<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SALESLOGIX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 86-0808340
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION CLASSIFICATION CODE NUMBER)
OR ORGANIZATION)
</TABLE>
8800 N. GAINEY CENTER DRIVE, SUITE 200
SCOTTSDALE, ARIZONA 85258
(602) 368-3700
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
PATRICK M. SULLIVAN, PRESIDENT
SALESLOGIX CORPORATION
8800 N. GAINEY CENTER DRIVE, SUITE 200
SCOTTSDALE, ARIZONA 85258
(602) 368-3700
FAX (602) 368-3799
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C>
THOMAS H. CURZON, ESQ. JEFFREY D. SAPER, ESQ.
WILLIