee shall be
determined based on Exhibit C as in effect as of the effective date of such
expiration or termination.
B. 1. Upon receipt of notice(s) from Licensee specifying Errors in
the current unaltered Release of the Program copy, and upon receipt of such
additional information as GeoTel may reasonably request, GeoTel will, without
cost to Licensee, resolve situations involving Errors according to the following
Severity Levels as assigned to such Errors by Licensee, provided such notice is
received by GeoTel within the Warranty Period or during the term of the
Technical Support, as the case may be:
(i) CRITICAL SITUATIONS: A "Critical Situation" is defined as a
situation in which an Error materially impacts Licensee's and/or a Customer's
productivity and/or service levels. Upon receipt of notification of a Critical
Situation by the GeoTel support organization, GeoTel will work with Licensee
and/or the Customer on a continuous, 24 hour per-day basis, and resolve the
Critical Situation within five (5) calendar days from such notification. GeoTel
can respond to a Critical Situation through providing an Update, patch, revision
or temporary workaround solution or by replacing the affected Program copy with
a Program copy conforming to the Specifications, and GeoTel shall be deemed to
have "resolved" a Critical Situation if it has either corrected the Error(s) or
moved Licensee and the Customer to either a "Moderate" or "Other Situation"
status, as defined below.
(ii) MODERATE SITUATIONS: A "Moderate Situation" is defined as
a situation in which Licensee's and/or Customer's operations are continuing but
the Error impairs the ability to use one or more functions of, or the
performance of, services based on the Program copy. GeoTel will respond to, and
resolve the Moderate Situation by providing to Licensee an Update, patch,
revision or temporary workaround or by replacing the affected Program copy with
a Program copy conforming to the Specifications and in any event correcting the
Error within fourteen (14) days after receiving notice from Licensee of the
situation.
(iii) OTHER SITUATIONS: In all other instances, GeoTel will
provide a solution to a reported GeoTel Program Error in the time frame
reasonably determined by GeoTel.
Where the resolution provided by GeoTel to either a Moderate Situation, or a
Critical Situation that has been reduced to a Moderate Situation, is not
permanent, then GeoTel shall provide a
<PAGE> 27
permanent solution as a part of the next Update or Release.
2. The Parties agree that it would be difficult to ascertain the
damages which might be incurred by Licensee as the result of the failure of
GeoTel to resolve a Critical Situation in a copy of a Program as required
pursuant to Section 11.1 B.1(i). Therefore, GeoTel acknowledges and agrees that
for each Error giving rise to a Critical Situation as to a copy of a Program
which GeoTel fails to resolve in the manner specified in Section 11.1 B.1(i)
within the required five days from receipt of notification from Licensee of the
Critical Situation as to such copy, GeoTel shall be liable to Licensee by way of
liquidated damages, and not by way of a penalty, for the amount of REDACTED
MATERIAL per day for each day in excess of such five day maximum that GeoTel
fails to resolve each such Error (the "Liquidated Damages"). Any such Liquidated
Damages shall be paid by GeoTel to Licensee, in Licensee's sole discretion, by
way of either: (i) a payment or payments to be made by GeoTel to Licensee at
such intervals during the continuation of any such failure to correct such
Errors as determined in Licensee's sole discretion, or (ii) one or more offsets
against any then outstanding or subsequent invoices submitted by GeoTel to
Licensee under this Agreement, again as determined in Licensee's sole
discretion, until all Liquidated Damages incurred pursuant to this Section are
paid by GeoTel in full, or (iii) a combination of the foregoing methods of
payment until all such Liquidated Damages are paid in full.
C. RESTRICTIONS ON PROVIDING ERROR CORRECTIONS. GeoTel is not
obligated to perform investigation and/or corrections of Errors reasonably found
by GeoTel to be either: (i) in other than a current, unaltered Release, provided
that GeoTel has made a current Release available to Licensee within the
timeframe specified in Section 11.1D and such new Release still complies with
the applicable Specifications; (ii) caused by Licensee's negligence; (iii)
caused by a modification to the Program by any person or entity other than
GeoTel made without GeoTel's consent or concurrence; (iv) use of the Program in
combination with programs either not furnished or approved by GeoTel or
otherwise certified by GeoTel as working in combination with such Program, or
the use of which in such combination should not reasonably have been anticipated
by GeoTel; (v) caused by use of the Program outside the scope of the User
Documentation; or (vi) due to external causes such as, but not limited to, power
failure or electric surges.
D. UPDATES AND RELEASES. Promptly after making the same generally
commercially available or otherwise available to its other licensees of the
Programs, GeoTel will provide Licensee with one (1) complete copy of each new
Release or Update and one (1) copy of the corresponding User Documentation for
each copy of the Program licensed by Licensee and covered by the Update or
Release. Following shipment of the Release materials, the previous Release shall
remain "current" for purposes hereof for a period of one hundred eighty (180)
days; thereafter only the newly delivered Release will be current. Such newly
delivered Release and the immediately prior Release for such period of 180 days
may be referred to collectively hereinafter as the "Current Release". Releases
will only be issued if Licensee has Technical Support in effect. GeoTel shall
have no obligation hereunder to furnish Licensee with separately priced
components to a Program for which Licensee has not obtained a license.
<PAGE> 28
E. RENEWAL/TERMINATION OF TECHNICAL SUPPORT. Each initial term of
Technical Support shall be for a period of one (1) year from the day after the
date of expiration of the Warranty Period and shall automatically renew for
additional, consecutive one-year terms pursuant to the terms and conditions of
this Section 11.1 unless, not less than thirty (30) days prior to the date upon
which the then-current term is due to end, Licensee notifies GeoTel in writing
of its intention to terminate Technical Support in which event Technical Support
shall terminate as of the end of the then-current term of Technical Support. In
addition, Licensee shall be entitled to terminate Technical Support at any time
for a Program copy on thirty (30) days prior written notice to GeoTel, in which
event Licensee shall receive a prorated refund, on a per diem basis, of any
remaining balance of Technical Support fees paid.
F. PRORATED STARTING DATE. GeoTel will prorate Technical Support
fees so that Technical Support for all Programs on a single Designated Computer
or in a single local area network are renewable on the same date, even if all
the Programs or Technical Support were not ordered at the same time. When GeoTel
and Licensee jointly designate such a common renewal date, then renewal and/or
termination pursuant to Section 11.1.E shall take place with reference to that
date.
G. REINSTATEMENT OF TECHNICAL SUPPORT. Licensee may reinstate
Technical Support which has been terminated by payment of a "Reinstatement Fee"
equal to the Technical Support fees that would otherwise have been applicable
pursuant to Exhibit C to the period between the effective date of termination of
Technical Support and the effective date of reinstatement plus payment of the
annual Technical Support fee for the one year period commencing upon the
effective date of reinstatement.
11.2 SUPPORT SERVICES.
----------------
A. Installation Services.
----------------------
1. During the Term Licensee shall purchase for each copy of a
Program obtained hereunder Installation Services as described in this Section
11.2 A and Section 2 of Exhibit D, and GeoTel shall be obligated to provide such
Installation Services upon the ordering of the same by Licensee pursuant to
Section 6.1 at the prices set forth in Exhibit C. Prices set forth in Exhibit C
shall cover Installation Services within North America; Installation Services
for copies of Programs to be installed outside of North America shall be
pursuant to quote from GeoTel.
2. Upon completion of the installation of each Program copy and
associated Designated Computer at Licensee's or Customer's site, such site being
designated in the Order, GeoTel will issue an Installation Certificate
confirming that GeoTel has successfully completed in conformity with the
Specifications, the configuring, installation and testing of the system
comprised of the Program copy and the Designated Computer within the intended
operational environment.
<PAGE> 29
3. Licensee shall pay the costs of any shipment of any
Designated Computers to GeoTel's facilities for purposes of installation and
configuration of the Programs on the Designated Computers. GeoTel shall prepay
the costs of shipment and any required packaging, handling and insurance, of the
combined Programs/Designated Computers to the applicable Licensee or Customer
site as specified in the Order, and shall add all such costs to Licensee's final
invoice for the installed Programs.
B. Training Services.
------------------
1. During the Term, Licensee shall be entitled, in its sole
discretion, to purchase Training Services, in addition to those otherwise
included as part of Installation Services, as described in this Section 11.2 B
and Section 3 of Exhibit D (provided that in the event of conflict between the
terms and conditions of this Section 11.2 B and those of said Section 3, the
terms and conditions of this Section 11.2 B shall prevail) and GeoTel shall be
obligated to provide such Training Services at GeoTel's training facilities or
at another location mutually agreeable to GeoTel and Licensee, upon the ordering
of the same by Licensee pursuant to Section 6.1 at the prices determined
pursuant to Exhibit C.
2. GeoTel and Licensee may agree to a "Train the Trainer"
program whereby GeoTel will provide in-depth training services to individuals
designated by Licensee as "Trainers". These "Trainers" will then develop
training materials, documentation and curricula, at Licensee's sole cost, to
support a training program in which Licensee's employees or contractors may
participate to become trained in the use and/or operation of the Programs. The
charge, if any, to Licensee for each such "Trainer" to attend GeoTel training
classes will be the same cost as for any other attendee pursuant to the charges
set forth in Exhibit C. "Trainers" may attend training classes provided in the
normal course of Installation Services pursuant to Section 2 of Exhibit D at no
additional cost.
C. PROJECT MANAGEMENT. GeoTel shall provide a qualified person for
each Customer as a point of contact for Licensee to provide project management,
coordination and other ancillary services to Licensee in connection with the
design and implementation of the project. There shall be no additional charge to
Licensee or Licensee's Customer for these services.
D. MODIFICATION OF USER DOCUMENTATION. At Licensee's request and
cost, but such cost subject to the prior approval of Licensee, GeoTel will make
reasonable modifications to the User Documentation, including without limitation
the addition of Licensee's "MCI logo" to the cover and title pages of the User
Documentation. GeoTel shall not be obligated to replace the GeoTel product names
on the User Documentation.
11.3 SOFTWARE DEVELOPMENT SERVICES
-----------------------------
A. During the Term, GeoTel shall develop and provide to Licensee
such modifications to the GeoTel Software (the "Modifications") as may be
requested from time to time by Licensee (the "Software Development Services"),
subject to GeoTel notifying Licensee in
<PAGE> 30
writing within thirty (30) days after receipt of each such request as to a
reasonable, good faith basis upon which GeoTel believes that the development of
the requested Modifications are either (i) not technically feasible, or (ii)
inconsistent with GeoTel's core business. Such notice shall set forth in
reasonably sufficient detail the basis for GeoTel's rejection.
B. Unless GeoTel provides the foregoing notice to Licensee within
the applicable thirty day time period, GeoTel shall work with Licensee to create
a requirements document for the requested Modifications (the "Technical
Specification"), which Technical Specifications are subject to the final
approval of Licensee. Licensee shall reimburse GeoTel for the reasonable time
and materials costs incurred by GeoTel in developing the Technical
Specifications by either: (i) reimbursing GeoTel for such costs promptly after
the Parties have failed to agree upon the development terms and conditions for
the Modifications required pursuant to Section 11.3 C within a reasonable period
of time after finalization of the Technical Specifications, or (ii) where such
terms and conditions are agreed upon by the Parties within such reasonable time
period, then such time and materials costs shall be incorporated into the agreed
pricing for the development of the Modifications. The rates for GeoTel personnel
developing the Technical Specifications shall be those set forth in Section C of
Exhibit C.
C. Upon finalization of the applicable Technical Specifications,
GeoTel and Licensee shall negotiate, in good faith, the terms and conditions
governing development by GeoTel of the requested Modifications pursuant to the
Technical Specifications, including without limitation: (i) the applicable
development milestones/deliverables and schedule, (ii) the payment mode, whether
by fixed price, hourly or otherwise, but subject to Section 11.3 D, and in any
event including payment of the reimbursable costs pursuant to Section 11.3 B
unless previously paid by Licensee, and (iii) such other terms and conditions as
may be agreed by the Parties. Upon agreement by the Parties as to the foregoing
terms and conditions, the same shall be set forth in either a written amendment
to this Agreement or a separate written agreement between the Parties.
D. GeoTel shall perform the Software Development Services for any
Modifications during the Term based upon the rates set forth in Section C of
Exhibit C.
E. GeoTel agrees that it shall develop Programs with so-called
"service bureau capabilities" (formerly referred to as "partitioning"), such
Programs hereinafter being referred to as the "Service Bureau Programs". GeoTel
acknowledges and agrees that it has determined that such Service Bureau Programs
are both technically feasible and consistent with the scope of GeoTel's core
business. GeoTel agrees that it shall develop the Service Bureau Programs
subject to the following:
(i) GeoTel will commence developing the Service Bureau Programs
within sixty (60) days after the Effective Date and make such Service Bureau
Programs available for licensing by Licensee hereunder in their final generally
commercially available form by no later than sixteen (16) months from the
Effective Date;
(ii) Licensee will participate in the development by GeoTel of
the Technical Specifications for the Service Bureau Programs but shall have no
liability for any costs, expenses
<PAGE> 31
or other moneys incurred by GeoTel in connection with that effort;
(iii) Licensee will fund an acceleration of GeoTel's development
calendar to include completion of the Service Bureau Programs in the time frame
specified in Subitem (i) immediately above by placing an Order with GeoTel for
the amount of Two Hundred Fifty Thousand Dollars ($250,000) upon the completion
of the Technical Specifications for the Service Bureau Programs (the
"Acceleration Fee"), and except for payment of the Acceleration Fee by Licensee,
Licensee shall have no other obligation to fund any portion of the development
of the Service Bureau Programs by GeoTel;
(iv) in consideration for payment of the Acceleration Fee,
GeoTel will further grant Licensee credits in the amount of the Acceleration Fee
which Licensee shall be entitled to apply against fees for purchases of licenses
for the Service Bureau Programs hereunder, or, at Licensee's sole discretion,
instead as a credit against fees for purchases of any other Programs or Services
hereunder if: (x) the Service Bureau Programs are made available by GeoTel to
Licensee in final generally commercially available form at a list price per copy
that exceeds sixty percent (60%) of the then applicable Exhibit C list price
hereunder per copy of a dedicated call router Program as defined in Exhibit C,
Model Number 12002 or its functional equivalent; or (y) in Licensee's sole
judgment, the Service Bureau Programs do not meet the functional and performance
requirements of Licensee. Any fees for purchases by Licensee utilizing any
portion of the Acceleration Fee credit shall be considered as Eligible Purchases
hereunder and as such will be applied towards meeting the Purchase Commitment;
and
(v) in the event that GeoTel does not make the Service Bureau
Programs conforming with the applicable Technical Specifications available in
final generally commercially available form for licensing by Licensee hereunder
by the date required pursuant to Subitem (i) immediately above, then the
Purchase Commitment shall from and after such due date be reduced by, and
Licensee shall be released from and have no further obligation or liability in
connection therewith, the amount of One Hundred Sixty Six Thousand Six Hundred
Sixty Six Dollars ($166,666) for every full calendar month after such due date
that the Service Bureau Programs are not made available for licensing by
Licensee in final generally commercially available form, provided that from and
after the date twenty four (24) calendar months from the Effective Date if such
failure to make the Service Bureau Programs so available continues, Licensee
shall further be entitled, at its option, in addition to the foregoing
continuing reduction in the Purchase Commitment, to obtain, and GeoTel shall be
obligated to provide, a prompt refund of the entire Acceleration Fee, provided,
further, however, that except to the extent of the remedies expressly provided
to Licensee pursuant to this Section 11.3 E(v) in the event of GeoTel's failure
to make the Service Bureau Programs so available by the date required pursuant
to Subitem (i) immediately above, such failure shall not otherwise be deemed a
material breach of this Agreement by GeoTel.
11.4 ADDITIONAL SERVICES During the Term, Licensee may request, and GeoTel
may perform, services in connection with the Programs which GeoTel is not
otherwise required to perform under the terms of this Agreement (the "Additional
Services") and Licensee shall pay to GeoTel a mutually agreed upon fee based on
the fees set forth in Section C of Exhibit C, including
<PAGE> 32
reasonable travel expenses and out-of-pocket expenses approved by Licensee, for
any such Additional Service which GeoTel agrees to perform.
11.5 ONSITE SERVICES GeoTel shall comply with the following requirements as
to any onsite services to be performed for Licensee hereunder:
A. INSURANCE. During the Term, GeoTel shall comply with the
Insurance Requirements set forth in Exhibit E ("Insurance Requirements")
attached hereto and incorporated herein by this reference.
B. INCIDENTAL EXPENSES. Licensee shall not be obligated to
reimburse GeoTel for travel and out-of-pocket expenses incurred by GeoTel in
connection with on-site services expressly included in the provision of the
Support Services or Technical Support. Unless otherwise agreed by the Parties,
Licensee shall reimburse GeoTel pursuant to Exhibit F ("Licensee Travel Policy")
attached hereto and incorporated herein by this reference, for reasonable travel
and out-of-pocket expenses actually incurred by GeoTel in connection with
on-site services either requested by Licensee pursuant to Section 11.4 or
otherwise outside of the scope of the on-site services expressly included in the
Technical Support or Support Services.
11.6 DESIGNATED COMPUTERS. GeoTel acknowledges and agrees that any
Designated Computers while in its possession or control during the performance
of any Services is and shall remain the property of Licensee, its bailor or its
designee, and GeoTel shall have no right, title or interest in or to such
Designated Computers other than the limited right of possession and use in order
to perform any of the Services as may be requested by Licensee from time to time
hereunder. While in GeoTel's possession or control, GeoTel shall:
(i) keep the Designated Computers in a secure environment, free
and clear of any and all claims, liens, security interests and other
encumbrances;
(ii) permit Licensee personnel or Licensee's designees
reasonable and free access to the Designated Computers; and
(iii) bear all risk of loss of and damage to the Designated
Computers, and shall further insure the Designated Computers against, and upon
receipt of an invoice, reimburse Licensee for any damage to the Designated
Computers sustained during such possession or control.
11.7 GEOTEL PERSONNEL. GeoTel represents and warrants that pursuant to the
Internal Revenue Code of 1986, as it may be amended or interpreted from time to
time, the regulations promulgated thereunder, and applicable provisions of the
common law, all GeoTel Personnel will be independent contractors in relation to
Licensee. Accordingly, GeoTel will file, or cause to filed, all required forms
and necessary payments appropriate to the status of GeoTel Personnel as
independent contractors in relation to Licensee.
<PAGE> 33
11.8 GEOTEL INDEMNITY. GeoTel at GeoTel's own expense, shall defend, hold
harmless and indemnify Licensee, its Affiliates, and its and their respective
directors, officers, employees and agents, from and against any and all claims,
costs, liabilities, damages, losses or expenses (including reasonable attorneys'
fees and allocated in-house legal expenses) arising from: (i) third party claims
of injury to or death of any person or loss of or damage to any tangible
property (excluding claims for lost data) to the extent caused by the
intentional or negligent acts or omissions of GeoTel or any GeoTel Personnel in
the performance of any of the Services, or (ii) any GeoTel Personnel being
declared to have "employee" status with respect to Licensee.
12. LICENSEE RESPONSIBILITIES REGARDING INSTALLATION SERVICES
12.1 OTHER REQUIREMENTS. Licensee will plan, select and order the quantity,
types and providers of telephone, data access lines or circuits, local area and
wide area network hardware and network services in connection with the
Installation Services and will arrange for their wiring, interconnection,
delivery and setup, as the case may be, at a demarcation point mutually agreed
upon by Licensee and GeoTel. Licensee will take appropriate steps to assure that
the date for GeoTel installation will not be delayed due to non-availability of
such lines, circuits, local area or wide area network hardware or services.
12.2 TELEPHONE ACCESS. Licensee shall provide at the installation site in
connection with Installation Services, at its expense, one telephone access line
for remote support and testing of the Programs and business use of GeoTel at the
demarcation point.
12.3 ADDITIONAL RESPONSIBILITIES. GeoTel shall also advise Licensee of any
additional Licensee responsibilities to enable installation of Programs by
GeoTel.
13. SOURCE CODE ESCROW
13.1 ESCROW AGREEMENT Simultaneously with the execution of this Agreement,
the Parties shall execute an "Additional Party Agreement" in the form of
Appendix C to the Deposit Agreement that shall be effective as of the Effective
Date to secure Licensee's rights hereunder and which Licensee shall be entitled
to maintain in effect during the period specified in Section 13.6. GeoTel
expressly agrees that any and all breaches by, or liability of, Licensee under
or in connection with the Source Code Escrow Agreement and such Additional Party
Agreement shall be subject to the limitations of liability set forth in Section
10.1 ("Limitations") of this Agreement, and that any Source Code Materials or
other Source Code received by Licensee thereunder or hereunder shall be subject
to the provisions of Section 9.1 hereto. GeoTel agrees that at its sole expense
during the period specified in Section 13.6 it shall maintain the Deposit
Agreement in full force and effect with Data Securities International, Inc., or
should such Deposit Agreement with Data Securities International, Inc. terminate
or otherwise expire for any reason during such period, then GeoTel shall
immediately enter into a replacement escrow arrangement for the Source Code
Materials, as defined below, with a replacement independent escrow agent
mutually satisfactory to GeoTel and Licensee (Data Securities International,
Inc. or such replacement escrow agent, as applicable, hereinafter being referred
to as the "Escrow Agent") pursuant to a
<PAGE> 34
form of agreement either substantially similar in form to the Deposit Agreement
or as otherwise mutually agreed by the Parties and in any event in accordance
with the provisions of this Article 13 (the Deposit Agreement or such
replacement agreement, as applicable, hereinafter being referred to as the
"Source Code Escrow Agreement").
A. SOURCE CODE RELEASE. Release of the Source Code Materials to
Licensee for a particular Program shall be on terms and conditions (including
notice, redeposit and other provisions) as set forth in the Source Code Escrow
Agreement, but in any event such release shall be granted if:
(i) GeoTel becomes unable to support such Program by reason of
insolvency, making an assignment for the benefit of creditors, having a receiver
appointed to manage its affairs, ceasing to do business or being adjudicated a
bankrupt under the laws of the United States; and
(ii) Licensee's use of such Program is likely to be seriously
impaired as a result.
B SOURCE CODE LICENSE. In the event that Licensee is furnished a
copy of any Source Code Materials, Licensee shall be authorized to use such
Source Code Materials only for the purpose of performing those support services
and Technical Support with respect to the affected Program that GeoTel was to
perform hereunder or as otherwise referred to in Section 13.6 at the time
Licensee is furnished such copy of the Source Code Materials. Any such Source
Code Materials shall be treated as proprietary and confidential material of
GeoTel under this Agreement and shall also be subject to all conditions and
restrictions set forth in Licensee's Additional Party Agreement under the Source
Code Escrow Agreement.
13.2 SOURCE CODE MATERIALS; AUDIT The Source Code Materials required to be
deposited with the Escrow Agent as of the Effective Date pursuant to Section 9.2
A (x) shall be kept current so as to accurately reflect the Source Code for the
then Current Releases of the Programs either under license to Licensee or
otherwise available to Licensee pursuant to this Agreement from time to time and
promptly updated by GeoTel, but in any event no less frequently than following
each material upgrade, modification or enhancement thereto, including without
limitation any new Releases or Updates provided to Licensee hereunder, and the
same shall be part of the Source Code Materials. GeoTel shall designate a
mutually acceptable neutral third party who, at the expense and request of
Licensee made from time to time, shall audit the materials deposited with the
Escrow Agent under the Source Code Escrow Agreement for purposes of determining
whether GeoTel has fulfilled its deposit obligations. GeoTel will promptly
correct any deficiency disclosed by the audit.
13.3 BANKRUPTCY, LIQUIDATION, ETC. The obligations of GeoTel under this
Article 13 shall extend to any trustee in bankruptcy, receiver, administrator or
liquidator appointed for
<PAGE> 35
GeoTel and GeoTel as debtor-in-possession ("Trustee"), as well as to any other
successor in interest to GeoTel. Without limiting the generality of the
foregoing, upon written request of Licensee, GeoTel shall not interfere with the
rights of Licensee as provided in this Agreement or the Source Code Escrow
Agreement to obtain the Source Code Materials from the Trustee, the escrowee or
any other person or entity having possession thereof, and shall, if requested
under the conditions specified in the Source Code Escrow Agreement for release
of the Source Code Materials, cause a copy of such Source Code Materials to be
made available to Licensee.
13.4 DISPUTES REGARDING SOURCE CODE MATERIALS. Notwithstanding that GeoTel
has submitted the affidavit referred to in Section 4 of the Source Code Escrow
Agreement in response to Licensee's written notice to the Escrow Agent of the
occurrence of an Event of Release, as defined in said Section 4, or that a
dispute between GeoTel and Licensee pursuant to the Source Code Escrow
Agreement, including arising under Section 4, has been submitted to arbitration
pursuant to Section 5 of that agreement, the Parties agree that the Source Code
Materials shall nonetheless be released to Licensee by the Escrow Agent. If the
arbitrator(s) ultimately find that under the terms of this Agreement release of
the Source Code Materials to Licensee should not have occurred, Licensee shall
return the Source Code Materials to the Escrow Agent.
13.5 FUTURE EVENTS. In the event that Licensee and GeoTel enter into a
separate agreement or an amendment to this Agreement providing for broader
distribution rights than set forth herein as of the Effective Date in which
Licensee becomes a reseller of GeoTel's Programs and Services, and/or services
based upon GeoTel's Programs and Services, directly or indirectly to the
end-user marketplace under Licensee's or third party private brand labels and is
marketing the Programs, Services and/or services as strategic Licensee products
and services, then GeoTel and Licensee will as a function of such separate
agreement or amendment to this Agreement negotiate in good faith the addition to
the then existing Source Code Escrow Agreement under this Agreement and any
escrow agreement under any such separate agreement a Source Code Materials
release trigger to address a failure of GeoTel to provide Technical Support.
13.6 SURVIVAL. The obligations of GeoTel under this Article 13 shall
survive and remain in effect until the later to terminate or expire of (i) this
Agreement or (ii) any separate agreement or other arrangement between the
Parties with respect to Technical Support or other maintenance and support for
the Programs, including without limitation any such agreement or other
arrangement between the Parties pursuant to Section 11.1 A in effect after the
expiration or termination of this Agreement.
14. GENERAL TERMS
14.1 INDEPENDENT CONTRACTORS. Notwithstanding anything herein contained to
the contrary, GeoTel and Licensee shall operate in the capacity of independent
contractors hereunder and nothing contained in this Agreement shall be deemed or
construed as creating a joint venture or partnership between GeoTel and
Licensee. Neither Party is by virtue of this Agreement authorized as an agent,
employee or legal representative of the other nor shall either Party have any
power or authority to bind or commit the other. Neither Party will represent to
any third
<PAGE> 36
parties that it has any right to enter into any binding obligation on the other
Party's behalf. Neither Party shall have power to control the activities and
operations of the other, it being intended that each Party is and at all times
will remain an independent contractor.
14.2 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement, and the prohibited
or invalid provision, to the extent of such prohibition or invalidity, shall be
replaced by a mutually acceptable provision which, being valid and enforceable,
comes closest to the intention of the Parties underlying the invalid or
unenforceable provision.
14.3 WAIVER. The waiver by either Party of any default or breach of this
Agreement shall not constitute a waiver of any other or subsequent default or
breach.
14.4 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York, without reference to its choice of law provisions. This
Agreement will not be governed by the United Nations Convention for the
International Sale of Goods.
14.5 ASSIGNMENT. This Agreement shall be binding on and inure to the
benefit of the Parties hereto and their respective successors and assigns.
Either Party may assign this Agreement, and, at such respective Party's option,
all of such Party's rights and obligations under all licenses to Program copies
then held by Licensee, subject to the prior express written consent of the other
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that notwithstanding the foregoing, either Party may, without the
consent of the other Party, assign its rights and obligations hereunder, and at
such assigning Party's option, all of such Party's rights and obligations in
Program licenses then held by Licensee, to an Affiliate, or to a successor in
interest or to a purchaser of all or substantially all of the assets of that
portion of such Party's business as to which this Agreement pertains, provided,
further, however that where any such assignment without consent is made by
GeoTel pursuant to this clause to any of the entities or any Affiliates of such
entities as listed in Exhibit H ("Prohibited Entities for Assignment"), then as
of the effective date of such assignment Licensee shall be released from and
have no further obligation or liability in connection with, and GeoTel shall be
deemed to have waived, the Purchase Commitment for the Contract Year in which
such assignment is effective as well as any Purchase Commitments for any
subsequent Contract Years, and Licensee and the assignee covered by Exhibit G as
to which GeoTel has made such assignment shall each further be entitled, at
their respective sole option, to terminate this Agreement by providing written
notice thereof to the other Party without any liability of any kind, but subject
to the provisions of Sections 4.4 A, 4.4 B, 4.5 and 4.6. Any prohibited
assignment shall be null and void.
14.6 NOTICES. All notices, requests, demands, or communications required or
permitted hereunder shall be in writing and shall be either delivered personally
(including delivery by Federal Express or other comparable nation-wide overnight
courier service), sent by facsimile
<PAGE> 37
transmission, or sent by certified or registered mail, postage prepaid, return
receipt requested, to the respective addresses set forth below (or at such other
addresses as shall be given in writing by either Party to the other) to:
Licensee: MCI Telecommunications Corporation
6 Concourse Parkway
Atlanta, GA 30328
Attn.: Gene Davidson, Contract Administrator
GeoTel: GeoTel Communications Corporation
25 Porter Road
Littleton, MA 01460
Attn.: Tim Allen, Chief Financial Officer
All notices, requests, demands or communications shall be deemed delivered
(a) on the date of delivery (or first business day thereafter if delivered on
Saturday, Sunday or legal holiday, or after normal business hours) when
delivered personally, (b) on the date of transmission (or first business day
thereafter if delivered on Saturday, Sunday or legal holiday, or after normal
business hours) when sent by facsimile transmission with telephonic confirmation
of receipt, and (c) on the date shown on the receipt when sent by certified or
registered mail unless delivery is refused or delayed by the addressee, in which
event they shall be deemed delivered one (1) day after dispatch.
14.7 EXPORT ADMINISTRATION. GeoTel and Licensee shall comply with all
applicable laws, regulations and rules, including, without limitation, the
export control laws of the United States of America and prevailing regulations
which may be issued from time to time by the United States Department of
Commerce and Office of Munitions Control, U.S. Department of State, concerning
the exporting, importing and re-exporting of the Programs, in their respective
performances under this Agreement. Without limiting the generality of the
foregoing, GeoTel and Licensee each agrees that it shall not export or re-export
any Programs or the direct product thereof in violation of the regulations of
the United States Department of Commerce or the U.S. Export Administration Act.
14.8 APPROVAL OF APPROPRIATE GOVERNMENTAL AUTHORITIES. Prior to
delivery of the Programs, GeoTel and Licensee shall apply to the appropriate
governmental authorities and obtain all approvals necessary for their respective
execution and fulfillment of this Agreement and the payment of the fees or other
moneys due hereunder.
14.9 HEADINGS Headings used in this Agreement are for convenience of
reference only and shall not be construed as altering the meaning of an Article,
Section or this Agreement.
4.10 COUNTERPARTSARTICLE . This Agreement may be executed simultaneously in
two counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same agreement.
<PAGE> 38
14.11 EXHIBITS. In the event of conflict between the terms and conditions
of this Agreement and the provisions of any Exhibit hereto, the terms and
conditions of this Agreement shall prevail.
14.12 ENTIRE AGREEMENT. This Agreement, including all Orders, along with
the Deposit Agreement, and the Additional Party Agreement constitute the
complete agreement between the Parties and supersedes all previous agreements or
representations, written or oral, with respect to the matters specified herein.
This Agreement may not be modified or amended, or any provision hereunder
waived, except in a writing signed by a duly authorized representative of each
Party (unless otherwise expressly provided to the contrary herein as to any
waiver). This Agreement shall supersede the terms of any unsigned license
agreement included in a package for GeoTel furnished Programs.
<PAGE> 39
IN WITNESS WHEREOF, the duly authorized representatives of the Parties have
executed this Agreement.
GEOTEL: LICENSEE:
GEOTEL COMMUNICATIONS MCI TELECOMMUNICATIONS
CORPORATION CORPORATION
By: By:
------------------------------ ----------------------------
(Authorized Signature) (Authorized Signature)
Name: Name:
---------------------------- --------------------------
(Type or Print) (Type or Print)
Title: Title:
--------------------------- -------------------------
Date: Date:
---------------------------- -------------------------
<PAGE> 40
EXHIBIT A
AFFILIATES AND ALLIANCE PARTNERS
A.LICENSEE AFFILIATES
1.networkMCI, Inc.
2.MCImetro Access Transmission Services, Inc.
3.MCI International, Inc.
4.MCI International Telecommunications Corporation
5.MCI Equipment Acquisition Corporation
6.MCI Wireless, Inc.
7.Overseas Telecommunications, Inc.
8.SHL Systemhouse Inc. (Canada)
9.SHL Systemhouse Corp. (U.S.)
10.SHL Computer Innovations, Inc. (Canada)
11.Telecom*USA, Inc.
B.REDACTED MATERIAL
-----------------
<PAGE> 41
EXHIBIT B
PERFORMANCE CRITERIA
The Programs shall be subject to the following Performance Criteria:
1. uptime measured over a rolling thirty (30) day period/Programs
availability in fully redundant configurations: ninety nine percent (99%)
uptime; and
2. response time to network: 60 calls per second in a properly
configured and redundant system.
a
<PAGE> 42
EXHIBIT C
PROGRAMS AND SERVICES PRICING
A. PROGRAMS AND LIST PRICES.
The GeoTel list prices for Program copy licenses, Technical Support and
Installation Services in effect as of the Effective Date are set forth in
Attachment A ("GeoTel Price List") attached to this Exhibit C and incorporated
herein by this reference.
B. REDACTED MATERIAL
a
<PAGE> 43
EXHIBIT D
TECHNICAL SUPPORT AND SUPPORT SERVICES
<PAGE> 44
EXHIBIT E
INSURANCE REQUIREMENTS
During the term of this Agreement the following insurance shall be maintained by
Licensor:
COMPREHENSIVE OR COMMERCIAL GENERAL LIABILITY INSURANCE. Comprehensive or
Commercial General Liability Insurance naming Licensor and its affiliates as the
named insured. LICENSEE, et al is to be named as an ADDITIONAL INSURED for
purposes of this Agreement. This policy shall cover liability for injury to or
death of persons or damage to property including but not limited to work
associated with this Agreement, including such liability as may arise from the
use of independent contractors, and contractual liability assumed under this
Agreement. The policy shall provide a limit of $1 Million combined single limit
(CSL) per occurrence and aggregate (where applicable) for bodily injury,
personal injury and property damage, and shall:
Cover broad form property damage;
Cover broad form/blanket contractual liability (both oral and written
contracts); Cover personal injury liability;
Cover employees as additional insured;
BUSINESS AUTOMOBILE LIABILITY INSURANCE. Business Automobile Liability
Insurance including coverage for owned, hired, and non-owned vehicles in the
amount of:
$1 Million CSL per occurrence/accident for bodily injury and property
damage. LICENSEE, et al is to be named as an ADDITIONAL INSURED for purposes of
this Agreement.
WORKER'S COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Workers'
Compensation in the statutory amount(s) and with benefits required by the laws
of the state in which the Work is performed and the state(s) in which employees
are hired, if the state(s) are other than that in which the Work is performed.
Employers' Liability with minimum limit of liability of:
$1 Million for bodily injury by accident/each accident; $1
Million for bodily injury by disease/each employee; and $1 Million
for bodily injury by disease/policy limit (aggregate).
Certificates of such insurance shall be submitted to LICENSEE naming LICENSEE,
et al as ADDITIONAL INSURED on such policies as appropriate, prior to the start
of Licensor's performance or this Agreement. The certificates shall certify
that no material alteration, modification or termination of such coverage
shall be effective without at least thirty (30) days advance notice to LICENSEE.
Licensor's carriers shall waive
<PAGE> 45
all rights of recovery against LICENSEE for any injuries to persons or damage
to property related to of this Agreement.
Licensor shall require each subcontractor to provide and
maintain at all times during the term of this Agreement insurance
equivalent to that which is required of Licensor.
Subcontractor and Subcontractor's carriers shall waive all right
to recovery against LICENSEE for any injuries to persons or
damage to property in the execution of Work
performed under this Agreement.
Licensor shall permit any authorized representative of LICENSEE
to examine Licensor's original insurance policies should LICENSEE so request.
Should Licensor at any time neglect or refuse or provide the insurance
required, or should such insurance be canceled or non-renewed, LICENSEE shall
have the right to purchase such insurance, and the cost shall be billed to
Licensor. In addition, should Licensor at any time neglect or refuse to pay the
necessary premium, LICENSEE shall have the right to deduct this amount
from moneys due Licensor. Licensor and all subcontractors shall ensure full
compliance with the terms of the Occupational Safety and Health Administration
(OSHA) and all locations, jurisdictions' safety and health regulations
during the full term of this Agreement.
<PAGE> 46
EXHIBIT F
LICENSEE TRAVEL POLICY
(a)Authorization. The Licensee Technical Representative may request GeoTel
Personnel to travel in the performance of duties. GeoTel Personnel must receive
approval from GeoTel and must have the written authorization of the appropriate
Licensee Director before commencing travel.
(b) Payment Procedure.
(1) GeoTel shall initially be responsible for travel expenses and shall
reimburse GeoTel Personnel, as appropriate.
(2)GeoTel will then invoice Licensee for the travel. A
separate Purchase Order will be used for all travel expenses. All
travel, transportation, and per diem expenses, copies of which shall
accompany invoices, for which reimbursement is sought, shall have
the signature of the Licensee Technical Representative and shall be itemized
and substantiated with appropriate receipts.
(3)Expense reports must be filed within five (5) days of completion of travel
and invoiced on the next regular invoice submission to Licensee.
(c) Payment Policy. Licensee-approved travel and related Licensee-approved
out-of-pocket expenses incurred in performing services for Licensee under the
Agreement shall be invoiced to Licensee at cost. All travel expenses must comply
with Licensee's corporate travel policy in effect during the term of
this Agreement (a copy of which is on file with Licensee).
(d) Reimbursement will be as follows:
(1)Commercial transportation - Reimbursable on an "incurred cost" basis at
economy, tourist or coach rates; or business class for international travel.
(2)Private automobile - Reimbursable at Licensee's standard rate, not to
exceed $0.24 per mile.
(3)Per diem - Reimbursable for actual lodging and local transportation and
actual meal expenses not to exceed $30.00 per day.
(4)Licensee will not reimburse for rental cars in conjunction with visits
to Licensee's Arlington facility.
<PAGE> 47
(e)Licensee will not reimburse GeoTel for local travel incurred as a result
of commuting to Licensee's facility to perform Work.
(f) In no event shall Licensee be liable for any travel charges
associated with relocation of GeoTel's personnel without the written approval of
the Licensee Authorized Representative.
<PAGE> 48
EXHIBIT G
DEPOSIT AGREEMENT
<PAGE> 49
EXHIBIT H
PROHIBITED ENTITIES FOR ASSIGNMENT
REDACTED MATERIAL
<PAGE> 1
EXHIBIT 10.6
SOFTWARE LICENSE AND DISTRIBUTION AGREEMENT
-------------------------------------------
Agreement made as of the 29th day of March, 1996, by and between GeoTel
Communications Corporation, a Delaware corporation with its principal place of
business at 25 Porter Road Littleton, Massachusetts, USA, 01460 ("GEOTEL") and
OPTUS Systems PTY Ltd ACN: 056-541-167, an Australian Corporation with its
principal place of business at 101 Miller Street, North Sydney, NSW 2060,
Australia ("OPTUS").
In consideration of the mutual covenants and agreements contained in
this Agreement, GEOTEL and OPTUS hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "OPTUS SUBLICENSE" means the license granted by OPTUS to a Customer
to use the Program subject to the terms and conditions herein. The number of
OPTUS Sublicenses for a given Designated Computer shall be one (1).
(b) "CUSTOMERS" means the third party customers of OPTUS who sublicense
the program for their internal use only.
(c) "DEMONSTRATION LICENSE" means the license granted by GEOTEL to
OPTUS to use the Demonstration System Package as described in Exhibit C for
demonstration and marketing purposes.
(d) "DESIGNATED COMPUTER" means the central processing unit(s)
designated in a purchase order for the Program.
(e) "PROGRAM" means GEOTEL's software products (in machine-readable,
object code form only) described on EXHIBIT A hereto.
(f) "TERRITORY" MEANS AUSTRALIA AND NEW ZEALAND
(g) "PURCHASE ORDER" shall mean an order prepared in accordance with
this Agreement to facilitate the license of Programs to the Customers by OPTUS
and submitted by OPTUS to GEOTEL.
(h) "Acceptance Testing" in relation to the Modified Programs referred
to in Clause 11 (f) shall mean those tests undertaken by OPTUS and for which
GEOTEL must provide reasonable assistance, to evaluate the Modified Programs to
ensure they provide the functionality specified in Clause 7 (f) by OPTUS, and
which shall take place within thirty (30) days after delivery of the Modified
Programs to OPTUS. GEOTEL shall have no responsibility for delays or failure of
Acceptance Testing caused by any third party OPTUS contractor's failure to
deliver products, features, services or interfaces which OPTUS had the
responsibility to provide in conjunction with the Modified Programs.
(i) "Modified Programs" shall mean only those custom features or
interfaces developed by GEOTEL, under contract to OPTUS and to specifications
supplied by OPTUS. GEOTEL's Programs are in no way included in the Modified
Programs or the license granted pursuant to Clause 12 (f).
2. DESIGNATION. Subject to the terms and conditions of this Agreement,
for the initial term of this Agreement, GEOTEL hereby designates OPTUS as the
exclusive authorized distributor of the Program in the Territory and hereby
grants to OPTUS the nontransferable, exclusive right to distribute the Program
to its Customers in the Territory.
2.1. (a) Notwithstanding anything to the contrary herein, except as
expressly provided for in Section 2.1 (c) hereunder, nothing in this Agreement
shall be deemed to limit or prevent GEOTEL, directly or indirectly, from
marketing, distributing, licensing or selling the Program anywhere throughout
the world, including in the Territory.
<PAGE> 2
(b) Except as otherwise authorized in writing by GEOTEL, OPTUS
shall not market, demonstrate, advertise, promote, distribute or engage in other
activities to sublicense the Programs outside the Territory.
(c) For the initial Term of this Agreement, so long as OPTUS
is not in material breach of this Agreement, GEOTEL will not designate any
company based in the Territory as a distributor of the Programs.
2.2 Internal Use Programs License Rights Granted.
(a) Upon GEOTEL's execution and receipt of initial payment,
GEOTEL grants to OPTUS a non-exclusive and nontransferable license to use the
Programs detailed in Exhibit D, pursuant to this Agreement as follows:
(i) to use the Programs solely for OPTUS's own
internal telecommunications operations ("Internal
Use") on the Designated Computer or on a backup
computer on a temporary basis if the Designated
Computer is inoperative. Programs may not be used to
process information for third parties which are not
related bodies corporate to OPTUS; and
(ii) to copy the Program for archival or backup
purposes. All archival and backup copies of the
Program are subject to the provisions of this
Agreement, and all titles, trademarks, and copyright
and restricted rights notices shall be reproduced in
such copies.
(b) By virtue of this Agreement, OPTUS acquires only the right
to use the Programs and does not acquire any other rights or ownership. All
rights, title, and interest in the Programs, including the copies of the
Programs delivered to OPTUS by GEOTEL, shall at all times remain the property of
GEOTEL or GEOTEL's licensor.
2.3 Documentation. GEOTEL will provide OPTUS with relevant user
documentation in English then current and sufficient to enable full and
efficient use of the Programs ("the Documentation"). Copying of the
Documentation and other GEOTEL materials is not permitted unless GEOTEL first
consents in writing to such copying, which for the purposes of OPTUS
sublicenses, will not be unreasonably withheld.
3. DEMONSTRATION LICENSE. Subject to the terms and conditions of this
Agreement, in connection with the distribution and Internal Use rights granted
to OPTUS set forth in Section 2 hereof, GEOTEL hereby also grants to OPTUS the
nontransferable, exclusive right in the Territory to use five (5) copies of the
GEOTEL Demonstration System Package as described in Exhibit C for demonstration
and marketing purposes ("Demonstration License"). OPTUS shall demonstrate the
Program only on system configurations that conform to the minimum configurations
specified in Exhibit B.
4. SUBLICENSES. Subject to the terms and conditions of this Agreement,
in connection with the distribution rights granted to OPTUS set forth in Section
2.1 hereof GEOTEL hereby also grants to OPTUS the nontransferable, nonexclusive
right to grant OPTUS Sublicenses in the Territory. In no event, shall OPTUS
furnish the Programs media or Documentation prior to GEOTEL's acceptance, which
acceptance shall not be unreasonably withheld, of OPTUS's Purchase Order for the
granting of an OPTUS Sublicense. OPTUS shall keep correct and complete records
of each Customer to whom it has granted a OPTUS Sublicense and furnished a copy
of the Programs media (including Updates) and related Documentation.
5. LICENSE AND SUBLICENSE AGREEMENTS. All OPTUS Sublicenses shall be
made pursuant to written sublicense agreements between OPTUS and each Customer,
and the licenses granted to OPTUS in Sections 2.2 and 3 of this Agreement are
granted pursuant to terms under which each Customer or OPTUS as the case may be
agrees (a) the sublicense or license shall be non-exclusive, personal and
nontransferable, (b) to use the Program for internal use only and only on the
Designated Computer on which the Program is installed by Customer or OPTUS, (c)
not to copy or reproduce the Program, in whole or in part, except for use on the
Designated Computer on which the Program is installed by Customer or OPTUS, and
then only with the inclusion of proper copyright and proprietary notices on such
copies, (d) not to provide or otherwise make available the Program or related
documentation to any other person or entity other than the Customer's or OPTUS's
employees and contractors (other than a competitor of GEOTEL) directly involved
with the Customer's or OPTUS's use of the Program who are bound to protect the
confidentiality of the Program, (e) not to modify, enhance or create works
derivative of the Program or decompile,
2
<PAGE> 3
disassemble or otherwise attempt to access the source code of the Program, (f)
GEOTEL'S liability shall be limited at least to the extent provided in this
Agreement, (g) Portions of the Programs are derived from third-party software
licensed to GEOTEL for integration into GEOTEL Programs and sublicensing. No
such third-party warrants the Programs or any portion thereof, assumes any
liability regarding use of the Programs, or undertakes to furnish any support or
information relating to the Programs. (h) the Programs are confidential and
proprietary to GEOTEL and GEOTEL and its licensors retain all title, copyrights,
patent rights and other proprietary rights to the Program and all copies
thereof; (i) in the event the sublicense or license of the Program is terminated
for whatever reason or expires, Customer or OPTUS must cease use and return to
OPTUS or GEOTEL or destroy the Programs and any copies thereof, (j) the Customer
or OPTUS shall not export the Program without first obtaining the appropriate US
or other governmental licenses and approvals, (k) the parties acknowledge that
GEOTEL is the owner of the intellectual property rights in the Programs. In
addition, no sublicense agreement shall (i) obligate GEOTEL to directly provide
installation, training and support or maintenance services to the Customer
unless expressly agreed to in writing by GEOTEL prior to the granting of a
Sublicense, (ii) obligate GEOTEL under any warranty or indemnification rights
granted to the Customer, (iii) provide for additional functionality or special
modifications to the Program other than for GEOTEL authorized modifications or
enhancements or (iv) adversely affect GEOTEL's ownership rights of the Program
or the economic interests of GEOTEL. Any permitted OPTUS Sublicense shall
continue upon the termination of the license from GEOTEL to OPTUS unless
terminated in accordance with the terms of the OPTUS Sublicense by termination
of use of the Program or by a breach of the OPTUS Sublicense.
6. DISTRIBUTORS REPRESENTATIVES. OPTUS shall not be entitled to appoint
third party representatives for solicitation of the Program without the prior
written consent of GEOTEL.
7. OPTUS'S OBLIGATIONS AND REPRESENTATIONS. OPTUS shall, at its own
expense and without remuneration from GEOTEL, perform the following during the
term of this Agreement:
(a) OPTUS shall (i) maintain a sales and marketing program in
the Territory to market the Programs, (ii) perform all reasonably necessary
promotion and advertising of the Programs and (iii) in general, utilize its
reasonable efforts to effect the maximum amount of gross revenues of the
Programs.
(b) OPTUS shall submit to GEOTEL, at least thirty (30) days
prior to the beginning of each calendar quarter during the term of this
Agreement, a non-binding revenue forecast for the ensuing twelve (12) month
period. Such forecasts are solely for the purpose of GEOTEL planning.
(c) OPTUS shall provide GEOTEL with timely reports detailing
marketing or technical information on products, competitive comparisons, special
sales or service suggestions, competitive announcements, etc., and shall respond
promptly to all inquiries and reasonable requests for help from GEOTEL.
(d) OPTUS will distribute only documentation produced by
GEOTEL, reproduced under a GEOTEL documentation license or approved by GEOTEL to
describe the Product, its capabilities or operations, except to the extent that
such documentation describes OPTUS customized features or OPTUS specific issues.
(e) OPTUS will work with GEOTEL to develop a joint press
release to announce the agreement described herein. From time to time, but at
least twice per calendar year, OPTUS and GEOTEL will jointly announce any
significant new customer installations. Public announcements identifying
specific customers or descriptions of identifiable customer applications will be
made only after securing customers' approval and resolution of any restrictions
imposed by the customers
(f). Upon execution of this Agreement, OPTUS will provide
GEOTEL with a specification and Acceptance Testing plan for developing the OPTUS
Network Interface or equivalent OPTUS SCP network interfaces and will jointly
perform certification testing with GEOTEL. For as long as this agreement is in
place, at GEOTEL'S request, OPTUS will re-certify the interfaces for the
Programs once each calendar year at no cost.
(g). OPTUS will certify that when the Program interface is
installed on an existing OPTUS system that the warranties and privileges granted
the customer remain in force and supported by OPTUS.
(h). Installation. OPTUS shall be responsible for the
installation of the Program on GEOTEL certified hardware platforms as described
in Exhibit B and shall subcontract for the installation of the Program with
3
<PAGE> 4
GEOTEL for the pricing set forth in Exhibit A plus reasonable travel and living
expenses. Once OPTUS has demonstrated to GEOTEL's reasonable satisfaction that
they have sufficient technical resources to properly install the product, OPTUS
can assume total installation responsibility.
(i). Training and Support. OPTUS shall be responsible for the
training and support of Customers and shall subcontract for the training and
support of the Program with GEOTEL for the pricing set forth in Exhibit A plus
reasonable travel and living expenses. Once OPTUS has demonstrated to GEOTEL's
reasonable satisfaction that they have sufficient technical resources to
properly train customers in the product, OPTUS can provide training using
instructors that have been certified by GEOTEL as well as GEOTEL materials.
(j). Maintenance. *
(k). OPTUS shall be responsible for billing and collecting all
amounts due from Customers. OPTUS shall pay all expenses incurred by it in
connection with its business and shall be solely responsible for the acts and
expenses of its employees and agents.
8. GEOTEL'S OBLIGATIONS. GEOTEL shall, at its own expense and without
remuneration from OPTUS, perform the following during the term of this
Agreement:
(a) GEOTEL shall provide OPTUS with all relevant technical
information regarding the Programs and timely reports detailing marketing or
technical information on products, competitive comparisons, special sales or
service suggestions, competitive announcements and shall respond promptly to all
inquiries and reasonable requests for help from OPTUS.
(b) During the term of this Agreement, OPTUS shall have the
right to use the tradenames and trademarks of GEOTEL applied to the Programs by
GEOTEL, whether registered or not, in advertising and promotional literature
solely in connection with OPTUS's marketing of the Programs. OPTUS shall
prominently identify that such trademarks and tradenames are the exclusive
property of GEOTEL. OPTUS shall have no right to register any such tradenames or
trademarks in its own name or right, whether as owner, user or otherwise,
without the prior written consent of GEOTEL. The use of GEOTEL's trademarks and
tradenames shall be in accordance with instructions and procedures provided from
time to time by GEOTEL. Nothing contained in this Agreement constitutes any
right or license to apply the trademarks or tradenames of GEOTEL to any
Programs, nor constitutes any transfer of any title or ownership interest in any
trademarks or tradenames of GEOTEL. OPTUS may add its own trademarks, logos,
symbols, or other identifying labels to products or their packages or container.
Upon termination or expiration of this Agreement, OPTUS shall immediately cease
using all trademarks or tradenames of GEOTEL, and shall not thereafter use any
marks or names similar thereto either in connection with the Programs or
otherwise upon completion of all outstanding or ongoing customer obligations.
9. GEOTEL SERVICE, UPDATES, TRAINING, AND CONSULTATION. GEOTEL shall
provide the following to OPTUS.
(a) SERVICE. In consideration of the payment By OPTUS of the
amount referred to in clause 7 (j), upon receipt of written notice from OPTUS
specifying failures or errors found in a Program, and upon receipt of such
additional information as GEOTEL may reasonably request, GEOTEL shall act in an
expeditious manner to correct defects in the current, unaltered release of such
Program, such Service is further described in the GEOTEL Backup Maintenance And
Service Support Policy contained in Exhibit F hereto. GEOTEL shall not be
obligated to
* Portions have been omitted for confidential treatment.
4
<PAGE> 5
perform investigation and / or correction of defects found by GEOTEL to be (i)
in other than a current, unaltered release; (ii) caused by OPTUS or its
Customers negligence or GEOTEL unauthorized modification of the Programs or use
thereof in combination with software not provided by GEOTEL; (iii) caused by
improper or unauthorized use of the Programs; or (iv) due to external causes
such as, but not limited to, power failure or electric surges.
(b) UPDATES. In further consideration of the payment by
OPTUSof the amount referred to in clause 7 (j), from time to time, GEOTEL may
issue modified or enhanced versions of the Program which it incorporates in the
then current version of the Programs and agrees to promptly provide OPTUS, so
long as the Programs licensed to OPTUS and its Customers is covered pursuant to
the annual maintenance fees due GEOTEL under Section 7 (j), with one copy of any
such update including one copy of the related documentation updates (the
"Update"). Following shipment of the Update materials, the previous release
shall remain "current" for purposes hereof for a period of one hundred eighty
(180) days. Thereafter, only the Update shall be current. GEOTEL shall have no
obligation hereunder to furnish OPTUS with separately priced components or
options to the Program except as described on EXHIBIT A hereto. GEOTEL will
provide OPTUS with 120 days advance notice of new release schedules and content.
Updates and Maintenance releases are offered at no charge through the term of
the Warranty Period. Major new separately priced applications which include new
functionality and are not service related will require upgrade purchases by
OPTUS Customers and will be included in the programs defined in Exhibit A.
(c) OPTUS TRAINING. GEOTEL agrees to provide at no additional
fee to OPTUS three man-weeks of user, sales, system and maintenance training at
GEOTEL'S training facility, located in Littleton, MA. . The training schedule
shall be by mutual agreement of the parties. Both parties agree to use their
best efforts to schedule all Training within 90 days of the date of this
Agreement.
(d) OPTUS CONSULTATION. GEOTEL agrees to make available to
OPTUS additional technical consultation for the purpose of providing additional
technical information not normally covered in standard training courses or
technical sales support. The amount, method of delivery, limitations and cost of
such consultation and related travel shall be as mutually agreed from time to
time.
10. OPTUS PURCHASE ORDERS
---------------------
(a) Form of Purchase Orders. OPTUS may place an order for the
license of Program by submitting an executed Purchase Order to GEOTEL. Each
Purchase Order must identify (i) the Program ordered, (ii) the name of the
Customer (OPTUS may substitute its own name and provide the Customers name
promptly after delivery of the Program ),(iii) the Designated Computer on which
the Customer will use the Programs and (iv) that the Program being ordered on
the Purchase Order are being ordered pursuant to the terms and conditions of
this Agreement.
(b) Terms of Licenses and Acceptance of Purchase Orders.
OPTUS's license of Programs pursuant to the grants in Sections 2.2 and 3
hereunder, for its own use or for sublicense to Customers, shall be governed
solely by the terms and conditions of this Agreement, including the prices and
discounts set forth in Section 11 hereto. Any additional or different terms
appearing in a Purchase Order shall be null and void. each Purchase Order will
be effective only upon acceptance by GEOTEL which shall not be unreasonably
withheld.
(c) Delivery of Program . All Purchase Orders must be received
by GEOTEL not less than two weeks prior to the expiration date of this Agreement
and must specify delivery within the term of this Agreement. Deliveries will be
scheduled in a timely manner by GEOTEL after receipt and acceptance of an
executed Purchase Order. All OPTUS Sublicenses of Program are FOB GEOTEL's
offices in Littleton, MA. . Unless specific instructions to the contrary are
supplied by OPTUS, methods and routes of shipment will be selected by GEOTEL,
but GEOTEL will not assume any liability in connection with shipment nor
constitute any carrier as GEOTEL's agent. Unless otherwise instructed by OPTUS,
GEOTEL will prepay transit insurance and freight and invoice OPTUS for such
amounts. All shipments will be made at OPTUS's risk and expense, and OPTUS will
be responsible for making claims with carriers, insurers, warehousemen and
others for misdelivery, non-delivery, loss, damage or delay.
11. PRICING AND PAYMENT TERMS.
-------------------------
(a) DISCOUNT With respect to the licenses granted to OPTUS
pursuant to Sections 2.2 and 3 and detailed in Exhibits C and D the discounts
are all inclusive and are included in the prepaid minimum royalty payment
5
<PAGE> 6
[*]
(b) REPORTS AND PAYMENT. OPTUS shall deliver to GEOTEL within
15 days after the end of each calendar month a written report showing which
OPTUS Sublicenses were granted. Such report shall identify each Customer to whom
a OPTUS Sublicense has been granted, the street address of the installation, the
type and configuration of license granted, , the system type, serial number for
the license and the amount due GEOTEL. Payment for all Programs shall be made by
OPTUS no later than thirty (30) days after date of GEOTEL invoice to OPTUS via
wire transfer of US dollars pursuant to wire instructions included in Exhibit E.
(c) RECORDS. OPTUS shall keep full, true and accurate books of
account and other records containing all information and data which may be
necessary to ascertain and verify the amounts payable hereunder. During the term
of this Agreement and for a period of one year following its termination, GEOTEL
shall have the right from time to time (not to exceed twice during each calendar
year) to inspect, or have an agent, accountant or other representative inspect,
upon reasonable notice and during regular business hours, such books, records
and supporting data. The expenses of any such examination shall be paid by
GEOTEL.
(d). MINIMUM ROYALTIES ON LICENSES AND SUBLICENSES OF THE
PROGRAM. [*]
6
[* Portions have been omitted for Confidential Treatment]
<PAGE> 7
(*)
(g) All payments to GEOTEL hereunder shall be paid in U.S.
dollars.
(h) All shipments to OPTUS hereunder shall be F.0.B. GEOTEL's
facility and all costs for shipping and insurance shall be paid for by OPTUS.
(i) This Agreement may be terminated by OPTUS in the event the
Modified Programs fail the Acceptance Testing. Upon termination, OPTUS will
return the Modified Programs and all copies of the Programs to GEOTEL. In the
event of OPTUS's termination of the Agreement pursuant to this clause 11 (i) and
receipt of the Modified Programs and Programs by GeoTel, then GEOTEL will
promptly refund to OPTUS all sums paid by OPTUS pursuant to Clauses 11 (f) and 7
(j). Upon such termination of this Agreement and refund of such moneys paid
pursuant to Sections 11 (f) and 7 (j) either parties continuing obligations as
they relate to this Agreement are contained in Section 26 hereunder.
12. PROPRIETARY RIGHTS AND CONFIDENTIALITY.
--------------------------------------
(a) OWNERSHIP. For purposes of Section 117 of the Copyright
Act of 1976, as amended, and for all other purposes, GEOTEL shall be considered
the owner of the Program and all related documentation and any copies thereof,
and of all copyright, trade secret, patent and other intellectual or industrial
property rights therein. All copies of the Program made by OPTUS shall contain
proper copyright an proprietary notices.
(b) PROPRIETARY INFORMATION. As used in this Agreement,
"Proprietary Information" shall mean all confidential, proprietary or secret
information of a party, including without limitation components, parts, drawings
data sketches, plans, programs, specifications, techniques, processes,
algorithms, inventions and other information or material, owned, possessed or
used by such party. Notwithstanding the foregoing, Proprietary Information shall
not include any information which (i) is or becomes party of the public domain
through no act or omission on the part of the receiving party, (ii) is disclosed
to third parties by the disclosing party without restriction on such third
parties, (iii) is in the receiving party's possession, without actual or
constructive knowledge of an obligation of the confidentiality with respect
thereto, at or prior to the time of disclosure under this Agreement, (iv) is
disclosed to the receiving party by a third party having no obligation of
confidentiality with respect thereto, (v) is independently developed by the
receiving party or (vi) is released from confidential treatment by written
consent of the disclosing party.
(c) CONFIDENTIALITY. Each party shall hold in confidence and
not disclose (except on a confidential basis to its employees or contractors
(other than a competitor of the other party) who need to know and are bound to
preserve the confidentiality thereof) all Proprietary Information received from
the other party in the manner and to the same extent as it holds in confidence
its own Proprietary Information, and shall not use any such Proprietary
Information except for purposes contemplated by this Agreement. Each party shall
limit use of and access to the other party's Proprietary Information to such of
its employees or contractors [other than a competitor of the other party] as are
directly involved in the utilization of such Proprietary Information. Each party
shall take all reasonable steps to safeguard the other party's Proprietary
Information, and to ensure that no persons authorized to have such access shall
take any action which would be in violation of this Agreement if taken by such
party. Each party shall promptly report to the other party any actual or
suspected violation of this subsection and shall take further steps as may
reasonably be requested by the other party to prevent or remedy any such
violation.
(d) PROTECTION OF THE PROGRAMS. The ideas and the expressions
thereof contained in the Programs are confidential and proprietary information
and trade secrets of GEOTEL that will be disclosed by GEOTEL to OPTUS in
confidence.. OPTUS agrees to treat the Programs as a valuable asset of GEOTEL
and agrees that the Programs shall not be used for any purpose other than to
assist in the normal use of the Programs as defined in the Documentation. In
particular, but without limitation, OPTUS agrees it will not decompile,
disassemble, or attempt in any way to reverse engineer the Programs or to
develop a competing product based on the Programs.
[*Portions have been omitted for Confidential Treatment]
7
<PAGE> 8
(e) EQUITABLE RELIEF. Because unauthorized use or transfer of
the Program and related documentation may diminish substantially the value of
such materials and irrevocably harm GEOTEL, if OPTUS breaches the provisions of
this Section 12, GEOTEL shall be entitled to equitable relief (including, but
not limited to, injunctive relief), in addition to other remedies afforded by
law, to prevent a breach of this Section 12.
(f) Custom Development.
------------------
i) [*]
13. WARRANTIES AND LIMITATIONS ON WARRANTIES
----------------------------------------
(a) Warranties.
(i) Program License Warranties. Subject to the
other provisions of this Section 13, GEOTEL warrants that for a period of 90
days following the execution of this Agreement (the "Warranty Period") the
Programs will function substantially in the manner described in the applicable
Documentation. Notwithstanding anything contained herein to the contrary, the
total liability of GEOTEL under this warranty is limited, at the option of
GEOTEL, to any of the following:
(I) use of reasonable efforts to
expeditiously repair any software, or
parts thereof (as GEOTEL may see fit)
including without limitation supplying
OPTUS , pursuant to the fees specified
in Clause 7(j) the services referenced
in Clause 7(j); or
(II) GEOTEL's use of reasonable efforts to
expeditiously replace any software, or
part thereof, or any shipment (as
GEOTEL may see fit) as to which any
defect is claimed by OPTUS and duly
verified by GEOTEL: or
(III) the refund of the amounts paid for the
defective product.
(ii) Support Services Warranty. GEOTEL warrants that
its Technical Support and Support Services will be performed expeditiously in a
workmanlike manner. This warranty shall be valid for ninety-days from the
completion of the service. The re-performance of services shall be GEOTEL's sole
obligation and OPTUS's sole remedy in the event of a breach of such warranty.
(iii) License Grant Warranty. GEOTEL warrants it may
lawfully grant the licenses for the Programs and has all necessary right, tittle
or interest to deal with all intellectual property rights contained in this
Agreement.
(b) Limitations on Warranties.
(i) No employee or agent of GEOTEL is authorized to
give a greater or different warranty than that set forth herein.
(ii) Portions of the Programs are derived from
third-party software licensed to GEOTEL for integration into GEOTEL Programs and
sublicensing. No such third-party warrants the Programs or any such portion,
assumes any liability regarding use of such portion or the Programs, or
undertakes to furnish any support or information relating to such portion or the
Programs.
[* Portions have been omitted for Confidential Treatment.]
8
<PAGE> 9
(iii) GeoTel is not obligated to perform
investigation and/or corrections of defects found by GEOTEL to be (i) in other
than a current, unaltered release; (ii) caused by modification of the Programs
or use thereof in combination with software not provided by GEOTEL or not
authorized by GEOTEL; (iii) caused by OPTUS or Customers improper or
unauthorized use of the Programs; or (iv) due to external causes such as, but
not limited to, power failure or electric surges.
(c) Disclaimers. THE EXPRESS WARRANTIES SET FORTH IN SECTION
13 ARE THE ONLY WARRANTIES MADE BY GEOTEL WITH RESPECT TO THE PROGRAMS, ,
SUPPORT SERVICES AND TECHNICAL SUPPORT GEOTEL MAKES NO OTHER WARRANTIES,
EXPRESS, IMPLIED OR ARISING BY CUSTOM OR TRADE USAGE, AND, SPECIFICALLY, MAKES
NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. GEOTEL'S
EXPRESS WARRANTIES SHALL NOT BE ENLARGED, DIMINISHED OR AFFECTED BY, AND NO
OBLIGATION OR LIABILITY SHALL ARISE OUT OF, GEOTEL RENDERING TECHNICAL OR OTHER
ADVICE OR SUPPORT SERVICE IN CONNECTION WITH THE PROGRAMS OR .
(d) Limitation of Liability.
(i) Except as expressly provided for in Section 14 of
this Agreement, GEOTEL's liability, whether in contract, tort, or otherwise,
arising out of or in connection with the Programs, Support Services, and
Technical Support or this Agreement shall not exceed the amounts paid to GEOTEL
by OPTUS for the applicable copy of the Program, Support Services, Technical
Support that gave rise to such claim.
(e) IN NO EVENT SHALL GEOTEL OR ITS LICENSORS BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR INDIRECT DAMAGES, INCLUDING,
WITHOUT LIMITATION, ANY DAMAGES RESULTING FROM LOSS OF USE, LOSS OF DATA, LOSS
OF PROFITS OR LOSS OF BUSINESS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE PERFORMANCE OF THE PROGRAMS, , SUPPORT SERVICES, TECHNICAL
SUPPORT, OR OF ANY OTHER OBLIGATIONS RELATING TO THIS AGREEMENT, WHETHER OR NOT
GEOTEL HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(f) Allocation. The provisions of this Article 13 allocate the
risks under this Agreement between GEOTEL and OPTUS. GEOTEL's pricing reflects
this allocation of risk and the limitation of liability specified herein.
14. INDEMNIFICATION BY GEOTEL
-------------------------
(a) INFRINGEMENT WARRANTY AND INDEMNITY. GEOTEL shall defend
or, at its option, settle, any claim, action or proceeding brought against OPTUS
that any Program infringes a United States or Territory patent, copyright or
trade secret, and shall indemnify and keep indemnified OPTUS against all damages
and costs finally awarded against OPTUS in any such action or proceeding which
results from any such claim. GEOTEL shall have no liability under this Section
14 unless OPTUS (a) promptly notifies GEOTEL in writing of the claim, (b) gives
GEOTEL full authority, information and assistance to defend such claim and (c)
gives GEOTEL sole control of the defense of such claim and all negotiations for
the compromise or settlement thereof. If a Program or any part thereof becomes,
or in GEOTEL's opinion is likely to become, the subject of a claim of
infringement or the like under any patent, copyright or trade secret law, GEOTEL
shall have the right, at its option and expense, either to expeditiously obtain
for OPTUS a license permitting the continued use of the Program or such part, to
expeditiously replace or modify it so that it becomes non-infringing, or to
refund an amount equal to the depreciated license fee paid by OPTUS for the
Program (calculated on a straight line basis over a five-year life) and to
terminate the license thereafter. GEOTEL shall have no liability hereunder for
any costs incurred or settlement entered into without its prior written consent.
GEOTEL shall have no liability hereunder with respect to any claim based upon
(a) the combination of the Program with other products not furnished by GEOTEL,
(b) any addition to or modification to the Program by any person or entity other
than GEOTEL or as authorized by GEOTEL, (c) GEOTEL furnishing to OPTUS any
information, data, service or applications assistance, other than the Programs
and the printed manuals relating thereto or (d) use of a superseded or altered
release of the Program.
9
<PAGE> 10
THE PROVISIONS OF THIS SECTION 14 STATE THE EXCLUSIVE LIABILITY OF GEOTEL AND
THE EXCLUSIVE REMEDY OF OPTUS WITH RESPECT TO ANY CLAIM OF PATENT, COPYRIGHT OR
TRADE SECRET INFRINGEMENT BY THE PROGRAMS, ANY PART THEREOF OR THE USE THEREOF,
AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND INDEMNITIES
WITH RESPECT THERETO.
15. INDEMNIFICATION BY OPTUS. OPTUS shall defend and hold GEOTEL
harmless against any expense, judgment or loss incurred in connection with any
action brought against GEOTEL based upon a claim that the manufacture or license
of any Program which is modified, altered or combined with any equipment or
software by OPTUS [or any of its Customers] and is not supplied by GEOTEL
hereunder constitutes an infringement because of such modification, alteration
or combination.
16. TERM AND TERMINATION.
-------------------------
(a) TERM. This Agreement shall remain in full force and effect
for an initial term ("Initial Term") commencing on the date hereof and extending
for a period of twenty seven (27) months , unless terminated earlier in
accordance with this Agreement. Notwithstanding the foregoing, OPTUS may provide
GEOTEL ninety (90) days notice any time after the first twenty four months of
this Agreement that it does not wish to continue this Agreement, in which case
this Agreement shall terminate at the end of that 90 day period, such
notification will not relieve or diminish in anyway OPTUS's obligations during
the initial term of this Agreement. This Agreement shall automatically renew for
consecutive one (1) year periods ("Extension Periods") based upon the terms and
conditions then contained in this Agreement, unless either Party provides
written notice to the other no later than ninety (90) days prior to the end of
the Initial Term or the then-current Extension Period of its intent to terminate
this Agreement in which event this Agreement shall terminate as of the end of
such Initial Term or Extension Period, as applicable. The Initial Term and any
Extension Periods may be collectively referred to in this Agreement as the Term.
(b) TERMINATION. This Agreement may also be terminated:
(i) By GEOTEL, in the event that OPTUS fails to
make royalty payments to GEOTEL when due under Section 11 hereof and fails to
remedy such breach within 60 days after written notice of such breach is
provided to OPTUS;
(ii) By either party, if the other party breaches
any of its obligations under this Agreement (other than OPTUS's obligation to
pay amounts due under this Agreement to GEOTEL) and fails to remedy such breach
within 60 days after written notice of such breach is provided to such other
party;
(iii) By either party, effective immediately and
without notice, if (A) a receiver, trustee, or liquidator of the other party is
appointed for any of the properties or assets of the other party; (B) either
party makes a general assignment for the benefit of its creditors; (C) either
party files a petition under the federal Bankruptcy Code or other federal or
state statue for the reorganization of the other party or any arrangement with
its creditors or readjustment of its debt, or its dissolution or liquidation, or
such a petition is flied against the other party and is not dismissed within 60
days thereafter; or (D) either party ceases doing business or commences
dissolution or liquidation proceedings.
(c) EFFECT OF TERMINATION. Upon any termination of this Agreement, (i)
OPTUS shall immediately cease to grant OPTUS Sublicenses, (ii) all obligations
of either party incurred hereunder prior to such termination and all obligations
of either party set forth under Section 16 hereof shall survive the termination
of this Agreement and (iii) OPTUS shall return to GEOTEL (or at GEOTEL's option,
destroy and certify in writing to GEOTEL that it has destroyed) the original and
all copies of the Program and related documentation, including compilations,
translations, partial copies and modifications, if any.
(d) SUPPORT SERVICES AFTER TERMINATION. Following expiration or
termination of this Agreement, OPTUS and GEOTEL will cooperate in the smooth
transition of the provision of the following to OPTUS Customers:, i)Warranty,
ii) Service and iii) Updates. GEOTEL may elect at it's sole discretion to: i)
continue to have OPTUS provide such services for a mutually agreed upon fee, ii)
appoint a new service provider in the Territory, iii) GEOTEL may provide such
services directly or iv) by any other means as GEOTEL may determine.
10
<PAGE> 11
17. RELATIONSHIP BETWEEN PARTIES. The relationship between GEOTEL and
OPTUS is that of independent contractors, and nothing in this Agreement shall be
construed to constitute one party as an employee, partner or agent of the other
party. Without limiting the foregoing, either party shall have any authority to
act for or to bind the other party in any way, to make representations or
warranties or to execute agreements on behalf of the other party or to represent
that the other party is in any way responsible for the acts or omissions of the
other party. Both parties shall indemnify and hold each other L harmless for any
liability or damage resulting from violation of this Section 17.
18. EXPORT. OPTUS agrees that the Program products licensed hereunder
will not be exported directly or indirectly from the United States, separately
or as part of a system, without first obtaining a valid license from the United
States Government, as required, and otherwise in compliance with all United
States Government Export Regulations. OPTUS shall have sole responsibility for
obtaining all such licenses or other required permits at its sole cost and
expense. No failure to obtain any such license shall excuse any nonperformance
by OPTUS of its obligation pursuant to this Agreement. OPTUS's obligations under
this provision shall survive and continue after any termination of rights under
this Agreement.
Specifically, not by way of limitation, as required by Part 179.4
(d)(2) of the Export Administration Regulations of the United States Department
of Commerce, OPTUS assures GEOTEL that, unless prior authorization is obtained
from the United States Office of Export Administration, OPTUS will not knowingly
export (or re-export) the Program products or the confidential and proprietary
information related thereto for any purpose, to any of the countries of Romania,
Poland, Albania, Bulgaria, Czechoslovakia, East Germany (Soviet Zone of Germany
and the Soviet sector of Berlin), Estonia, Hungary, Latvia, Lithuania, Outer
Mongolia, People's Republic of China ( excluding Republic of China), Taiwan
(Formosa), Union of Soviet Socialist Republics, North Korea, North Vietnam,
South Vietnam, Cambodia, Afghanistan, Cuba and Libya.
19. TAXES. OPTUS shall pay all import duties, levies or imposts, and
all sales, use, value added, property, or other taxes of any nature, assessed
upon or with respect to any Programs, or other products or services ordered by
OPTUS from GEOTEL, which are imposed by any community of nations, nation, or
political subdivision thereof, but excluding United States taxes based on
GEOTEL's net income. If OPTUS is required by law to make any deduction or to
withhold from any sum payable to GEOTEL by OPTUS hereunder, then the sum payable
by OPTUS upon which the deduction or withholding is based shall be increased to
the extent necessary to ensure that, after all deduction and withholding, GEOTEL
receives and retains, free from liability for any deduction or withholding, a
net amount equal to the amount GEOTEL would have received and retained in the
absence of required deduction or withholding. In the event GEOTEL is required at
any time to pay any such tax, fee, duty or charge, OPTUS shall promptly
reimburse GEOTEL therefor. OPTUS shall obtain and provide to GEOTEL any
certificate of exemption or similar document required to exempt any transaction
under this Agreement from sales tax, use tax or other tax liability.
20. FORCE MAJEURE. In the event that either party is prevented from
performing, or is unable to perform, any of its obligations under this Agreement
due to any act of God, fire, casualty, flood, war, strike, lock out, failure of
public utilities, injunction or any act, exercise, assertion or requirement of
governmental authority, epidemic, destruction of production facilities,
insurrection, inability to procure materials, labor, equipment, transportation
or energy sufficient to meet manufacturing needs, or any other cause beyond the
reasonable control of the party invoking this provision, and if such party shall
have used its best efforts to avoid such occurrence and minimize its duration
and shall have given prompt written notice to the other party, then the affected
party's performance shall be excused and the time for performance shall be
extended for the period of delay or inability to perform due to such occurrence.
21. NOTICES. All notices or other communications given by either party
of the other under this Agreement shall be in writing and shall be personally
delivered or sent by registered or certified mail, return-receipt requested, to
the other party at its address set forth above or such other address as a party
may subsequently designate in writing. The date of personal delivery or the date
of mailing, as the case may be, shall be deemed to be the date on which such
notice is given.
11
<PAGE> 12
22. ENTIRE AGREEMENT. This Agreement and the Exhibits constitute the
entire agreement between GEOTEL and OPTUS with respect to the subject matter
hereof. No waiver, consent, modification, amendment or change of the terms of
this Agreement or of any Exhibit shall bind either party unless in writing and
signed by both parties.
23. SEVERABLITY. In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the validity
of the remaining provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular provisions held to be unenforceable.
24. ASSIGNMENTS PROHIBITED. Neither this Agreement nor any rights or
licenses granted hereunder may be assigned or delegated, by operation of law or
otherwise, without the written consent of the other party, which consent shall
not be unreasonably withheld; provided, however, that GEOTEL shall be entitled
to assign this Agreement to an entity which purchases substantially all of the
assets of GEOTEL or purchases a majority interest in the voting stock of GEOTEL
or otherwise assumes the business of GEOTEL.
25. GOVERNING LAW. This Agreement shall be governed by and construed as
a sealed instrument in accordance with the laws of the Commonwealth of
Massachusetts.
26. SURVIVAL OF PROVISIONS. Optus agrees that the provisions of
Sections 11, 12, 13, 14, 15, 16 (c), 16 (d), 18, 19, 21, 24, 25 and 26 shall
survive the expiration or earlier termination of this Agreement for any reason.
IN WITNESS WHEREOF, the parties hereto executed this Agreement under
seal as of the day and year indicated above.
GEOTEL Communications Corporation
By: /s/ TIMOTHY J. ALLEN
----------------------------------------
Timothy J. Allen
Vice President & Chief Financial Officer
OPTUS SYSTEMS PTY LTD
By:
----------------------------------------
Title:
12
<PAGE> 13
EXHIBIT A
---------
GEOTEL COMMUNICATIONS CORPORATION PRICE LIST
--------------------------------------------
[CAPTION]
*
* Portions have been omitted for Confidential Treatment.
13
<PAGE> 14
*
* PORTIONS HAVE BEEN OMITTED FOR CONFIDENTIAL TREATMENT
14
<PAGE> 15
*
* PORTIONS HAVE BEEN OMITTED FOR CONFIDENTIAL TREATMENT
15
<PAGE> 16
*
*Portions have been omitted for confidential treatment.
16
<PAGE> 17
*
*Portions have been omitted for confidential treatment.
17
<PAGE> 18
EXHIBIT B--GEOTEL CERTIFIED HARDWARE PLATFORMS
----------------------------------------------
SUBJECT TO CHANGE
DETAIL SPECIFICATIONS ARE ATTACHED HEREUNDER
18
<PAGE> 19
*
[* Portions have been omitted for Confidential Treatment.]
19
<PAGE> 20
EXHIBIT D--INTERNAL USE SYSTEM
------------------------------
*
[* Portions have been omitted for Confidential Treatment.]
20
<PAGE> 21
EXHIBIT E--GEOTEL'S WIRE INSTRUCTIONS
-------------------------------------
INSTRUCTIONS FOR WIRE TRANSFERS TO
GEOTEL COMMUNICATIONS CORPORATION
FLEET BANK OF MASSACHUSETTS
75 STATE STREET
BOSTON, MA 02109
ROUTING ABA #011000138
FURTHER CREDIT TO GEOTEL COMMUNICATIONS CORPORATION
ACCOUNT #9372912511
21
<PAGE> 22
EXHIBIT F--GEOTEL'S BACK UP MAINTENANCE & SERVICE SUPPORT POLICY
----------------------------------------------------------------
1. INTRODUCTION
1.1 OVERVIEW
This document establishes policies for GEOTEL Back Up Maintenance & Service
Support Services for the GEOTEL Intelligent CallRouter System ("ICR System").
The following are discussed:
- -- Post-Installation Technical Support Services
- -- Custom Support Services (If Contracted For By OPTUS)
- -- OPTUS Responsibilities
1. TECHNICAL SUPPORT SERVICES
Post-install technical support is available during the warranty period.
1.1 COVERAGE
GEOTEL Technical Support as defined below in paragraph 1.2 is available on a
continuous, 24 hour-per-day basis. Unless otherwise agreed to, all other
Technical Support will be provided within the 50 United States and District of
Columbia between the hours of 8:30 AM and 6:30 PM Eastern time, Monday through
Friday, excluding GEOTEL holidays ("Normal GEOTEL Business Hours"). Requests
received after 6:30 PM are deemed to have been received during the next GEOTEL
working day. The Technical Support covers specified remote or on-site support
for the Programs in consideration of the fees identified in Section 7 (j) and
Exhibit A (if applicable) of this Agreement Charges for services not within the
scope of the standard Back Up Maintenance & Service Support Policy requested by
OPTUS shall be provided by quotation at the time and materials rate in effect at
the time of the request. With respect to the aforementioned on-site services
requested by OPTUS, OPTUS shall reimburse GEOTEL for reasonable travel and
out-of-pocket expenses actually incurred.
1.2 GEOTEL RESPONSIBILITIES
1.2.1 GEOTEL PROGRAMS
For those Programs unaltered and unmodified designated in the Agreement , GEOTEL
will provide the following Technical Support subject to the provisions of
Section 9 of the Agreement:
1.2.1.1 REMEDIAL PROGRAM SUPPORT
GEOTEL will provide remedial support by providing an update, patch, revision or
temporary workaround solution to verified problems reported to GEOTEL by OPTUS.
1.2.1.2 UPDATES AND NEW RELEASES OF PROGRAMS
For Programs OPTUS has purchased, GEOTEL will distribute to OPTUS Updates
and new releases of Programs as they are released for General Availability. All
updates and new releases are subject to the same software licensing terms and
conditions as governed the originally supplied version of the Programs. In
those cases where Updates are installable by OPTUS or remotely by GEOTEL,
remote or on-site installation services requested by OPTUS for updates and new
releases shall be in accordance with the GEOTEL prices and fees then in effect.
The updates and releases can be installed by GEOTEL either on-site or remotely,
and in some cases, may be installable by OPTUS.
1.2.1.3 SUPPORT FOR PAST VERSIONS AND RELEASES OF PROGRAMS
GEOTEL will have no obligation to offer support for GEOTEL Program problems
corrected by a more current version, or for problems in Releases more than 180
days older than the then current Release. The term "Release" shall mean a new
version of a GEOTEL Program that contains significant new functionality or
features. Each Release shall be identified solely by the numeral(s) to the left
of the decimal point, with the newer Release having the larger numeral. Feature
and maintenance updates are identified solely by the numeral(s) to the right of
the decimal point.
1.2.2 GEOTEL REMEDIAL PROGRAM SUPPORT OBJECTIVES
GEOTEL will use reasonable efforts to meet the following objectives with
regard to remedial support for GEOTEL Programs:
1.2.2.1 CRITICAL SITUATIONS
22
<PAGE> 23
A Critical Situation is defined by OPTUS as a service affecting product defect
that materially impacts the OPTUS's ability to operate the system. Upon
notification of a critical situation, GEOTEL will work with OPTUS on a
continuous, 24 hour-per-day basis, until the Critical Situation is resolved.
1.2.2.2 MODERATE SITUATIONS
In those instances not constituting a Critical Situation but where the GEOTEL
Program problem impacts OPTUS's use of the Intelligent CallRouter ("Moderate
Situations"), GEOTEL will schedule a patch, workaround or other fix within
fourteen (14) days of receiving notice from OPTUS of the problem.
1.2.2.3 OTHER SITUATIONS
In all other instances, GEOTEL will provide a solution to a reported GEOTEL
Program problem in the time frame determined by GEOTEL.
1.3 GEOTEL OPTUS SUPPORT CENTER
The GEOTEL OPTUS Support Center ("CSC") will provide Technical Support which may
include: Remote monitoring and support of ICR System operation and diagnosis of
GEOTEL Program and Hardware problems.
- -- Central point of contact and tracking for general ICR product questions.
- -- Making available to OPTUS via telephone, during Normal GEOTEL Business
hours, qualified personnel to aid OPTUS in the resolution or verification of
GEOTEL Program problems. GEOTEL will make all reasonable effort to respond
within 15 minutes. Calls reporting "Critical Situations" will be given priority.
- -- Making available to OPTUS via telephone, after Normal GEOTEL Business hours,
for "Critical Situations" only, qualified personnel to aid OPTUS in the
resolution or verification of GEOTEL Program or Hardware problems. GEOTEL will
make all reasonable effort to respond within 30 minutes.
1.4. CUSTOM SUPPORT SERVICES
The following custom support services are available for the ICR System, at the
then prevailing time and material rates. With respect to any custom support
services requested by OPTUS, OPTUS shall reimburse GEOTEL for reasonable travel
and out-of-pocket expenses actually incurred. Custom support services are
subject to specific acceptance by GEOTEL.
- -- Design and delivery of custom reports
- -- Custom training
- -- Application Consulting (R)
2. OPTUS RESPONSIBILITIES
2.1 TRAINING
OPTUS shall designate a person at the primary ICR System Central Controller site
who has attended GEOTEL Intelligent CallRouter training to serve as the primary
point-of-contact for OPTUS with the GEOTEL CSC. OPTUS may designate a maximum of
three persons at a primary Central Controller site.
2.2 PROVISIONING OF NETWORK SERVICES
OPTUS shall provide, support and be responsible for ordering all network
services, including Local and Wide Area Data Networks, Inter-Exchange Carrier
access services, and all associated premises wiring and equipment, required for
the ICR System. OPTUS shall report network service problems to the appropriate
network service provider or vendor.
2.3 REMOTE MAINTENANCE AND DIAGNOSTICS ACCESS
OPTUS shall provide, at no charge to GEOTEL, access to telecommunications
equipment, as reasonably determined by GEOTEL, needed to establish a data
communication link with GEOTEL, for use in remote diagnosis and support of the
ICR System Intelligent CallRouter. OPTUS also agrees to make available to GEOTEL
current system passwords as necessary to provide such remote diagnosis and
support.
2.4 SUPPORT OF PREMISE EQUIPMENT
OPTUS shall provide all support for network OPTUS premise equipment as may be
required for network services, such as, but not limited Data Service Units;
Channel Service Units; and Local and Wide Area Network Routers and Bridges.
2.5 PROBLEM VERIFICATION
23
<PAGE> 24
OPTUS is responsible for all reasonable efforts to verify the existence of a
GEOTEL Program or Hardware problem prior to requesting support from GEOTEL.
2.6 SUPPORT OF ADMINISTRATIVE WORKSTATION DESKTOP ENVIRONMENT
OPTUS accepts overall responsibility for supporting the Administrative
Workstation Windows NT Desktop environment for the GEOTEL Administrative
Workstation. GEOTEL will make all reasonable efforts to assist the OPTUS in
diagnosing and resolving problems which may occur as result of conflicts or
resource contention between GEOTEL Programs and other OPTUS applications that
may be running in the Administrative Workstation Desktop Environment.
2.7 CHANGES TO CENTRAL CONTROLLER OR PERIPHERAL GATEWAYS
OPTUS shall obtain certification from GEOTEL prior to making any software or
hardware configuration changes to the Central Controller (Router, Logger, or
Network Interface Controller) or Peripheral Gateways.
24
<PAGE> 1
EXHIBIT 10.7
LEASE AGREEMENT
BY AND BETWEEN
NATIONWIDE LIFE INSURANCE COMPANY
AND
GEOTEL COMMUNICATIONS CORPORATION
<PAGE> 2
EXHIBIT D
---------
RULES
-----
1. Tenant shall not obstruct or encumber or use for any purpose other
than ingress and egress to and from the Premises any sidewalk, entrance,
passage, court, elevator, vestibule, stairway, corridor, hall or other part of
the Building not exclusively occupied by Tenant. Landlord shall have the right
to control and operate the public portions of the Building and the facilities
furnished for common use of the tenants, in such manner as Landlord deems best
for the benefit of the tenants generally. Tenant shall not permit the visit to
the Premises of persons in such numbers or under such conditions as to interfere
with the use and enjoyment of the entrances, corridors, elevators and other
public portions or facilities of the Building by other tenants. Tenant shall
coordinate in advance with Landlord's property management department all
deliveries to the Building so that arrangements can be made to minimize such
interference.
2. Tenant shall not place any showcase, mat or other article in any
common or public area of the Building.
3. Tenant shall not use the water and wash closets and other plumbing
fixtures for any purpose other than those for which they were constructed, and
Tenant shall not place any debris, rubbish, rag or other substance therein.
4. Tenant shall not construct, maintain, use or operate within their
respective premises any electrical device, wiring or apparatus in connection
with a loudspeaker system or other sound system without Landlord's prior written
consent. Tenant shall not construct, maintain, use or operate any such
loudspeaker or sound system outside of the Premises.
5. Tenant shall not bring any bicycle, vehicle, animal, bird or pet of
any kind into the Building. Tenant shall not do or permit any cooking on the
Premises, except for microwave cooking and use of coffee machines by Tenant's
employees for their own consumption. Tenant shall not install any microwave oven
or coffee machine in the Premises without Landlord's prior written approval of
such equipment and its location within the Premises. Tenant shall not cause or
permit any unusual or objectionable odor to be produced upon or permeate from
the Premises. Tenant, at Tenant's expense, shall comply with all laws, orders,
ordinances and regulations of federal, state, county and municipal authorities
and with directions of public officers, departments, boards or similar entities
thereunder, and with the Occupational Safety and Health Act, respecting all
matters of occupancy, condition or maintenance of the Premises, whether such
orders or directions shall be directed to Tenant or Landlord and Tenant shall
hold landlord harmless from cost or expense on account thereof.
6. Tenant shall not use any space in the Building for the sale of
goods or for the sale at auction of goods or property of any kind. Tenant shall
not suffer or permit any trade or occupation or activity to be carried on or use
made of the Premises which shall be unlawful, noisy, offensive or injurious to
any person or property.
7. Tenant shall not place on any floor a load exceeding the floor load
per square foot which such floor was designed to carry. Landlord shall have the
right to prescribe the weight, position and manner of installation of safes and
other heavy items. Landlord shall have the right to repair or replace at
Tenant's expense any damage caused by Tenant's moving property into or out of
the Premises or due to the same being in or upon the Premises or to require
Tenant to do the same.
8. Tenant shall not place additional locks or bolts of any kind on any
door or window or make any change in any lock or locking mechanism without
Landlord's prior written approval. Tenant shall keep doors leading to a corridor
or main hall closed during business hours except as such doors may be used for
ingress or egress. Upon the termination of its tenancy, Tenant shall deliver to
Landlord the operations manual for any security or other system installed by
Tenant and all keys furnished to or procured by Tenant, and if any key so
furnished is not delivered, then Tenant shall pay the replacement cost thereof.
Tenant's key system shall be separate from that for the rest of the Building.
9. Tenant shall not install or operate in the Premises any equipment
that operates on greater than 110 volt power without obtaining Landlord's prior
written consent. Landlord may condition such consent upon Tenant's payment of
additional rent in compensation for the excess consumption of electricity or
other utilities and for the cost of any additional wiring or apparatus that may
be occasioned by the operation of such equipment. Tenant shall not install any
equipment of any type or nature that will or may necessitate any changes,
replacements or additional to, or changes in the use of, the water system,
heating system, plumbing system, air conditioning system or electrical system of
the Premises or the Building, without obtaining Landlord's prior written
consent, which consent may be granted or withheld in Landlord's sole and
absolute discretion. If any equipment of Tenant causes noise or vibration that
may be transmitted to such a degree as to be objectionable to Landlord or any
tenant in the Building, then Landlord shall have the right to install at
Tenant's expense vibration eliminators or other devices sufficient to reduce
such noise as vibration to a level satisfactory to Landlord or to require Tenant
to do the same.
C1
<PAGE> 3
In the event that Tenant's energy consumption apparently exceeds
that normally used by conventional office usage, the excess energy consumption
shall be determined and shall be paid for by Tenant.
10. Tenant shall not request Landlord's employees to do anything
outside of such employees' regular duties without Landlord's prior written
consent. Tenant's special requirements will be attended to only upon application
to Landlord, and any such special requirements shall be billed to Tenant in
accordance with the schedule of charges maintained by Landlord from time to time
or as is agreed in writing in advance by Landlord and Tenant. Tenant shall not
employ any employee of Landlord for any purpose whatsoever without Landlord's
prior written consent.
11. Canvassing, soliciting and peddling in the Building are prohibited.
Tenant shall cooperate to prevent the same.
12. Only hand trucks equipped with rubber tires and side guards may be
used in the Building. Tenant shall be responsible for loss or damage resulting
from any delivery made by or for Tenant.
13. Tenant shall comply with standards prescribed by Landlord for
curtains, drapes, blinds, shades, screens, lights and ceilings, including
standards designed to give the Building a uniform, attractive appearance.
14. Drapes (whether installed by Landlord or Tenant) which are visible
from exterior of the Building shall be cleaned by Tenant at least once a year at
Tenant's expense.
15. Flammable, explosive or other hazardous liquids and materials shall
not be brought on the Premises or into the Building without the prior written
consent of Landlord.
16. Tenant shall store all trash and garbage within the Premises and
shall not burn or otherwise dispose of any trash or garbage in or about the
Premises or in any of the common areas of the Building.
17. Tenant shall use plastic chair mats under desk chairs in all
carpeted areas in the Premises.
18. No vehicle shall be permitted on any street or access road, either
public or private, or at any other place than the paved, marked spaces provided
for by the Premises. No truck parking shall be permitted other than loading or
unloading without the prior written permission of Landlord.
19. No signs, fixtures, advertisements or notices shall be displayed,
inscribed, painted or affixed by Tenant on any part of the interior or exterior
portion of the Premises or on the parking lot or any other part of Landlord's
property adjacent to the Premises without the prior written permission of
Landlord.
No "For Rent" signs shall be displayed by the Tenant, and no
showcases, or obstructions, signs, flags, barber poles, statuary, or any
advertising devices of any kind whatever shall be placed in front of said
Building or in the passageways, halls, lobbies, or corridors thereof by the
Tenant; and the Landlord reserves the right to remove all such showcases,
obstruction, signs, flags, barber poles, statuary, or advertising devises, and
all signs other than those provided for, without notice to the Tenant and at the
Tenant's expense.
20. Landlord agrees to furnish Tenant heat and air conditioning on
business days adequate and reasonable for the Premises herein leased, or when
and required by law.
21. The janitorial service provided for in the Lease shall include but
shall not be limited to the following:
(a) Trash baskets emptied, ash trays cleaned, trash removed, desks
dusted, floors cleaned and rest rooms cleaned and washed five (5)
times per week.
(b) Vertical shades and light fixtures dusted, glass washed and
floors re-conditioned by buffing and waxing twelve (12) times per
year.
Janitorial service shall include care of the grounds, entrances and
parking lot areas on a reasonable basis.
Landlord may retain a pass key to the Premises and be allowed
admittance hereto at all times to enable its representative to inspect said
Premises from time to time.
22. The Tenant shall not allow anything to be placed against or near the
glass in partitions, between the Premises leased and the halls or corridors of
the Building or windows which shall diminish the light in, or prove unsightly
from the halls, corridors or exterior portion of the Premises.
23. The Tenant when closing its office for business, at any time, shall
use diligence to see that all doors and windows are closed and secured within
the Premises. Any damage to the Premises as a result of Tenant's negligence from
storm, rain or freezing shall be the responsibility of Tenant to restore the
Premises to its original condition.
C2
<PAGE> 4
24. The Landlord or his agents shall have the right to enter the demised
Premises at all reasonable hours for the purpose of making any repairs,
alterations, or additions which they shall deem necessary for the safely,
preservation, or improvement of said Premises of said Building, and the Landlord
shall be allowed to take all material into and upon said Premises that may be
required to make such repairs, improvements and additions, or any alterations
for the benefit of the Tenant without in any way being deemed or held guilty of
any eviction of the Tenant; and the rent reserved shall in no way abate while
said repairs, alterations, or additions are being made. All such repairs,
decorations, alterations, additions, and improvements shall be done during
ordinary business hours, if possible, subject to satisfactory compliance of the
Tenant.
25. The Tenant shall not allow anything to be placed on the outside
window ledges of the Premises, nor shall anything be thrown by the Tenant, or
his employees or visitors, out of the windows of the Building.
26. The Premises leased shall not be used for lodging or sleeping, nor
for any immoral or illegal purposes or for any purpose that will damage the
Premises.
27. The Landlord reserves the right to add, delete or amend the rules
and regulations as in its judgement may from time to time be needful for the
safety, care and cleanliness of the Premises, and for the preservation of good
order therein, and any such other or further rules and regulations shall be
binding upon the parties hereto with the same force and effect as if they had
been inserted herein at the time of the execution hereof.
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<PAGE> 5
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Definitions ........................................... 1
ARTICLE II
Premises .............................................. 1
ARTICLE III
Term .................................................. 1
ARTICLE IV
Base Rent ............................................. 2
ARTICLE V
Operating Charges ..................................... 3
ARTICLE VI
Use of Premises ....................................... 4
ARTICLE VII
Assignment and Subletting ............................. 4
ARTICLE VIII
Maintenance and Repairs ............................... 6
ARTICLE IX
Alterations ........................................... 6
ARTICLE X
Signs ................................................. 7
ARTICLE XI
Security Deposit ...................................... 7
ARTICLE XII
Holding Over .......................................... 7
ARTICLE XIII
Insurance ............................................. 8
ARTICLE XIV
Services and Utilities ................................ 8
ARTICLE XV
Liability of Landlord ................................. 9
ARTICLE XVI
Rules ................................................. 10
ARTICLE XVII
Damage or Destruction ................................. 10
ARTICLE XVIII
Condemnation .......................................... 11
ARTICLE XIX
Default ............................................... 11
ARTICLE XX
Bankruptcy ............................................ 13
ARTICLE XXI
Subordination ......................................... 14
ARTICLE XXII
Covenants of Landlord ................................. 14
ARTICLE XXIII
General Provisions .................................... 15
ARTICLE XXIV
Parking ............................................... 17
EXHIBIT A -- Plan Showing Premises
EXHIBIT B -- Landlord Workletter
EXHIBIT C -- Sample Operating Charges Including Real Estate Taxes
EXHIBIT D -- Rules and Regulations
i
<PAGE> 6
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (this "Lease") is dated as of November 29, 1993, by
and between Nationwide Life Insurance Company, an Ohio Corporation ,
("Landlord"), and GeoTel Communications Corporation ("Tenant").
ARTICLE I
---------
DEFINITIONS
-----------
1.1 Building: a two (2) story office building containing 66,500 square
feet of rentable area, known as 25 Porter Road, Littleton, Mass., and located on
certain land (the "Land") together with related parking areas and facilities
(whether in or near the Building), roadways and driveways and other amenities.
1.2 Premises: 7,000 square feet of rentable area (6,140 usable square
feet) located on the second (2nd) floor of the Building and outlined on Exhibit
A attached hereto.
1.3 Tenant's Proportionate Share: 10.53% of entire Building.
1.4 Lease Term: Five (5) years.
1.5 Lease Commencement: Seven days after the issuance of a Certificate
of Occupancy by the Town of Littleton.
1.6 Years 1-3: $4.75/sf NNN; Years 4 and 5: $5.25/sf NNN.
1.7 Intentionally Deleted.
1.8 Security Deposit: $3,000 dollars.
1.9 Broker(s): R.M. Bradley & Co., Inc. and The Leggat Company.
1.10 Tenant Address for Notices: ______________________________________
(Attn:__________________ ), until Tenant has commenced beneficial use of the
Premises, and the Premises (Attn:______________________ ) after Tenant has
commenced beneficial use of the Premises.
1.11 Intentionally Deleted.
1.12 Intentionally Deleted.
1.13 Landlord Address for Notices: Nationwide Life Insurance Company, One
Nationwide Plaza, 34-T, Columbus, Ohio 43216, Attn: Inez Bayes with a copy to
R.M. Bradley & Co., Inc., 250 Boylston Street, Boston, MA 02116, Attn: Property
Management.
ARTICLE II
----------
PREMISES
--------
2.1 Tenant leases the Premises from Landlord upon the terms stated
herein. Tenant will have the non-exclusive right to use for their intended
purpose the areas of the Building designated by Landlord from time to time as
common and public space, but shall include, without limitation, such hallways,
stairways, elevators, bathrooms, entrances, and accessways as shall be
reasonably necessary for the convenient use and enjoyment of the Premises.
2.2 On the Lease Commencement Date, Tenant shall occupy and shall pay
base rent and additional rent on 3,500 s.f. for the first nine months of the
Lease Term. Commencing with the tenth calendar month following the Lease
Commencement date, Tenant shall occupy and shall pay base rent and additional
rent on the entire 7,000 s.f. Premises. Should Tenant require occupancy of
greater than 3,500 r.s.f. anytime during the initial 9 months of the Lease Term,
Tenant may occupy all or a portion of the entire 7,000 SF Premises, and shall
pay Landlord for the additional space at the rate of $4.75/sf NNN.
2.3 During the initial 5-year term of this Lease, Tenant shall have the
Right of First Refusal to Lease the space designated as "I" on Exhibit A. Tenant
shall have ten (10) business days after written notice from Landlord to enter
into a lease amendment on the same terms as set forth in a bona fide offer made
by a third party to Landlord to lease all or any portion of the space designated
as "I" on Exhibit A, which offer Landlord is willing to accept, except that (i)
the termination date as to Tenant's leasing of such space shall be November 30,
1998 unless Tenant elects earlier termination in accordance with this Agreement,
and (ii) the improvements included in the business terms being matched may be
modified by mutual agreement to the extent appropriate to reflect the lease term
for Tenant and its intended use of the space to the extent different from the
term and use
l
<PAGE> 7
contemplated by the third party offer. If Tenant does not enter into a lease
amendment during said ten (10) day period, Landlord shall be free to lease said
space to such third party, and if Landlord enters into a lease with a third
party, Tenant's right of first refusal shall be null and void, except as
otherwise herein provided. If Landlord does not enter into such a lease with a
third party on any portion of the space designated as "I" on Exhibit A, Tenant's
Right of First Refusal shall be reinstated with respect to the unleased portion
of the space designated as "I" on Exhibit A. Tenant's Right of First Refusal to
Lease shall be in force until an occurrence of an Event of Default by Tenant
that has not been cured per Section 19.
ARTICLE III
-----------
TERM
----
3.1 The terms and conditions of this Lease shall be effective from the
date of execution of this Lease by Landlord and Tenant. The Lease Term shall
commence on the Lease Commencement Date specified in Section 3.2 hereinbelow. If
the Lease Commencement Date is not the first day of a month, then the Lease Term
shall be the period set forth in Section 1.4 hereinabove plus the partial month
in which the Lease Commencement Date occurs. The Lease Term shall also include
any properly exercised renewal or extension of the term of this Lease.
3.2 (a) The Lease Commencement Date shall be seven days after the
issuance of a Certificate of Occupancy by the Town of Littleton.
3.3 Lease Year shall mean a period of twelve (12) consecutive months
commencing on the Lease Commencement Date and each successive twelve (12) month
period thereafter; provided, however, that if the Lease Commencement Date is not
the first day of a month, then the second Lease Year shall commence on the first
day of the month in which the first anniversary of the Lease Commencement Date
occurs.
3.4 Tenant shall have the Right to Terminate this Lease (without
liability except as set forth below) effective anytime after the date two (2)
years after the Term Commencement Date, provided Tenant notifies Landlord in
writing of such Termination six months in advance. In the event of such
Termination, Tenant shall pay a Termination Fee equal to $23,500 on the date two
(2) years after the Term Commencement Date, said amount to be reduced on a
monthly amortized basis over the remainder of the Term should Tenants
termination occur at a later date. Tenant's Right to Terminate shall be in force
until the occurrence of an Event of Default by Tenant that has not been cured
per Section 19.
ARTICLE IV
----------
BASE RENT
---------
4.1 During each Lease Year during the Lease Term, Tenant shall pay to
Landlord as annual base rent for the Premises, without set-off, deduction or
demand, the Base Rent. The Base Rent shall be divided into twelve (12) equal
monthly installments and each such monthly installment shall be due and payable
in advance on the first day of each month during each Lease Year. Concurrently
with Tenant's execution of this Lease, Tenant shall pay an amount equal to one
(1) monthly installment of the Base Rent payable during the first Lease Year,
which amount shall be credited toward the first monthly installment of the Base
Rent due and payable hereunder. If the Lease Commencement Date is not the first
day of a month, then the Base Rent from the Lease Commencement Date until the
first day of the following month shall be prorated on a per diem basis at the
rate of one-thirtieth (1/30) of the monthly installment of the Base Rent payable
during the first Lease Year, and Tenant shall pay such prorated installment in
advance on the Lease Commencement Date.
4.2 Tenant shall also pay Landlord monthly for separately metered
electric service for lights and outlets furnished by Landlord to the Leased
Premises.
4.3 All sums payable by Tenant shall be paid to Landlord in legal
tender of the United States, at the address to which notices to Landlord are to
be given or to such other party or such other address as Landlord may designate
in writing. Landlord's acceptance of rent after it shall have become due and
payable shall not execute a delay upon subsequent occasions nor constitute a
waiver of fights, not withstanding any endorsement or restriction that Tenant
may include with such payment. If Tenant shall have been in default hereunder,
Landlord may at any time thereafter require that Base Rent and additional rent
due hereunder be paid by certified check.
ARTICLE V
---------
OPERATING CHARGES
-----------------
5.1 Tenant shall pay as additional rent to Landlord, Tenant's
Proportionate Share (as defined in Section 1.3 hereinabove) of the amount by
which Operating Charges (as defined in Section 5.2 hereinbelow) during each
calendar year falling entirely or partly within the Lease Term exceed a base
amount (the "Operating Charges Base Amount") equal to the actual Operating
Charges for the calendar year 1994. Tenant's Proportionate Share is that
percentage which is equal to a fraction, the numerator of which is the number of
square feet of rentable area in the Premises, and the denominator of which is
the number of square feet of rentable area in the Building, excluding the number
of square feet of rentable area of any storage, roof or garage space, provided
that during the first nine months of the term the number of square feet of
rentable area in the Premises shall be based upon the number of square feet
occupied by Tenant, and Tenant's proportionate share for said period shall be
calculated accordingly.
<PAGE> 8
5.2 Operating Charges shall mean all costs and expenses incurred by
Landlord in the operation of the Building and the Land, including, but not
limited to: (a) electricity, including Tenant's pro rate share of HVAC
electricity to its Premises, water, sewer, power, natural gas, fuel oil and
other utility charges (including surcharges and connection fees); (b) insurance
premiums; (c) management fees and personnel costs, not to exceed such fees and
costs commonly charged for similar buildings in Littleton, Massachusetts; (d)
costs of service, security and maintenance contracts; (e) maintenance,
redecoration and repair expenses; (f) depreciation for capital expenditures made
by Landlord to reduce operating expenses if Landlord reasonably estimates that
the annual reduction in operating expenses equals or exceeds such depreciation;
(g) Real Estate Taxes (as defined in Section 5.3); (h) charges for janitorial,
cleaning, security, window cleaning, and snow and trash removal services; (i)
any business, professional and occupational license tax payable by Landlord with
respect to the Building; (j) reasonable reserves for replacements, repairs and
contingencies; (k) any cost or expense incurred by Landlord in connection with
providing (directly or indirectly) transportation assistance or service to or
from the Building or in administering any transportation management program
required by any governmental agency or instrumentality; (l) auditing and
accounting fees; (m) legal and other professional fees; and (n) any other
expense incurred by Landlord in owning, maintaining, repairing or operating the
Building. Notwithstanding any of the foregoing, Landlord's Operating Charges
shall not include (i) expenses of a capital nature (whether for improvements,
replacements or restoration), (ii) principal or interest payments on any
mortgage, deed of trust, or ground lease, (iii) amounts charged for services
rendered to other tenant and not to Tenant, (iv) expenses for labor or personnel
to the extent not employed with respect to the Building and/or the Land, (v) any
charge for Landlord's overhead or service charge of any nature by Landlord, (vi)
legal fees incurred unless incurred in connection with the common areas or for
the benefit of the Building and/or Land as a whole, or (vii) broker's fees or
leasing commissions in connection with the leasing of the Building; and nothing
herein shall permit Landlord to make a profit by reason of Landlord's Operating
Charges. Operating Charges shall also not include: principal or interest
payments on any mortgage, deed of trust or ground lease; leasing commissions;
depreciation of the Building (except as specified above); and the costs of
special services or utilities separately charged to and paid for by particular
tenants of the Building.
5.3 Real Estate Taxes shall mean (a) all real estate taxes, including
general and special assessments, ordinary and extraordinary, foreseen and
unforeseen, which are imposed or levied upon Landlord or assessed against the
Building and/or the Land or Landlord's personal property used in connection
therewith, (b) any other present or future taxes or governmental charges that
are imposed upon Landlord or assessed against the Building or the Land which are
in the nature of or in substitution for real estate taxes, including any tax
levied on or measured by the rents payable by tenants of the Building, and (c)
all expenses (including attorney's fees) incurred in reviewing or seeking a
reduction of any real estate taxes. Real Estate Taxes shall not include income
taxes or estate or inheritance taxes.
5.4 At the beginning of the Lease Term and at the beginning of each
calendar year thereafter, Landlord may submit a statement setting forth the
amount by which Operating Charges that Landlord reasonably expects to be
incurred during each calendar year exceed the Operating Charges Base Amount and
Tenant's Proportionate Share of such excess. Tenant shall pay to Landlord on the
first day of each month after receipt of such statement, until Tenant's receipt
of any succeeding statement, an amount equal to one-twelfth (1/12) of the total
estimated amount payable by Tenant as set forth in such statement.
5.5 Within approximately one hundred twenty (120) days after the end of
each calendar year, Landlord shall submit a statement showing (a) Tenant's
Proportionate Share of the amount by which Operating Charges incurred during the
preceding calendar year exceeded the Operating Charges Base Amount, and (b) the
aggregate amount of Tenant's estimated payments during such year. Tenant may
request to review Landlord's records used to compile such statement. If such
statement indicates that the aggregate amount of such estimated payments exceeds
Tenant's actual liability, then the excess shall be credited to Tenant. If such
statement indicates that Tenant's actual liability exceeds the aggregate amount
of such estimated payments, then Tenant shall pay the amount of such excess
within thirty (30) days after receipt of such statement. If Tenant does not
notify Landlord in writing of any objection to such statement within thirty (30)
days after receipt, then Tenant shall be deemed to have waived such objection.
If Tenant objects to anything contained in such statement, Tenant may, after
paying the amount set forth in such statement, notify Landlord in writing of its
objections. Landlord shall review such objections and furnish to Tenant
reasonable documentation of the specific items of expense to which Tenant has
objected in writing. Landlord agrees to retain such records for a minimum of one
year subsequent to the end of each calendar year.
5.6 If the Lease Term commences or expires on a day other than the first
day or the last day of a calendar year, respectively, then Tenant's liability
for Operating Charges incurred during such year shall be proportionately
reduced.
ARTICLE VI
----------
USE OF PREMISES
---------------
6.1 Tenant shall use the Premises solely for general office purposes
including, without implied limitation, for a software development company and
all uses appurtenant thereto and for no other use or purpose. Tenant shall not
use the Premises for any unlawful purpose or in any manner that in Landlord's
reasonable opinion will constitute waste, nuisance or unreasonable annoyance to
Landlord or any tenant of the Building.
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Tenant shall comply at its expense with all present and future laws, ordinances,
regulations and orders (including, without limitation, any regulation requiring
the sorting or separation of refuse and trash) concerning the use, occupancy and
condition of the Premises and all machinery, equipment and furnishings therein.
If any such law, ordinance, regulation or order requires an occupancy or use
permit for the Premises, then Tenant shall obtain and keep current such permit
at Tenant's expense and promptly deliver a copy thereof to Landlord. Use of the
Premises is subject to all covenants, conditions and restrictions of record. To
the best of Landlord's knowledge, there are no matters of record with respect to
the Property's Title which would adversely affect Tenant's use as described in
Sections 2.1 and 6.1 of this lease.
6.2 Tenant shall pay before delinquency any business, rent or other tax
or fee that is now or hereafter assessed or imposed upon Tenant's use or
occupancy of the Premises, the conduct of Tenant's business in the Premises or
Tenant's equipment, fixtures, furnishings, inventory or personal property. If
any such tax or fee is enacted or altered so that such tax or fee is imposed
upon Landlord or so that Landlord is responsible for collection or payment
thereof, then Tenant shall pay the amount of such tax or fee within ten (10)
days after Landlord's demand therefore.
6.3 Tenant shall not in the Building and/or the Premises generate,
store, handle, release, discharge, or otherwise deal with any material
classified as "hazardous material" for purposes of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time (CERCLA) or the Resource Conservation and Recovery Act of 1976, as
amended from time to time (RCRA), or any similar or related federal, state or
local statutes, rules, regulations or ordinances. Without limiting the
generality of the foregoing, Tenant expressly covenants and agrees that it shall
not, nor shall it permit anyone to:
(A) Use asbestos or any asbestos-containing materials in the Premises or in the
Building.
(B) Use any liquid-filled transformers in the Premises or in the Building,
unless consented to by Landlord in writing and confirmed by an outside
authoritative source to be free of polychlorinated biphenyls (PCB's);
(C) Install any underground storage tanks, unless consented to by Landlord in
writing and specifically approved and certified to be in compliance with
applicable code requirements;
(D) Store any opened containers of combustible products, such as cleaning
solvents, in other than metal containers and cabinets approved by the
Landlord in writing.
Tenant shall protect, indemnify, and save Landlord and its officers, agents,
servants and employees harmless from and against any and all obligations,
liabilities, costs, damages, claims and expenses of whatsoever nature arising
from or in connection with any violation of this paragraph by Tenant.
It is not the intent of this Section 6 to prevent Tenant from storing or using
reasonable quantities of chemicals typically found in office/R&D facilities for
the purpose of cleaning the Premises or conducting normal day-to-day operations.
ARTICLE VII
-----------
ASSIGNMENT AND SUBLETTING
-------------------------
7.1 Tenant shall not assign this Lease or any of Tenant's rights or
obligations hereunder, or sublet or permit anyone to occupy the Premises or any
part thereof, without (a) the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. No assignment or transfer of this
Lease may be effected by operation of law or otherwise without Landlord's prior
written consent. Any assignment, subletting or occupancy, Landlord's consent
thereto or Landlord's collection or acceptance of rent from any assignee,
subtenant or occupant, shall not be construed as a waiver or release of Tenant
from liability hereunder (it being understood that Tenant shall at all times
remain primarily liable as a principal and not as a guarantor or a surety) and
shall not be construed as relieving Tenant or any assignee, subtenant or
occupant from the obligation of obtaining Landlord's prior written consent to
any subsequent assignment, subletting or occupancy. Tenant assigns to Landlord
any sum due from any assignee, subtenant or occupant of Tenant as security for
Tenant's performance of its obligations pursuant to this Lease. Tenant
authorizes each such assignee, subtenant or occupant to pay such sum directly to
Landlord if such assignee, subtenant or occupant receives written notice from
Landlord specifying that such rent shall be paid directly to Landlord.
Landlord's collection of such rent shall not be construed as an acceptance of
such assignee, subtenant or occupant as a tenant nor a waiver of any default
hereunder by Tenant. All restrictions and obligations imposed pursuant to this
Lease on Tenant or the use and occupancy of the Premises shall be deemed to
extend to any subtenant, assignee or occupant of Tenant, and Tenant shall cause
such persons to comply with all such restrictions and obligations. Tenant shall
not mortgage or hypothecate this Lease without Landlord's written consent, which
consent shall not be unreasonably withheld or delayed. Tenant shall pay the
expenses (including attorney's fees and hourly fees for Landlord's employees and
agents) incurred by Landlord in connection with reviewing Tenant's request for
Landlord to give its consent to any assignment, subletting, occupancy or
mortgage, not to exceed $250.00 in any one instance.
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7.2 If Tenant is a partnership, then any dissolution of Tenant or a
withdrawal or change, whether voluntary, involuntary or by operation of law, of
partners owning a controlling interest in Tenant shall be deemed a voluntary
assignment of this Lease. Notwithstanding anything in this Lease to the
contrary:
A. Tenant shall have the right to assign this Lease or to sublet
the entire Premises, whether expressly or by operation of law (including without
limitation by merger, consolidation, reorganization or the like) without the
requirement of Landlord's consent, as follows:
1. To any corporation or entity which is a parent, subsidiary
or affiliate of Tenant;
2. To any corporation or entity resulting from a merger or
consolidation, or the formation of a joint venture or partnership;
3. By a transfer of stock in Tenant, whether or not a
controlling interest.
7.3 If Tenant wants to assign, sublet or otherwise transfer all or part
of the Premises or this Lease, then Tenant shall give Landlord written notice
("Tenant's Request Notice") of the identity of the proposed assignee or
subtenant and its business, all terms of the proposed assignment or subletting,
the commencement date of the proposed assignment or subletting (the "Proposed
Sublease Commencement Date"), the area proposed to be assigned or sublet (the
"Proposed Sublet Space") and such other information as Landlord may reasonably
request. Tenant shall also transmit therewith the most recent financial
statement or other evidence of financial responsibility of such assignee or
subtenant and a certification executed by Tenant and such proposed assignee or
subtenant stating whether any premium or other consideration is being paid for
the proposed assignment or sublease.
7.4 Landlord shall have the right in its sole and absolute discretion to
terminate this Lease with respect to the Proposed Sublet Space by sending Tenant
written notice within forty-five (45) days after Landlord's receipt of Tenant's
Request Notice. If the Proposed Sublet Space does not constitute the entire
Premises and Landlord elects to terminate this Lease with respect to the
Proposed Sublet Space, then (a) Tenant shall tender the Proposed Sublet Space to
Landlord on the Proposed Sublease Commencement Date as if the Proposed Sublease
Commencement Date had been originally set forth in this Lease as the expiration
date of the Lease Term with respect to the Proposed Sublet Space, and (b) as to
all portions of the Premises other than the Proposed Sublet Space, this Lease
shall remain in full force and effect except that additional rent payable
pursuant to Article V and the Base Rent shall be reduced proportionately. Tenant
shall pay all expenses of construction required to permit the operation of the
Proposed Sublet Space separate from the balance of the Premises. If the Proposed
Sublet Space constitutes the entire Premises and Landlord elects to terminate
this Lease, then (1) Tenant shall tender the Premises to Landlord on the
Proposed Sublease Commencement Date, and (2) the Lease Term shall terminate on
the Proposed Sublease Commencement Date, and Tenant shall have no further
obligation hereunder other than for rent applicable to the period prior to the
date of termination.
7.5 If any sublease, assignment or other transfer (whether by operation
of law or otherwise) provides that the subtenant, assignee or other transferee
(or any affiliate thereof) other than as set forth in Section 7.2 above, is to
pay any amount in excess of the rent and other charges due under this Lease,
then, whether such excess be in the form of an increased rental, lump sum
payment, payment for the sale or lease of fixtures or other leasehold
improvements or any other form (and if applicable space does not constitute the
entire Premises, the amount and existence of such excess shall be determined on
a pro rata basis), Tenant shall pay to Landlord seventy percent (70%) of any
such excess upon such terms as shall be specified by Landlord and in no event
later than ten (10) days after Tenant's receipt thereof. Tenant shall in all
events diligently pursue the collection of all amounts owed by any subtenant,
assignee or other transferee. Landlord shall have the right to inspect and audit
Tenant's books and records relating to any sublease, assignment or other
transfer. Any sublease, assignment or other transfer shall be effected on forms
supplied or approved by Landlord.
ARTICLE VIII
------------
MAINTENANCE AND REPAIRS
-----------------------
8.1 Tenant shall keep and maintain the Premises and all fixtures and
equipment located therein in clean, safe and sanitary condition and in
compliance with all legal requirements, shall take good care thereof and make
all repairs thereto, shall suffer no waste or injury thereto, and at the
expiration or earlier termination of the Lease Term, shall surrender the
Premises in the same order and condition in which they were on the Lease
Commencement Date (ordinary wear and tear consistent with the permitted use
hereunder excepted). All material injury, breakage and damage to the Premises
and to any other part of the Building or the Land caused by any act or omission
of any invitee, agent, employee, subtenant, assignee, contractor, client, family
member, licensee, customer or guest of Tenant (collectively "Invitee") or
Tenant, shall be repaired or replaced (as applicable) by and at Tenant's
expense, except that Landlord shall have the right at Landlord's option to make
any such repair or replacement and to charge Tenant for all reasonable costs and
expenses incurred in connection therewith.
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8.2 (a) Landlord shall keep the exterior walls, lead bearing elements,
foundations, pipes and conduits, roof and common areas that form a part of the
Building, and the building standard mechanical, electrical, HVAC and plumbing
systems that are provided by Landlord in the operation of the Building, clean
and in good operating condition and, subject to Section 8.1, shall make all
required repairs thereto.
(b) Notwithstanding any of the foregoing to the contrary,
maintenance and repair of special tenant areas, facilities, finishes and
equipment (including, but not limited to, any special fire protection equipment,
telecommunications and computer equipment, kitchen/galley/coffee equipment, air
conditioning equipment serving the Premises only and all other furniture,
finishings and equipment of Tenant and any Alterations (as hereinafter defined)
made by Tenant) shall be the sole responsibility of Tenant. Moreover, Landlord
shall have the right to require Tenant, at Tenant's sole expense, to enter into
maintenance contracts with duly qualified contractors satisfactory to Landlord
in all respects providing for good, workmanlike, first-class and prompt
maintenance and repair of such areas, facilities, finishes, equipment and
Alterations as may be designated by Landlord in its sole and absolute
discretion.
ARTICLE IX
----------
ALTERATIONS
-----------
9.1 The initial improvement of the Premises shall be accomplished by
Landlord in accordance with Exhibit B. Landlord is under no obligation to make
any alterations, additions, improvements, demolitions or other changes
(collectively "Alterations") in or to the Premises except as set forth in
Exhibit B.
9.2 Tenant shall not make or permit anyone to make any structural
alterations, additions, improvements, or demolitions costing in excess of $5,000
per occurrence in or to the Premises or the Building without Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed.
Any Alteration which Landlord permits Tenant to make shall be made: (a) in a
good, workmanlike, first-class and prompt manner; (b) using new materials only;
(c) by a contractor and in accordance with plans and specifications approved in
writing by Landlord; (d) in accordance with legal requirements (including,
without limitation, the Americans With Disabilities Act) and requirements of any
insurance company insuring the Building; (e) after obtaining any required
consent of the holder(s) of any Mortgage; (f) after obtaining a workmen's
compensation insurance policy approved in writing by Landlord; (g) after
delivering to Landlord written, unconditional waivers of mechanics' and
materialmen's liens against the Premises, the Building and the Land from all
proposed contractors, subcontractors, laborers and material suppliers for all
work and materials in connection with such Alteration and (h) in compliance with
such other requirements as Landlord might impose. If any lien (or a petition to
establish a lien) is filed in connection with any Alteration, then such lien (or
petition) shall be discharged by Tenant at Tenant's expense within ten (10) days
thereafter by the payment thereof or filing of a bond acceptable to Landlord.
Landlord's consent to the making of an Alteration shall be deemed not to
constitute Landlord's consent to subject its interest in the Premises or the
Building or the Land to liens which may be filed in connection therewith.
9.3 If any Alteration is made without Landlord's prior written consent,
then Landlord shall have the right, in addition to exercising all other
available remedies, at Tenant's expense to remove and correct such Alteration
and restore the Premises and the Building to their condition immediately prior
thereto or to require Tenant to do the same. Unless Landlord elects otherwise
pursuant to this Section 9.3, all Alterations to the Premises or the Building
made by either party shall immediately become Landlord's property (provided,
however, that during the Lease Term Tenant shall retain an insurable interest in
such Alterations) and shall remain upon and be surrendered with the Premises at
the expiration or earlier termination of the Lease Term; provided, however, that
if Tenant is not in default under this Lease, then Tenant shall have the right
to remove, prior to the expiration or earlier termination of the Lease Term, all
movable furniture, furnishings and trade fixtures installed in the Premises
solely at Tenant's expense. Notwithstanding anything of the foregoing to the
contrary in this Section 9.3, Tenant shall also be required to remove all
Alterations to the Premises or the Building and all non-trade fixtures and
equipment which Landlord designates in writing for removal (which designation
shall be provided to Tenant prior to the expiration or earlier termination of
the Lease Term) and Tenant shall be required to remove all telephone and data
cabling installed by or on behalf of Tenant (collectively, "Cabling"). Landlord
shall have the right to repair or replace at Tenant's expense all damage to the
Premises or the Building caused by any such removal or to require Tenant to do
the same. If any such furniture, furnishing or trade fixture is not removed by
Tenant upon or prior to the expiration or earlier termination of the Lease Term,
then the same shall, at Landlord's option, become Landlord's property and shall
be surrendered with the Premises as a part thereof; provided, however, that
Landlord shall have the right to remove from the Premises at Tenant's expense
such furniture, furnishing or trade fixture and any Alteration, non-trade
fixture or equipment (which Landlord designates in writing for removal) and any
Cabling.
ARTICLE X
---------
SIGNS
-----
10.1 Landlord will list Tenant's name on the Building directory, if any,
and provide building standard signage near one suite entry door. Tenant shall
not paint, affix or otherwise display on any part of the exterior or interior of
the Building (or any part of the Premises which is visible from outside the
Premises) any other sign, advertisement or notice. If any such item that has not
been approved by Landlord is so displayed, then Landlord shall have the right to
remove such item at Tenant's expense or to require Tenant to do the same.
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10.2 Except by United States mail, Tenant shall not distribute any
advertisements or notices within the Complex. Landlord reserves the right to
prohibit any advertisement which in Landlord's opinion tends to impair the
reputation or desirability of the Building or the Complex.
ARTICLE XI
----------
SECURITY DEPOSIT
----------------
11.1 Concurrently with Tenant's execution of this Lease, Tenant shall
deposit with Landlord the Security Deposit to secure Tenant's full and faithful
performance of all the obligations herein set forth. Landlord shall not be
required to pay interest on the Security Deposit or to maintain the Security
Deposit in a separate account. If any sum payable by Tenant to Landlord shall be
due and unpaid, or if Landlord makes any payments on behalf of Tenant, or if
Landlord suffers any loss, cost or expense as a result of Tenant's
non-performance of any obligation or covenant herein, then Landlord, at its
option and without limiting any other remedy, may use and apply any part of the
Security Deposit to compensate Landlord for the payments not made or the loss,
cost or expense suffered by Landlord. Within thirty (30) days after written
notice of Landlord's use of the Security Deposit, Tenant shall deposit with
Landlord cash in an amount sufficient to restore the Security Deposit to its
prior amount. Within approximately ninety (90) days after the later of (a) the
expiration or earlier termination of the Lease Term, or (b) Tenant's vacating
the Premises, Landlord shall return the Security Deposit less such portion
thereof as Landlord may have used to satisfy Tenant's obligations and less such
other sums as Landlord reasonably expects to be due from Tenant. If Landlord
transfers the Security Deposit to a transferee of the Building or Landlord's
interest therein, then such transferee (and not Landlord) shall be liable for
its return. The holder of any Mortgage shall not be liable for the return of the
Security Deposit unless such holder actually receives the Security Deposit.
Tenant shall not transfer or assign the Security Deposit or any interest therein
without Landlord's prior written consent, which consent Landlord may withhold in
its sole and absolute discretion.
ARTICLE XII
-----------
HOLDING OVER
------------
12.1 Tenant acknowledges that it is extremely important that Landlord
have substantial advance notice of the date on which Tenant will vacate the
Premises, because Landlord will (a) require an extensive period to locate a
replacement tenant, and (b) plan its entire leasing and renovation program for
the Building in reliance on its lease expiration dates. Tenant also acknowledges
that if Tenant fails to surrender the Premises at the expiration or earlier
termination of the Lease Term, then it will be conclusively presumed that the
value to Tenant of remaining in possession, and the loss that will be suffered
by Landlord as a result thereof, far exceed the Base Rent and additional rent
that would have been payable had the Lease Term continued during such holdover
period. Therefore, if Tenant does not immediately surrender the Premises upon
the expiration or earlier termination of the Lease Term, then the rent shall be
increased to equal the greater of (1) one and one-half times the fair market
rent for the Premises, or (2) one and one-half (1 1/2) the Base Rent, additional
rent and other sums that would have been payable pursuant to the provisions of
this Lease if the Lease Term had continued during such holdover period. Such
rent shall be computed on a monthly basis and shall be payable on the first day
of such holdover period and the first day of each calendar month thereafter
during such holdover period until the Premises have been vacated. Landlord's
acceptance of such rent shall not in any manner adversely affect Landlord's
other rights and remedies, including Landlord's right to evict Tenant and to
recover damages. Tenant agrees to hold Landlord harmless from and against all
loss and damages, direct and consequential, which Landlord may suffer or incur
in connection with claims by other parties against Landlord arising out of the
holding over by Tenant, including, without limitation, reasonable attorney's
fees which may be incurred by Landlord in defense of such claims. Except as
otherwise specifically provided in this Article, all terms of this Lease shall
remain in full force and effect during such holdover period.
ARTICLE XIII
------------
INSURANCE
---------
13.1 Tenant shall not conduct any activity or place any item in or about
the Building which may increase the rate of any insurance on the Building. If
any increase in the rate of such insurance is due to any such activity or item,
then (whether or not Landlord has consented to such activity or item and without
waiving Landlord's right to require such activities to cease) Tenant shall pay
the amount of such increase. The statement of any insurance company or insurance
rating organization (or other organization exercising similar functions in
connection with the prevention of fires or the correction of hazardous
conditions) that such an increase is due to any such activity or item shall be
conclusive evidence thereof.
13.2 Tenant shall maintain throughout the Lease Term with a company
licensed to do business in the jurisdiction in which the Building is located,
approved by Landlord and having a rating equal to or exceeding A:11 in Best's
Insurance Guide (a) broad form comprehensive general liability insurance
(written on an occurrence basis and including contractual liability coverage
insuring the obligations assumed by Tenant pursuant to Section 15.2 and an
endorsement for personal injury), (b) all-risk property insurance. Such
liability insurance shall be in minimum amounts typically carried by prudent
tenants engaged in similar operations, but in no event shall be in an amount
less than one million dollars ($1,000,000) combined single limit per occurrence,
and two million dollars ($2,000,000) in the aggregate. Such property insurance
shall be in an amount not less than that
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<PAGE> 13
required to replace all Alterations and all other contents of the Premises,
excluding only the work and materials considered to be building standard
finishes. All such insurance shall name Landlord as additional named insured;
contain an endorsement that such insurance shall remain in full force and effect
regardless of whether Tenant has waived any claim against the Landlord, under
this Lease, or any other person; provide that the insurer waives all right of
recovery by way of subrogation against Landlord, its agents and employees; and
contain an endorsement prohibiting cancellation, failure to renew, reduction in
amount of insurance or change of coverage as to the interests of Landlord by
reason of any act or omission of Tenant without the insurer's giving Landlord
thirty (30) days prior written notice of such action. Landlord reserves the
right from time to time to require Tenant to obtain higher minimum amounts or
different types of insurance, but only such insurance as is commonly required by
owners of similar properties for similar tenants located in the Town of
Littleton, Massachusetts. Tenant shall deliver a certificate of such insurance
and receipts evidencing payment of the premium for such insurance to Landlord on
or before the Lease Commencement Date and at least annually thereafter.
13.3 Landlord shall maintain fire insurance with extended coverage
insuring the base Building (but not any Alterations or any personal property or
other property of any tenant, including Tenant) in an amount not less than
ninety percent (90%) of replacement cost.
13.4 Landlord and Tenant hereby waive and release any rights and claims
each may have against the other on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, the Premises,
the Building, its contents or improvements to the extent covered by insurance,
carried or required to be carried under the terms of this Lease. Landlord and
Tenant each, on behalf of their respective insurance companies insuring hereby
waive any right of subrogation that it might have against Landlord or Tenant, as
the case may be, to the maximum extent permitted by law.
ARTICLE XIV
-----------
SERVICES AND UTILITIES
----------------------
14.1 Landlord will furnish to the Premises heating, ventilation and air
conditioning ("HVAC") during the seasons they are required in Landlord's
reasonable judgment. Landlord shall not be liable for any failure to maintain
comfortable atmosphere conditions in all or any portion of the Premises due to
excessive heat generated by any equipment or machinery installed by Tenant (with
or without Landlord's consent) or due to any impact that Tenant's furniture,
equipment, machinery or millwork may have upon the delivery of HVAC to the
Premises. For purposes of this Section 14.1, excessive heat shall be deemed to
result from (a) the installation of machinery or equipment, other than normal
office machinery and equipment, in an area not engineered for such office
machinery and equipment, or (b) the installation and concurrent operation of a
number of normal office machines or pieces of equipment in an area not
engineered for such a concentration. For example, a typical office will provide
comfortable temperatures for its occupant when a normal personal computer is
installed and operated in that office, but it may not do so if an unusually
large computer or a number of smaller computers are installed and operated in
that office. Landlord shall not be liable for its failure to maintain
comfortable atmosphere conditions due to an occupancy lead of more than one
person per one hundred and fifty (150) square feet. Landlord will provide:
standard janitorial service on Monday through Friday only (excluding legal
public holidays celebrated by the federal government); electricity; water;
elevator service; and exterior window-cleaning service. The normal hours of
operation of the Building will be 8:00 a.m. to 6:00 p.m. on Monday through
Friday (except such holidays) and such other hours, if any, as Landlord
determines. If Tenant requires air conditioning or heat beyond the normal hours
of operation, then Landlord will furnish the same, provided Tenant gives
Landlord sufficient advance notice of such requirement. Tenant shall pay for
such extra service in accordance with Landlord's then-current schedule. Except
as otherwise specified herein, Landlord shall not be required to furnish
services and utilities during hours other than the normal hours of operation of
the Building.
14.2 Tenant shall promptly reimburse Landlord on demand for the cost of
any excess or disproportionate utility usage in or in connection with the
Premises (including, but not limited to, water, sewer and chiller usage). Excess
and/or disproportionate usage shall be determined by Landlord (in consultation
with its mechanical engineer) and pursuant to measurement of such usage by
Landlord's energy management system.
14.3 Landlord reserves the fight to curtail or suspend any utility,
service or Building system when necessary or desirable in the reasonable
judgment of Landlord, by reason of accident, emergency, repairs, alterations,
replacements or improvements or any other reason whatsoever, until such cause
has been removed or remedied. In the event of Landlord's failure or inability to
furnish any of the utilities or services required to be furnished by Landlord
hereunder, Landlord shall not have any liability to Tenant; provided, however,
that Landlord shall use good faith efforts to restore such failure or inability
so long as such failure or inability is within Landlord's reasonable control,
and to avoid whenever reasonably possible, interference with the conduct of
Tenant's business on the Premises.
14.4 If any public utility or governmental body requires Landlord or
Tenant to restrict the consumption of any utility or reduce any service to the
Premises or the Building, Landlord and Tenant shall comply with such
requirements whether or not the utilities and services referred to in this
Article X1V are thereby reduced or otherwise affected, without any abatement,
deduction, set-off, rebate or adjustment to the Base Rent or additional rent
payable hereunder.
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ARTICLE XV
----------
LIABILITY OF LANDLORD
---------------------
15.1 Landlord, its employees and agents shall not be liable to Tenant,
any Invitee or any other person on entity for any damage (including indirect and
consequential damage), injury, loss or claim (including claims for the
interruption of or loss of business) based on or arising out of any cause
whatsoever (except as otherwise provided in this Section), including without
limitation the following: repair to any portion of the Premises or the Building;
interruption in the use of the Premises or any equipment therein; any accident
or damage resulting from any use or operation (by Landlord, Tenant or any other
person or entity) of elevators or heating, cooling, electrical, sewerage, or
plumbing or mechanical equipment or apparatus; termination of this Lease by
reason of damage to the Premises or the Building; fire, robbery, theft,
vandalism, mysterious disappearance or any other casualty; actions of any other
tenant of the Building or of any other person or entity; failure or inability to
furnish any service specified in this Lease; and leakage in any part of the
Premises or the Building from water, rain, ice, snow or other cause that may
leak into, or flow from, any part of the Premises or the Building or the Land,
or from drains, pipes or plumbing fixtures in the Premises or the Building or
the Land. If any condition exists which may be the basis of a claim of
constructive eviction, then Tenant shall give Landlord written notice thereof
and a reasonable opportunity to correct such condition, and in the interim
Tenant shall not claim that it has been constructively evicted or is entitled to
a rent abatement. Any property placed by Tenant or Invitees in or about the
Premises, the Building or the Land shall be at the sole risk of Tenant, and
Landlord shall not in any manner be responsible therefor. If any employee of
Landlord receives any package or article delivered for Tenant, then such
employee shall be acting as Tenant's agent for such purpose and not as
Landlord's agent. Notwithstanding the foregoing provisions of this Section,
Landlord shall not be released from liability to Tenant for any physical injury
to any natural person caused by Landlord's willful misconduct or negligence of
the extent such injury is not covered by insurance (a) carried by Tenant or such
person, or (b) required by this Lease to be carried by Tenant.
15.2 Tenant shall reimburse Landlord for, and shall indemnify, defend
upon request and hold Landlord, its employees and agents harmless from and
against, all costs, damages, claims, liabilities, expenses (including attorney's
fees), losses and court costs suffered by or claimed against Landlord, directly
or indirectly, based on or arising out of, in whole or in part, (a) use and
occupancy of the Premises or the business conducted therein, (b) any act or
omission of Tenant or any Invitee, (c) any breach of Tenant's obligations under
this Lease, including failure to surrender the Premises upon the expiration or
earlier termination of the Lease Term, or (d) any entry by Tenant or any Invitee
upon the Land prior to the Lease Commencement Date.
Landlord shall reimburse Tenant for, and shall indemnify, defend
upon request and hold Tenant, its employees and agents harmless from and against
all cost, damages, claims, liabilities, expenses (including attorney's fees),
losses and court costs suffered by or claimed against Tenant, directly or
indirectly, based on or arising out of, in whole or in part, (a) injury, death
or property damage occurring in or about the Premises or Building caused by the
negligence or willful misconduct of Landlord or (b) any breach of Landlord's
obligations under this Lease.
15.3 If any landlord hereunder transfers the Building or such landlord's
interest therein, then such landlord shall not be liable for any obligation or
liability based on or arising out of any event or condition occurring after such
transfer. Tenant shall attorn to such transferee and, within five (5) days after
request, shall execute, acknowledge and deliver any document submitted to Tenant
confirming such attornment.
15.4 Tenant shall not have the right to offset or deduct any amount
allegedly owed to Tenant pursuant to any claim against Landlord from any rent or
other sum payable to Landlord. Tenant's sole remedy for recovering upon such
claim shall be to institute an independent action against Landlord.
15.5 If Tenant or any Invitee is awarded a money judgment against
Landlord, then recourse for satisfaction of such judgment shall be limited to
execution against Landlord's estate and interest in the Building and the Land.
No other asset of Landlord, any partner, director or office of Landlord
(collectively, "Officer") or any other person or entity shall be available to
satisfy or subject to such judgment, nor shall any Officer or other person or
entity have personal liability for satisfaction of any claim or judgment against
Landlord or any Officer.
ARTICLE XVI
-----------
RULES
-----
16.1 Tenant and Invitees shall observe the rules specified in Exhibit D
attached hereto. Tenant and Invitees shall also observe any other reasonable
rule that Landlord may promulgate for the operation or maintenance of the
Building, provided that notice thereof is given and such rule is not
inconsistent with the provisions of this Lease. Landlord shall have no duty to
enforce such rules or any provision of any other lease against any other tenant.
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ARTICLE XVII
------------
DAMAGE OR DESTRUCTION
---------------------
17.1 If the Premises or the Building are totally or partially damaged or
destroyed thereby rendering the Premises totally or partially untenantable, then
Landlord shah repair and restore the Premises (except as hereinafter provided)
and the Building to substantially the same condition in which they were in prior
to such damage or destruction; provided, however, that if in Landlord's
reasonable judgment such repair and restoration cannot be completed within
ninety (90) days after the occurrence of such damage or destruction (taking into
account the time needed for effecting a satisfactory settlement with any
insurance company involved, removal of debris, preparation of plans and issuance
of all required governmental permits), then Landlord shall have the right, at
its sole option, to terminate this Lease as of the seventy-fifth (75) day after
such damage or destruction by giving written notice of termination within
forty-five (45) days after the occurrence of such damage or destruction. If the
Premises or any part thereof are damaged or destroyed by fire or any other
cause, Tenant shall give prompt notice thereof to Landlord. Tenant shall be
responsible for any additional expenses incurred in the event that Tenant does
not promptly provide such notice. If this Lease is terminated pursuant to this
Article, then rent shall be apportioned (based on the portion of the Premises
which is usable after such damage or destruction) and paid to the date of
termination. If this Lease is not terminated as a result of such damage or
destruction, then until such repair and restoration of the Premises are
substantially complete, Tenant shall be required to pay the Base Rent and
additional rent only for the portion of the Premises that is usable while such
repair and restoration are being made; provided, however, that if such damage or
destruction was caused by the act or omission of Tenant or any Invitees, then
Tenant shall be entitled to a rent reduction only to the extent that Landlord
has received loss of rent insurance proceeds. If this Lease is not terminated as
a result of such damage or destruction, then Landlord shall bear the expenses of
such repair and restoration of the Premises and the Building; provided, however,
that if such damage or destruction was caused by the negligence or willful act
or omission of Tenant or any Invitee, then Tenant shall pay the amount by which
such expenses exceed the insurance proceeds, if any, actually received by
Landlord on account of such damage or destruction; and provided further,
however, that in no event shall Landlord be required to repair or restore any
work and materials not deemed by Landlord to be building standard work and
materials, any Alteration previously made by Tenant or any of Tenant's trade
fixtures, furnishings, equipment or personal property. Notwithstanding anything
herein to the contrary, Landlord shall have the right to terminate this Lease if
(a) the holder of any Mortgage fails or refuses to make such insurance proceeds
available for such repair and restoration, (b) zoning or other applicable laws
or regulations do not permit such repair and restoration, or (c) the Building is
damaged by fire or casualty (whether or not the Premises has been damaged) to
such an extent that Landlord decides, in its sole and absolute discretion, not
to rebuild or reconstruct the Building. Notwithstanding anything contained
herein to the contrary, if Landlord shall not elect to terminate this Lease as
set forth above, then Landlord shall so restore the Premises and the Building
within one hundred and twenty (120) days after the occurrence of such damage or
destruction, and if Landlord shall so fail to restore, Tenant shall have the
right to terminate this Lease upon ten (10) days prior written notice to
Landlord.
ARTICLE XVIII
-------------
CONDEMNATION
------------
18.1 If one-third or more of the Premises or occupancy thereof shall be
taken or condemned by any governmental or quasi-governmental authority for any
public or quasi-public use or purpose or sold under threat of such a taking or
condemnation (collectively, "condemned"), then this Lease shall terminate on the
date title vests in such authority and rent shall be apportioned as of such
date. If less than one-third of the Premises or occupancy thereof is condemned,
then this Lease shall continue in full force and effect as to the part of the
Premises not condemned, except that as of the date title vests in such authority
Tenant shall not be required to pay the Base Rent and additional rent with
respect to the part of the Premises condemned, and rent shall abate to the
extent which Tenant is unable to use the Premises during any demolition or
reconstruction of the Building. Notwithstanding anything contained herein to the
contrary, Landlord shall promptly restore the Premises remaining after such
taking, and if Landlord shall fail to complete such restoration within one
hundred and twenty (120) days after such taking, Tenant shall have the right to
terminate this Lease upon ten (10) days prior written notice to Landlord.
Notwithstanding anything herein to the contrary, if any portion of the Land or
the Building is condemned, and the nature, location or extent of such
condemnation is such that Landlord elects, in its sole and absolute discretion,
to demolish the Building (in whole or in part), then Landlord may terminate this
Lease by giving sixty (60) days prior written notice of such termination to
Tenant at any time after such condemnation and this Lease shall terminate on the
date specified in such notice and rent shall be adjusted to such date.
18.2 All awards, damages and other compensation paid by such authority on
account of such condemnation shall belong to Landlord, and Tenant assigns to
Landlord all rights to such awards, damages and compensation. Tenant shall not
make any claim against Landlord or the authority for any portion of such award,
damages or compensation attributable to damage to the Premises, value of the
unexpired portion of the Lease Term, loss of profits or goodwill, leasehold
improvements or severance damages. Nothing contained herein, however, shall
prevent Tenant from pursuing a separate claim against the authority for the
value of furnishings and trade fixtures installed in the Premises at Tenant's
expense and for relocation expenses, provided that such claim is stated
separately from any award to Landlord and provided further that such claim shall
in no way diminish the award, damages or compensation otherwise payable to
Landlord in connection with such condemnation.
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ARTICLE XIX
DEFAULT
19.1 An Event of Default is any one or more of the following: (a)
Tenant's failure to make when due any payment of the Base Rent, additional rent
or other sum due hereunder, within ten (10) days after notice of such failure
from Landlord; (b) Tenant's failure to perform or observe any other term,
covenant or condition hereof, within thirty (30) days after notice thereof from
Landlord, or if such failure may not reasonably be cured within said thirty (30)
day period, then for such further period as may be reasonably required so long
as such cure is commenced within said thirty (30) day period, and is thereafter
diligently prosecuted to completion; (c) Tenant's failure to occupy continuously
the Premises for two (2) consecutive months; (d) an Event of Bankruptcy as
specified in Article XX; or (e) Tenant's dissolution or liquidation. Landlord
notice as required per subsections (a) and (b) per this section shall be limited
to two times per year. Thereafter, Landlord shall not be obligated to provide
Tenant with notice of default.
19.2 If there shall be an Event of Default, including an Event of Default
prior to the Lease Commencement Date, then the provisions of this Section shall
apply. Landlord shall have the right, at its sole option, to terminate this
Lease. In addition, with or without terminating this Lease, Landlord may
re-enter, terminate Tenant's right of possession and take possession of the
Premises. The provisions of this Article shall operate as a notice to quit, any
other notice to quit or of Landlord's intention to re-enter the Premises being
expressly waived. If necessary, Landlord may proceed to recover possession of
the Premises under applicable laws, by such other proceedings, including
re-entry and possession, or by using such force as may be necessary. If Landlord
elects to terminate this Lease and/or elects to terminate Tenant's right of
possession, then everything in this Lease to be done by Landlord shall cease,
without prejudice, however, to Tenant's liability for all rent and other sums
due hereunder. Landlord may relet the Premises or any part thereof, alone or
together with other premises, for such term(s) (which may extend beyond the date
on which the Lease Term would have expired but for Tenant's default) and on such
terms and conditions (which may include concessions or free rent and alterations
of the Premises) as Landlord, in its sole discretion, may determine, but
Landlord shall not be liable for, nor shall Tenant's obligations be diminished
by reason of, Landlord's failure to relet the Premises or collect any rent due
upon such reletting. If Landlord relets the Premises and collects rent in excess
of the Base Rent and additional rent owed by Tenant hereunder, Landlord shall be
entitled to retain any such excess and Tenant shall not be entitled to a credit
therefor. Whether or not this Lease is terminated, Tenant nevertheless shall
remain liable for the Base Rent, additional rent and damages which may be due or
sustained, and all costs, fees and expenses (including without limitation,
reasonable attorney's fees, brokerage fees and expenses incurred in placing the
Premises in building standard rentable condition) incurred by Landlord in
pursuit of its remedies and in renting the Premises to others from time to time.
Tenant shall be liable for all rent that would have applied to any period of
occupancy of the Premises (whether or not any such period has elapsed) for which
Tenant was hereunder granted occupancy without any obligation to pay such rent
(if any). Tenant shall also be liable for additional damages which at Landlord's
election shall be either: (a) an amount equal to the Base Rent and additional
rent which would have become due during the remainder of the Lease Term, less
the amount of rental, if any, which Landlord receives during such period from
others to whom the Premises may be rented (other than any additional rent
payable as a result of any failure of such other person to perform any of its
obligations), in which case such damages shall be computed and payable in
monthly installments, in advance, on the first day of each calendar month
following Tenant's default and continuing until the date on which the Lease Term
would have expired but for Tenant's default provided, however, that separate
suits may be brought to collect any such damages for any month(s), and such
suits shall not in any manner prejudice Landlord's right to collect any such
damages for any subsequent month(s), or Landlord may defer any such suit until
after the expiration of the Lease Term, in which event such suit shall be deemed
not to have accrued until the expiration of the Lease Term). Tenant waives any
right of redemption, re-entry or restoration of the operation of this Lease
under any present or future law, including any such right which Tenant would
otherwise have if Tenant shall be dispossessed for any cause. As used in the
preceding sentence, the words "redemption", "re-entry", "retention", and
"dispossessed" shall not be deemed restricted to their technical or legal
meanings. Whether or not this Lease and/or Tenant's right of possession is
terminated, Landlord shall have the right to terminate by written notice any
renewal or expansion right contained in this Lease and to grant or withhold any
consent or approval pursuant to this Lease in its sole and absolute discretion.
With respect to Tenant liabilities per this section should Tenant be in default
of this Lease, damages due from Tenant shall be calculated as if Tenant elected
to terminate this lease in accordance with Section 3.4.
19.3 Landlord's rights and remedies set forth in this Lease are
cumulative and in addition to Landlord's other rights and remedies at law or in
equity, including those available as a result of any anticipatory breach of this
Lease. Landlord's exercise of any such right or remedy shall not prevent the
concurrent or subsequent exercise of any other right or remedy. Landlord's delay
or failure to exercise or enforce any of Landlord's rights or remedies or
Tenant's obligations shall not constitute a waiver of any such rights, remedies
or obligations. Landlord shall not be deemed to have waived any default unless
such waiver expressly is set forth in an instrument signed by Landlord. Any such
waiver shall not be construed as a waiver of any covenant or condition except as
to the specific circumstances described in such waiver. Neither Tenant's payment
of an amount less than a sum due nor Tenant's endorsement or statement on any
check or letter accompanying such payment shall be deemed an accord and
satisfaction. Notwithstanding any request or designation by Tenant, Landlord may
apply any payment received from Tenant to any payment then due. Landlord may
accept the same without prejudice to Landlord's right to recover the balance of
such sum or to pursue other remedies. Re-entry and acceptance of keys shall not
be considered an acceptance of a surrender of this Lease.
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19.4 If more than one natural person and/or entity shall constitute
Tenant or any Guarantor, then the liability of each person or entity shall be
joint and several. If Tenant or any Guarantor is a general partnership or other
entity the partners or members of which are subject to personal liability, then
the liability of each such partner or member shall be joint and several.
19.5 If Tenant fails to make any payment to any third party or to do any
act herein required to be made or done by Tenant, then Landlord may, but shall
not be required to, make such payment or do such act. Landlord's taking such
action shall not be considered a cure of such failure by Tenant nor prevent
Landlord from pursuing any remedy it is otherwise entitled to in connection with
such failure. If Landlord elects to make such payment or do such act, then all
expenses incurred, plus interest thereon at the Default Rate (as hereinafter
defined) from the date incurred to the date of payment thereof by Tenant, shall
constitute additional rent. The Default Rate shall equal the rate per annum
which is the lesser of eighteen percent (18%) or the highest rate permitted by
law.
19.6 If Tenant fails to make any payment of the Base Rent, additional
rent or any other sum payable to Landlord after expiration of any grace periods,
then Tenant shall pay a late charge equal to the greater of (i) five percent (5
%) of the amount of such payment or (ii) three hundred dollars ($300.00). Such
payment and such late fee shall bear interest at the Default Rate from the date
such payment was due to the date of payment. If Tenant is in default of this
Lease for the same or substantially the same reason more than twice during any
Lease Year, then, at Landlord's election, Tenant shall not have the right to
cure such repeated default. In the event of Landlord's election not to allow a
cure of a repeated default, Landlord shall have all the rights and remedies
provided herein and by law. If Tenant shall deliver to Landlord a check that is
returned unpaid for any reason, such payment shall be deemed never to have been
made and, additionally, Tenant shall pay Landlord twenty-five dollars ($25.00)
for Landlord's expense in connection therewith (plus any out-of-pocket expenses
incurred in connection therewith) and said charge shall be payable to Landlord
on the first day of the next succeeding month as additional rent.
ARTICLE XX
----------
BANKRUPTCY
----------
20.1 An Event of Bankruptcy is: (a) Tenant's, a Guarantor's or any
general partner (a "General Partner") of Tenant's becoming insolvent, as that
term is defined in Title 11 of the United States Code (the "Bankruptcy Code"),
or under the insolvency laws of any state (the "Insolvency Laws"); (b)
appointment of a receiver or custodian for any property of Tenant, a Guarantor
or a General Partner, or the institution of a foreclosure or attachment action
upon any property of Tenant, a Guarantor or a General Partner not released,
discharged or discontinued within forty-five (45) days; (c) filing of a
voluntary petition by Tenant, a Guarantor or a General Partner under the
provisions of the Bankruptcy Code or Insolvency Laws; (d) filing of an
involuntary petition against Tenant, a Guarantor or a General Partner as the
subject debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is
not discussed within forty-five (45) days after filing, or (2) results in the
issuance of an order for relief against the debtor; (e) Tenant's a Guarantor's
or a General Partner's making or consenting to an assignment for the benefit of
creditors or a composition of creditors; or (f) an admission by Tenant or a
Guarantor of its inability to pay debts as they become due.
20.2 Upon occurrence of an Event of Bankruptcy, Landlord shall have all
rights and remedies available pursuant to Article XIX; provided, however, that
while a case (the "Case") in which Tenant is the subject debtor under the
Bankruptcy Code is pending, Landlord's right to terminate this Lease shall be
subject, to the extent required by the Bankruptcy Code, to any rights of Tenant
or its trustee in bankruptcy (collectively, "Trustee") to assume or assign this
Lease pursuant to the Bankruptcy Code. Trustee shall not have the right to
assume or assign this Lease unless Trustee promptly (a) cures all defaults under
this Lease, (b) compensates Landlord for all damages incurred as a result of
such defaults, (c) provides adequate assurance of future performance on the part
of Tenant as debtor in possession or Tenant's assignee, and (d) complies with
all other requirements of the Bankruptcy Code. If Trustee fails to assume or
assign this Lease in accordance with the requirements of the Bankruptcy Code
within sixty (60) days after the initiation of the Case, then Trustee shall be
deemed to have rejected this Lease. Adequate assurance of future performance
shall require that, at a minimum, all of the following minimum criteria be met:
(1) Tenant's gross income (as defined by generally accepted accounting
principles) during the thirty (30) days preceding the filing of the Case must be
greater than ten (10) times the next monthly installment of the Base Rent and
additional rent; (2) Both the average and median of Tenant's monthly gross
income (as defined by generally accepted accounting principles) during the seven
(7) months preceding the filing of the Case must be greater than ten (10) times
the next monthly installment of the Base Rent and additional rent; (3) Trustee
must pay its estimated pro rata share of the cost of all services performed or
provided by Landlord (whether directly or through agents or contractors and
whether or not previously included as part of the Base Rent) in advance of the
performance or provision of such services; (4) Trustee must agree that Tenant's
business shall be conducted in a first-class manner, and that no liquidating
sale, auction or other non-first-class business operation shall be conducted in
the Premises; (5) Trustee must agree that the use of the Premises as stated in
this Lease shall remain unchanged and that no prohibited use shall be permitted;
(6) Trustee must agree that the assumption or assignment of this Lease shall not
violate or affect the rights of other tenants in the Building and the Complex;
(7) Trustee must pay at the time the next monthly installment of the Base Rent
is due, in addition to such installment, an amount equal to the monthly
installments of the Base Rent and additional rent due for the next six (6)
months thereafter, such amount to be held as a
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security deposit; (8) Trustee must agree to pay, at any time Landlord draws on
such security deposit, the amount necessary to restore security deposit to its
original amount; and (9) All assurances of future performance specified in the
Bankruptcy Code must be provided.
ARTICLE XXI
-----------
SUBORDINATION
-------------
21.1 This Lease is subject and subordinate to the hen, provisions,
operation and effect of all mortgages, deeds of trust, ground leases or other
security instruments which may now or hereafter encumber the Building or the
Land (individually, "Mortgage" and collectively, "Mortgages"), to all funds and
indebtedness intended to be secured thereby, and to all renewals, extensions,
modifications, recastings or refinancings thereof. The holder of any Mortgage to
which this Lease is subordinate shall have the right (subject to any required
approval of the holders of any superior Mortgage) at any time to declare this
Lease to be superior to the lien, provisions, operation and effect of such
Mortgage and Tenant shall execute, acknowledge and deliver all confirming
documents required by such holder.
21.2 In confirmation of the foregoing subordination, Tenant shall at
Landlord's request promptly execute any requisite or appropriate document.
Tenant appoints Landlord as Tenant's attorney-in-fact to execute any such
document for Tenant if Tenant fails to execute same within ten (10) days after
request therefor. Tenant waives the provisions of any statute or rule of law now
or hereafter in effect which may give or purport to give Tenant any right to
terminate or otherwise adversely affect this Lease or Tenant's obligations in
the event any such foreclosure proceeding is prosecuted or completed or in the
event the Land, the Building or Landlord's interest therein is sold at a
foreclosure sale or by deed in lieu of foreclosure. If this Lease is not
extinguished upon such sale or by the purchaser following such sale, then, at
the request of such purchaser, Tenant shall attorn to such purchaser and shall
recognize such purchaser as the landlord under this Lease. Upon such attornment
such purchaser shall not be (a) bound by any payment of the Base Rent or
additional rent more than one (1) month in advance, (b) bound by any amendment
of this Lease made without the consent of the holder of each Mortgage existing
as of the date of such amendment, (c) liable for damages for any breach, act or
omission of any prior landlord, or (d) subject to any offsets or defenses which
Tenant might have against any prior landlord. Within five (5) days after
receipt, Tenant shall execute, acknowledge and deliver any requisite or
appropriate document submitted to Tenant confirming such attornment.
21.3 If any lender providing financing secured by the Building requires
as a condition of such financing that modifications to this Lease be obtained,
and provided that such modifications (a) are reasonable, (b) do not adversely
affect in a material manner Tenant's use of the Premises as herein permitted,
and (c) do not increase the rent and other sums to be paid by Tenant, then
Landlord may submit to Tenant an amendment to this Lease incorporating such
modifications. Tenant shall execute, acknowledge and deliver such amendment to
Landlord within five (5) days after receipt.
21.4 Landlord shall, at Tenants request, provide it's best efforts to
obtain so-called non-disturbance and attornment agreements in Tenant's favor
from all present and future mortgagees.
ARTICLE XXII
------------
COVENANTS OF LANDLORD
---------------------
22.1 Landlord covenants that if Tenant shall perform timely all of its
obligations, then, subject to the provisions of this Lease, Tenant shall during
the Lease Term peaceably and quietly occupy and enjoy possession of the Premises
without hindrance by Landlord or anyone claiming through Landlord.
22.2 Landlord reserves the right to: (a) change the street address and
name of the Building or the Complex; (b) change the arrangement and location of
entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets
or other public parts of the Building and the Complex, and, in connection with
such work, to temporarily close door entry ways, common or public spaces and
corridors of the Building or the Complex so long as the Premises remain
reasonably accessible; (c) erect, use and maintain pipes and conduits in and
through the Premises; (d) grant to anyone the exclusive right to conduct any
particular business in the Building or the Complex not inconsistent with the
permitted use of the Premises; (e) use or lease exclusively the roof areas, the
sidewalks and other exterior areas; (f) resubdivide the Land or to combine the
Land with other lands so long as Real Estate Taxes shall only relate to the Land
and Building as now constituted; (g) construct improvements (including kiosks)
on the Land and in the public and common areas of the Building; (h) relocate or
change roads, driveways and parking areas and to alter the means of access to
all or any portion of the Building or Complex; (i) install and display signs,
advertisements and notices on any part of the exterior or interior of the
Building; (i) install such security systems and devices as Landlord deems
appropriate; (k) create easements over the Premises and in the entrances, aisles
and stairways of any parking areas for utilities, telephone lines, sanitary
sewer, storm sewer, water lines, pipes, conduits, drainage ditches, sidewalks,
pathways, emergency vehicles, and ingress and egress for the use and benefit of
others, without Tenant joining in the execution thereof and the Lease shall
automatically be subject and subordinate thereto; and (1) alter the site plan,
landscaping, walkways and common areas outside the Building within the context
of general site improvements, repairs and maintenance. Exercise of any such
right shall not be considered a constructive eviction or a disturbance of
Tenant's business or
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occupancy.
ARTICLE XXIII
-------------
GENERAL PROVISIONS
------------------
23.1 Tenant acknowledges that neither Landlord nor any broker, agent or
employee of Landlord has made any representation or promise with respect to the
Premises or the Building or the Land except as expressly set forth herein, and
no right is being acquired by Tenant except as expressly set forth herein. This
Lease contains the entire agreement of the parties and supersedes all prior
agreements, negotiations, letters of intent, proposals, representations,
warranties and discussions between the parties. This Lease may be changed in any
manner only by an instrument signed by both parties.
23.2 Nothing contained in this Lease shall be construed as creating any
relationship between Landlord and Tenant other than that of landlord and tenant.
23.3 Landlord and Tenant each warrants that in connection with this Lease
it has not employed or dealt with any broker, agent or finder other than the
Broker(s). Tenant shall indemnify and hold Landlord harmless from and against
any claim for brokerage or other commissions asserted by any other broker, agent
or finder employed by Tenant or with whom Tenant has dealt.
23.4 From time to time upon ten (10) days prior written notice, Tenant
and each subtenant, assignee or occupant of Tenant shall execute, acknowledge
and deliver to Landlord and any designee of Landlord a written statement
certifying: (a) that this Lease is unmodified and in full force and effect (or
that this Lease is in full force and effect as modified and stating the
modifications); (b) the dates to which rent and any other charges have been
paid; (c) that Landlord is not in default in the performance of any obligation
(or specifying the nature of any default); (d) the address to which notices are
to be sent; (e) that this Lease is subject and subordinate to all Mortgages;(f)
that Tenant has accepted the Premises and all work thereto has been completed
(or specifying the incomplete work); and (g) such other matters as Landlord may
request. Any such statement may be relied upon by any owner of the Building or
the Land, any prospective purchaser of the Building or the Land, any holder or
prospective holder of a Mortgage or any other person or entity. Tenant
acknowledges that time is of the essence to the delivery of such statements and
Tenant's failure to deliver timely such statements may cause substantial damages
resulting from, for example, delays in obtaining financing secured by the
Building.
From time to time upon ten (10) days prior written notice, Landlord
shall execute, acknowledge and deliver to Tenant, and any designee of Tenant, a
written statement certifying: (a) that this Lease is unmodified and in full
force and effect (or that this Lease is in full force and effect as modified and
stating the modifications); (b) the dates to which rent and any other charges
have been paid; (c) that Tenant is not in default in the performance of any
obligation (or specifying the nature of any default); (d) the address to which
notices are to be sent; (e) that this Lease is subject and subordinate to all
Mortgages; (f) such other matters as Tenant may request. Any such statement may
be relied upon by any person or entity. Landlord acknowledges that time is of
the essence to the delivery of such statements and Landlord's failure to deliver
timely such statements may cause substantial damages.
23.5 LANDLORD, TENANT, GUARANTORS AND GENERAL PARTNERS WAIVE TRIAL BY
JURY IN ANY ACTION, CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE LANDLORD-TENANT
RELATIONSHIP, TENANT'S USE OR OCCUPANCY OF THE PREMISES OR ANY CLAIM OF INJURY
OR DAMAGE. Tenant consents to service of process and any pleading relating to
any such action at the Premises; provided, however, that nothing herein shall be
construed as requiring such service at the Premises. Landlord, Tenant, all
Guarantors and all General Partners waive any objection to the venue of any
action filed in any court situated in the jurisdiction in which the Building is
located and waive any right under the doctrine of forum non conveniens or
otherwise to transfer any such action filed in any such court to any other
court.
23.6 All notices or other required communications shall be in writing and
shall be deemed duly given only when delivered in person (with receipt
therefor), or when sent by certified or registered mail, return receipt
requested, postage prepaid, to the following addresses: (a) if to Landlord, at
the Landlord Address for Notices; or (b) if to Tenant, at the Tenant Address for
Notices. Either party may change its address for the giving of notices by notice
given in accordance with this Section. If Landlord or the holder of any Mortgage
notifies Tenant that a copy of each notice to Landlord shall be sent to such
holder at a specified address, then Tenant shall send (in the manner specified
in this Section and at the same time such notice is sent to Landlord) a copy of
each such notice to such holder, and no such notice shall be considered duly
sent unless such copy is so sent to such holder. If Tenant claims that Landlord
has breached any obligation, then Tenant shall send such holder notice
specifying the breach and permit such holder a reasonable opportunity to cure
the breach.
23.7 Each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law. If any provision or its application to any
person or circumstance shall to any extent be invalid or unenforceable, then
such provision shall be deemed to be replaced by the valid and enforceable
provision most substantively similar thereto, and the remainder of this Lease
and the application of such provision to other persons or circumstances shall
not be affected.
14
<PAGE> 20
23.8 Feminine, masculine and neuter pronouns shall be substituted for
those of another form, and the plural or singular shall be substituted for the
other number, in any place in which the context may require.
23.9 The provisions of this Lease shall be binding upon and inure to the
benefit of the parties and their respective representatives, successors and
assigns, subject to the provisions herein restricting assignment or subletting.
23.10 Landlord and its designees may enter the Premises at any time, in
the company of an officer or employee of Tenant after reasonable oral notice
(except in the case of emergencies) without charge therefor and without
diminution of the rent payable by Tenant, to inspect and exhibit the Premises
and make such alterations and repairs as Landlord may deem necessary (including,
but not limited to, alterations and repairs for a new tenant during the last
sixty (60) days of the Lease Term if Tenant has vacated the Premises).
23.11 This Lease shall be governed by the laws of the jurisdiction in
which the Building is located.
23.12 Headings are used for convenience and shall not be considered when
construing this Lease.
23.13 The submission of a copy of this document to Tenant shall not
constitute an offer or option to lease. This Lease shall become effective and
binding only upon execution and delivery by both Landlord and Tenant.
23.14 Time is of the essence with respect to each obligation of Tenant and
Landlord.
23.15 This Lease may be executed in multiple counterparts, each of which
is deemed an original and all of which constitute one and the same document.
23.16 Neither this Lease nor a memorandum thereof shall be recorded.
23.17 Landlord reserves the right to make reasonable changes to the plans
and specifications for the Building without Tenant's consent, provided such
changes do not alter the character of the Building as a first-class office
building.
23.18 Except as otherwise provided in this Lease, any additional rent or
other sum owed by Tenant to Landlord, and any cost, expense, damage or liability
incurred by Landlord for which Tenant is liable, shall be considered additional
rent payable pursuant to this Lease and paid by Tenant no later than thirty (30)
days after the date Landlord notified Tenant of the amount thereof.
23.19 Tenant's liabilities existing as of the expiration or earlier
termination of the Lease Term shall survive such expiration or earlier
termination.
23.20 If Landlord or Tenant is in any way delayed or prevented from
performing any obligation, except for payment of monetary obligations, due to
fire, act of God, governmental act or failure to act, labor dispute, inability
to procure materials or any cause beyond Landlord's reasonable control (whether
similar or dissimilar to the foregoing events), then the time for performance of
such obligation shall be excused for the period of such delay or prevention and
extended for the time necessary to compensate for the period of such delay or
prevention.
23.21 The deletion of any printed, typed or other portion of this Lease
shall not evidence an intention to contradict such deleted portion. Such deleted
portion shall be deemed not to have been inserted in this Lease.
23.22 The person executing this Lease on Tenant's behalf and the person
executing this Lease on Landlord's behalf, each warrants that such person is
duly authorized to so act.
23.23 Intentionally Deleted.
23.24 If any Base Rent or additional rent is collected by or through an
attorney or if Landlord requires the services of an attorney to cause Tenant to
cure any default, to evict Tenant or to pursue any other remedies to which
Landlord is entitled hereunder, Tenant shall pay the reasonable fees of such
attorney together with all reasonable costs and expenses incurred by Landlord in
connection with such matters, whether or not any legal proceedings have been
commenced.
23.25 Intentionally Deleted.
23.26 Landlord agrees to make readily achievable modifications in order to
comply with applicable laws and regulations pertaining to access by handicapped
persons, including, but not limited to, the Americans with Disabilities Act
("ADA"), with respect to the Building and the parking lot and other common
areas. Tenant acknowledges its understanding that the ADA code makes the Tenant
responsible for compliance therewith in Tenant Premises, during the term of this
lease.
15
<PAGE> 21
ARTICLE XXIV
------------
PARKING
-------
24.1 During the Lease Term, Tenant shall have the right to use (on a
non-exclusive first-come, first-served basis) the Parking Lot for the parking of
passenger automobiles in the parking areas designed from time to time by
Landlord for the use of tenants of the Building, in a ratio of 2.83 spaces per
one thousand rentable square feet leased, rounded to the nearest full space.
24.2 Landlord reserves the right to establish and modify or amend rules
and regulations governing the use of such parking areas. Landlord shall have the
right to revoke a user's parking privilege in the event such user fails to abide
by the rules and regulations governing the use of such parking areas. Tenant
shall be prohibited from using such parking areas for purposes other than for
parking registered vehicles. The storage or repair of vehicles in such parking
areas shall be prohibited.
24.3 Tenant shall not assign or sublet any parking rights granted to
Tenant herein. Any attempted assignment or sublease shall be null and void.
24.4 Landlord reserves the right to institute a valet parking system or a
magnetic card access system or any other parking or permit system it deems
appropriate.
24.5 Landlord shall not be liable for any damage or loss to any
automobile (or property therein) parked in, on or about such parking areas, or
for any injury sustained by any person in, on or about such areas. If Landlord,
in its sole and absolute discretion, deems it necessary to repair or maintain
such parking areas, Landlord shall have the right to substitute use of other
parking areas.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
date first above written.
WITNESS: LANDLORD:
Nationwide Life Insurance Company
---------------------------------
/s/ Sue Ann Crego By: /s/ Robert H. McNaghten
- -------------------------- ------------------------------
Robert H. McNaghten
Title: Vice President
--------------------------
Date: 11-29-93
---------------------------
WITNESS: TENANT:
GeoTel Communications Corporation
---------------------------------
/s/ Steve Webber By: /s/ G. Wayne Andrews
- --------------------------- ------------------------------
Title: President & CEO
---------------------------
Date: 11-22-93
---------------------------
16
<PAGE> 22
EXHIBIT B
---------
WORKLETTER
----------
Landlord at its sole cost and expense shall perform the following work:
(a) Create a new signage program for the property, including a tenant
directory in main lobby of Building. The existing tenant signs shall be removed
from the grounds and the lobby area.
(b) Upgrade main lobby area of the building with new flooring and new
paint on walls. Remove existing guard desk and glass case.
(c) Deliver all building systems (including mechanical, electrical,
HVAC, lighting and outlets) in good working order.
(d) Install a "coffee station" comprised of sink with running water,
formica countertop and stock lower cabinetry. This will be installed in a
mutually agreeable location on the wall contiguous to the bathroom.*
The time-frame for completing items (c) and (d) above shall be within one
month of lease execution date. Landlord's time-frame for completion of items
9(a) and (b) above shall be five (5) months of lease execution date.
Landlord shall install a wall demising Tenant Premises from vacant space.
Landlord shall be responsible for installing locks in doors leading to the
common corridor. Landlord may, but shall not be obligated to, reconfigure the
Common Area connecting the second floor lobby to the second floor bathrooms. In
this instance, at Tenant's option, the room located adjacent to Tenant entry may
be demolished.
* Install 4 locks on 3 rooms during temporary occupancy and add 1 room.
B1
<PAGE> 23
EXHIBIT "C"
25 PORTER ROAD,LITTLETON, MASSACHUSETTS
SAMPLE OPERATING CHARGES INCLUDING REAL ESTATE TAXES
===================================
P.S.F.
ANNUALLY
--------
(1) Building Insurance $ .09
(2) Trash Removal .12
(3) Landscape Maintenance .16
(4) Security ** .16
(5) Elevator Service .04
(6) HVAC Maintenance .13
(7) Other Utilities
(Water, Septic, Common area electric) .32
(8) Payroll & Related* .17
(9) Repairs & Maintenance .12
(10) Snow Removal/Parking Lot Maintenance .11
(11) General/Administrative .33
12. Nightly Cleaning of Common Areas .18
-----
SUBTOTAL 1.93
13. Real Estate Taxes .95
-----
TOTAL 2.88
* Represents a portion of the salary of a part-time, on-site, full-time, on
call building supervisor.
** Nightly car patrol and check of building two times per night on weekdays,
and three times per day during weekends.
B2
<PAGE> 24
EXHIBIT A
PLAN SHOWING PREMISES
[GRAPHIC: FLOOR 2]
<PAGE> 25
Landlord's Acknowledgement
- --------------------------
STATE OF OHIO )
) SS:
COUNTY OF FRANKLIN )
The foregoing instrument was acknowledged before me this 29th of Nov.,
1993, by Robert H. McNaghten, Vice President (title) of Nationwide Life
Insurance Company, an Ohio corporation, on behalf of the corporation.
(SEAL) [LOGO] Sue Ann Crego /s/ Sue Ann Crego
Notary-Public-State of Ohio --------------------------
My Commission expires Notary Public
10-20-95
-----------------------
My commission expires:
Tenant's Acknowledgement
- ------------------------
STATE OF Massachusetts )
) SS:
COUNTY OF Suffolk )
The foregoing instrument was acknowledged before me this 22 of November,
1993, by G. Wayne Andrews, President & CEO (title) of GeoTel Communications Co.
a Massachusetts corporation, on behalf of the corporation
(SEAL) /s/ Christine A. George
--------------------------------
Notary Public
My commission expires:
CHRISTINE A. GEORGE
Notary Public
My Commission Expires Dec. 4, 1998
17
<PAGE> 26
AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE made this 28TH day of December, 1994 ("the
Effective Date") by and between NATIONWIDE LIFE INSURANCE COMPANY ("Landlord")
and GEOTEL COMMUNICATIONS CORPORATION ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have heretofore entered into a Lease, dated
November 29, 1993, covering certain premises located in the building known as 25
Porter Road, Littleton, MA, said premises being more particularly described in
said Lease, attached hereto and incorporated herein, and
WHEREAS, Landlord and Tenant desire to amend said Lease in certain
respects.
NOW, THEREFORE, in consideration of mutual promises contained herein,
Landlord and Tenant agree as follows:
1. PREMISES. The Premises will be increased by 7356 Rentable Square Feet
(RSF) ("Additional Space") to a total of 14,356 RSF. The Additional Space is
located on the second floor as indicated in Exhibit A to this Amendment
(Attached hereto and incorporated herein).
2. OCCUPANCY DATE. Occupancy will occur in three phases:
Phase I 3500 RSF on the earlier of completion of tenant improvements
or occupancy.
Phase II 1500 RSF on or before 10-01-95 (Occupancy Date)
Phase III 2356 RSF on or before 01-01-96 (Occupancy Date)
So long as Tenant honors the size constraint detailed in this Section 2
above, the Tenant, at its own discretion, may occupy any section, or
non-contiguous sections, of the Additional Space. However, in the event that
Tenant requires occupancy of additional space prior to the Phase-in dates,
Tenant may occupy such additional space, and shall pay the Landlord for the
additional space in accordance with Section 3 of this Amendment.
3. BASE RENT. Tenant shall pay to Landlord Base Rent at a rate which is at
the same amount as the Lease. Also consistent with the Lease, Tenant shall pay
its Pro Rata Share of the Building Operating Charges. Tenant's Pro Rata Share
shall be modified as follows:
Phase I 15.79% (10,500 RSF)
Phase II 18.05% (12,000 RSF)
Phase III 21.59% (14,356 RSF)
4. LEASE TERM. This First Amendment to Lease will expire simultaneously
with the Lease.
<PAGE> 27
5. LANDLORD'S CONTRIBUTION TO TENANT FIT-UP. Tenant accepts the Additional
Space in "as is" condition, and Tenant Fit-up shall be funded as follows: The
First $15,000 shall be funded by Tenant. The next $20,000 shall be funded by
Landlord. The next $15,000 shall be shared equally by both Landlord and Tenant.
Landlord shall not be responsible for funding any buildout in excess of the
above. R.M. Bradley will manage the fit-up and use best efforts to manage and
control the costs.
6. TENANTS TERMINATION RIGHT. Tenant's Right to Terminate shall be delayed
such that December 31, 1997 shall be the earliest date which Tenant may
terminate. The Termination Fee shall be $23,500 should Tenant terminate on
December 31, 1997, except that such fee shall be increased by the amount, if
any, by which Landlord's Contribution to Tenant Fit-up exceeds $20,000. The
Termination Fee shall be reduced on a monthly basis over the remainder of the
term should Tenant's Termination occur after December 31, 1997. Tenant's Right
to Terminate shall be in force until the occurrence of an Event of Default by
Tenant that has not been cured per Section 19 of the Lease.
7. Except as amended, all terms and conditions of said Lease are ratified
and reaffirmed in all respects.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
date first above written.
WITNESS: LANDLORD:
/s/ Inez L. Bayer Nationwide Life Insurance Company
---------------------------------
By: /s/ Robert H. McNaghten
------------------------------
Robert H. McNaghten
Title: VICE PRESIDENT
Date: 12-28-94
WITNESS: TENANT:
GeoTel Communications Corporation
----------------------------------
By: John Thibault
Title: PRESIDENT
Date: 12/20/94
<PAGE> 28
Landlord's Acknowledgement
- --------------------------
STATE OF OHIO )
) SS:
COUNTY OF FRANKLIN )
The foregoing instrument was acknowledged before me this 28 of December
1994, by Robert H. McNaghten, Vice President (title) of Nationwide Life
Insurance Company, an Ohio corporation, on behalf of the corporation.
(SEAL) /s/ Michael T. Stevens
Notary Public
[LOGO] MICHAEL T. STEVENS
Notary Public
My commission expires: 01-06-95
My commission expires:
Tenant's Acknowledgement
- ------------------------
STATE OF MASSACHUSETTS )
) SS:
COUNTY OF MIDDLESEX )
The foregoing instrument was acknowledged before me this 20th of December,
1994, by John C. Thibault, PRESIDENT (title) of GEOTEL COMMUNICATIONS, CORP.
corporation, on behalf of the corporation.
(SEAL) /s/ Frank B. Gill
Notary Public
My commission expires:
MY COMMISSION EXPIRES OCTOBER 3, 1993
<PAGE> 29
EXHIBIT A
The Premises Including Additional Space
14,356 RSF
(Not to Scale. No representation is made as to the accuracy of interior
partitioning. Existing configuration may be altered by Tenant per Section 5 of
Amendment).
[GRAPHIC: FLOOR 2]
<PAGE> 30
ESTOPPEL CERTIFICATE
MGI Properties
30 Rowes Wharf
Boston, MA 02110
RE: Lease dated: November 29, 1993
Lease Amendments (if any) dated: First Amendment dated December 28, 1994
Landlord: Nationwide Life Insurance Company
Tenant: GeoTel Communications Corporation
Demised Premises: 14,356 sq. ft. on second floor of Building located at
25 Porter Road, Littleton, Massachusetts
Ladies and Gentlemen:
The undersigned ("Tenant") is the tenant under the Lease noted above (said
lease together with all amendments thereto noted above shall be the "Lease")
and, understanding that Landlord and MGI Properties or its designee (the
"Buyer") will rely on the representations and agreements below in connection
with the purchase of the premises of which the Demised Premises are a part,
hereby acknowledges, certifies and represents to Landlord and Buyer that:
1. A true and accurate copy of the Lease, including all amendments
thereto (if any) noted above, have been delivered to the Buyer. The Lease
represents the entire understanding between Landlord and Tenant with respect to
the leasing of the Demised Premises, and, except as modified by the Lease
Amendments noted above (if any), the Lease has not been modified, altered or
amended. The Lease has been duly authorized, executed and delivered by Tenant
and is in full force and effect.
2. Tenant has accepted possession of the Demised Premises and is in
occupancy under the Lease. The initial term of the Lease commenced on March 8,
1994 and expires on March 7, 1999. Tenant has no option to extend the term of
the Lease. Tenant has no right to acquire or purchase the Demised Premises or
any portion thereof or interest therein.
3. The obligation to pay base and additional rent under the Lease
commenced on March 8, 1994. All rent payable through July 31, 1995 has been paid
by Tenant. Rent has not been paid for any period beyond the now current monthly
rental, except as expressly provided in the Lease. There exists no default nor
state of facts which with the passage of time or the giving of notice or both
could ripen into a default on the part of Tenant, or to the best knowledge of
Tenant, could ripen into a default on the part of Landlord under the Lease.
There are no offsets, deductions or credits against the rents due and payable
under the Lease.
4. The improvements to the Demised Premises which are the Landlord's
responsibility under the Lease have been completed, and to the best of Tenant's
knowledge paid for, in accordance with the terms of the Lease. Tenant is not
entitled to receive payment
<PAGE> 31
or credit for tenant improvement work or any other charges related to any
leasehold improvements.
5. Landlord is holding a security deposit in the amount of $3,000.
6. Tenant has not assigned, transferred, pledged or hypothecated the
Lease or any interest therein or subleased all or any portion of the Demised
Premises as of the date hereof.
7. Tenant is not insolvent and is able to pay its debts as they mature
and there is not pending or, to the best knowledge of Tenant, threatened against
or contemplated by the Tenant, any petition in bankruptcy, whether voluntary or
otherwise, any assignment for the benefit of creditors, or any petition seeking
reorganization or arrangement under the federal bankruptcy laws or those of any
state.
8. The term "Buyer" as used herein includes any successor or assign of
MGI Properties or its designee, and the term "Tenant" as used herein includes
any successor or assign of the named Tenant herein.
WITNESS the execution hereof under seal the ______ day of July, 1995.
TENANT:
GEOTEL COMMUNICATIONS
CORPORATION
By: /s/ Jill Cass
----------------------------------
Name: Jill Cass
-----------------------------
Title: OFFICE ADMINISTRATOR
----------------------------
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss. July 24, 1995
- --------- -------------
Then, personally appeared the above-named Jill Cass , Office Administrator
of GeoTel Communications Corporation, and acknowledged the foregoing to be the
free act and deed of said entity.
/s/ Nancy Donohue
-----------------------------
Notary Public
My commission expires: 2/10/2000
2
<PAGE> 1
Exhibit 10.8
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of September 11, 1996,
by and between GeoTel Communications Corporation ("Borrower") whose address is
25 Porter Road, Littleton, MA 01460 and Silicon Valley Bank, a
California-chartered bank ("Lender"), with its principal place of business at
3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production office
located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, MA
02181, doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Promissory Note, dated May 18, 1994 in the original principal
amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the "Term Note
1"), a Promissory Note, dated May 1, 1995, in the original principal amount of
Six Hundred Thousand and 00/100 Dollars ($600,000.00 (the "Term Note 2"), and a
Promissory Note, dated March 1, 1995 in the original principal amount of Two
Hundred Fourteen Thousand Seven Hundred Eighty Two and 53/100 Dollars
($214,782.53) (the "Term Note 3"). The Term Note 1, Term Note 2 and Term Note 3
shall be referred to collectively herein as the Notes. Notwithstanding anything
to the contrary contained in the Notes, the Notes, together with other
promissory notes from Borrower to Lender, shall now be governed by the terms and
conditions of the Letter Agreement, dated September 11, 1996, between Borrower
and Lender, as such agreement may be amended from time to time (the "Loan
Agreement"). Such Loan Agreement shall supersede any and all existing letter
agreements between Borrower and Lender. Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL: Repayment of the Indebtedness is secured by a
Commercial Security Agreement, dated May 18, 1994, and Collateral Assignment,
Patent Mortgage and Security Agreement dated May 18, 1994.
Hereinafter, the above-described security documents, together with all other
documents securing payment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents."
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Notes.
-------------------------
1. The Notes are hereby amended to provide that Borrower now has the
option to adjust the interest rate on the unpaid principal
balance of the Notes, to either a variable rate or a fixed rate,
as described-below:
A rate equal to the Index (as defined therein), resulting in an
initial rate of 8.250% per annum (the "Variable Rate") or a fixed
rate of either (i) a three (3) year Treasury Yield Percentage
plus 300 basis points or (ii) the LIBOR Rate plus 250 basis
points.
For purposes of this Agreement:
"Treasury Yield Percentage" shall be defined as the most recent
weekly average yield on actively traded U.S. Treasury obligations
as determined by reference to the week ending figures published
in the most recent Federal Reserve Statistical Release which
shall become available at least two business days prior to the
date as of which such yield is to be
1
<PAGE> 2
determined, or if a Statistical Release is not then published, the
arithmetic average (rounded to the nearest .01%) of the per annum yields to
maturity for each business day during the week ending at least two business
days prior to the date such determination is made, of all issues of
actively traded marketable United States Treasury fixed interest rate
securities with a constant maturity equal to, or not more than 30 days
longer or 30 days shorter than the average life of the payments of
principal and interest that are avoided by any prepayment (excluding all
such securities which can be surrendered at the option of the holder at the
face value of payment of any Federal estate tax, or which provide for tax
benefits to the holder).
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) equal to (i) the LIBOR Base Rate (for the Interest
Period) divided by (ii) 1 minus the Reserve Requirement for such Interest
Period.
"LIBOR Base Rate" means the rate of interest per annum determined by Lender
to be the per annum rate of interest as which deposits in United States
Dollars are offered to Lender in the London interbank market in which
Lender customarily participates at 11:00 A.M. (local time in such interbank
market) two (2) business days before the end of the Draw Period.
"Interest Period" means either a thirty, sixty or ninety day LIBOR Base
Rate, as Borrower may elect.
"Reserve Requirement" means the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required
to be maintained during such Interest Period under Regulation D against
"Eurocurrency liabilities" (as such term is used in Regulation D) by member
banks of the Federal Reserve System. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by Lender by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by
reference to which the LIBOR Rate is to be determined as provided in the
definition of "LIBOR Base Rate" or (ii) any category of extensions of
credit or other assets which include Loans.
"Regulatory Change" means, with respect to Lender, any change on or after
the date of this Note in United States federal, state or foreign laws or
regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a
class of lenders including Lender of or under any United States federal or
state, or any foreign, laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
2. The following paragraphs are hereby added:
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject
to refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. During such time as the Variable Rate
is in effect, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due. Notwithstanding any other provisions of
this Note, in the event Borrower elects the fixed rate option, the
following pre-payment penalty shall apply:
2
<PAGE> 3
"Prepayment Penalty" means with respect to prepayment of all or any portion
of the Obligations which are subject to a fixed rate of interest (the
"Fixed Obligations"), a fee equal to the greater of (i) zero or (ii) the
Mark to Market Adjustment. "Mark to Market Adjustment" means the amount,
calculated on the Prepayment Date, equal to the difference between (a) the
principal amount of the Fixed Obligations or portion thereof to be prepaid
as of such Prepayment Date, less (b) the Mark to Market Value of the Fixed
Obligations or portion of thereof to be prepaid on such Prepayment Date.
"Mark to Market Value" means the amount calculated on any Prepayment Date,
equal to the sum of the present values of each prospective payment of
principal and interest which, without such full or partial prepayment,
could otherwise have been received by Lender over the remaining contractual
life of the Fixed Obligations to be prepaid if Lender had instead invested
the Fixed Obligations proceeds on the Closing Date of such Fixed
Obligations at the Initial Blended Money Market Funds Rate. The individual
discount rate used to evaluate each prospective payment of interest or
principal shall be the Current Blended Money Market Funds Rate for the
maturity matching that of each specific payment of principal or interest.
"Current Blended Money Market Funds Rate means that zero-coupon rate,
calculated on the applicable Prepayment Date, which would be attainable by
Lender if it borrowed funds on such Prepayment Date in a maturity matching
a specific principal or interest payment date. Such funds would be borrowed
in one or more wholesale funding markets available to Lender, including
negotiable certificates of deposit, Federal Funds or others. A separate
Current Blended Money Market Funds Rate will be calculated for each
principal repayment or interest payment date. The calculation of the
Current Blended Money Market Funds Rate shall be at the sole discretion of
Lender. "Initial Blended Money Market Funds Rate" means that borrowing
rate, calculated on the funding date with respect to any Fixed Obligation
and including costs incurred by Lender for FDIC insurance, reserve
requirements, and other such explicit or implicit costs levied upon Lender
by any regulatory agency which would be attainable by Lender had it
borrowed funds with an interest payment frequency and principal repayment
schedule matching that of such Obligation. Such funds would be borrowed in
one or more wholesale funding markets available to Lender, including
negotiable certificates of deposit, Federal Funds or others. Borrower
acknowledges that Lender may not actually fund the Obligation with any such
specific matched set or mix of instruments. The calculation of the Initial
Blended Money Market Funds Rate shall be at the sole discretion of Lender.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Lender's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Lender to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Lender in writing. No maker, endorser, or guarantor will be released by virtue
of this
3
<PAGE> 4
Loan Modification Agreement. The terms of this Paragraph apply not only to this
Loan Modification Agreement, but also to all subsequent loan modification
agreements.
7. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
8. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Lender (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Lender in California).
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: LENDER:
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK, DOING BUSINESS AS
SILICON VALLEY EAST
By: /s/ TIMOTHY J. ALLEN By:
------------------------------ ----------------------------------
Name: TIMOTHY J. ALLEN Name:
----------------------------- --------------------------------
Title: VICE PRESIDENT AND CFO Title:
---------------------------- -------------------------------
SILICON VALLEY BANK
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
(Signed at Santa Clara, CA)
4
<PAGE> 1
EXHIBIT 10.9
[LETTER HEAD: SILICON VALLEY EAST]
September 11, 1996
Mr. Timothy Allen
Chief Financial Officer
GeoTel Communications Corporation
25 Porter Road
Littleton, MA 01460
Dear Mr. Allen:
We are pleased to inform you that Silicon Valley Bank, a California-chartered
bank ("Lender") with its principal place of business at 3003 Tasman Drive, Santa
Clara, CA 95054 and with a loan production office located at Wellesley Office
Park, 40 William Street, Suite 350, Wellesley, Massachusetts 02181 doing
business under the name "Silicon Valley East," has approved an equipment line
of credit in the amount of Eight Hundred Thousand and 00/100 Dollars
($800,000.00) (the "Equipment Line") for use by GeoTel Communications
Corporation. (the "Borrower") subject to the following terms and to the Lender's
periodic review.
The Equipment Line shall not become effective unless and until an executed copy
of this letter together with all necessary accompanying documentation as well as
the facility. fee described below has been returned to the Lender, which must
take place within 30 days from the date of this letter.
Borrowings under the Equipment Line will be permitted through June 30, 1997 (the
"Draw Period"). Borrower shall pay regular monthly payments of all accrued
unpaid interest due as of each payment date, beginning September 30, 1996 and
all subsequent interest payments will be due on the same day of each month
thereafter. The Equipment Line shall convert to a term loan payable in
thirty-six (36) even payments of principal plus interest (at an interest rate,
of Borrower's option, as described in the Promissory Note of even date herewith)
beginning July 5, 1997, and all subsequent payments of principal plus interest
will be due on the same day of each month thereafter. The final payment, due
June 5, 2000, shall be for all outstanding principal plus all accrued interest
not yet paid.
Borrowings under the Equipment Line shall be secured by a first security
interest in the Borrower's accounts receivable, inventory, machinery, equipment,
general intangibles (including, without limitation, Borrower's intellectual
property) all other assets, all monies, and all other property in Lenders
possession which Lender may use to pay Borrower's obligations, pursuant to a
Commercial Security Agreement and a Collateral Assignment, Patent Mortgage and
Security Agreement. each dated May 18, 1994.
At any time from the date hereof through the end of the Draw Period, Borrower
may request advances (each an "Advance" and collectively the "Advances") under
the Equipment Line from Lender in an aggregate amount not to exceed $800,000.00.
To evidence the Advances, Borrower shall deliver to Lender, at the time of each
advance request, an invoice for equipment purchases after May 31, 1996. The
Advances shall be
1
<PAGE> 2
used for purchases of equipment only and shall not exceed ninety percent (90%)
of the invoice amount approved from time to time by Lender, excluding taxes,
shipping, software, insurance and installation expenses.
Borrowings under the Equipment Line, through the end of the Draw Period, shall
bear interest at a rate equal to Lender's Prime Rate. Prime Rate means the rate
from time to time announced and made effective by Lender as its Prime Rate.
Borrower's interest rate shall change each time the Prime Rate changes. Upon
term out of the Equipment Line, Borrower shall have the option to choose either
the variable rate described above or a fixed rate as described in the Promissory
Note of even date herewith. Interest will be charged monthly in arrears and
shall be calculated on a 360-day year. Lender shall be authorized to debit
Borrower's principal account or any other account maintained by Borrower with
Lender for any principal, interest or fees associated with Borrower's Equipment
Line (and any other obligations owing by Borrower to Lender) with or without
notice to Borrower. Borrower shall pay to Lender facility fee in the amount of
Three Thousand and 00/100 Dollars ($3,000.00) for the Equipment Line, as well
as all out-of-pocket expenses incurred by Lender in connection with the
establishment of the Equipment Line, which must be paid at the time the
documents are returned to Lender.
In addition to the Equipment Line, this Letter Agreement will govern those
certain Promissory Notes, from Borrower to Lender, dated May 18, 1994, May 1,
1995 and March 1, 1996, as such notes may be amended, substituted, renewed or
consolidated from time to time.
Any advances hereunder or renewal hereof will be made only if in the opinion of
the Lender there exists no default under any loan documentation executed by you
with the Lender. A default is as defined in the accompanying Promissory Note of
even date.
A. REQUIREMENTS.
-------------
1. AFFIRMATIVE COVENANTS. So long as the Equipment Line (and any other
obligations owing by Borrower to Lender) remains outstanding, Borrower
agrees to maintain the following covenants:
a. If a private reporting company: To provide the Lender with
duplicate unaudited monthly financial statements, together with a
Compliance Certificate, prepared in accordance with generally
accepted accounting principals and duplicate audited annual
(consolidated and consolidating) financial statements certified
by public accountants with an unqualified opinion, to be received
30 and 90 days, respectively after the close of the period.
If a public reporting company: To provide the Lender with
Borrower's Form 1OK and audited financial statements certified
by public accountants with an unqualified opinion, and Form 10Q,
to be received within 5 days of filing with the Securities and
Exchange Commission, together with a Compliance Certificate.
b. Comply with the following Financial Covenants, which shall be
calculated net of deferred revenue:
LEVERAGE - (Tested Monthly) Maintain a ratio of Total Liabilities
less Subordinated Debt divided by TCB not to exceed 1.00 to 1.00.
TANGIBLE CAPITAL BASE - (Tested Monthly) Maintain a minimum
Tangible Capital Base (TCB) of $2,000,000.00 plus 50% of new
equity raised. TCB is defined as Stockholders' Equity plus
Subordinated Debt (debt
2
<PAGE> 3
which is formally subordinated to the Lender) less intangibles
(including but not limited to Goodwill, Capitalized Software and
Excess Purchase Costs).
LIQUIDITY - (Tested Monthly) Maintain a minimum level of
unrestricted cash (and equivalents) plus 70% of net accounts
receivable of one and one-half times the outstanding principal
balance of all outstanding term debt owed by Borrower to Lender.
c. File all tax returns and to pay all taxes due.
d. Reimburse the Lender for any reasonable expenses incurred by the
Lender to enforce the terms of this obligation.
e. Maintain adequate fire and liability insurance satisfactory to
the Lender, a copy of which shall be forwarded to the Lender.
2. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the
prior written consent of Lender:
a. Participate in any merger or consolidation or to pay any
dividends.
b. Dispose of any material assets other than in the ordinary course
of business.
c. Be in default of any other loan agreement with any other bank.
d. File for protection under the Bankruptcy Code.
e. Directly or indirectly pledge, grant, create or permit to exist
any security interest, lien or other encumbrance upon any of
Borrower's assets except in favor of the Lender. Without the
Lender's prior written consent, which will not be unreasonably
withheld.
f. Invest in any securities other than money market instruments
acceptable to the Lender, without the Lender's prior written
consent which will not be unreasonably withheld.
g. Incur indebtedness for borrowed money, except for either a)
indebtedness to Silicon Valley Bank or b) indebtedness incurred
for the purchase or lease of equipment.
If the Lender waives any rights under this Agreement, it will not affect any
future action the Lender may wish to take. This Agreement shall be binding upon
any of the Borrower's successors in interest. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. THE BORROWER ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND,
AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS LETTER AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS THEN VENUE SHALL LIE IN SANTA CLARA COUNTY,
CALIFORNIA. (INITIAL HERE /i/ ??) LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO
ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
LENDER OR BORROWER AGAINST THE OTHER.
3
<PAGE> 4
It is our understanding that Borrower will consider Silicon Valley Bank to be
one of its banks. Among other things, the Borrower agrees to maintain a
reasonable portion of its excess funds in Silicon Valley Bank.
This Agreement shall become effective only when it shall have been executed by
the Borrower and the Lender (provided, however, in no event shall this Agreement
become effective until signed by an officer of the Lender in California).
We are delighted to expand our relationship with GeoTel Communications
Corporation and look forward to many successful years of working together.
Sincerely,
SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SILICON VALLEY BANK
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
(Signed at Santa Clara County, CA)
Agreed and Accepted this ____ day of __________, 1996.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ TIMOTHY J. ALLEN
----------------------------------
Name. TIMOTHY J. ALLEN
---------------------------------
Title: VICE PRESIDENT AND CFO
--------------------------------
4
<PAGE> 5
PROMISSORY NOTE
Borrower: GEOTEL COMMUNICATIONS Lender: Silicon Valley Bank,
CORPORATION a California-chartered
25 Porter Road bank doing business as
Littleton, MA 01460 Silicon Valley East
Wellesley Office Park
40 William Street, Suite 350
Wellesley, MA 02181
================================================================================
Principal Initial Rate: 8.250% Date of Note:
Amount: $800,000.00 September 11, 1996
PROMISE TO PAY. GEOTEL COMMUNICATIONS CORPORATION ("Borrower") promises to pay
to SILICON VALLEY BANK, a California-chartered bank, with a loan production
office in Wellesley, Massachusetts ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Eight Hundred Thousand &
00/100 Dollars ($800,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each
advance.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan in accordance with the following payment schedule:
The Draw Period shall begin as of this date and shall end on June 30,
1997 (the "Draw Period"). Borrower shall pay regular monthly payments of
all accrued unpaid interest due as of each payment date, beginning
September 30, 1996 and all subsequent interest payments will be due on
the last day of each month thereafter. The outstanding principal balance
on June 30, 1997, will be payable in thirty-six (36) even payments of
principal plus interest due as of each payment date, beginning July 5,
1997 and all subsequent payments of principal plus interest will be due
on the same day of each month thereafter. The final payment, due on June
5, 2000, will be for all outstanding principal plus all accrued interest
not yet paid.
Interest on this Note is computed on a 365/350 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
INTEREST RATE. The interest rate on this Note is subject to change from time to
time based on changes in an index which is Lender's Prime Rate (the "index").
This is the rate Lender charges, or would charge on 90-day unsecured loans to
the most creditworthy corporate customers. This rate may or may not be the
lowest rate available from Lender at any given time. Lender will tell Borrower
the current index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each time the prime rate is adjusted by Silicon Valley
Bank. The index currently is 8.250% per annum. The interest rate to be applied
to the unpaid principal balance of this Note through the Draw Period will be at
a rate equal to the index, resulting in an initial rate of 8.250% per annum (the
"Variable Interest Rate"). Following the Draw Period, Borrower may choose either
a variable rate option, as described above, or a fixed rate of either (i) a
three (3) year Treasury Yield Percentage plus 300 basic points or (ii) the LIBOR
Rate plus 250 basis points. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
For purposes of this Agreement:
"Treasury Yield Percentage" shall be defined as the most recently weekly
average yield on actively traded U.S. Treasury obligations as determined by
reference to the week ending figures published in the most recent Federal
Reserve Statistical Release which shall become available at least two business
days prior to the date as of which such yield is to be determined, or if a
Statistical Release is not then published, the arithmetic average (rounded to
the nearest .01%) of the per annum yields to maturity for each business day
during the week ending at least two business days prior to the date such
determination is made, of all issues of actively traded marketable United States
Treasury fixed interest rate securities with a constant maturity equal to, or
not more than 30 days longer or 30 days shorter than the average life of the
payments of principal and interest that are avoided by any prepayment (excluding
all such securities which can be surrendered at the option of the holder at the
face value of payment of any Federal estate tax, or which provide for tax
benefits to the holder).
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) equal to (i) the LIBOR Base Rate (for the Interest
Period) divided by (ii) 1 minus the Reserve Requirement for such Interest
Period.
"LIBOR Base Rate" means the rate of interest per annum determined by
Lender to be the per annum rate of interest as which deposits in United States
Dollars are offered to Lender in the London interbank market in which Lender
customarily participates at 11:00 A.M. (local time in such interbank market) two
(2) business days before the end of the Draw Period.
"Interest Period" means either a thirty, sixty or ninety day LIBOR Base
Rate, as Borrower may elect.
"Reserve Requirement" means the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D against "Eurocurrency
liabilities" (as such term is used in Regulation D) by member banks of the
Federal Reserve System. Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by Lender by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the LIBOR Rate is to
be determined as provided in the definition of "LIBOR Base Rate" or (ii) in any
category of extensions of credit or other assets which include Loans.
"Regulatory Change" means, with respect to Lender, any change on or
after the date of this Note in United States federal, state or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives
<PAGE> 6
PROMISSORY NOTE
(CONTINUED)
or requests applying to a class of lenders including Lender of or under any
United States federal or state, or any foreign, laws or regulations (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. During such time as the Variable Interest Rate is
in effect, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
Notwithstanding any other provisions of this Note, in the event Borrower elects
the fixed rate option, the following pre-payment penalty shall apply:
"Prepayment Penalty" means with respect to prepayment of all or any portion of
the Obligations which are subject to a fixed rate of interest (the "Fixed
Obligations"), a fee equal to the greater of (i) zero or (ii) the Mark to Market
Adjustment. "Mark to Market Adjustment" means the amount, calculated on the
Prepayment Date, equal to the difference between (a) the principal amount of the
Fixed Obligations or portion thereof to be prepaid as of such Prepayment Date,
less (b) the Mark to Market Value of the Fixed Obligations or portion of thereof
to be prepaid on such Prepayment Date. "Mark to Market Value" means the amount,
calculated on any Prepayment Date, equal to the sum of the present values of
each prospective payment of principal and interest which, without such full or
partial prepayment, could otherwise have been received by Lender over the
remaining contractual life of the Fixed Obligations to be prepaid if Lender had
instead invested the Fixed Obligations proceeds on the Closing Date of such
Fixed Obligations at the initial Blended Money Market Funds Rate. The individual
discount rate used to evaluate each prospective payment of interest or principal
shall be the Current Blended Money Market Funds Rate for the maturity matching
that of each specific payment of principal or interest. "Current Blended Money
Market Rate" means that zero-coupon rate, calculated on the applicable
Prepayment Date, which would be attainable by Lender if it borrowed funds on
such Prepayment Date in a maturity matching a specific principal or interest
payment date. Such funds would be borrowed in one or more wholesale funding
markets available to Lender, including negotiable certificates of deposit,
Federal Funds or others. A separate Current Blended Money Market Funds Rate will
be calculated for each principal repayment or interest payment date. The
calculation of the Current Blended Money Market Funds Rate shall be at the sole
discretion of Lender. "Initial Blended Money Market Funds Rate" means that
borrowing rate, calculated on the funding date with respect to any Fixed
Obligation and including costs incurred by Lender for FDIC insurance, reserve
requirements, and other such explicit or implicit costs levied upon Lender by
any regulatory agency which would be attainable by Lender had it borrowed funds
with an interest payment frequency and principal repayment schedule matching
that of such Obligation. Such funds would be borrowed in one or more wholesale
funding markets available to Lender, including negotiable certificates of
deposit, Federal Funds or others. Borrower acknowledges that Lender may not
actually fund the Obligation with any such specific matched set or mix of
instruments. The calculation of the Initial Blended Money Market Funds Rate
shall be at the sole discretion of Lender.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to 5,000 percentage points over the otherwise
effective interest rate, and (b) add any unpaid accrued interest to principal
and such sum will bear interest therefrom until paid at the rate provided in
this Note (including any increased rate). The interest rate will not exceed the
maximum rate permitted by applicable law. Lender may hire or pay someone else to
help collect this Note if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not here is a lawsuit,
including attorneys'[ fees, and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law. Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
lender and accepted by Lender in the Commonwealth of Massachusetts. If there is
a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction
of the courts of Norfolk County, the Commonwealth of Massachusetts. Lender and
Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. (Initial
Here [SIG]) This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
LINE OF CREDIT. This Note evidences a straight line of credit through the end
of the Draw Period. Once the total amount of principal has been advanced,
Borrower is not entitled to further loan advances. Advances under this Note, as
well as directions for payment from Borrower's accounts, may be requested orally
or in writing by borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. Borrower agrees to be
liable for all sums either: (a) advanced in accordance with these instructions
of an authorized person or (b) credited to any of Borrower's accounts with
Lender. The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Lenders' internal records,
including daily computer print-outs. Lender will have no obligation to advance
funds under this Note if: (a) Borrower or any guarantor is in default under the
terms of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; or (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender.
REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received
from its business activities in accounts maintained by Borrower at Silicon
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of
Borrower's accounts with Lender, specifically, without limitation, Account
Number 700609870, for payments of interest and principal due on the loan and any
other obligations owing by Borrower to Lender. Lender will notify Borrower of
all debits which Lender makes against Borrower's accounts. Any such debits
against Borrower's accounts in no way shall be deemed a set-off.
<PAGE> 7
PROMISSORY NOTE
(CONTINUED)
ADVANCE RATE. At any time from the date hereof through the end of the Draw
Period, Borrower may request advances (each an "Advance" and collectively the
"Advances") from Lender in a aggregated amount not to exceed the principal
amount of the Note. To evidence the Advances, Borrower shall deliver to Lender,
at the time of each advance request, an invoice for equipment purchases after
May 31, 1996. The Advances shall be used only to purchase equipment and shall
not exceed ninety percent (90%) of the invoice amount approved from time to time
by Lender, excluding taxes, shipping, software and installation expenses.
LETTER AGREEMENT. This Note is subject to and shall be governed by all the
terms and conditions of the Letter Agreement dated September 11, 1996 between
Borrower and Lender, which Letter Agreement is incorporated herein by reference.
LOAN FEE. This Note is subject to a loan fee in the amount of Three Thousand
and 00/100 Dollars ($3,000.00) plus all out-of-pocket expenses.
WAIVERS AND GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. To the extent
permitted by applicable law, all such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release any party
or guarantor of collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER HAS READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. THIS NOTE IS
EXECUTED UNDER SEAL BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ Timothy J. Allen
-------------------------
Name: TIMOTHY J. ALLEN
-----------------------
Title: Vice President and CFO
----------------------
<PAGE> 8
DISBURSEMENT REQUEST AND AUTHORIZATION
================================================================================
Borrower: GEOTEL COMMUNICATIONS Lender: SILICON VALLEY BANK,
CORPORATION a California-chartered bank
25 Porter Road doing business as
Littleton, MA 01460 Silicon Valley East
Wellesley Office Park
40 William Street, Suite 350
Wellesley, MA 02181
================================================================================
LOAN TYPE. This is a Variable Rate (at SILICON VALLEY BANK PRIME RATE, making
an initial rate of 8.250%), Non-Revolving Line of Credit Loan to a Corporation
for $800,000.00 due on June 5, 2000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for (please
initial):
Personal, Family, or Household Purposes of Personal Investment.
-------
Business (Including Real Estate Investment).
-------
SPECIFIC PURPOSE. The specific purpose of this loan is: to provide equipment
financing.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $800,000.00 as follows:
Amount paid to Borrower directly: $800,000.00
$800,000.00 Deposited to Account
# Undisbursed
-----------
Note Principal: $800,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $3,000.00
$3,000.00 Loan Fees
Other Charges Paid in Cash: $35.00
$35.00 Credit Report
---------
Total Charges Paid in Cash: $3,035.00
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED SEPTEMBER 11, 1996.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ TIMOTHY J. ALLEN
--------------------
Name: Timothy J. Allen Title: VICE PRESIDENT AND CFO
---------------- ----------------------
===============================================================================
<PAGE> 9
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: GEOTEL COMMUNICATIONS CORPORATION
LOAN OFFICER: DOUG MARSHALL
DATE: SEPTEMBER 11, 1996
LOAN FEE $3,000.00
FEES DUE $3,000.00
-------- ---------
PLEASE INDICATE THE METHOD OF PAYMENT:
/ / A check for the total amount is attached.
/X/ Debit DDA ____________ for the total amount.
/ / Loan proceeds
TIMOTHY J. ALLEN
VICE PRESIDENT AND CFO
- -----------------------------
AUTHORIZED SIGNER
- ------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
<PAGE> 10
CORPORATE RESOLUTION OF BORROW
===============================================================================
Borrower: GEOTEL COMMUNICATIONS Lender: SILICON VALLEY BANK, a
CORPORATION California-chartered bank doing
25 Porter Road business as Silicon Valley East
Littleton, MA 01460 Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
===============================================================================
I, the undersigned Secretary or Assistant of GEOTEL COMMUNICATIONS CORPORATION
(the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware as a
corporation for profit, with its principal office at 25 Porter Road, Littleton,
MA 01460, and is duly authorized to transact business in the Commonwealth of
Massachusetts.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on _____________, at which a quorum was present and voting, or
by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURES
- ----- --------- -----------------
John Thibault President & Chief Executive Officer /s/ John Thibault
Timothy J. Allen VP & Chief Financial Officer /s/ Timothy J. Allen
________________ ____________________________________ x_________________
________________ ____________________________________ x_________________
acting for and on behalf of the Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from SILICON VALLEY BANK, a
California-chartered bank ("Lender"), on such terms as may be agreed upon
between the Corporation and Lender, such sum or sums of money as in their
judgment should be borrowed, without limitation.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancing, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accommodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accommodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times, and may be either in addition to or in lieu of any property
therefore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are give;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents
and agreements, including agreements waiving the right to a trial by jury,
as they may in their discretion deem reasonably necessary or proper in
order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s) or (e)
change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
FOREIGN EXCHANGE CONTRACT. Execute and deliver foreign exchange contracts,
either spot or forward, from time to time, in such amounts as, in the judgment
of the officer or officers herein authorized.
LETTER OF CREDIT. To execute letter of credit applications and other related
documents pertaining to Lender's issuance of letters of credit.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE> 11
09-11-1996 CORPORATE RESOLUTION OF BORROW PAGE 2
(Continued)
===============================================================================
IN TESTIMONY WHEREOF, I have hereunto set my hand on September 11, 1996 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED BY:
/s/ John Thibault
--------------------------------
John Thibault
x
--------------------------------
NOTE: In case the Secretary or other certifying officer is designated by
the foregoing resolutions as one of the signing officers, it is advisable to
have this certificate signed by a second Officer or Director of the
Corporation.
===============================================================================
<PAGE> 1
EXHIBIT 10.10
[SILICON VALLEY EAST LETTERHEAD]
Date: May 1, 1995
GeoTel Communications Corporation
25 Porter Road
Littleton, MA 01460
Attention: Tim Allen, Chief Financial Officer
Dear Ladies and Gentlemen:
We are pleased to inform you that Silicon Valley Bank, a
California-chartered bank ("Bank") ,with its principal place of business at 3000
Lakeside Drive, Santa Clara, CA 95054 and with a loan production office located
at Wellesley Office Park, 45 William Street, Suite 170, Wellesley, Massachusetts
02181 doing business under the name "Silicon Valley East", has approved a
fixed asset line of credit in the original principal amount of Six Hundred
Thousand and 00/100 Dollars ($600,000.00) for the use of GeoTel Communications
Corporation (the "Company") subject to the following terms and to the Bank's
periodic review. Drawings under this line will be pertained through March I,
1996, at which time the line will convert to a term loan. Repayment will be
scheduled such that the amount outstanding at the end of this drawdown period
shall be repaid in thirty-six (36) equal monthly installments of principal plus
interest beginning on April 1, 1996. The commitment shall not become effective
unless and until an executed. copy of this letter together with all necessary
accompanying documentation as well as the facility fee described below has been
returned to the Bank, which must take place within 21 days from the date of this
letter.
Borrowings under the fixed asset line shall be secured by all corporate assets,
including intellectual property. The maximum available borrowings under this
line will be the lesser of $600,000.00 or ninety percent (90%) against the
invoice price of approved equipment purchased after November 30, 1994, not
including personal computer software, taxes, shipping costs, and installation
fees. You agree to provide the Bank with copies of these invoices.
Borrowings under this line shall bear interest at a rate per annum equal to the
Prime Rate plus one percentage point (1.000%). The "Prime Rate" means the rate
from time to time announced and made effective by the Bank as its Prime Rate.
The Company's borrowing rate shall change as the Prime Rate changes. A facility
fee of Three Thousand and 00/100 Dollars ($3,000.00) as well as any
out-of-pocket expenses incurred by the Bank in connection with the establishment
of this credit facility must be paid at the time the documents are returned to
the Bank. Interest will be charged monthly in arrears and is calculated on the
basis of a 360-day year. The Bank shall be authorized to debit the Company's
principal account or any other account maintained by the Company with the Bank
for any principal, interest, or fees associated with the Company's credit
facility without prior notice.
Any advances hereunder or renewal hereof will be made only if in the opinion of
the Bank there exists no default under any loan documentation executed by you
with the Bank. A default is as defined in the accompanying Promissory Note dated
May 1, 1995.
<PAGE> 2
Page 2
This fixed asset line of credit shall be cross-collateralized and
cross-defaulted with the Company's additional fixed asset line of credit as
described in the Promissory Note dated May 18, 1994, from Bank to the Company.
So long as this commitment remains outstanding, the Company agrees to maintain
the following covenants, beginning as of March 31, 1995:
1. MINIMUM EQUITY - (Tested Monthly) Maintain a minimum Tangible Capital
Base (TCB) of $1,000,000.00 through the month ending September 30, 1995,
decreasing to $750,000.00 thereafter. Adjustments to the required TCB will
be made immediately if they result from investments by others or quarterly
if they result from earnings. TCB is defined as Stockholders' Equity plus
Subordinated Debt (debt which is formally subordinated to the Bank) less
intangibles (including but not limited to Goodwill, Capitalized Software
and Excess Purchase Costs).
2. LEVERAGE - (Tested Monthly) Maintain a ratio of Total Liabilities less
Subordinated Debt divided by TCB not to exceed 2.00 to 1.00.
3. LIQUIDITY - (Tested Monthly) Maintain a minimum level of unrestricted
cash (and equivalents) plus 70% of net accounts receivable of the greater
of(i) $750,000.00 or (ii) 1.5 times the outstanding term debt principal
balance.
4. Not directly or indirectly pledge, grant, create or permit to exist any
security interest, lien or other encumbrance upon any of the Company's
assets except in favor of the Bank.
5. To provide the Bank with duplicate unaudited monthly financial
statements prepared in accordance with generally accepted accounting
principals and duplicate audited annual (consolidated and consolidating)
financial statements certified by public accountants with an unqualified
opinion, to be received 25 and 90 days respectively after the close of the
period.
6. To provide the Bank with a copy of the annual management letter provided
by the Company's auditors and with copies of all legal process served upon
the Company.
7. Maintain adequate fire and liability insurance satisfactory to the
Bank, a copy, of which shall be forwarded to the Bank.
8. Not to participate in any merger or consolidation or to pay any
dividends without the Bank's consent.
9. Not to dispose of any material assets other than in the ordinary, course
of business without the Bank's consent.
10. To file all tax returns and to pay all taxes due.
11. Not to invest in any securities other than money market instruments
acceptable to the Bank.
12. Not to incur indebtedness for borrowed money, except for either a)
indebtedness to Silicon Valley Bank or b) indebtedness incurred for the
purchase or lease of equipment in an aggregate amount not exceeding
$150,000.00 at any given point in time.
13. Not to be in default of any other loan agreement with any other Bank.
<PAGE> 3
Page 3
14. To remain a duly organized corporation existing under the laws of the
State of Delaware, and not to file for protection under the Bankruptcy
Code.
15. All legal fees incurred will be for the account of the Company.
16. To reimburse the Bank for any reasonable expenses incurred by the Bank
to enforce the terms of this obligation.
17. Prior to closing you agree to provide the Bank with Articles of
Incorporation and a Certificate of Good Standing from the appropriate state
authorities.
If the Bank waives any rights under this Agreement, it will not affect any
future action the Bank may wish to take. This Agreement shall be binding upon
any of the Company's successors in interest. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. THE COMPANY ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND,
AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS LETTER AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY, STATE
OF CALIFORNIA. (INITIAL HERE. JSP/???) BANK AND COMPANY HEREBY WAIVE THE RIGHT
TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
BANK OR BORROWER AGAINST THE OTHER.
It is our understanding that the Company will consider Silicon Valley Bank to be
its primary bank. Among other things, the Company agrees to use its Silicon
Valley Bank account as its primary disbursement account and to maintain a
reasonable proportion of its excess funds in Silicon Valley Bank money market
accounts or certificates of deposits.
<PAGE> 4
Page 4
This Agreement shall become effective only when it shall have been executed by
the Company and the Bank (provided, however, in no event shall this Agreement
become effective until signed by an officer of the Bank in California).
We are delighted to expand our relationship with GeoTel Communications
Corporation and look forward to many successful years of working together.
Sincerely,
SILICON VALLEY BANK, doing business
as SILICON VALLEY EAST
By: /s/ JOAN S. PARSONS
---------------------------------
Name: JOAN S. PARSON
-------------------------------
Title: VICE PRESIDENT
------------------------------
SILICON VALLEY BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Agreed and Accepted this 11th day of May, 1995.
---- ---
By: /s/ TIMOTHY J. ALLEN
---------------------------------
Name: TIMOTHY J. ALLEN
-------------------------------
Title: VICE PRESIDENT AND CFO
------------------------------
mdg
enclosure:
1. Promissory Note
2. Certificate of Compliance
3. Account Opening Forms
4. Other ancillary forms and documents
<PAGE> 5
PROMISSORY NOTE
BORROWER: GEOTEL COMMUNICATIONS CORPORATION
25 PORTER ROAD
LITTLETON, MA 01460
LENDER: SILICON VALLEY BANK, A CALIFORNIA-CHARTERED BANK
DOING BUSINESS AS SILICON VALLEY EAST
WELLESLEY OFFICE PARK
45 WILLIAM STREET, SUITE 170
WELLESLEY, MA 02181
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT: $600,000.00 INITIAL RATE: 10.000% DATE OF NOTE: MAY 1, 1995
PROMISE TO PAY. GEOTEL COMMUNICATIONS CORPORATION ("BORROWER") PROMISES TO PAY
TO SILICON VALLEY BANK, A CALIFORNIA-CHARTERED BANK, WITH A LOAN PRODUCTION
OFFICE IN WELLESLEY, MASSACHUSETTS, DOING BUSINESS AS SILICON VALLEY EAST
("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE
PRINCIPAL AMOUNT OF SIX HUNDRED THOUSAND & 00/100 DOLLARS ($600,000.00),
TOGETHER WITH INTEREST ON THE UNPAID PRINCIPAL BALANCE FROM MAY 1, 1995, UNTIL
PAID IN FULL.
PAYMENT. SUBJECT TO ANY PAYMENT CHANGES RESULTING FROM CHANGES IN THE INDEX,
BORROWER WILL PAY THIS LOAN IN ACCORDANCE WITH THE FOLLOWING PAYMENT SCHEDULE:
THE DRAW PERIOD SHALL BEGIN AS OF THIS DATE AND SHALL END ON MARCH 1, 1996
(THE "DRAW PERIOD"). BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ALL
ACCRUED UNPAID INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING JUNE 1, 1995
AND ALL SUBSEQUENT INTEREST PAYMENTS WILL BE DUE ON THE SAME DAY OF EACH
MONTH THEREAFTER THROUGH MARCH 1, 1996. THE OUTSTANDING PRINCIPAL BALANCE
ON MARCH 1, 1996 WILL BE PAYABLE IN THIRTY-SIX (36) EVEN PAYMENTS OF
PRINCIPAL PLUS INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING APRIL 1,
1996 AND ALL SUBSEQUENT PAYMENTS OF PRINCIPAL PLUS INTEREST WILL BE DUE ON
THE SAME DAY OF EACH MONTH THEREAFTER. THE FINAL PAYMENT, DUE ON MARCH 1,
1999, WILL BE FOR ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED INTEREST NOT
YET PAID.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at 3000
Lakeside Drive, Santa Clara, California 95054. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is Lender's Prime Rate (the
"index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current Index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each time the prime rate is adjusted by
Silicon Valley Bank. THE INDEX CURRENTLY IS 9.000% PER ANNUM. THE INTEREST RATE
TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF
1.000 PERCENTAGE POINT OVER THE INDEX, RESULTING IN A
<PAGE> 6
PROMISSORY NOTE
CONTINUED
---------
CURRENT RATE OF 10.000% PER ANNUM. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law. whenever increases occur in the interest rate, Lender, at its option, may
do one or more of the following: (a) increase Borrower's payments to ensure
Borrower's loan will pay off by its original final maturity date, (b) increase
Borrower's payments to cover accruing interest, (c) increase the number of
Borrower's payments, and (d) continue Borrower's payments at the same amount and
increase Borrower's final payment.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender and such
failure continues unremedied for more than ten (10) days. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
Related Documents and such default continues unremedied for more than ten (10)
days. (d) Any representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any material respect.
(e) Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (f) Any creditor tries to take any of Borrower's
property on or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to either 5.000 percentage points over the Index or
4.000 percentage points over the otherwise effective interest rate, and (b) add
any unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided in this Note (including any increased
rate). The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law.
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
WITHOUT REGARD FOR CHOICE OF LAW PROVISIONS. BORROWER AND LENDER CONSENT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE;
PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF OF THE
COURTS OF THE
2
<PAGE> 7
PROMISSORY NOTE
CONTINUED
---------
COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY,
CALIFORNIA. (INITIAL HERE /i/ ??) Lender and Borrower hereby waive the right to
any jury trial in any action, proceeding, or counterclaim brought by either
Lender or Borrower against the other.
REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received
from its business activities in accounts maintained by Borrower at Silicon
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of
Borrower's accounts with Lender, specifically, without limitation, Account
Number 07006098-70 for payments of interest and principal due on the loan and
any other obligations owing by Borrower to Lender. Lender will notify Borrower
of all debits which Lender makes against Borrower's accounts. Any such debits
against Borrower's accounts in no way shall be deemed a set-off.
LINE OF CREDIT, This Note evidences a straight line of credit until March 1,
1996. Once the total amount of principal has been advanced, Borrower is not
entitled to further loan advances. Advances under this Note, as well as
directions for payment from Borrower's accounts, may be requested orally or in
writing by Borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. Borrower agrees to be
liable for all sums either: (a) advanced in accordance with the instructions of
an authorized person or (b) credited to any of Borrower's accounts with Lender.
The unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under this
Note if: (a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (b) Borrower or
any guarantor ceases doing business or is insolvent; (c) any guarantor seeks,
claims, or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Lender; or (d) Borrower has
applied funds provided pursuant to this Note for purposes other than those
authorized by Lender.
ADVANCE RATE. Any time from the date hereof through the end of the Draw Period,
Borrower may request advances (each, an "Equipment Advance" and collectively,
the "Equipment Advances") from Lender up to the principal amount of this Note.
To evidence the Equipment Advances, Borrower shall deliver to Lender, at the
time of each advance request, invoices for the equipment purchased. The
Equipment Advances shall be used only to purchase equipment and shall not exceed
ninety percent (90%) of the invoice amount of eligible equipment purchased after
November 30, 1994, excluding taxes, shipping and installation expense.
LETTER AGREEMENT. This Note is subject to and shall be governed by all the terms
and conditions of the Letter Agreement of even date between Borrower and Lender,
which Letter Agreement is incorporated herein by reference.
LOAN FEE. This Note is subject to a loan fee in the amount of Three Thousand and
00/100 Dollars ($3,000.00) plus all out-of-pocket expenses.
WAIVERS AND GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower, to the extent
allowed by law, waives presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, Borrower shall not be released from liability. To
the extent permitted by applicable law, Borrower agrees that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release Borrower or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the
3
<PAGE> 8
PROMISSORY NOTE
CONTINUED
---------
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to Borrower.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. THIS NOTE IS
EXECUTED UNDER SEAL. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ TIMOTHY J. ALLEN
---------------------------------
Name: TIMOTHY J. ALLEN
------------------------------
Title: VICE PRESIDENT AND CFO
------------------------------
4
<PAGE> 9
INVOICE FOR FEES AND EXPENSES
BORROWER: GEOTEL COMMUNICATIONS CORPORATION
LOAN OFFICER: JOAN PARSONS
DATE: MAY 1, 1995
LOAN FEE $3,000.00
-------- ---------
TOTAL $3,000.00
PLEASE INDICATE THE METHOD OF PAYMENT:
/X/ A check for the total amount is attached. (PPE-PAID)
/ / Debit DDA # ___________ for the total amount.
/ / Loan proceeds
/s/ ????????????????? 5/11/95
- -----------------------------------------
AUTHORIZED SIGNER (DATE)
- -----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
<PAGE> 10
DISBURSEMENT REQUEST AND AUTHORIZATION
===============================================================================
Borrower: GEOTEL COMMUNICATIONS Lender: SILICON VALLEY BANK, a
CORPORATION California-chartered bank doing
25 Porter Road business as Silicon Valley East
Littleton, MA 01460 Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
===============================================================================
LOAN TYPE: This is a Variable Rate (1.000% over SILICON VALLEY BANK PRIME RATE,
making an initial rate of 10.000%), Generic Payment Stream Loan to a Corporation
for $600,000.00 due on March 1, 1999.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for (please
initial):
* _________Personal, Family, or Household Purposes or Personal Investment.
**_________Business (Including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is: To finance equipment
purchases.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $600.000.00 as follows:
Amount paid to Borrower directly: $600,000.00
$600,000.00 Deposit to Account # Undisbursed______
0000000.00
-----------
Note Principal: $600,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $3,000.00
$3,000.00 Loan Fees
00000.00
---------
Total Charges Paid in Cash: $3,000.00
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED MAY 1, 1995.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ TIMOTHY J. ALLEN
-------------------------------------
Name: TIMOTHY J. ALLEN
--------------------------------
Title: VICE PRESIDENT AND CFO
-------------------------------
===============================================================================
<PAGE> 1
EXHIBIT 10.11
[LOGO]
[SILICON VALLEY EAST LETTERHEAD]
May 18, 1994
Mr. John Thibault
Chief Executive Officer
GeoTel Communications Corporation
25 Porter Road
Littleton, MA 01460
Dear John:
We are pleased to inform you that Silicon Valley Bank, a California-chartered
bank ("Bank") with its principal place of business at 3000 Lakeside Drive, Santa
Clara, CA 95054 and with a loan production office located at Wellesley Office
Park, 45 William Street, Wellesley, MA 02181 doing business under the name
"Silicon Valley East", has approved a fixed asset line of credit of $500,000 for
the use of GeoTel Communications Corporation (the "Company") subject to the
following terms and to the Bank's periodic review. Drawings under this line will
be permitted through May 5, 1995, at which time the line will convert to a term
loan. The commitment shall not become effective unless and until an executed
copy of this letter together with all necessary accompanying documentation as
well as the facility fee described below has been returned to the Bank, which
must take place within 21 days from the date of this letter.
Borrowings under the equipment line shall be secured by all corporate assets.
The maximum available borrowings under this line will be the lesser of $500,000
or a 90% advance rate against the invoice price of approved equipment purchased
after January 1, 1994, not including software for personal computers, taxes,
shipping costs, and installation fees. You agree to provide the Bank with copies
of these invoices.
Borrowings under this line shall bear interest at a rate per annum equal to the
Prime Rate plus 1.5%. The "Prime Rate" means the rate from time to time
announced and made effective by the Bank as its Prime Rate. The Company's
borrowing rate shall change as the Prime Rate changes. A facility fee of $2,500
as well as any out-of-pocket expenses incurred by the Bank in connection with
the establishment of this credit facility must be paid at the time the
documents are returned to the Bank. All interest will be charged monthly in
arrears and will be calculated on the basis of a 360-day year. The Bank shall
be authorized to debit the Company's principal account or any other account
maintained by the Company with the Bank for any principal, interest, or fees
associated with the Company's credit facility without prior notice.
Any advances hereunder or renewal hereof will be made only if in the opinion of
the Bank there exists no default under any loan documentation executed by you
with the Bank. A default is as defined in the accompanying Promissory Note
dated May 18, 1994. In addition, in the event of default, the Bank retains the
right to require the Company to cash collateralize up to 100% of the amount
outstanding under the line of credit within five days of default.
<PAGE> 2
Page Two
So long as this commitment remains outstanding, the Company agrees to maintain
the following covenants:
1. MINIMUM EQUITY - (Tested Monthly) Maintain a minimum Tangible Capital
Base (TCB) of $500,000. TCB is defined as Stockholders' Equity plus
Subordinated Debt (debt which is formally subordinated to the Bank) less
intangibles (including but not limited to Goodwill, Capitalized Software
and Excess Purchase Costs).
2. LIQUIDITY - (Tested Monthly) Maintain a minimum of $500,000 in cash.
3. Not directly or indirectly pledge, grant, create or permit to exist
any security interest, lien or other encumbrance upon any of the
Company's assets except in favor of the Bank.
4. To provide the Bank with duplicate unaudited monthly financial
statements prepared in accordance with generally accepted accounting
principals and duplicate audited annual financial statements certified
by public accountants to be received 30 and 90 days respectively after
the close of the period.
5. To provide the Bank with a copy of the annual management letter
provided by the Company's auditors and with copies of all legal process
served upon the Company.
6. Maintain adequate fire and liability insurance satisfactory to the
Bank, a copy of which shall be forwarded to the Bank.
7. Not to participate in any merger or consolidation or to pay any
dividends without the Bank's consent.
8. Not to dispose of any material assets other than in the ordinary
course of business without the Bank's consent.
9. To file all tax returns and to pay all taxes due.
10. Not to invest in any U.S. Government and Corporate Securities with a
rating below "A".
11. Not to incur indebtedness for borrowed money, except for either a)
indebtedness to Silicon Valley Bank or b) indebtedness incurred for the
purchase or lease of equipment in an aggregate amount not exceeding
$150,000 at any given point in time.
12. Not to be in default of any other loan agreement with any other
lender.
13. To remain a duly organized corporation under the laws of Delaware,
and not to file for protection under the Bankruptcy Code.
14. All legal fees incurred will be for the account of the Borrower.
15. To reimburse the Bank for any reasonable expenses incurred by the
Bank to enforce the terms of this obligation.
16. Prior to closing you agree to provide the Bank with a Certificate of
Good Standing from the appropriate state authorities.
<PAGE> 3
Page Three
If the Bank waives any rights under this Agreement, it will not affect any
future action the Bank may wish to take. This Agreement shall be binding upon
any of the Company's successors in interest. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. THE BORROWER ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF CALIFORNIA IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND AGAINST IT
WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT.
It is our understanding that the Company will consider the Silicon Valley Bank
to be its primary bank. Among other things, the Company agrees to use its
Silicon Valley Bank account as its primary disbursement account and to maintain
a reasonable proportion of its excess funds in Silicon Valley Bank money market
accounts or certificates of deposits.
This Agreement shall become effective only when it shall have been executed by
the Borrower and the Bank (provided, however, in no event shall this Agreement
become effective until signed by an officer of the Bank in California).
We are delighted to expand our relationship with GeoTel Communications
Corporation and look forward to many successful years of working together.
Sincerely,
SILICON VALLEY BANK
By: /s/ [SIG]
---------------------
Name: [NAME]
-------------------
Title: Operations Officer
------------------
SILICON VALLEY BANK doing business
as SILICON VALLEY EAST
/s/ ANDREA L. CARLIN
- ----------------------------
ANDREA L. CARLIN
Assistant Vice President
Technology Division
Agreed and Accepted this 28th day of June, 1994.
By: /s/ JOHN C. THIBAULT
--------------------
Name: John C. Thibault
------------------
Title: President & CEO
------------------
enclosure:
1. Promissory Note
2. Security Documents
3. Certificate of Compliance
4. Other ancillary forms and documents
<PAGE> 4
PROMISSORY NOTE
Borrower: GEOTEL COMMUNICATIONS CORPORATION
25 Porter Road
Littleton, MA 01460
Lender: Silicon Valley Bank a California-chartered bank
doing business in Massachusetts as Silicon Valley East,
with a Loan Production Office located at 45 William Street
Wellesley, MA 022181
- --------------------------------------------------------------------------------
Principal Initial Rate: 8.250% Date of Note:
Amount: $500,000.00 May 18, 1994
PROMISE TO PAY. GEOTEL COMMUNICATIONS CORPORATION ("Borrower") promises to pay
to Silicon Valley Bank a California-chartered bank doing business in
Massachusetts as Silicon Valley East with a Loan Production Office located at 45
William Street, Wellesley, MA 02181 ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Five Hundred Thousand & 00/100
Dollars ($500,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this Note according to the following payment
schedule:
THE FIRST DRAW PERIOD. The First Draw Period shall begin as of this date and
shall end on November 5, 1994. Borrower will pay regular monthly payments of
all accrued unpaid interest due as of each payment date, beginning June 5,
1994, and all subsequent interest payments will be due on the same day of each
month thereafter until November 5, 1994. The outstanding principal balance on
November 5, 1994, will be payable in thirty (30) even payments of principal
plus interest due as of each payment date, beginning December 5, 1994 and all
subsequent payments of principal plus interest will be due on the same day of
each month thereafter. The final payment for the First Draw Period will be due
on May 5, 1997, and will be for all outstanding principal plus all accrued
interest not yet paid. THE SECOND DRAW PERIOD. The Second Draw Period shall
begin on November 6, 1994 and shall end on May 5, 1995. Borrower will pay
regular monthly payments of all accrued interest, due as of each payment date
beginning, December 5, 1994 and all subsequent interest payments will be due
on the same day of each month thereafter until May 5, 1995. The outstanding
principal balance on May 5, 1995, will be payable in thirty (30) even payments
of principal plus interest due as of each payment date, beginning June 5,
1995, and all subsequent payments of principal plus interest will be due on
the same day of each month thereafter. The final payment for the Second Draw
Period, shall be due on November 5, 1997, will be for all outstanding
principal plus all accrued interest not yet paid.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is Lender's Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current Index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each time the prime rate is adjusted by
Silicon Valley Bank. THE INDEX CURRENTLY IS 7.250% PER ANNUM. THE INTEREST RATE
TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT
<PAGE> 5
A RATE OF 1.500 PERCENTAGE POINTS OVER THE INDEX, RESULTING IN AN INITIAL RATE
OF 8.750% PER ANNUM. NOTICE: Under no circumstances will the interest rate on
this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. Except for the foregoing, Borrower may
pay without penalty all or a portion of the amount owed earlier than it is due.
Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the
payment schedule. Rather, they will reduce the principal balance due and may
result in Borrower making fewer payments.
DEFAULT. Borrower will be in default if any of the following happens and
continues unremedied for more than 20 days with the exception of: (a) Borrower
fails to make any payment when due. (b) Borrower breaks any promise Borrower has
made to Lender, or Borrower fails to perform promptly at the time and strictly
in the manner provided in this Note or any agreement related to this Note, or in
any other agreement or loan Borrower has with Lender. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
Related Documents. (d) Any representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect. (e) Borrower becomes insolvent, a receiver is appointed for
any part of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against Borrower
under any bankruptcy or insolvency laws. (f) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or security interest. This
includes a garnishment of any of Borrower's accounts with Lender.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, do one or both of the following: (a) increase the variable interest rate on
this Note to 4.5 percentage points over the otherwise effective interest rate,
and (b) add any unpaid accrued interest to principal and such sum will bear
interest therefrom until paid at the rate provided in this Note (including any
increased rate). Lender may hire or pay someone else to help collect this Note
if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any court
costs, in addition to all other sums provided by law.
LINE OF CREDIT. This Note evidences a revolving line of credit until May 5,
1995. Advances under this Note, as well as directions for payment from
Borrower's accounts, may be requested orally or in writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests be
confirmed in writing. Borrower agrees to be liable for all sums either: (a)
advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note or
by Lender's internal records, including daily computer print-outs. Lender will
have no obligation to advance funds under this Note if: (a) Borrower or any
guarantor is in default under the terms of this Note or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (d) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.
ADVANCE RATE. Funds shall be advanced under this Note according to an advance
rate, as determined by Lender, defined as follows: Ninety percent (90%) of
invoice amount for approved equipment purchased after January 1, 1994, excluding
personal computer software, taxes, shipping costs and installation fees.
Borrower shall provide Lender with copies
<PAGE> 6
of invoices at the time of each advance request.
LETTER AGREEMENT. This Note is subject to and shall be governed by all the
terms and conditions of the Letter Agreement dated May 18, 1994, between
Borrower and Lender, which Letter Agreement is incorporated herein by reference.
LOAN FEE. This Note is subject to a loan fee in the amount of Two Thousand
Five Hundred and NO/100 Dollars ($2,500.00) plus all out-of-pocket expenses.
REQUEST TO DEBIT. Borrower will regularly deposit all funds received from its
business activities in accounts maintained at Silicon Valley Bank. Borrower
hereby authorizes Lender to debit any accounts with Lender, including, without
limitation, Account Number 07006098-70 for payments of principal and interest
due on the loan and any other obligations owing by Borrower to Lender. Lender
will notify Borrower of all debits which Lender makes against Borrower's
accounts. Any such debits against Borrower's accounts in no way shall be
deemed a set-off.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, or endorses this Note, to the extent allowed by law, waive any applicable
statute of limitations, presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or collateral; or impair, fail to realize
upon or perfect Lender's security interest in the collateral; and take any other
action deemed necessary by Lender without the consent of or notice to anyone.
All such parties also agree that Lender may modify this loan without the consent
of or notice to anyone other than the party with whom the modification is made.
CONDITIONS. Prior to disbursement of any loan proceeds under this Note,
Borrower shall deliver to Lender, Borrower's March 31, 1994 balance sheet. Upon
receipt of such balance sheet, Lender shall review and make advances conditioned
upon its acceptability.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
--------------------
Name: John Thibault
------------------
Title: President & CEO
-----------------
<PAGE> 7
COMMERCIAL SECURITY AGREEMENT
================================================================================
Borrower: GEOTEL COMMUNICATIONS Lender: SILICON VALLEY BANK,
CORPORATION a California-chartered bank
25 Porter Road doing business as
Littleton, MA 01460 Silicon Valley East
Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
================================================================================
THIS COMMERCIAL SECURITY AGREEMENT is entered into between GEOTEL COMMUNICATIONS
CORPORATION (referred to below as "Grantor"); and SILICON VALLEY BANK, a
California-chartered bank (referred to below as "Lender"). For valuable
consideration, Grantor grants to Lender a security interest in the Collateral to
secure the indebtedness and agrees that Lender shall have the rights stated in
this Agreement with respect to the Collateral, in addition to all other rights
which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement
together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time. If any, as amended from time to time.
COLLATERAL. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, CONTRACT RIGHTS, DEPOSIT
ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES, FIXTURES, INSTRUMENTS AND
DOCUMENTS.
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, contract rights, general intangibles, instruments,
rents, monies, payments, and all other rights, arising out of a sale,
lease, or other disposition of any of the property described in this
Collateral section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
EVENT OF DEFAULT. The words "Event of Default" mean and include any of the
Events of Default set forth below in the section titled "Events of
Default."
GRANTOR. The word "Grantor" means GEOTEL COMMUNICATIONS CORPORATION, its
successors and assigns.
GUARANTOR. The word "Guarantor" means and includes without limitation, each
and all of the guarantors, sureties, and accommodation parties in
connection with the indebtedness.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents.
LENDER. The word "Lender" means SILICON VALLEY BANK, a California-chartered
bank, its successors and assigns.
NOTE. The word "Note" means the notes, letters of credit, or credit
agreements in any principal amount from Borrower to Lender, together with
all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the notes or credit agreements.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
guaranties, security agreements, mortgages, deeds of trust, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the indebtedness.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of
Grantor. THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN
EFFECT EVEN THOUGH ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND
EVEN THOUGH FOR A PERIOD OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER, SO
LONG AS THE NOTE OR ANY RELATED DOCUMENTS REMAIN IN EFFECT. AT SUCH TIME
AS THE NOTE AND RELATED DOCUMENTS HAVE EXPIRED, ARE OF NO FURTHER FORCE AND
EFFECT AND GRANTOR HAS SATISFIED ALL OF ITS OBLIGATIONS THEREUNDER, LENDER
SHALL RELEASE ITS SECURITY INTEREST IN THE COLLATERAL, AND SHALL, AT
GRANTOR'S REQUEST, EXECUTE SUCH DOCUMENTS AS MAY BE NECESSARY TO EFFECTUATE
SUCH RELEASE.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, contract rights, chattel paper, or general intangibles, the
Collateral is enforceable in accordance with its terms, is genuine, and
complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact
obligated as they appear to be on the Collateral.
LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver
to Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased
<PAGE> 8
COMMERCIAL SECURITY AGREEMENT Page 2
(Continued)
================================================================================
by Grantor; (b) all real property being rented or leased by Grantor; (c)
all storage facilities owned, rented, leased, or being used by Grantor; and
(d) all other properties where Collateral is or may be located. Except in
the ordinary course of its business, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the
records concerning the Collateral) at Grantor's address shown above, or at
such other locations as are acceptable to Lender. Except in the ordinary
course of its business, including the sales of inventory, Grantor shall not
remove the Collateral from its existing locations without the prior written
consent of Lender. To the extent that the Collateral consists of vehicles,
or other titled property, Grantor shall not take or permit any action which
would require application for certificates of title for the vehicles
outside the Commonwealth of Massachusetts, without the prior written
consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A sale in
the ordinary course of Grantor's business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Grantor shall not
pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right
to the security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
COLLATERAL SCHEDULES AND LOCATIONS. Insofar as the Collateral consists of
inventory, Grantor shall deliver to Lender, as often as Lender shall
require, such lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of its
subsidiaries or related companies.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit
or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have
the right of all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of all
cases involving the return, rejection, repossession, loss or damage of or
to any Collateral; of any request for credit or adjustment or of any other
dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount
of the Collateral.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to
Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys' fees or other charges that could accrue as
a result of foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the Collateral. Granter shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances and regulations of all governmental authorities
applicable to the production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or regulation and
withhold compliance during any proceeding, including appropriate appeals,
so long as Lender's interest in the Collateral, in Lender's opinion, is not
jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),
the Hazardous Materials Transportation Act, 48 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 49 U.S.C. Section 6901,
et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. The terms "hazardous waste" and
"hazardous substance" shall also include, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days' prior written
notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. In connection with all
policies covering assets in which Lender holds or is offered a security
interest, Grantor will provide Lender with such loss payable or other
endorsements as Lender may require. If Grantor at any time fails to obtain
or maintain any insurance as required under this Agreement, Lender may (but
shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if it so chooses "single interest insurance," which
will cover only Lender's interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE PREMIUMS. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be
<PAGE> 9
COMMERCIAL SECURITY AGREEMENT Page 3
(Continued)
================================================================================
created by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at lease equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following: (a) the name of the
Insurer; (b) the risks insured; (c) the amount of the policy; (d) the
property insured; (e) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and
(f) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's security interest in such Collateral. If
Lender at any time has possession of any Collateral, whether before or after an
Event of Default. Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect, preserve or
maintain any security interest given to secure the Collateral.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement.
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on
the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement is
false or misleading in any material respect, either now or at the time made
or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or
becomes incompetent.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Massachusetts Uniform Commercial Code. In addition and without
limitation following an event of default, Lender may exercise any one or more of
the following rights and remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be
made. The requirements of reasonable notice shall be met if such notice is
given at least ten (10) days before the time of the sale or disposition.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, preparing
for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand,
with interest at the Note rate from date of expenditure until repaid. Any
excess proceeds received by Lender upon disposition of the Collateral
shall be applied in accordance with the Uniform Commercial Code including
such provisions that require Lender to account to Grantor for any surplus.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the indebtedness or apply it to payment of the indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general Intangibles, insurance policies, instruments,
[LAST LINE ON PAGE NOT LEGIBLE]
<PAGE> 10
COMMERCIAL SECURITY AGREEMENT Page 4
(Continued)
================================================================================
realize on the Collateral as Lender may determine, whether or not
indebtedness or Collateral is then due. For those purposes Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement, Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of
a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, shall
be cumulative and may be exercised singularly or concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to
exercise its remedies.
MISCELLANEOUS PROVISION. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including reasonable attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may pay someone else to help enforce this Agreement,
and Grantor shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender's reasonable attorneys' fees and legal expenses
whether or not there is a lawsuit, including reasonable attorneys' fees and
legal expenses for bankruptcy proceedings (and including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Grantor also shall pay all court costs
and such additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
NOTICES. All notices required to be given under this Agreement shall be
given in writing and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Grantor, notice to any Grantor
will constitute notice to all Grantors. For notice purposes, Grantor agrees
to keep Lender informed at all times of Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the claim; and (d) to
file any claim or claims or to take any action or institute or take part in
any proceedings, either in its own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the Indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 18,
1994. THIS COMMERCIAL SECURITY AGREEMENT IS EXECUTED UNDER SEAL.
GRANTOR: LENDER:
GEOTEL COMMUNICATIONS CORPORATION Silicon Valley Bank
By: /s/ JOHN THIBAULT By: /s/ ANDREA L. CARLIN
-------------------- ---------------------------
Name: John Thibault Name: Andrea L. Carlin
---------------- -------------------------
Title: President & CEO Title: Assistant Vice President
--------------- ------------------------
================================================================================
<PAGE> 11
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- FORM UCC-1
INSTRUCTIONS MASSACHUSETTS
1. PLEASE TYPE this form. Fold only along perforation for enrolling.
2. Remove Secured Party and Debtor Copies and send other 3 copies to
the filing officer. Enclose filing fee.
3. When filing is to be with more than one office, Form UCC-2 may be placed
over this set to avoid double typing.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of the financing statement. Long
schedules of collateral, indentures, etc., may be on any size paper that is
convenient for the secured party.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. When a copy of the security agreement is used as a financing statement, it
is requested that it be accompanied by a completed but unsigned set of these
forms, without extra fee.
7. At the time of original filing, filing officer should return third copy as
an acknowledgement. At a later time, secured party may date and sign
termination legend and use third copy as a Termination Statement.
<TABLE>
<S> <C> <C>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant
to the Uniform Commercial Code 3 Maturity date (if any):
- ----------------------------------------------------------------------------------------------------------------------------------
1 Debtor(s) (Last Name First) 2 Secured Party(ies) and For Filing Officer (Date, Time, Number, and Filing Office)
and address(es) address(es)
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK
25 PORTER ROAD 3000 LAKESIDE DRIVE
LITTLETON, MA 01460 SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
4 This financing statement covers the following types (or items) of property: 5 Assignee(s) of Secured Party and
Address(es)
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, CONTRACT RIGHTS, DEPOSIT
ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES, FIXTURES, INSTRUMENTS, -------------------------------------------------
DOCUMENTS WHETHER OWNED NOW OR ACQUIRED HEREAFTER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS
RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
INTANGIBLES AND ACCOUNT PROCEEDS).
Check [X] if covered: [ ] Proceeds of Collateral are also covered [ ] Products of collateral are also covered.
No. of additional sheets presented:
- ----------------------------------------------------------------------------------------------------------------------------------
Filed with: TOWN CLERK OF LITTLETON, MA
- ----------------------------------------------------------------------------------------------------------------------------------
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK
- ----------------------------------------------- ------------------------------------
By: /s/ JOHN THIBAULT By: /s/ ANDREA L. CARLIN
-------------------------------------------- ---------------------------------
Signature(s) of Debtor(s) Signature(s) of Party(ies)
STANDARD FORM -- UNIFORM COMMERCIAL CODE -- FORM UCC-1
STATE OF MASSACHUSETTS
</TABLE>
<PAGE> 12
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- FORM UCC-1
INSTRUCTIONS MASSACHUSETTS
1. PLEASE TYPE this form. Fold only along perforation for enrolling.
2. Remove Secured Party and Debtor Copies and send other 3 copies to
the filing officer. Enclose filing fee.
3. When filing is to be with more than one office, Form UCC-2 may be placed
over this set to avoid double typing.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of the financing statement. Long
schedules of collateral, indentures, etc., may be on any size paper that is
convenient for the secured party.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. When a copy of the security agreement is used as a financing statement, it
is requested that it be accompanied by a completed but unsigned set of these
forms, without extra fee.
7. At the time of original filing, filing officer should return third copy as
an acknowledgement. At a later time, secured party may date and sign
termination legend and use third copy as a Termination Statement.
<TABLE>
<S> <C> <C>
This FINANCING STATEMENT is presented to a filing officer for filing pursuant
to the Uniform Commercial Code 3 Maturity date (if any):
- ----------------------------------------------------------------------------------------------------------------------------------
1 Debtor(s) (Last Name First) 2 Secured Party(ies) and For Filing Officer (Date, Time, Number, and Filing Office)
and address(es) address(es)
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK
25 PORTER ROAD 3000 LAKESIDE DRIVE
LITTLETON, MA 01460 SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
4 This financing statement covers the following types (or items) of property: 5 Assignee(s) of Secured Party and
Address(es)
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, CONTRACT RIGHTS, DEPOSIT
ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES, FIXTURES, INSTRUMENTS, -------------------------------------------------
DOCUMENTS WHETHER OWNED NOW OR ACQUIRED HEREAFTER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS
RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
INTANGIBLES AND ACCOUNT PROCEEDS).
Check [X] if covered: [ ] Proceeds of Collateral are also covered [ ] Products of collateral are also covered.
No. of additional sheets presented:
- ----------------------------------------------------------------------------------------------------------------------------------
Filed with: STATE OF MASSACHUSETTS
- ----------------------------------------------------------------------------------------------------------------------------------
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK
- ----------------------------------------------- ------------------------------------
By: /s/ JOHN THIBAULT By: /s/ ANDREA L. CARLIN
-------------------------------------------- ---------------------------------
Signature(s) of Debtor(s) Signature(s) of Party(ies)
STANDARD FORM -- UNIFORM COMMERCIAL CODE -- FORM UCC-1
STATE OF MASSACHUSETTS
</TABLE>
<PAGE> 13
LESSOR'S SUBORDINATION
WHEREAS, GeoTel Communications Corporation (the "Company") has or is about
to enter into certain financing agreements (the "Loan Documents") with Silicon
Valley Bank (the "Bank") pursuant to which the Bank has been or may be granted a
security interest in, INTER ALIA, any or all of the Company's accounts
receivable, inventory, instruments, general intangibles, documents and books and
records relating to the foregoing (collectively, the "Bank Collateral") located
on the Premises, as defined below; and
WHEREAS, the Company is the lessee, pursuant to a lease agreement by and
between the Company and Nationwide Life Insurance Company (the "Lessor") dated
as of November 29, 1993 (the "Lease"), of certain demised premises contained in
the building located at the following address:
25 Porter Road
Littleton, MA 01460
and more particularly described in such lease agreement (the "Premises");
NOW, THEREFORE, in consideration of any financial accommodation extended by
the Bank to the Company, at any time, and other good and valuable consideration,
Lessor agrees, for as long as the Company remains indebted to the Bank, as
follows:
(a) Lessor acknowledges and agrees that the Bank has a security interest in
the Bank Collateral which is located on the Premises.
(b) Lessor acknowledges and agrees that the Bank Collateral may be located
on the Premises and is not and shall not be deemed a fixture or part of the real
estate but shall at all times be considered the personal property of the
Company.
(c) Lessor subordinates any lien, all rights of levy or distraint, security
interest or other interest the Lessor may now or hereafter have in any of the
Bank Collateral and agrees to assert no claim to the Bank Collateral which is
prior in priority to any properly perfected security interest of the Bank.
(d) Upon providing the Lessor with reasonable advance written notice that
the Company is in default of its obligations to the Bank under the Loan
Documents, the Bank, at its option, may enter the Premises during business
hours, upon prior written notice to Lessor, for the purpose of inspecting,
repossessing, removing, selling or otherwise dealing with said Bank Collateral,
and such license shall continue without charge from the date of such notice for
a period of fifteen (15) days, provided that Bank shall promptly repair any
damage to the Premises caused by removal of the Bank Collateral therefrom, and
shall indemnify and hold Lessor harmless against any personal injury, property
damage or other liability caused, directly or indirectly, by entry upon the
Premises by Bank, its agents or employees. If the Bank elects to acquire or
repossess any of the said Bank Collateral in which Bank has a properly perfected
security interest, the Lessor agrees to recognize the Bank as the owner of said
Bank Collateral.
(e) Lessor agrees to use reasonable efforts to promptly provide the Bank
with copies (it being recognized, however, that an inadvertent failure to so
provide such notice shall be of no consequence), by the same means of
transmission as provided to the Company, of any notice of default delivered to
the Company under the provisions of the lease agreement to:
SILICON VALLEY EAST
Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
Attention: Eva R. Burmeister
FAX No.: (617) 431-9906
<PAGE> 14
Upon receipt of said notice, the Bank shall thereupon have the right, but not
the obligation, to cure said default within the cure period set forth in the
lease agreement with respect to the applicable default. Any payment made or act
done by the Bank to cure any such default shall not constitute an assumption of
the lease agreement or any obligations of the Company,
(f) All notices and other communications under this Subordination shall be
in writing, and shall be delivered by hand, by a nationally recognized
commercial overnight delivery service, by first class mail or by telecopy,
delivered, addressed or transmitted, if to the Bank, at its address or telecopy
number set forth in paragraph (e) above, and if to the Lessor, at its address or
telecopy number set out below its signature. Such notices shall be effective (a)
in the case of hand deliveries, when received, (b) in the case of an overnight
delivery service, upon delivery, (c) in the case of mail, three days after
deposit in the postal system, first class postage prepaid and (d) in the case of
telecopy notices, when electronic indication of receipt is received. Either
party may change its address and telecopy number by written notice to the other.
(g) The Bank shall indemnify and hold harmless the Lessor for any physical
damage to the Premises or for any cost, expense, liability, or claim, including
attorney's fees which arises due to Bank actions as a result of the exercise of
its rights hereunder.
This Subordination may not be changed or terminated orally and is binding
upon the Lessor and the Bank, and their successors and assigns.
Dated this 16th day of June, 1994.
---- ----
Lessor:
NATIONWIDE LIFE INSURANCE COMPANY
One Nationwide Plaza 1-34001
Witnesses: Columbus, OH 43215
Telecopier: (614) 249-4247
/s/ Inez L. Boyer
- ------------------------------ By: /s/ Robert H. McNaghten
-------------------------------
/s/ Jennifer C. Reynolds Robert H. McNaghten
- ------------------------------ Its: Vice President
ACKNOWLEDGMENT
STATE OF OHIO )
COUNTY OF FRANKLIN)
There then appeared before me the above-named Robert H. McNaghten, to me
known, Vice President of Nationwide Life Insurance Company, an Ohio corporation,
who acknowledged the foregoing to be his free act and deed and the free act and
deed of said corporation.
/s/ Sue Ann Crego
---------------------------------
Notary Public
[NOTARY Sue Ann Crego
SEAL] Notary-Public-State of Ohio
My Commission expires
10-20-95
----------------------
<PAGE> 15
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<S> <C>
=========================================================================================================
BORROWER: GEOTEL COMMUNICATIONS CORPORATION LENDER: SILICON VALLEY BANK, a California-chartered bank
25 Porter Road doing business as Silicon Valley East
Littleton, MA 01460 Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
=========================================================================================================
</TABLE>
LOAN TYPE. This is a Variable Rate (1.500% over SILICON VALLEY BANK PRIME RATE,
making an initial rate of 8.250%). Revolving Line of Credit Loan to a
Corporation for $500,000.00 due on October 31, 1997.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for (please
initial):
[ ] _____ Personal Family, or Household Purposes or Personal Investment.
[X] _____ Business (including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is: To finance equipment
purchase.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lendor's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $500,000.00 as follows:
Amount paid to Borrower directly: $.00
Undisbursed Funds: $500,000.00
------------
Note Principal: $500,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $2,535.00
$2,500.00 Loan Fee
$35.00 Credit Report
Other Charges Paid in Cash: $740.00
$150.00 Information America Search
$20.00 UCC Filing Fee
$70.00 Town Search
$500.00 IP Filing
------------
Total Charges Paid in Cash: $3,275.00
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE MATERIAL CHANGE IN BORROWER'S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO
LENDER. THIS AUTHORIZATION IS DATED MAY 18, 1994:
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN THIBAULT
--------------------------------------------
Name: John Thibault Title: President & CEO
===============================================================================
<PAGE> 16
INVOICE FOR FEES AND EXPENSES
BORROWER: GEOTEL COMMUNICATIONS CORPORATION
LOAN OFFICER: ANDREA CARLIN
DATE: MAY 13, 1994
LOAN FEE $2,500.00
CREDIT REPORT 35.00
UCC SEARCH 220.00
IP FILING FEES 500.00
FILING FEES 20.00
--------------- ---------
* TOTAL ......... $3,275.00
* This is an estimation only, the actual expenses may vary
PLEASE INDICATE THE METHOD OF PAYMENT:
/X/ A check for the total amount is attached.
/ / Debit DDA # ___________ for the total amount.
/ / Loan proceeds
/s/ John C. Thibault
- ----------------------------------------
AUTHORIZED SIGNER (DATE)
/s/ Andrea L. Carlin
- ----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
<PAGE> 17
GEOTEL COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME PAYMENT NUMBER CHECK DATE 1141
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
OUR VOUCHER NUMBER YOUR VOUCHER NUMBER DATE AMOUNT AMOUNT PAID DISCOUNT WRITE-OFF NET
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
00492 6/02/94 6/2/94 $3,275.00 $3,275.00 $0.00 $0.00 $3,275.00
- ----------------------------------------------------------------------------------------------------------------------------------
$3,275.00 $3,275.00 $0.00 $0.00 $3,275.00
COMMENT --------------------------------------------------------------------------
</TABLE>
SILICON VALLEY BANK
SANTA CLARA, CALIFORNIA 95054 11471
GEOTEL COMMUNICATIONS CORPORATION 90-4039-1211
25 PORTER RD.
LITTLETON, MA 01400
PH. 508-406-0022
DATE AMOUNT
6/2/94 $3,275.00
Three Thousand Two Hundred Seventy Five Dollars and 00 Cents
PAY
TO THE
ORDER
OF Silicon Valley Bank
/s/ JOHN C. THIBAULT
-----------------------------
<PAGE> 18
[LOGO] MASON &
MASON
- --------------------------- -----------------------
Insurance Agency, Inc. 458 South Avenue
- --------------------------- Whitman, MA 02382
Technology Insurance (617) 447-5531 FAX: (617) 447-7230
Services, Inc. (800) 759-1452
- ---------------------------
CERTIFICATE OF INSURANCE
------------------------
INSURED: COMPANIES AFFORDING COVERAGE
Geotel Communications Corp. Co. Letter A Federal Insurance
25 Porter Rd. Co. Letter B
Littleton, MA 01460 Co. Letter C
<TABLE>
This is to certify that policies of insurance listed below have been issued to
the insured named above for the policy period indicated, notwithstanding any
requirement, term or condition of any contract or other document with respect to
which this certificate may be issued or may pertain, the insurance afforded by
the policies described herein is subject to all the terms, exclusions, and
conditions of such policies. Limits shown may have been reduced by paid claims.
<CAPTION>
CO LTR. TYPE OF INS. POLICY NO. & TERM LIMITS (IN THOUSANDS)
- ------- ------------ ----------------- ---------------------
<S> <C> <C> <C> <C>
A General Liab. 35322538 General Aggregate $2,000,
___ claims made 11/16/93-94 Prod-Comp/ops Agg $2,000,
x occurrence Personal & Adv Inj. $1,000,
Each Occurrence $1,000,
Fire Damage Legal $ 100,
Medical Exp/per person $ 10,
Property Special Form including $
at 25 Porter Rd. theft $ 250,
Deductible $ 1,
</TABLE>
- --------------------------------------------------------------------------------
It is understood and agreed that the certificate holder is included as loss
payee as their interest may apprear.
- --------------------------------------------------------------------------------
Should any of the above described policies be cancelled before the expiration
date thereof, the issuing Co. will endeavor to mail 10 days written notice to
the certificate holder named below, but failure to mail such notice shall impose
no obligation or liability of any kind upon the company, its agents or
representatives. This certificate is issued as a matter of information only and
confers no rights upon the certificate holder. This certificate does not amend,
extend or alter the coverage afforded by the policies above.
CERTIFICATE HOLDER:
Silicon Valley Bank
Wellesley Office Park
45 William St., Suite 170
Wellesley, MA 02181
/s/ P. Mason Date Issued 5/25/94
----------------
<PAGE> 19
AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<S> <C>
=========================================================================================================
BORROWER: GEOTEL COMMUNICATIONS CORPORATION LENDER: SILICON VALLEY BANK, a California-chartered bank
25 Porter Road doing business as Silicon Valley East
Littleton, MA 01460 Wellesley Office Park
45 William Street, Suite 170
Wellesley, MA 02181
=========================================================================================================
</TABLE>
INSURANCE REQUIREMENTS. GEOTEL COMMUNICATIONS CORPORATION ("Grantor")
understands that insurance coverage is required in connection with the
extending of a loan or the providing of other financial accommodations to
Grantor by Lender. These requirements are set forth in the security
documents. The following minimum insurance coverages must be provided on the
following described collateral (the "Collateral"):
COLLATERAL: ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, CONTRACT RIGHTS, DEPOSIT
ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES, FIXTURES, INSTRUMENTS AND
DOCUMENTS.
TYPE. All risks, including fire, theft and liability.
AMOUNT. Full insurance value.
BASIS. Replacement value.
ENDORSEMENTS. Lender's loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of
ten (10) days' prior to written notice to Lender.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on or
before closing, evidence of the required insurance as provided above, with an
effective date of May 18, 1994, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Lender may do so at Grantor's expense as provided in
the applicable security document. The cost of any such insurance, at the
option of Lender, shall be payable on demand or shall be added to the
indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT
IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED
PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE
LOAN; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 18, 1994.
GRANTOR:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN C. THIBAULT
-----------------------
Name: John Thibault Title: President & CEO
------------- ---------------
- -------------------------------------------------------------------------------
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE: _____________ PHONE: _____________
AGENT'S NAME: _________________________________________________________________
INSURANCE COMPANY: ____________________________________________________________
POLICY NUMBER: ________________________________________________________________
EFFECTIVE DATES: ______________________________________________________________
COMMENTS: _____________________________________________________________________
- -------------------------------------------------------------------------------
===============================================================================
<PAGE> 20
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT
This Collateral Assignment, Patent Mortgage and Security Agreement is made
as of the 18th day of May 1994 by and between GeoTel Communications Corporation
("Assignor"), and Silicon Valley Bank, a California banking corporation
("Assignee").
RECITALS
A. Assignee has agreed to lend or has tent to Assignor certain funds
(the "Loan"), pursuant to a Letter Agreement dated May 18, 1994 (the "Loan
Agreement") and Assignor desired to borrow such funds from Assignee. The Loan is
or will be evidenced by one or more promissory notes (a "Note" or, collectively,
the "Notes") and is or will be secured in part pursuant to the terms of a
Commercial Security Agreement dated May 18, 1994 (the "Security Agreement").
B. In order to induce Assignee to make or amend the terms of the Loan,
Assignor has agreed to assign certain intangible property to Assignee for
purposes of securing the obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. ASSIGNMENT, PATENT MORTGAGE AND GRANT OF SECURITY INTEREST. As
collateral security for the prompt and complete payment and performance oral1 of
Assignor's present or future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, but not as an ownership interest
in and to Assignor's entire fight, title and interest in, to and under the
following (all of which shall collectively be called the "Collateral"):
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections m each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on EXHIBIT A
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property fights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design fights which may be available to Assignor
now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on EXHIBIT B attached
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on EXHIBIT C attached hereto (collectively, the "Trademarks");
(f) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
<PAGE> 21
(g) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights; and
(h) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE NOTE AND THE LOAN AGREEMENT.
2. AUTHORIZATION AND REQUEST. Assignor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.
3. COVENANTS AND WARRANTIES. Assignor represents, warrants, covenants
and agrees as follows:
(a) Assignor is now the sole owner of the Collateral, except for
non-exclusive licenses granted by Assignor to its customers in the ordinary.
course of business;
(b) Performance of this Assignment does not conflict with or
result in a breach of any agreement to which Assignor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this Assignment constitutes an assignment;
(c) During the term of this Agreement, Assignor will not
transfer or otherwise encumber any interest in the Collateral, except for
non-exclusive licenses granted by Assignor in the ordinary. course of business
or as set forth in this Assignment;
(d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
(e) Assignor shall promptly advise Assignee of any material
adverse change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Assignor in or to any Trademark, Patent
or Copyright not specified in this Assignment;
(f) Assignor shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents and Copyrights, (ii) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Assignee in writing of material infringements detected and (iii)
not allow any Trademarks, Patents, or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Assignee, which shall not
be unreasonably withheld unless Assignor determines that reasonable business
practices suggest that abandonment is appropriate;
(g) Assignor shall promptly register the most recent version of
any of Assignor's Copyrights, if not so already registered, and shall, from time
to time, execute and file such other instruments, and take such further
actions as Assignee may reasonably request from time to time to perfect or
continue the perfection of Assignee's interest in the Collateral;
(h) This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and
<PAGE> 22
perfected first priority security interest in the Collateral in the United
States securing the payment and performance of the obligations evidenced by the
Note upon making the filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing with the
United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights
necessary to perfect the security interests and assignment created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority of
U.S. regulatory body is required either (i) for the grant by Assignor of the
security. interest granted hereby or for the execution, delivery or performance
of this Assignment by Assignor in the U.S. or (ii) for the perfection in the
United States or the exercise by Assignee of its rights and remedies thereunder;
(j) All information heretofore, herein or hereafter supplied to
Assignee by or on behalf of Assignor with respect to the Collateral is accurate
and complete in all material respects;
(k) Assignor shall not enter into any agreement that would
materially impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be unreasonably
withheld. Assignor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Assignor's rights and interest in
any property included within the definition of the Collateral acquired under
such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts;
(l) Upon any executive officer of Assignor obtaining actual
knowledge thereof, Assignor will promptly notify Assignee in writing of any
event that materially adversely affects the value of any material Collateral,
the ability of Assignor to dispose of any material Collateral of the rights and
remedies of Assignee in relation thereto, including the levy of any legal
process against any of the Collateral.
4. ASSIGNEE'S RIGHTS. Assignee shall have the right, but not the
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.
5. INSPECTION RIGHTS. Assignor hereby grants to Assignee and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, and any of Assignor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested, but not more than one (1) in every six (6) months;
provided, however, nothing herein shall entitle Assignee access to Assignor's
trade secrets and other proprietary information.
6. Further Assurances; Attorney in Fact.
-------------------------------------
(a) On a continuing basis, Assignor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings
with the United States Patent and Trademarks Office and the Register of
Copyrights, and take all such action as may reasonably be deemed necessary or
advisable, or as requested by Assignee, to perfect Assignee's security interest
in all Copyrights, Patents and Trademarks and otherwise to carry out the intent
and purposes of this Collateral Assignment, or for assuring and confirming to
Assignee the grant or perfection of a security interest in all Collateral.
(b) Assignor hereby irrevocably appoints Assignee as Assignor's
attorney-in-fact, with full
<PAGE> 23
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion, upon
Assignor's failure or inability to do so, to take any action and to execute any
instrument which Assignee may deem necessary or advisable to accomplish the
purposes of this Collateral Assignments, including:
(i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A, Exhibit B and Exhibit C hereof, as
appropriate, to include reference to any right, title or interest in any
Copyrights, Patents or Trademarks acquired by Assignor after the execution
hereof or to delete any reference to any right, title or interest in any
Copyright, Parents or Trademarks in which Assignor no longer has or claims any
right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement or any
Note; or
(b) Assignor breaches any warranty or agreement made by Assignor
in this Assignment.
8. REMEDIES. Upon the occurrence and continuance of an Event of
Default, Assignee shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Assignor to assemble the Collateral and any tangible
property in which Assignee has a security interest and to make it available to
Assignee at a place designated by Assignee. Assignee shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Assignee to exercise its rights and remedies upon
the occurrence of an Event of Default. Assignor will pay any expenses (including
reasonable attorney's fees) incurred by Assignee in connection with the exercise
of any of Assignee's rights hereunder, including without limitation any expense
incurred in disposing of the Collateral. All of Assignee's rights and remedies
with respect to the Collateral shall be cumulative.
9. INDEMNIFY. Assignor agrees to defend, indemnify and hold harmless
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party. in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee as a
result of or in any way arising out of, following or consequential to
transactions between Assignee and Assignor, whether under this Assignment or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising from or out of Assignee's gross
negligence or willful misconduct.
10. REASSIGNMENT. At such time as Assignor shall completely satisfy all
of the obligations secured hereunder, Assignee shall execute and deliver to
Assignor all deed, assignments, and other instruments as may be necessary or
proper to reinvest in Assignor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Assignee pursuant
hereto.
11. COURSE OF DEALING. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. ATTORNEYS' FEES. If any action relating to this Assignment is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.
13. AMENDMENTS. This Assignment may be amended only by a written
instrument signed by both
<PAGE> 24
parties hereto.
14. COUNTERPARTS. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
15. CALIFORNIA LAW AND JURISDICTION. This Agreement shall be governed
by the laws of the State of Massachusetts without regard for choice of law
provisions. Assignor and Assignee consent to the non-exclusive jurisdiction of
any state or federal court of competent jurisdiction in the Commonwealth of
Massachusetts in any action, suit, or proceeding of any kind against it which
arises out of or by reason of this Agreement; provided, however, that if for any
reason Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
16. CONFIDENTIALITY. In handling any confidential information,
Assignee shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Assignment except that the disclosure of this information may
be made (i) to the affiliates of the Assignee, (ii) to prospective transferee
or purchasers of an interest in the obligations secured hereby, provided that
they have entered into comparable confidentiality agreement in favor of
Assignor and have deliver a copy to Assignor, (iii) as required by law,
regulation, rule or order, subpoena judicial order or similar order and (iv) as
may be required in connection with the examination, audit or similar
investigation of Assignee provided that Assignee shall use its best efforts to
cause any recipient of such non public information to maintain its
confidentiality.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on
the day and year first above written, provided that Assignee causes such
affiliates to maintain the confidentiality of any non-public information.
Address of Assignor: ASSIGNOR:
25 Porter Road GeoTel Communications Corporation
Littleton, MA 01460
By: /s/ JOHN THIBAULT
-------------------------------
Name: John Thibault
-----------------------------
Title: President & CEO
----------------------------
ASSIGNEE:
Silicon Valley Bank
By: /s/ ANDREA L. CARLIN
-------------------------------
Name: Andrea L. Carlin
-----------------------------
Title: Assistant Vice President
----------------------------
<PAGE> 25
ALL-PURPOSE ACKNOWLEDGEMENT
State of Massachusetts
---------------------------
County of Middlesex
--------------------------
On 6/21/94 before me,
----------
______________________, personally appeared _______________________ [ ]
personally known to me -OR- [x] proved to me on the basis of satisfactory
evidence to the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal.
/s/ [ILLEGIBLE]
- -------------------------------
SIGNATURE OF NOTARY
CAPACITY CLAIMED BY SIGNER
[ ] INDIVIDUAL(S)
[X] CORPORATE _______
OFFICER(S)______
TITLE(S)
[ ] PARTNER(S)
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] SUBSCRIBING WITNESS
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER: __________________
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
John C. Thibault,
- ---------------------------------
President & CEO
- ---------------------------------
GeoTel Communications Corporation
- ---------------------------------
<PAGE> 26
Exhibit "A" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated ____, 19__.
EXHIBIT "A"
COPYRIGHTS
SCHEDULE A - ISSUED COPYRIGHTS
- ------------------------------
COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
- ----------- ------ --------
SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
- -------------------------------------------
FIRST DATE
COPYRIGHT APPLICATION DATE OF DATE OF OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
- ----------- ------ ------ -------- ------------
SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)
- --------------------------------------------------------------------------------
DATE AND
RECORDATION NUMBER
ORIGINAL OF ASSIGNMENT TO
AUTHOR OR ASSIGNOR (IF
OWNER OF ORIGINAL AUTHOR OR
FIRST DATE COPYRIGHT OWNER OF COPYRIGHT
COPYRIGHT DATE OF OF (IF DIFFERENT IS DIFFERENT FROM
DESCRIPTION CREATION DISTRIBUTION FROM ASSIGNOR) ASSIGNOR)
- ----------- -------- ------------ ------------- -------------------
Intelligent 10/1/93
Call Router
Software
<PAGE> 27
Exhibit "B" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated __, 19__.
EXHIBIT "B"
PATENTS
PATENT
DESCRIPTION DOCKET NO. COUNTRY SERIAL NO. FILING DATE STATUS
- ----------- ---------- ------- ---------- ----------- ------
None
<PAGE> 28
Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated______________, 19____.
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
- ----------- ------- ---------- ------- ------
Intelligent Call Router Intent to use
Network Routing Operating System Intent to use
<PAGE> 29
Exhibit "A" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated ________, 19____.
EXHIBIT "A"
COPYRIGHTS
SCHEDULE A - ISSUED COPYRIGHTS
- ------------------------------
COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
- ----------- ------------ --------
SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
- -------------------------------------------
FIRST DATE
COPYRIGHT APPLICATION DATE OF DATE OF OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
- ----------- ----------- ------- -------- ------------
SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is
Pending)
- -----------------------------------------------------------------------
DATE AND
RECORDATION NUMBER
ORIGINAL OF ASSIGNMENT TO
AUTHOR OR ASSIGNOR (IF
OWNER OF ORIGINAL AUTHOR OR
FIRST DATE COPYRIGHT OWNER OF COPYRIGHT
COPYRIGHT DATE OF OF (IF DIFFERENT IS DIFFERENT FROM
DESCRIPTION CREATION DISTRIBUTION FROM ASSIGNOR) ASSIGNOR)
- ----------- -------- ------------ ------------- ------------------
<PAGE> 30
Exhibit "B" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated __, 19__.
EXHIBIT "B"
PATENTS
<TABLE>
<S> <C> <C> <C> <C> <C>
PATENT
DESCRIPTION DOCKET NO. COUNTRY SERIAL NO. FILING DATE STATUS
- ----------- ---------- ------- ---------- ----------- ------
</TABLE>
<PAGE> 31
Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated______________, 19____.
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
- ----------- ------- ---------- ------- ------
<PAGE> 1
EXHIBIT 10.12
PROMISSORY NOTE
BORROWER: GEOTEL COMMUNICATIONS CORPORATION
25 PORTER ROAD
LITTLETON, MA 01460
LENDER: SILICON VALLEY BANK, A CALIFORNIA-CHARTERED BANK
DOING BUSINESS AS SILICON VALLEY EAST
WELLESLEY OFFICE PARK
40 WILLIAM STREET, SUITE 350
WELLESLEY, MA 02181
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT: $214,782.53 INITIAL RATE: 9.250% DATE OF NOTE: MARCH 1, 1996
</TABLE>
PROMISE TO PAY. GEOTEL COMMUNICATIONS CORPORATION {"BORROWER") PROMISES TO PAY
TO SILICON VALLEY BANK, A CALIFORNIA-CHARTERED BANK, WITH A LOAN PRODUCTION
OFFICE IN WELLESLEY, MASSACHUSETTS, DOING BUSINESS AS SILICON VALLEY EAST
("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE
PRINCIPAL AMOUNT OF TWO HUNDRED FOURTEEN THOUSAND SEVEN HUNDRED EIGHTY TWO &
53/100 DOLLARS ($214,782.53), TOGETHER WITH INTEREST ON THE UNPAID PRINCIPAL
BALANCE FROM MARCH 1, 1996, UNTIL PAID IN FULL.
PAYMENT. SUBJECT TO ANY PAYMENT CHANGES RESULTING FROM CHANGES IN THE INDEX,
BORROWER WILL PAY THIS LOAN IN ACCORDANCE WITH THE FOLLOWING PAYMENT SCHEDULE:
THE DRAW PERIOD SHALL BEGIN AS OF THIS DATE AND SHALL END ON MAY 1, 1996
(THE "DRAW PERIOD"). BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ALL
ACCRUED UNPAID INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING APRIL 1,
1996 AND ALL SUBSEQUENT INTEREST PAYMENTS WILL BE DUE ON THE SAME DAY OF
EACH MONTH THEREAFTER THROUGH MAY 1, 1996. THE OUTSTANDING PRINCIPAL
BALANCE ON MAY 1, 1996 WILL BE PAYABLE IN THIRTY-FOUR (34) EVEN PAYMENTS OF
PRINCIPAL PLUS INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING JUNE 1, 1996
AND ALL SUBSEQUENT PAYMENTS OF PRINCIPAL PLUS INTEREST WILL BE DUE ON THE
SAME DAY OF EACH MONTH THEREAFTER. THE FINAL PAYMENT, DUE ON MARCH 1, 1999,
WILL BE FOR ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED INTEREST NOT YET
PAID.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at 3003
Tasman Drive, Santa Clara, California 95054. Unless otherwise agreed or required
by applicable law, payments will be applied first to accrued unpaid interest,
then to principal, and any remaining amount to any unpaid collection costs and
late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is Lender's Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current Index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each time the prime rate is adjusted by
Silicon Valley Bank. THE INDEX CURRENTLY IS 8.250% PER ANNUM. THE INTEREST RATE
TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF
1.000 PERCENTAGE POINT OVER THE INDEX, RESULTING IN A CURRENT RATE OF 9.250% PER
ANNUM. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. Whenever increases occur
in the interest rate,
<PAGE> 2
PROMISSORY NOTE
CONTINUED
---------
Lender, at its option, may do one or more of the following: (a) increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (b) increase Borrower's payments to cover accruing interest, (c)
increase the number of Borrower's payments, and (d) continue Borrower's payments
at the same amount and increase Borrower's final payment.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender and such
failure continues unremedied for more than ten (10) days. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
Related Documents and such default continues unremedied for more than ten (10)
days. (d) Any representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any material respect.
(e) Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (f) Any creditor tries to take any of Borrower's
property on or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to either 5.000 percentage points over the Index or
4.000 percentage points over the otherwise effective interest rate, and (b) add
any unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided in this Note (including any increased
rate). The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law.
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
WITHOUT REGARD FOR CHOICE OF LAW PROVISIONS. BORROWER AND LENDER CONSENT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE;
PROVIDED, HOWEVER, THAT IF FOR ANY REASON LENDER CANNOT AVAIL ITSELF OF THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA
COUNTY, CALIFORNIA. (INITIAL HERE /i/ ?? ) Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought by
either Lender or Borrower against the other.
2
<PAGE> 3
PROMISSORY NOTE
CONTINUED
---------
REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received
from its business activities in accounts maintained by Borrower at Silicon
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of
Borrower's accounts with Lender, specifically, without limitation, Account
Number 07006098-70 for payments of interest and principal due on the loan and
any other obligations owing' by Borrower to Lender. Lender will notify Borrower
of all-debits which Lender makes against Borrower's accounts. Any such debits
against Borrower's accounts in no way shall be deemed a set-off.
LINE OF CREDIT. This Note evidences a straight line of credit until May 1, 1996.
Once the total amount of principal has been advanced, Borrower is not entitled
to further loan advances. Advances under this Note, as well as directions for
payment from Borrower's accounts, may be requested orally or in writing by
Borrower or by an authorized person. Lender may, but need not, require that all
oral requests be confirmed in writing. Borrower agrees to be liable for all sums
either: (a) advanced in accordance with the instructions of an authorized person
or (b) credited to any of Borrower's accounts with Lender. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (a) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims, or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (d) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.
ADVANCE RATE. Any time from the date hereof through the end of the Draw Period,
Borrower may request advances (each, an "Equipment Advance" and collectively,
the "Equipment Advances") from Lender up to the principal amount of this Note.
To evidence the Equipment Advances, Borrower shall deliver to Lender, at the
time of each advance request, invoices for the equipment purchased. The
Equipment Advances shall be used only to purchase equipment and shall not exceed
ninety percent (90%) of the invoice amount of eligible equipment purchased after
November 30, 1994, excluding taxes, shipping and installation expense.
LETTER AGREEMENT. This Note is subject to and shall be governed by all the terms
and conditions of the Letter Agreement dated May 1, 1995 between Borrower and
Lender, which Letter Agreement is incorporated herein by reference.
WAIVERS AND GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower, to the extent
allowed by law, waives presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, Borrower shall not be released from liability. To
the extent permitted by applicable law, Borrower agrees that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release Borrower or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to Borrower.
3
<PAGE> 4
PROMISSORY NOTE
CONTINUED
---------
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. THIS NOTE IS
EXECUTED UNDER SEAL. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ TIMOTHY J. ALLEN
---------------------------------
Name: TIMOTHY J. ALLEN
-------------------------------
Title: VICE PRESIDENT AND CFO
------------------------------
4
<PAGE> 5
DISBURSEMENT REQUEST AND AUTHORIZATION
================================================================================
<TABLE>
<S> <C> <C> <C>
BORROWER: GEOTEL COMMUNICATIONS CORPORATION LENDER: SILICON VALLEY BANK, A CALIFORNIA-CHARTERED BANK
25 PORTER ROAD DOING BUSINESS AS SILICON VALLEY EAST
LITTLETON, MA 01460 WELLESLEY OFFICE PARK
40 WILLIAM STREET, SUITE 350
WELLESLEY, MA 02181
</TABLE>
================================================================================
LOAN TYPE. This is a Variable Rate (1.000% over SILICON VALLEY BANK PRIME RATE,
making an initial rate of 9.250%), Non-Revolving Line of Credit Loan to a
Corporation for $214,782.53 due on March 1, 1999.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for (please
initial):
/ / ____ PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR PERSONAL INVESTMENT.
/X/ ____ BUSINESS (INCLUDING REAL ESTATE INVESTMENT).
SPECIFIC PURPOSE. The specific purpose of this loan is: To finance equipment
purchases.
<TABLE>
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $214,782.53 as follows:
<S> <C>
AMOUNT PAID TO BORROWER DIRECTLY: $ 0.00
UNDISBURSED FUNDS: $214,782.53
-----------
NOTE PRINCIPAL: $214,782.53
</TABLE>
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED MARCH 1, 1996.
BORROWER:
GEOTEL COMMUNICATIONS CORPORATION
BY: /s/ Timothy J. Allen
-------------------------------
Name: TIMOTHY J. ALLEN Title: VICE PRESIDENT AND CFO
------------------------- ----------------------
================================================================================
<PAGE> 6
Exhibit 10.8
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of September 11, 1996,
by and between GeoTel Communications Corporation ("Borrower") whose address is
25 Porter Road, Littleton, MA 01460 and Silicon Valley Bank, a
California-chartered bank ("Lender"), with its principal place of business at
3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production office
located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, MA
02181, doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Promissory Note, dated May 18, 1994 in the original principal
amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the "Term Note
1"), a Promissory Note, dated May 1, 1995, in the original principal amount of
Six Hundred Thousand and 00/100 Dollars ($600,000.00 (the "Term Note 2"), and a
Promissory Note, dated March 1, 1995 in the original principal amount of Two
Hundred Fourteen Thousand Seven Hundred Eighty Two and 53/100 Dollars
($214,782.53) (the "Term Note 3"). The Term Note 1, Term Note 2 and Term Note 3
shall be referred to collectively herein as the Notes. Notwithstanding anything
to the contrary contained in the Notes, the Notes, together with other
promissory notes from Borrower to Lender, shall now be governed by the terms and
conditions of the Letter Agreement, dated September 11, 1996, between Borrower
and Lender, as such agreement may be amended from time to time (the "Loan
Agreement"). Such Loan Agreement shall supersede any and all existing letter
agreements between Borrower and Lender. Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL: Repayment of the Indebtedness is secured by a
Commercial Security Agreement, dated May 18, 1994, and Collateral Assignment,
Patent Mortgage and Security Agreement dated May 18, 1994.
Hereinafter, the above-described security documents, together with all other
documents securing payment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents."
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Notes.
-------------------------
1. The Notes are hereby amended to provide that Borrower now has the
option to adjust the interest rate on the unpaid principal
balance of the Notes, to either a variable rate or a fixed rate,
as described-below:
A rate equal to the Index (as defined therein), resulting in an
initial rate of 8.250% per annum (the "Variable Rate") or a fixed
rate of either (i) a three (3) year Treasury Yield Percentage
plus 300 basis points or (ii) the LIBOR Rate plus 250 basis
points.
For purposes of this Agreement:
"Treasury Yield Percentage" shall be defined as the most recent
weekly average yield on actively traded U.S. Treasury obligations
as determined by reference to the week ending figures published
in the most recent Federal Reserve Statistical Release which
shall become available at least two business days prior to the
date as of which such yield is to be
1
<PAGE> 7
determined, or if a Statistical Release is not then published, the
arithmetic average (rounded to the nearest .01%) of the per annum yields to
maturity for each business day during the week ending at least two business
days prior to the date such determination is made, of all issues of
actively traded marketable United States Treasury fixed interest rate
securities with a constant maturity equal to, or not more than 30 days
longer or 30 days shorter than the average life of the payments of
principal and interest that are avoided by any prepayment (excluding all
such securities which can be surrendered at the option of the holder at the
face value of payment of any Federal estate tax, or which provide for tax
benefits to the holder).
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) equal to (i) the LIBOR Base Rate (for the Interest
Period) divided by (ii) 1 minus the Reserve Requirement for such Interest
Period.
"LIBOR Base Rate" means the rate of interest per annum determined by Lender
to be the per annum rate of interest as which deposits in United States
Dollars are offered to Lender in the London interbank market in which
Lender customarily participates at 11:00 A.M. (local time in such interbank
market) two (2) business days before the end of the Draw Period.
"Interest Period" means either a thirty, sixty or ninety day LIBOR Base
Rate, as Borrower may elect.
"Reserve Requirement" means the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required
to be maintained during such Interest Period under Regulation D against
"Eurocurrency liabilities" (as such term is used in Regulation D) by member
banks of the Federal Reserve System. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by Lender by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by
reference to which the LIBOR Rate is to be determined as provided in the
definition of "LIBOR Base Rate" or (ii) any category of extensions of
credit or other assets which include Loans.
"Regulatory Change" means, with respect to Lender, any change on or after
the date of this Note in United States federal, state or foreign laws or
regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a
class of lenders including Lender of or under any United States federal or
state, or any foreign, laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
2. The following paragraphs are hereby added:
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject
to refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. During such time as the Variable Rate
is in effect, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due. Notwithstanding any other provisions of
this Note, in the event Borrower elects the fixed rate option, the
following pre-payment penalty shall apply:
2
<PAGE> 8
"Prepayment Penalty" means with respect to prepayment of all or any portion
of the Obligations which are subject to a fixed rate of interest (the
"Fixed Obligations"), a fee equal to the greater of (i) zero or (ii) the
Mark to Market Adjustment. "Mark to Market Adjustment" means the amount,
calculated on the Prepayment Date, equal to the difference between (a) the
principal amount of the Fixed Obligations or portion thereof to be prepaid
as of such Prepayment Date, less (b) the Mark to Market Value of the Fixed
Obligations or portion of thereof to be prepaid on such Prepayment Date.
"Mark to Market Value" means the amount calculated on any Prepayment Date,
equal to the sum of the present values of each prospective payment of
principal and interest which, without such full or partial prepayment,
could otherwise have been received by Lender over the remaining contractual
life of the Fixed Obligations to be prepaid if Lender had instead invested
the Fixed Obligations proceeds on the Closing Date of such Fixed
Obligations at the Initial Blended Money Market Funds Rate. The individual
discount rate used to evaluate each prospective payment of interest or
principal shall be the Current Blended Money Market Funds Rate for the
maturity matching that of each specific payment of principal or interest.
"Current Blended Money Market Funds Rate means that zero-coupon rate,
calculated on the applicable Prepayment Date, which would be attainable by
Lender if it borrowed funds on such Prepayment Date in a maturity matching
a specific principal or interest payment date. Such funds would be borrowed
in one or more wholesale funding markets available to Lender, including
negotiable certificates of deposit, Federal Funds or others. A separate
Current Blended Money Market Funds Rate will be calculated for each
principal repayment or interest payment date. The calculation of the
Current Blended Money Market Funds Rate shall be at the sole discretion of
Lender. "Initial Blended Money Market Funds Rate" means that borrowing
rate, calculated on the funding date with respect to any Fixed Obligation
and including costs incurred by Lender for FDIC insurance, reserve
requirements, and other such explicit or implicit costs levied upon Lender
by any regulatory agency which would be attainable by Lender had it
borrowed funds with an interest payment frequency and principal repayment
schedule matching that of such Obligation. Such funds would be borrowed in
one or more wholesale funding markets available to Lender, including
negotiable certificates of deposit, Federal Funds or others. Borrower
acknowledges that Lender may not actually fund the Obligation with any such
specific matched set or mix of instruments. The calculation of the Initial
Blended Money Market Funds Rate shall be at the sole discretion of Lender.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Lender's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Lender to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Lender in writing. No maker, endorser, or guarantor will be released by virtue
of this
3
<PAGE> 9
Loan Modification Agreement. The terms of this Paragraph apply not only to this
Loan Modification Agreement, but also to all subsequent loan modification
agreements.
7. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
8. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Lender (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Lender in California).
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: LENDER:
GEOTEL COMMUNICATIONS CORPORATION SILICON VALLEY BANK, DOING BUSINESS AS
SILICON VALLEY EAST
By: /s/ TIMOTHY J. ALLEN By:
------------------------------ ----------------------------------
Name: TIMOTHY J. ALLEN Name:
----------------------------- --------------------------------
Title: VICE PRESIDENT AND CFO Title:
---------------------------- -------------------------------
SILICON VALLEY BANK
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
(Signed at Santa Clara, CA)
4
<PAGE> 1
EXHIBIT 10.13
EXECUTIVE CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of this 26th day of September, 1996 by and between
GeoTel Communications Corporation, a Delaware corporation with its principal
place of business in Littleton, Massachusetts (the "Company") and Timothy J.
Allen (the "Executive").
1. Purpose. The Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without limitation
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into
<PAGE> 2
voting securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a wilful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or wilful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with
the Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the
Executive, in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to the
Change in Control; or
2
<PAGE> 3
(ii) a reduction in the Executive's annual base salary and
bonuses as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary or bonuses reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Company's offices at which the
Executive is principally employed immediately prior to the date of a Change in
Control to a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. Severance Payment. In the event a Terminating Event occurs within
twelve (12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal
to the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of twelve (12) months following
the Date of Termination;
(b) the Executive shall continue to be covered under the medical
benefit plans maintained by the Company on the Date of Termination, at no
additional charge to the Executive, for a period of twelve (12) months following
the Date of Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earlier of (a) the termination by the Company
of the employment of the Executive because of (A) a wilful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. Withholding. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
3
<PAGE> 4
7. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 7. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of the clauses (A) through (C) of Section
3(a) hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
4(a), (b) and (c) hereof. Further, the amount of any payment provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
4
<PAGE> 5
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Assignment; Prior Agreements. Neither the Company nor the
Executive may make any assignment of this Agreement of any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party, and without such consent any attempted transfer shall be null and void
and of no effect. This Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. Enforceability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. Effect on Other Plans. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
5
<PAGE> 6
14. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
15. Obligations of Successors. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its best efforts
to require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly 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.
16. Election of Remedies. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not constitute a breach by the Executive of any employment
agreement between the Company and the Executive, and shall be deemed a
termination of employment by the Company without cause for the purpose of
determining the Executive's right to receive any benefits or cash compensation
under any such employment agreement. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement
the Executive may then have with the Company, provided, however, that if there
is a Terminating Event under Section 3 hereof after a Change in Control, the
Executive may elect either to receive the severance payment provided under
Section 4 or such base salary and cash compensation as the Executive may be
entitled to receive under any employment agreement, but may not elect to receive
both. The foregoing proviso shall apply only to base salary and cash
compensation to which the Executive may be entitled under any employment
agreement and shall not be construed to limit the rights of the Executive to
receive any benefits under such employment agreement other than base salary or
cash compensation in the event that the Executive elects to receive severance
payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN THIBAULT
______________________________________
Name: John Thibault
Title:
/s/ TIMOTHY J. ALLEN
______________________________________
Timothy J. Allen
6
<PAGE> 1
EXHIBIT 10.14
EXECUTIVE CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of this 26th day of September, 1996 by and between
GeoTel Communications Corporation, a Delaware corporation with its principal
place of business in Littleton, Massachusetts (the "Company") and G. Wayne
Andrews (the "Executive").
1. Purpose. The Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without limitation
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into
<PAGE> 2
voting securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a wilful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or wilful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with
the Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the
Executive, in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to the
Change in Control; or
2
<PAGE> 3
(ii) a reduction in the Executive's annual base salary and
bonuses as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary or bonuses reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Company's offices at which the
Executive is principally employed immediately prior to the date of a Change in
Control to a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. Severance Payment. In the event a Terminating Event occurs within
twelve (12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal
to the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of twelve (12) months following
the Date of Termination;
(b) the Executive shall continue to be covered under the medical
benefit plans maintained by the Company on the Date of Termination, at no
additional charge to the Executive, for a period of twelve (12) months following
the Date of Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earlier of (a) the termination by the Company
of the employment of the Executive because of (A) a wilful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. Withholding. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
3
<PAGE> 4
7. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 7. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of the clauses (A) through (C) of Section
3(a) hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
4(a), (b) and (c) hereof. Further, the amount of any payment provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
4
<PAGE> 5
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Assignment; Prior Agreements. Neither the Company nor the Executive
may make any assignment of this Agreement of any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. Effect on Other Plans. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
5
<PAGE> 6
14. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
15. Obligations of Successors. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its best efforts
to require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly 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.
16. Election of Remedies. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not constitute a breach by the Executive of any employment
agreement between the Company and the Executive, and shall be deemed a
termination of employment by the Company without cause for the purpose of
determining the Executive's right to receive any benefits or cash compensation
under any such employment agreement. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement
the Executive may then have with the Company, provided, however, that if there
is a Terminating Event under Section 3 hereof after a Change in Control, the
Executive may elect either to receive the severance payment provided under
Section 4 or such base salary and cash compensation as the Executive may be
entitled to receive under any employment agreement, but may not elect to receive
both. The foregoing proviso shall apply only to base salary and cash
compensation to which the Executive may be entitled under any employment
agreement and shall not be construed to limit the rights of the Executive to
receive any benefits under such employment agreement other than base salary or
cash compensation in the event that the Executive elects to receive severance
payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
---------------------------------
Name: John C. Thibault
Title:
By: /s/ G. Wayne Andrews
----------------------------------
Name: G. Wayne Andrews
Title:
6
<PAGE> 1
EXHIBIT 10.15
EXECUTIVE CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of this 26th day of September, 1996 by and between
GeoTel Communications Corporation, a Delaware corporation with its principal
place of business in Littleton, Massachusetts (the "Company") and John C.
Thibault (the "Executive").
1. Purpose. The Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without limitation
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into
<PAGE> 2
voting securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a wilful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or wilful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with
the Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the
Executive, in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to the
Change in Control; or
2
<PAGE> 3
(ii) a reduction in the Executive's annual base salary and
bonuses as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary or bonuses reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Company's offices at which the
Executive is principally employed immediately prior to the date of a Change in
Control to a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. Severance Payment. In the event a Terminating Event occurs within
twelve (12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal
to the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of twelve (12) months following
the Date of Termination;
(b) the Executive shall continue to be covered under the medical
benefit plans maintained by the Company on the Date of Termination, at no
additional charge to the Executive, for a period of twelve (12) months following
the Date of Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earlier of (a) the termination by the Company
of the employment of the Executive because of (A) a wilful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. Withholding. All payments made by the Company under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Company under applicable law.
3
<PAGE> 4
7. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 7. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of the clauses (A) through (C) of Section
3(a) hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
4(a), (b) and (c) hereof. Further, the amount of any payment provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
4
<PAGE> 5
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Assignment; Prior Agreements. Neither the Company nor the Executive
may make any assignment of this Agreement of any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. Effect on Other Plans. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
5
<PAGE> 6
14. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
15. Obligations of Successors. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its best efforts
to require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly 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.
16. Election of Remedies. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not constitute a breach by the Executive of any employment
agreement between the Company and the Executive, and shall be deemed a
termination of employment by the Company without cause for the purpose of
determining the Executive's right to receive any benefits or cash compensation
under any such employment agreement. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement
the Executive may then have with the Company, provided, however, that if there
is a Terminating Event under Section 3 hereof after a Change in Control, the
Executive may elect either to receive the severance payment provided under
Section 4 or such base salary and cash compensation as the Executive may be
entitled to receive under any employment agreement, but may not elect to receive
both. The foregoing proviso shall apply only to base salary and cash
compensation to which the Executive may be entitled under any employment
agreement and shall not be construed to limit the rights of the Executive to
receive any benefits under such employment agreement other than base salary or
cash compensation in the event that the Executive elects to receive severance
payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN C. THIBAULT
_______________________________________
Name: John C. Thibault
Title:
/s/ JOHN C. THIBAULT
__________________________________________
John C. Thibault
6
<PAGE> 1
EXHIBIT 10.16
EXECUTIVE CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of this 26th day of September, 1996 by and between
GeoTel Communications Corporation, a Delaware corporation with its principal
place of business in Littleton, Massachusetts (the "Company") and Louis J. Volpe
(the "Executive").
1. Purpose. The Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without limitation
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into
<PAGE> 2
voting securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a wilful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or wilful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with
the Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the
Executive, in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to the
Change in Control; or
2
<PAGE> 3
(ii) a reduction in the Executive's annual base salary and
bonuses as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary or bonuses reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Company's offices at which the
Executive is principally employed immediately prior to the date of a Change in
Control to a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. Severance Payment. In the event a Terminating Event occurs within
twelve (12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal
to the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of twelve (12) months following
the Date of Termination;
(b) the Executive shall continue to be covered under the medical
benefit plans maintained by the Company on the Date of Termination, at no
additional charge to the Executive, for a period of twelve (12) months following
the Date of Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earlier of (a) the termination by the Company
of the employment of the Executive because of (A) a wilful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. Withholding. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
3
<PAGE> 4
7. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 7. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of the clauses (A) through (C) of Section
3(a) hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
4(a), (b) and (c) hereof. Further, the amount of any payment provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
4
<PAGE> 5
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Assignment; Prior Agreements. Neither the Company nor the
Executive may make any assignment of this Agreement of any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party, and without such consent any attempted transfer shall be null and void
and of no effect. This Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. Enforceability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. Waiver. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. Effect on Other Plans. An election by the Executive to resign
after a Change in Control and a Terminating Event under the provisions of this
Agreement shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
5
<PAGE> 6
14. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
15. Obligations of Successors. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its best efforts
to require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly 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.
16. Election of Remedies. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not constitute a breach by the Executive of any employment
agreement between the Company and the Executive, and shall be deemed a
termination of employment by the Company without cause for the purpose of
determining the Executive's right to receive any benefits or cash compensation
under any such employment agreement. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement
the Executive may then have with the Company, provided, however, that if there
is a Terminating Event under Section 3 hereof after a Change in Control, the
Executive may elect either to receive the severance payment provided under
Section 4 or such base salary and cash compensation as the Executive may be
entitled to receive under any employment agreement, but may not elect to receive
both. The foregoing proviso shall apply only to base salary and cash
compensation to which the Executive may be entitled under any employment
agreement and shall not be construed to limit the rights of the Executive to
receive any benefits under such employment agreement other than base salary or
cash compensation in the event that the Executive elects to receive severance
payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ John C. Thibault
--------------------------
Name: John C. Thibault
Title:
By: /s/ Louis J. Volpe
---------------------------
Name: Louis J. Volpe
Title:
6
<PAGE> 1
EXHIBIT 10.17
EXECUTIVE CHANGE IN CONTROL AGREEMENT
AGREEMENT made as of this 26th day of September, 1996 by and between
GeoTel Communications Corporation, a Delaware corporation with its principal
place of business in Littleton, Massachusetts (the "Company") and Steven H.
Webber (the "Executive").
1. Purpose. The Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders. Therefore, the Board has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control. Nothing in this Agreement shall be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act")) becomes a "beneficial owner"
(as such term is defined in Rule 13d-3 promulgated under the Act) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities;
(b) persons who, as of September 30, 1996, constituted the Company's
Board (the "Incumbent Board") cease for any reason, including without limitation
as a result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person becoming a
director of the Company subsequent to September 30, 1996 whose election was
approved by at least a majority of the directors then comprising the Incumbent
Board shall, for purposes of this Agreement, be considered a member of the
Incumbent Board;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into
<PAGE> 2
voting securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of the Company's then outstanding
securities, or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (A) a wilful act of dishonesty by the
Executive with respect to any matter involving the Company or any subsidiary or
affiliate, or (B) conviction of the Executive of a crime involving moral
turpitude, or (C) the gross or wilful failure by the Executive to substantially
perform the Executive's duties with the Company, or (D) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death, disability or retirement; provided, however, that a Terminating Event
shall not be deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor to
the business or assets of the Company, rather than continuing as an employee of
the Company following a Change in Control. For purposes of clause (D) of this
Section 3(a), Section 6 and Section 7(b) hereof, "disability" shall mean the
Executive's incapacity due to physical or mental illness which has caused the
Executive to be absent from the full-time performance of his duties with the
Company for a period of six (6) consecutive months if the Company shall have
given the Executive a Notice of Termination and, within thirty (30) days after
such Notice of Termination is given, the Executive shall not have returned to
the full-time performance of his duties. For purposes of clause (D) of this
Section 3(a) and Section 5, "retirement" shall mean termination of the
Executive's employment in accordance with the Company's retirement policy, not
including early retirement, generally applicable to its salaried employees, as
in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to the Executive with the
Executive's express written consent;
(b) termination by the Executive of the Executive's employment with
the Company for Good Reason. Good Reason shall mean the occurrence of any of the
following events:
(i) a materially adverse change, not consented to by the
Executive, in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Executive immediately prior to the
Change in Control; or
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<PAGE> 3
(ii) a reduction in the Executive's annual base salary and
bonuses as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary or bonuses reductions similarly
affecting all or substantially all management employees; or
(iii) the relocation of the Company's offices at which the
Executive is principally employed immediately prior to the date of a Change in
Control to a location more than twenty-five (25) miles from such offices, or the
requirement by the Company for the Executive to be based anywhere other than the
Company's offices at such location, except for required travel on the Company's
business to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Change in Control.
4. Severance Payment. In the event a Terminating Event occurs within
twelve (12) months after a Change in Control,
(a) the Company shall continue to pay to the Executive an amount equal
to the Executive's base salary as in effect on the Date of Termination (as such
term is defined in Section 7(b)) for a period of twelve (12) months following
the Date of Termination;
(b) the Executive shall continue to be covered under the medical
benefit plans maintained by the Company on the Date of Termination, at no
additional charge to the Executive, for a period of twelve (12) months following
the Date of Termination; and
(c) the Company shall pay to the Executive all reasonable legal and
arbitration fees and expenses incurred by the Executive in successfully
obtaining or enforcing any right or benefit provided by this Agreement.
5. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earlier of (a) the termination by the Company
of the employment of the Executive because of (A) a wilful act of dishonesty by
the Executive with respect to any matter involving the Company or any subsidiary
or affiliate, or (B) commission of the Executive of a crime punishable as a
felony, or (C) the gross or wilful failure by the Executive to perform in a
satisfactory manner a substantial portion of the Executive's duties with the
Company, or (D) the failure by the Executive to perform his full-time duties
with the Company by reason of his death, disability (as defined in Section 3(a))
or retirement (as defined in Section 3(a)), (b) the resignation or termination
of the Executive for any reason prior to a Change in Control or (c) the
resignation of the Executive after a Change in Control for any reason other than
the occurrence of any of the events enumerated in Section 3(b)(i)-(iii) of this
Agreement.
6. Withholding. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
3
<PAGE> 4
7. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and during the
term of this Agreement, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 7. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and the Date of Termination. Further, a Notice of
Termination pursuant to one or more of the clauses (A) through (C) of Section
3(a) hereof is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the termination met the criteria set forth in one or more of clauses (A) through
(C) of Section 3(a) hereof.
(b) Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period) and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination. In the case of a
termination by the Company other than a termination pursuant to one or more of
clauses (A) through (C) of Section 3(a) (which may be effective immediately),
the Date of Termination shall not be less than thirty (30) days after the Notice
of Termination is given. In the case of a termination by the Executive, the Date
of Termination shall not be less than fifteen (15) days from the date such
Notice of Termination is given.
(c) No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
4(a), (b) and (c) hereof. Further, the amount of any payment provided for in
this Agreement shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
4
<PAGE> 5
selection of arbitrators which shall be as provided in this Section 7(d).
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
8. Assignment; Prior Agreements. Neither the Company nor the Executive
may make any assignment of this Agreement of any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after a Terminating Event but prior to the completion by the Company of
all payments due him under Section 4(a), (b) and (c) of this Agreement, the
Company shall continue such payments to the Executive's beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).
9. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
12. Effect on Other Plans. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not be deemed a voluntary termination of employment by the
Executive for the purpose of interpreting the provisions of any of the Company's
non-competition agreements, non-disclosure agreements, benefit plans, programs
or policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company's benefit plans, programs or policies and except
that the Executive shall have no rights to any severance benefits under any
severance pay plan.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
5
<PAGE> 6
14. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
15. Obligations of Successors. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its best efforts
to require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly 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.
16. Election of Remedies. An election by the Executive to resign after
a Change in Control and a Terminating Event under the provisions of this
Agreement shall not constitute a breach by the Executive of any employment
agreement between the Company and the Executive, and shall be deemed a
termination of employment by the Company without cause for the purpose of
determining the Executive's right to receive any benefits or cash compensation
under any such employment agreement. Nothing in this Agreement shall be
construed to limit the rights of the Executive under any employment agreement
the Executive may then have with the Company, provided, however, that if there
is a Terminating Event under Section 3 hereof after a Change in Control, the
Executive may elect either to receive the severance payment provided under
Section 4 or such base salary and cash compensation as the Executive may be
entitled to receive under any employment agreement, but may not elect to receive
both. The foregoing proviso shall apply only to base salary and cash
compensation to which the Executive may be entitled under any employment
agreement and shall not be construed to limit the rights of the Executive to
receive any benefits under such employment agreement other than base salary or
cash compensation in the event that the Executive elects to receive severance
payments under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the date first above written.
GEOTEL COMMUNICATIONS CORPORATION
By: /s/ JOHN C. THIBAULT
______________________________________
Name: John C. Thibault
Title:
/s/ STEVEN H. WEBBER
______________________________________
Steven H. Webber
6
<PAGE> 1
EXHIBIT 10.18
GEOTEL COMMUNICATIONS CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED AUGUST 5, 1996)
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of Geotel Communications Corporation
(the "Company") and any present or future subsidiaries of the Company by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO"
or "ISOs"); and (b) to officers, employees, consultants and directors of the
Company and any present or future subsidiaries by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"). As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms are
defined in Section 424 of the Code and the Treasury Regulations promulgated
thereunder (the "Regulations").
2. Stock Subject to the Plan.
(a) The initial maximum number of shares of common stock, par value
$.01 per share, of the Company ("Common Stock") available for stock options
granted under the Plan through the end of the Company's fiscal year ending
December 31, 1996 shall be 1,335,652 shares of Common Stock. The number of
shares of Common Stock available for grants of stock options under this Plan
shall be increased by the number of shares of Common Stock repurchased from time
to time by the Company under the Company's 1993 Restricted Stock Purchase Plan.
In addition, effective January 1, 1997 and each January 1 thereafter during the
term of this Plan, the number of shares of Common Stock available for grants of
stock options under this Plan shall be increased cumulatively by 4% of the total
number of issued and outstanding shares of Common Stock (including shares held
in treasury) as of the close of business on December 31 of the preceding year.
Notwithstanding the foregoing, the maximum cumulative number of shares of Common
Stock available for grants of stock options under the Plan shall be 6,000,000.
The maximum number of shares of Common Stock available for grants shall be
subject to adjustment in accordance with Section 11 thereof. Shares issued under
the Plan may be authorized but unissued shares of Common Stock or shares of
Common Stock held in treasury.
(b) To the extent that any stock option shall lapse, terminate, expire
or otherwise be cancelled without the issuance of shares of Common Stock, the
shares of Common Stock covered by such option(s) shall again be available for
the granting of stock options.
<PAGE> 2
(c) Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee (as defined in Section 3 below).
3. Administration of the Plan.
(a) The Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Company's Board of Directors, each of
whom is a disinterested person as defined from time to time in Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"). The
Board of Directors may from time to time appoint a member or members of the
Committee in substitution for or in addition to the member or members then in
office and may fill vacancies on the Committee however caused. The Committee
shall choose one of its members as Chairman and shall hold meetings at such
times and places as it shall deem advisable. A majority of the members of the
Committee shall constitute a quorum and any action may be taken by a majority of
those present and voting at any meeting. Any action may also be taken without
the necessity of a meeting by a written instrument signed by a majority of the
Committee. The decision of the Committee as to all questions of interpretation
and application of the Plan shall be final, binding and conclusive on all
persons. The Committee shall have the authority to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any option agreement granted
hereunder in the manner and to the extent it shall deem expedient to carry the
Plan into effect and shall be the sole and final judge of such expediency. No
Committee member shall be liable for any action or determination made in good
faith. Prior to the date of the registration of an equity security of the
Company under Section 12 of the Exchange Act, the Plan may be administered by
the Board of Directors and in such event all references in this Plan to the
Committee shall be deemed to mean the Board of Directors.
(b) Subject to the terms of the Plan, the Committee shall have the
authority to (i) determine the employees of the Company and its subsidiaries
(from among the class of employees eligible under Section 4 to receive ISOs) to
whom ISOs may be granted, and to determine (from the class of individuals
eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified
Options may be granted; (ii) determine the time or times at which options may be
granted; (iii) determine the option price of shares subject to each option which
price shall not be less than the minimum price specified in Section 6; (iv)
determine whether each option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to Section 9) the time or times when each option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to options and the nature of such restrictions; and (vii) determine the
size of any Options under the Plan, taking into account the position or office
of the optionee with the Company, the job performance of the optionee
2
<PAGE> 3
and such other factors as the Committee may deem relevant in the good faith
exercise of its independent business judgment.
4. Eligibility.
Options designated as ISOs may be granted only to officers and other
employees of the Company or any subsidiary. Non-Qualified Options may be granted
to any officer, employee, consultant or director of the Company or of any of its
subsidiaries.
In determining the eligibility of an individual to be granted an option,
as well as in determining the number of shares to be optioned to any individual,
the Committee shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
No option designated as an ISO shall be granted to any employee of the
Company or any subsidiary if such employee owns, immediately prior to the grant
of an option, stock representing more than 10% of the voting power or more than
10% of the value of all classes of stock of the Company or a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 6 hereof
shall apply.
5. Option Agreement.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as ISOs shall meet all of the
conditions for ISOs as defined in Section 422 of the Code. The date of grant of
an option shall be as determined by the Committee. More than one option may be
granted to an individual.
6. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Committee, but in no event shall the option price be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company
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or its successors in interest may be organized. The option price or prices of
shares of the Company's Common Stock for ISOs shall be the fair market value of
such Common Stock at the time the option is granted as determined by the
Committee in accordance with the Regulations promulgated under Section 422 of
the Code. If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on such exchange on the business day immediately preceding the date of
the grant of the option or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2. If the shares are not then listed on any
such exchange, the fair market value of such shares shall be the mean between
the high and low sales prices, if any, as reported in the National Association
of Securities Dealers Automated Quotation System National Market System
("NASDAQ/NMS") for the business day immediately preceding the date of the grant
of the option, or, if none, shall be determined by taking a weighted average of
the means between the highest and lowest sales on the nearest date before and
the nearest date after the date of grant in accordance with Treasury Regulations
Section 25.2512-2. If the shares are not then either listed on any such exchange
or quoted in NASDAQ/NMS, the fair market value shall be the mean between the
average of the "Bid" and the average of the "Ask" prices, if any, as reported in
the National Daily Quotation Service for the business day immediately preceding
the date of the grant of the option, or, if none, shall be determined by taking
a weighted average of the means between the highest and lowest sales prices on
the nearest date before and the nearest date after the date of grant in
accordance with Treasury Regulations Section 25.2512-2. If the fair market value
cannot be determined under the preceding three sentences, it shall be determined
in good faith by the Committee.
7. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, or (iii)
any combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only under such circumstances and on such terms as may from
time to time be established by the Committee. The fair market value of any
shares of the Company's Common Stock which may be delivered upon exercise of an
option shall be determined by the Committee in accordance with Section 6 hereof.
With the consent of the Committee, payment may also be made by delivery of a
properly executed exercise notice to the Company, together with a copy of
irrevocable instruments to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
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(b) To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after ten business days from the
date of receipt of the notice by the Company, as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the Company
and the person or persons exercising the option.
8. Exercise of Options.
Subject to the provisions of paragraphs 9 through 11, each option
granted under the Plan shall be exercisable as follows:
(a) Vesting. The option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
(b) Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
option, unless otherwise specified by the Committee.
(c) Partial Exercise. Each option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.
(d) Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment or any option; provided that
the Committee shall not, without the consent of an optionee, accelerate the
exercise date of any installment of any option granted to any employee as an ISO
if such acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code.
9. Term of Options; Exercisability.
(a) Term. Each option shall expire not more than ten (10) years from
the date of the granting thereof, but shall be subject to earlier termination as
may be provided in the Agreement.
(b) Exercisability. Except as otherwise provided in the Agreement, an
option granted to an employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall be exercisable only to the extent that
the right to purchase shares under
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such option has accrued and is in effect on the date such optionee ceases to be
an employee of the Company or one of its subsidiaries.
10. Options Not Transferable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, or (solely with respect to
Non-Qualified Options) pursuant to a qualified domestic relations order, as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, and any such option shall be exercisable during the
lifetime of such optionee only by him. Any option granted under the Plan shall
be null and void and without effect upon the bankruptcy of the optionee to whom
the option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, divorce, except as provided above with respect to Non-Qualified
Options, trustee process or similar process, whether legal or equitable, upon
such option.
11. Adjustments. Upon the occurrence of any of the following events,
an optionee's rights with respect to options granted to him or her hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such option:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Committee or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding options, either (i)
make appropriate provision for the continuation of such options by substituting
on an equitable basis for the shares then subject to such options the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition; or (ii) upon written notice to the optionees,
provide that all options must be exercised, to the extent then exercisable,
within a specified number of days of the date of such notice, at the end of
which period the options shall terminate; or (iii) terminate all options in
exchange for a cash payment equal to the excess of the fair market value of the
shares subject to such options (to the extent then exercisable) over the
exercise price thereof.
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(c) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph (b) above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an option shall be entitled to receive
for the purchase price paid upon such exercise the securities he would have
received if he had exercised his option prior to such recapitalization or
reorganization.
(d) Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments.
(e) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, each option will terminate immediately prior to
the consummation of such proposed action or at such other time and subject to
such other conditions as shall be determined by the Committee.
(f) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(g) Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in Section 2 hereof that are subject to options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described in such subparagraphs. The Committee or
the Successor Board shall determine the specific adjustments to be made under
this paragraph 11 and, subject to Section 3, its determination shall be
conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of an option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which
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such shares or securities or cash were issued, unless otherwise determined by
the Committee or the Successor Board.
12. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.
13. Withholding.
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise and
employment tax withholding requirements. The Company and employee may agree to
withhold shares of Common Stock purchased upon exercise of an option to satisfy
the above-mentioned withholding requirements. With the approval of the
Committee, which it shall have sole discretion to grant, and on such terms and
conditions as the Committee may impose, the option holder may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld. The Committee
shall also have the right to require that shares be withheld from delivery to
satisfy such condition.
14. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 7, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:
(i) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
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(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
15. Purchase for Investment; Rights of Holder on Subsequent
Registration.
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
16. Loans.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
17. Modification of Outstanding Options.
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The Committee may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
this Plan.
18. Approval of Shareholders.
The Plan shall be subject to approval by the vote of shareholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held shareholders' meeting, or by written consent of
shareholders holding at least a majority of the voting stock of the Company,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.
19. Termination and Amendment.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 19, the Board of
Directors may not, without the approval of the shareholders of the Company
obtained in the manner stated in Section 18, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires shareholder approval under applicable law or
regulations, including any approval requirement which is a prerequisite for
exemptive relief under Section 16 of the Exchange Act. The Committee may grant
options to persons subject to Section 16(b) of the Exchange Act after an
amendment to the Plan by the Board of Directors requiring shareholder approval
under Section 19, but any such option shall become effective as of the date of
grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval. The Committee may terminate, amend or modify
any outstanding option without the consent of the option holder, provided,
however, that, except as provided in Section 11, without the consent of the
optionee, the Committee shall not change the number of shares subject to an
option, nor the exercise price thereof, nor extend the term of such option.
20. Compliance with Rule 16b-3.
It is intended that the provisions of the Plan and any option granted
hereunder to a person subject to the reporting requirements of Section 16(a) of
the Exchange Act shall comply in all respects with the terms and conditions of
Rule 16b-3 under the Exchange Act, or any successor provisions, to the extent
the Company has any equity security registered
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pursuant to Section 12 of the Exchange Act. Any agreement granting options shall
contain such provisions as are necessary or appropriate to assure such
compliance. To the extent that any provision hereof is found not to be in
compliance with such Rule, such provision shall be deemed to be modified so as
to be in compliance with such Rule, or if such modification is not possible,
shall be deemed to be null and void, as it relates to a recipient subject to
Section 16(a) of the Exchange Act.
21. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
22. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a shareholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. Notices.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
Approved by the Directors: August 5, 1996
Approved by the Stockholders: August 5, 1996
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EXHIBIT 10.19
GEOTEL COMMUNICATIONS CORPORATION
1993 RESTRICTED STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of the Geotel Communications Corporation Restricted Stock
Purchase Plan (the "Plan") is to attract and retain the services of experienced
and knowledgeable directors, officers, consultants and other key personnel
(individually a "Participant," collectively "Participants") of Geotel
Communications Corporation (the "Corporation") or any subsidiary for the benefit
of the Corporation and its stockholders and to provide additional incentive for
Participants to promote the success of the Corporation or its subsidiaries
through continuing ownership of its common stock.
2. SHARES SUBJECT TO PLAN.
The total number of shares of common stock, par value $.01 per share
("Shares"), of the Corporation which may be subject to the Plan shall not exceed
1,324,063 in the aggregate, subject to adjustment under Section 13. Shares which
are sold under the Plan but which are repurchased by the Corporation shall
become available for additional sales. 1,324,063 Shares will be reserved for
sales under the Plan.
3. ADMINISTRATION OF THE PLAN.
(a) The Board of Directors (the "Board") shall appoint a committee to
administer the Plan (the "Committee"), consisting of at least two directors,
elected from time to time by the Board. The initial members of the Committee
shall be Gardner Hendrie and Michael Humphreys. Each member of the Committee
shall be ineligible to participate in the Plan, and
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shall be a "disinterested person" as defined in Rule 16b-3, under the Securities
Exchange Act of 1934 (the "Exchange Act").
(b) The Committee shall be responsible for administration of the Plan.
In its discretion, and subject to the provisions of the Plan, it shall have the
power to select Participants, authorize sales of stock, construe the Plan,
determine all questions and adopt and amend rules and regulations for the
administration of the Plan. A majority of the members of the Committee shall
constitute a quorum and any action may be taken by a majority of those present
and voting at any meeting. Meetings may be held by conference telephone calls.
Any action may also be taken without the necessity of a meeting by a written
instrument signed by a majority of the Committee. The decision of the Committee
on all questions of interpretation and application of the Plan shall be final
and binding on all persons. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Offer (as
hereinafter defined) as necessary to carry the Plan into effect. The members of
the Committee shall be entitled to reasonable compensation, as determined by the
Board, for services in connection with the Plan, and the Corporation shall
reimburse members of the Committee for any necessary expenses incurred by them.
The Corporation shall indemnify the Committee and each member against all
expense or liability occasioned by any act or omission in good faith.
4. ELIGIBILITY.
Participants shall be selected by the Committee from directors,
officers, consultants and other key personnel of the Corporation or any
subsidiary. In designating Participants and in determining the number of Shares
to be sold to any Participant, the Committee shall take into
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account the Participant's level of responsibility, performance, potential,
compensation, the number of Shares of the Corporation's common stock purchased
or subject to purchase under stock options granted to the Participant pursuant
to any of the Corporation's stock option plans, and such other considerations as
the Committee deems appropriate.
5. RIGHTS TO PURCHASE; OFFER.
After the Committee determines that it will offer a Participant the
right to purchase Shares under the Plan, it shall make a written offer (an
"Offer") to the Participant stating the number of Shares the Participant shall
be entitled to purchase, the purchase price per Share, such other conditions,
including repurchase and escrow rights, as the Committee deems appropriate, and
that the Participant has fifteen (l5) days to accept the Offer. The Committee
may extend the term of the Offer. The Offer shall incorporate by reference the
provisions of the Plan. Subject to the Plan, Offers made to different
Participants, or to the same Participant at different times, may be subject to
provisions which differ from each other.
6. PURCHASE PRICE.
The purchase price of the Shares (the "Original Purchase Price") shall
be determined from time to time by the Committee. The Original Purchase Price
shall be paid in full, in cash or equivalent, to the Corporation prior to
expiration of the Offer. The date the Original Purchase Price is paid is called
the "Closing Date".
7. SHARES SUBJECT TO REPURCHASE.
A Participant's Shares are subject to repurchase by the Corporation at
the Original Purchase Price for up to five (5) years after either the Closing
Date or such other date within
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twelve (12) months prior to the Closing Date as determined by the Committee on a
case by case basis (the "Vesting Reference Date"):
(a) If the Participant shall for any reason, including without
limitation death, disability, voluntary action or involuntary removal with or
without cause, cease to be employed or engaged in any capacity by the
Corporation or any of its subsidiaries, the Corporation may repurchase at the
Original Purchase Price all of the Shares (such number of shares being subject
to equitable adjustment for any stock split, stock dividend combination of
shares or the like), other than any of such Shares which have become Vested
Shares as defined in Section 7(b).
(b) "Vested Shares" shall mean those Shares that are no longer
subject to repurchase by the Company under Section 7(a) as determined in
accordance with the following schedule:
Prior to the first anniversary date of the Vesting Reference Date (the
"First Anniversary Date"), 100% of the Shares shall be subject to repurchase by
the Company under Section 7(a). On the First Anniversary Date, twenty percent
(20%) of the Shares shall vest and no longer be subject to repurchase by the
Company under Section 7(a). Thereafter, additional Shares shall vest on a
monthly basis, in arrears, as follows: at the end of each month after the First
Anniversary Date, an additional 1/60 of the Shares shall vest and no longer be
subject to repurchase by the Company under Section 7(a) hereof such that by the
fifth anniversary date of the Vesting Reference Date all the Shares shall be
vested and not subject to repurchase. Any Shares not vested under this Section
7(b) shall continue to be subject to repurchase by the Company under Section
7(a) hereof. The end of a month shall for
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purposes hereof be the same day of the month as the day of the month on which
falls the First Anniversary Date, or if not one in a particular month, the last
day of such month. Notwithstanding any other provisions of this section in the
event of a Change in Control, each Participant with a minimum of six months
service will automatically receive twelve months accelerated Vesting; in the
event of a Change in Control of the Corporation not approved by the Board of
Directors prior to such Change of Control all of the Shares shall be fully
Vested immediately upon such Change of Control. For purposes of this Agreement a
"Change of Control" shall be deemed to have occurred if any of the following
conditions have occurred: (1) the merger or consolidation of the Corporation
with another entity other than with a subsidiary or an affiliate, where the
Corporation is not the surviving entity; (2) the sale of all or substantially
all of the Corporation's assets to a third party who is not prior thereto a
stockholder or affiliate of the Corporation, or (3) a transaction or series of
related transactions whereby in excess of 51% of the voting stock of the
Corporation is transferred to parties who are not prior thereto stockholders or
affiliates of the Corporation.
In addition to the foregoing the Committee may in its discretion waive
any such repurchase rights at any time on or subsequent to the Closing Date. A
Participant may not sell, exchange, transfer, pledge, hypothecate or otherwise
dispose of such Shares subject to the aforementioned repurchase rights.
8. DEPOSIT OF SHARES IN ESCROW.
Certificates representing Shares shall bear a legend that the shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of the
Plan and the transfer agent for the common stock of the
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Corporation shall be so instructed. Participants shall deposit such certificates
together with a stock power or other instrument of transfer, appropriately
endorsed in blank with signatures guaranteed, with an escrow agent designated by
the Committee under a deposit agreement requiring the Shares to be held in
escrow until a repurchase occurs under Section 7 or until such repurchase rights
shall have lapsed, and containing such other terms and conditions as the
Committee shall approve, all expenses of any such escrow to be borne by the
Corporation. During the period while the Shares are held in escrow, the
Participant shall be entitled to vote the Shares and to receive all dividends
declared thereon.
9. FORM OF AGREEMENTS.
The Committee may specify from time to time such forms of Repurchase
Agreement, Sales Agreement, Escrow Agreement and other agreements and documents
it deems necessary in connection with the issuance of Shares under the Plan.
10. PROVISIONS RELATING TO SECURITIES ACT.
(a) Shares shall be registered in the name of the Participant on the
stock and transfer records of the Corporation and stock certificates shall be
delivered after the Offer has been accepted. However, if the Board determines
that the listing upon any securities exchange or the registration or
qualification under any federal or state law of the Shares, or the consent or
approval of any governmental regulatory body, is necessary or desirable in
connection with the sale of such Shares, registration on the stock and transfer
records and delivery of stock certificates may be delayed until such listing,
registration, qualification, consent or approval is obtained, free of any
conditions not acceptable to the Board.
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(b) Delivery of Shares may be made either from shares of authorized
but unissued common stock or from outstanding shares of common stock held in the
Treasury of the Corporation.
(c) Notwithstanding any other provision of this Plan, the Corporation
may delay registration on its stock and transfer records and delivery of stock
certificates to a Participant until one of the following conditions shall have
been satisfied:
(i) The Shares covered by a sale are at the time of such sale
effectively registered under the Securities Act of 1933 (the
"Securities Act");
(ii) A no action letter in respect of the sale of such Shares
shall have been obtained by the Corporation from the Securities and
Exchange Commission; or
(iii) Counsel for the Corporation shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that
such Shares are exempt from registration under the Securities Act.
Moreover, unless such Shares have been effectively registered under the
Securities Act the Corporation shall be under no obligation to make any sale
unless the Participant shall first give a written representation to the
Corporation satisfactory to the Corporation's counsel and upon which, in the
opinion of such counsel, the Corporation may reasonably rely, that the
Participant is acquiring the Shares as an investment and not with a view to or
for sale in connection with any distribution of any such Shares in violation of
the Securities Act. Each certificate representing Shares delivered in such sale
shall bear a legend referring to such investment representation.
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(d) The Corporation shall have no obligation, contractual or otherwise,
to any Participant to register the Shares to be sold to such Participant under
the Securities Act.
(e) If a Participant desires to make an election with respect to Shares
under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Participant must do so within thirty (30) days after the Closing
Date. A sample form of an election is included in Exhibit A.
11. EXPENSES OF THE PLAN.
All costs and expenses for the adoption and administration of the Plan
shall be borne by the Corporation.
12. NO IMPLIED RIGHT.
Nothing in the Plan shall be deemed to give any person, or any other
person claiming under or through him, any contractual or other right to
participate in the benefits of the Plan. Nothing in the Plan and no action or
sale thereunder shall be construed to constitute or be evidence of any agreement
or understanding, express or implied, on the part of the Corporation to employ
or otherwise retain any Participant for any specific period of time.
13. ADJUSTMENTS.
In the event of any change in the outstanding shares of common stock of
the Corporation by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares for other securities,
or other similar corporate change, the Committee may make such adjustments as
the Committee deems appropriate in (a) the total number of Shares which may be
offered for purchase under the Plan; and (b) the number of Shares which may be
offered to any Participant.
- 8 -
<PAGE> 9
14. TRANSFERABILITY.
Except as otherwise specifically provided in the Plan, no right or
interest under the Plan of any Participant shall be assignable or transferable,
in whole or in part, either directly or by operation of law or otherwise,
including, without limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner (except by will or the laws of descent and
distribution in accordance with the Plan, pursuant to a qualified domestic
relations order as defined by the Code or under Title I of the Employee
Retirement Income Security Act, or the rules thereunder); and no such right or
interest of any Participant shall be subject to any obligation or liability of
such Participant.
15. WITHHOLDING OF INCOME TAXES.
The Corporation shall have the right to deduct from any amounts paid to
the Participant to require the Participant to remit payment to the Corporation
to cover any federal, state or local taxes required by law to be withheld with
respect to any event under the Plan.
16. COMPLIANCE WITH RULE 16B-3.
It is intended that the provisions of the Plan and any Offer to a
person subject to the reporting requirements of Section 16(a) of the Exchange
Act shall comply in all respects with Rule 16b-3 of the Exchange Act, or any
successor provisions. Any Offer shall contain such provisions as are necessary
or appropriate to assure such compliance. To the extent that any provision
hereof is found not to be in compliance with such Rule, such provision shall be
deemed to be modified so as to be in compliance with such Rule, or if such
modification is not possible, shall be deemed to be null and void, as it relates
to a recipient subject to such Section 16(a).
- 9 -
<PAGE> 10
17. APPROVAL.
The Plan shall be subject to approval by the affirmative vote of a
majority of the shares of common stock of the Corporation entitled to vote after
adoption by the Board and to approval by any governmental agency which is
required by applicable law.
18. EFFECTIVE DATE.
The Plan shall become effective upon approval by the stockholders as
provided in Section 17.
19. AMENDMENT AND TERMINATION OF THE PLAN.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from its effective date, or upon the sale of all the Shares
available for sale under the Plan, whichever shall first occur. The Board may at
any time terminate, extend, or amend the Plan. However, termination or amendment
of the Plan shall not, without the consent of any person affected thereby,
modify or in any way affect any right or obligation created prior to such
termination or amendment, and any amendment of the Plan which materially
increases benefits accruing to Participants under the Plan, materially increases
the number of Shares reserved for the Plan or materially modifies the
requirements of eligibility for participation in the Plan must be approved by
the affirmative vote of a majority of the shares of common stock of the
Corporation outstanding and entitled to vote before it may take effect.
20. NOTICES.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Corporation,
- 10 -
<PAGE> 11
to its principal place of business, attention: President, and if to a
Participant, to the address appearing on the records of the Corporation.
Adopted by the Board of Directors: December 17, 1993
Approved by the Shareholders: December 17, 1993
<TABLE>
<CAPTION>
Amendments: Adopted by Board Approved by Shareholders
- ----------- ---------------- ------------------------
<S> <C> <C>
#1 July 19, 1994 July 19, 1994
#2 December 12, 1994 January 26, 1995
#3 January 26, 1995 January 26, 1995
#4 December 12, 1994 July 18, 1995
</TABLE>
- 11 -
<PAGE> 12
EXHIBIT A
FORM OF 83(b) ELECTION
- 12 -
<PAGE> 1
EXHIBIT 10.20
GEOTEL COMMUNICATIONS CORPORATION
1996 Employee Stock Purchase Plan
---------------------------------
1. Purpose
-------
It is the purpose of this 1996 Employee Stock Purchase Plan to provide a
means whereby eligible employees may purchase Common Stock of GeoTel
Communications Corporation (the "Company") and any subsidiaries as defined below
through after-tax payroll deductions. It is intended to provide a further
incentive for employees to promote the best interests of the Company and to
encourage stock ownership by employees in order that they may participate in the
Company's economic growth.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code and the provisions of this Plan shall be construed in a manner consistent
with the Code and Treasury Regulations promulgated thereunder.
2. Definitions
-----------
The following words or terms, when used herein, shall have the following
respective meanings:
(a) "Plan" shall mean the 1996 Employee Stock Purchase Plan.
(b) "Company" shall mean GeoTel Communications Corporation, a
Delaware corporation.
(c) "Account" shall mean the Employee Stock Purchase Account
established for a Participant under Section 7 hereunder.
<PAGE> 2
(d) "Basic Compensation" shall mean the regular rate of salary or
wages in effect immediately prior to a Purchase Period, before
any deductions or withholdings, but shall exclude overtime,
bonuses, sales commissions and amounts paid in reimbursement for
expenses.
(e) "Board of Directors" shall mean the Board of Directors of GeoTel
Communications Corporation.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Compensation Committee appointed
by the Board of Directors.
(h) "Common Stock" shall mean shares of the Company's common stock,
$.01 par value per share.
(i) "Effective Date" shall mean the date of the closing of the
Company's first public offering of Common Stock made pursuant to
an effective Registration Statement filed with the Securities
and Exchange Commission.
(j) "Eligible Employees" shall mean all persons employed by the
Company or one of its Subsidiaries, but excluding:
(1) Persons who have been employed by the Company or its
Subsidiaries for less than six months on the first day
of the Purchase Period;
(2) Persons whose customary employment is less than
twenty-four hours per week or five months or less per
year; and
- 2 -
<PAGE> 3
(3) Persons who are deemed for purposes of Section
423(b)(3) of the Code to own stock possessing 5% or
more of the total combined voting power or value of all
classes of stock of the Company or a subsidiary.
For purposes of the Plan, employment will be treated as continuing
intact while a Participant is on military leave, sick leave, or other bona fide
leave of absence, for up to 90 days or so long as the Participant's right to
re-employment is guaranteed either by statute or by contract, if longer than 90
days.
(k) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business
day.
(l) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan under Section 6 hereunder.
(m) Except as provided below, there shall be two "Purchase Periods"
in each full calendar year during which the Plan is in effect,
one commencing on January 1 of each calendar year and continuing
through June 30 of such calendar year, and the second commencing
on July 1 of each calendar year and continuing through December
31 of the following calendar year. The first Purchase Period
after the Effective Date of the Plan shall commence on January
1, 1997. The last Purchase Period shall commence on July 1, 2006
and end on December 31, 2006.
(n) "Purchase Price" shall mean the lower of (i) 85% of the fair
market value of a share of Common Stock for the first business
day of the relevant Purchase Period, or (ii) 85% of such value
on the relevant Exercise Date. If the shares of Common
- 3 -
<PAGE> 4
Stock are listed on any national securities exchange, or traded
on the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") National Market System, the fair
market value per share of Common Stock on a particular day shall
be the closing price, if any, on the largest such exchange, or
if not traded on an exchange, the Nasdaq National Market System,
on such day, and, if there are no sales of the shares of Common
Stock on such particular day, the fair market value of a share
of Common Stock shall be determined by taking a weighted average
of the means between the highest and lowest sales on the nearest
date before and the nearest date after the particular day in
accordance with Treasury Regulations Section 25.2512-2. If the
shares of Common Stock are not then listed on any such exchange
or the Nasdaq National Market System, the fair market value per
share of Common Stock on a particular day shall be the mean
between the closing "Bid" and the closing "Asked" prices, if
any, as reported in the National Daily Quotation Service for
such day. If the fair market value cannot be determined under
the preceding sentences, it shall be determined in good faith by
the Board of Directors.
(o) "Subsidiary" shall mean any present or future corporation which
(i) would be a "subsidiary corporation" of the Company as that
term is defined in Section 424(f) of the Code and (ii) is
designated as a participant in the Plan by the Board.
3. Grant of Option to Purchase Shares.
----------------------------------
Each Eligible Employee shall be granted an option effective on the first
business day of each Purchase Period to purchase shares of Common Stock. The
term of the option shall be the
- 4 -
<PAGE> 5
length of the Purchase Period. The number of shares subject to each option shall
be the quotient of the aggregate payroll deductions in the Purchase Period
authorized by each Participant in accordance with Section 6 divided by the
Purchase Price, but in no event greater than 1,000 shares per option, or such
other number as determined from time to time by the Board of Directors or the
Committee (the "Share Limitation"). Notwithstanding the foregoing, no employee
shall be granted an option which permits his right to purchase shares under the
Plan to accrue at a rate which exceeds in any one calendar year $25,000 of the
fair market value of the Common Stock as of the date the option to purchase is
granted.
4. Shares.
------
There shall be 250,000 shares of Common Stock reserved for issuance to
and purchase by Participants under the Plan, subject to adjustment as herein
provided. The shares of Common Stock subject to the Plan shall be either shares
of authorized but unissued Common Stock or shares of Common Stock reacquired by
the Company and held as treasury shares. Shares of Common Stock not purchased
under an option terminated pursuant to the provisions of the Plan may again be
subject to options granted under the Plan.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common Stock
covered by each outstanding option, and the purchase price for each such option
shall be appropriately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other increases
or decreases in the outstanding shares of Common Stock effected without receipt
of consideration by the Company.
- 5 -
<PAGE> 6
5. Administration.
--------------
The Plan shall be administered by the Board of Directors or the
Compensation Committee appointed from time to time by the Board of Directors.
The Board of Directors or the Committee, if one has been appointed, is vested
with full authority to make, administer and interpret such equitable rules and
regulations regarding the Plan as it may deem advisable. The Board of
Directors', or the Committee's, if one has been appointed, determinations as to
the interpretation and operation of the Plan shall be final and conclusive. No
member of the Board of Directors or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted under the Plan.
6. Election to Participate.
-----------------------
An Eligible Employee may elect to become a Participant in the Plan for a
Purchase Period by completing a "Stock Purchase Agreement" form prior to the
first day of the Purchase Period for which the election is made. Such Stock
Purchase Agreement shall be in such form as shall be determined by the Board of
Directors or the Committee. The election to participate shall be effective for
the Purchase Period for which it is made. There is no limit on the number of
Purchase Periods for which an Eligible Employee may elect to become a
Participant in the Plan. In the Stock Purchase Agreement, the Eligible Employee
shall authorize regular payroll deductions of any full percentage of his Basic
Compensation, but in no event less than one percent (1%) nor more than ten
percent (10%) of his Basic Compensation, not to exceed $25,000 per year. An
Eligible Employee may not change his authorization except as otherwise provided
in Section 9. Options granted to Eligible Employees who have failed to execute a
Stock Purchase Agreement within the time periods prescribed by the Plan will
automatically lapse.
- 6 -
<PAGE> 7
7. Employee Stock Purchase Account.
-------------------------------
An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes, and payroll deductions made
under Section 6 will be credited to such Accounts. However, prior to the
purchase of shares in accordance with Section 8 or withdrawal from or
termination of the Plan in accordance with the provisions hereof, the Company
may use for any valid corporate purpose all amounts deducted from a
Participant's wages under the Plan and credited for bookkeeping purposes to his
Account.
The Company shall be under no obligation to pay interest on funds
credited to a Participant's Account, whether upon purchase of shares in
accordance with Section 8 or upon distribution in the event of withdrawal from
or termination of the Plan as herein provided.
8. Purchase of Shares.
------------------
Each Eligible Employee who is a Participant in the Plan automatically
and without any act on his part will be deemed to have exercised his option on
each Exercise Date to the extent that the balance then in his Account under the
Plan is sufficient to purchase at the Purchase Price whole shares of the Common
Stock subject to his option, subject to the Share Limitations and the Section
423(b)(8) limitation described in Section 3. Any balance remaining in the
Participant's Account shall be refunded to him in cash without interest.
9. Withdrawal.
----------
A Participant who has elected to authorize payroll deductions for the
purchase of shares of Common Stock may cancel his election by written notice of
cancellation ("Cancellation") delivered to the office or person designated by
the Company to receive Stock Purchase
- 7 -
<PAGE> 8
Agreements, but any such notice of Cancellation must be so delivered not later
than ten (10) days before the relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after
delivery of the notice of Cancellation, the amount credited to his Account. Any
Participant who so withdraws from the Plan may again become a Participant at the
start of the next Purchase Period in accordance with Section 6.
Upon dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving entity every option
outstanding hereunder shall terminate, in which event each Participant shall be
refunded the amount of cash then in his Account.
10. Issuance of Stock Certificates.
------------------------------
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on the
Exercise Date. Prior to that date none of the rights or privileges of a
shareholder of the Company, including the right to vote or receive dividends,
shall exist with respect to such shares.
Within a reasonable time after the Exercise Date, the Company shall
notify the transfer agent and registrar of the Common Stock of the Participant's
ownership of the number of shares of Common Stock purchased by a Participant for
the Purchase Period, which shall be registered either in the Participant's name
or jointly in the names of the Participant and his spouse with right of
survivorship as the Participant shall designate in his Stock Purchase Agreement.
Such designation may be changed at any time by filing notice thereof with the
party designated by the Company to receive such notices.
11. Termination of Employment.
-------------------------
- 8 -
<PAGE> 9
(a) Upon a Participant's termination of employment for any reason,
other than death, no payroll deduction may be made from any
compensation due him and the entire balance credited to his
Account shall be automatically refunded, and his rights under
the Plan shall terminate.
(b) Upon the death of a Participant, no payroll deduction shall be
made from any compensation due him at time of death, the entire
balance in the deceased Participant's Account shall be paid in
cash to the Participant's designated beneficiary, if any, under
a group insurance plan of the Company covering such employee, or
otherwise to his estate, and his rights under the Plan shall
terminate.
12. Rights Not Transferable.
-----------------------
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not transferable
by him. If a Participant attempts to transfer his right to purchase shares under
the Plan, he shall be deemed to have requested withdrawal from the Plan and the
provisions of Section 9 hereof shall apply with respect to such Participant.
13. No Guarantee of Continued Employment.
------------------------------------
Granting of an option under this Plan shall imply no right of continued
employment with the Company for any Eligible Employee.
14. Notice.
------
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to GeoTel Communications Corporation, 25 Porter Road, Littleton,
Massachusetts, Attn: Timothy Allen. Any notice to a Participant or an Eligible
Employee shall be conspicuously posted in the Company's principal
- 9 -
<PAGE> 10
office or shall be mailed addressed to the Participant or Eligible Employee at
the address designated in the Stock Purchase Agreement or in a subsequent
writing.
15. Application of Funds.
--------------------
All funds deducted from a Participant's wages in payment for shares
purchased or to be purchased under this Plan may be used for any valid corporate
purpose provided that the Participant's Account shall be credited with the
amount of all payroll deductions as provided in Section 7.
16. Government Approvals or Consents.
--------------------------------
This Plan and any offering and sales to Eligible Employees under it are
subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section 17, the
Board of Directors of the Company may make such changes in the Plan and include
such terms in any offering under this Plan as may be necessary or desirable, in
the opinion of counsel, to comply with the rules or regulations of any
governmental authority, or to be eligible for tax benefits under the Code or the
laws of any state.
17. Amendment of the Plan.
---------------------
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that no such action shall adversely affect
options theretofore granted hereunder, and provided that no such action by the
Board of Directors without approval of the Company's shareholders may (a)
increase the total number of shares of Common Stock which may be purchased by
all Participants, (b) change the class of employees eligible to receive options
under the Plan, or (c) make any changes to the Plan which require shareholder
approval under
- 10 -
<PAGE> 11
applicable law or regulations, including Section 423 of the Code and the
regulations promulgated thereunder.
For purposes of this Section 17, termination of the Plan by the Board of
Directors pursuant to Section 18 shall not be deemed to be an action which
adversely affects options theretofore granted hereunder.
18. Term of the Plan.
----------------
The Plan shall become effective on the Effective Date, provided that it
is approved within twelve months after adoption by the Board of Directors by the
affirmative vote of holders of a majority of the stock of the Company present or
represented and entitled to vote at a duly held shareholders' meeting. The Plan
shall continue in effect through December 31, 2006, provided, however, that the
Board of Directors shall have the right to terminate the Plan at any time, but
such termination shall not affect options then outstanding under the Plan. It
will terminate in any case when all or substantially all of the unissued shares
of stock reserved for the purposes of the Plan have been purchased. If at any
time shares of stock reserved for the purposes of the Plan remain available for
purchase but not in sufficient number to satisfy all then unfilled purchase
requirements, the available shares shall be apportioned among Participants in
proportion to the amount of payroll deductions accumulated on behalf of each
Participant that would otherwise be used to purchase stock and the Plan shall
terminate. Upon such termination or any other termination of the Plan, all
payroll deductions not used to purchase stock will be refunded, without
interest.
19. Notice to Company of Disqualifying Disposition; Legend.
------------------------------------------------------
- 11 -
<PAGE> 12
By electing to participate in the Plan, each Participant agrees to
notify the Company in writing immediately after the Participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Purchase Period in which such Common Stock was
acquired. Each Participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to Participants and to the Company and
its participating Subsidiaries. The Participant further agrees that all stock
certificates for Common Stock purchased under the Plan by the Participant shall
be held in his name or jointly with his spouse, as the case may be, and not in
the name of a broker, nominee or other person or entity for such two-year
period, and agrees that such stock certificates shall bear a legend reflecting
that such Common Stock was obtained upon the purchase of Common Stock under the
Plan. The Participant acknowledges that the Company may send a Form W-2, or
substitute therefor, as appropriate, to the Participant with respect to any
income recognized by the Participant upon a disqualifying disposition of Common
Stock.
20. Withholding of Additional Income Taxes.
--------------------------------------
By electing to participate in the Plan, each Participant acknowledges
that the Company and its participating Subsidiaries are required to withhold
taxes with respect to the amounts deducted from the Participant's compensation
and accumulated for the benefit of the Participant under the Plan and each
Participant agrees that the Company and its participating Subsidiaries may
deduct additional amounts from the Participant's compensation, when amounts are
added to the
- 12 -
<PAGE> 13
Participant's account, used to purchase Common Stock or refunded, in order to
satisfy such withholding obligations. Each Participant further acknowledges that
when Common Stock is purchased under the Plan, the Company and its participating
Subsidiaries may be required to withhold taxes with respect to all or a portion
of the difference between the fair market value of the Common Stock purchased
and its purchase price, and each Participant agrees that such taxes may be
withheld from compensation otherwise payable to such Participant. It is intended
that tax withholding will be accomplished in such a manner that the full amount
of payroll deductions elected by the Participant under Section 6 will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any Participant, then, notwithstanding any other provision of the
Plan, the Company may withhold such taxes from the Participant's accumulated
payroll deductions and apply the net amount to the purchase of Common Stock,
unless the Participant pays to the Company, prior to the exercise date, an
amount sufficient to satisfy such withholding obligations. Each Participant
further acknowledges that the Company and its participating Subsidiaries may be
required to withhold taxes in connection with the disposition of stock acquired
under the Plan and agrees that the Company or any participating subsidiary may
take whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
Participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the Participant upon the payment
to the Company or such subsidiary of an amount sufficient to satisfy such
withholding requirements.
- 13 -
<PAGE> 14
21. General.
-------
Whenever the context of this Plan permits, the masculine gender shall
include the feminine and neuter genders.
- 14 -
<PAGE> 1
GOETEL COMMUNICATIONS CORPORATION EXHIBIT 11.1
<TABLE>
STATEMENT REGARDING COMPUTER OF NET INCOME(LOSS)
PER COMMON AND COMMON EQUIVALENT SHARE
<CAPTION>
INCEPTION
(JUNE 4, 1993) YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
THROUGH ----------------------- -------------------------
DECEMBER 31, 1993 1994 1995 1995 1996
----------------- ----------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Historical - Primary:
Weighted average issued common stock
outstanding 1,099,493 1,874,301 2,304,135 2,232,246 2,411,586
Cheap stock(1) 850,595 850,595 850,595 850,595 850,595
Weighted average common stock
equivalents -- -- -- -- 8,297,532
Weighted average number of common
and common equivalent shares ---------- ---------- ---------- ---------- -----------
outstanding 1,950,088 2,724,895 3,154,729 3,082,841 11,559,713
========== ========== ========== ========== ===========
Net income (loss) $ (377) $ (2,966) $ (3,862) $ (2,277) $ 150
Less: accretion of redeemable convertible
preferred stock to (4) (35) (77) (30) (54)
---------- ---------- ---------- ---------- -----------
Net income (loss) available (attributable) to
common shareholders $ (381) $ (3,001) $ (3,939) $ (2,307) $ 96
========== ========== ========== ========== ===========
Net income (loss) per common and common
equivalent shares $ (0.20) $ (1.10) $ (1.25) $ (0.75) $ 0.01
========== ========== ========== ========== ===========
<CAPTION>
1995 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Pro forma(2):
Weighted average issued common stock
and preferred stock outstanding (2) 2,304,135 2,411,586
Cheap stock (1) 850,595 850,595
Weighted average common stock
equivalents 7,210,736 8,297,532
----------- -----------
Weighted average number of common
and common equivalent shares
outstanding 10,365,465 11,559,713
=========== ===========
Net income (loss) $ (3,862) $ 150
=========== ===========
Net income (loss) per share $ (0.37) $ 0.01
=========== ===========
<FN>
- -----------------------------------
Notes:
(1) In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 83, issuances of common
stock, common stock equivalents and Series C Redeemable Convertible Preferred Stock within one year prior of
the initial filing of the registration statement, at share prices below the assumed initial public offering
price of $9.00 per share are considered to have been made in anticipation of the contemplated public offering
for which this registration statement was prepared. Accordingly, these stock issuances are treated as if
issued and outstanding, using the treasury stock mehtod for options, since the inception of the Company.
(2) All shares of Redeemable, Convertible Preferred Stock are considered, on a pro forma basis, to be common
stock and are included using the if-converted method on the dates of their original issuance.
(3) Fully diluted net income (loss) per share is not presented as it is the same as the amounts disclosed in
historical net income (loss) per share for all periods presented.
</TABLE>
<PAGE> 1
EXHIBIT 16.1
October 2, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: GeoTel Communications Corporation
Dear Sirs:
We have reviewed a copy of the Registration Statement on Form S-1 dated
October 2, 1996 of GeoTel Communications Corporation and are in agreement with
the statements made by it therein in response to Item 304(a) of Regulation S-K
under the Securities Act of 1933, as amended.
Very truly yours,
ARTHUR ANDERSEN LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated March 5, 1996 on our audit of the financial statements of
GeoTel Communications Corporation. We also consent to the references to our firm
under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 1, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated March 21, 1995 and to all references to our Firm included in or
made a part of this registration statement. It should be noted that we have not
examined any financial statements of the Company subsequent to December 31, 1994
or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 1, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 5,507
<SECURITIES> 0
<RECEIVABLES> 1,997
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,598
<PP&E> 1,611
<DEPRECIATION> 743
<TOTAL-ASSETS> 8,466
<CURRENT-LIABILITIES> 3,058
<BONDS> 0
12,201
0
<COMMON> 26
<OTHER-SE> 54
<TOTAL-LIABILITY-AND-EQUITY> 8,466
<SALES> 3,888
<TOTAL-REVENUES> 3,888
<CGS> 798
<TOTAL-COSTS> 3,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1>The financial statements reflect the most recent period ended June 30,
1996 for Geotel Communications Corporation.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 4,537
<SECURITIES> 0
<RECEIVABLES> 1,015
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,659
<PP&E> 1,309
<DEPRECIATION> 519
<TOTAL-ASSETS> 6,449
<CURRENT-LIABILITIES> 1,367
<BONDS> 0
11,986
0
<COMMON> 26
<OTHER-SE> 74
<TOTAL-LIABILITY-AND-EQUITY> 6,449
<SALES> 1,534
<TOTAL-REVENUES> 1,534
<CGS> 875
<TOTAL-COSTS> 4,685
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,862)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
<FN>
<F1>The financial statements reflect the most recent year ended December 31,
1995 for Geotel Communications Corporation.
</FN>
</TABLE>
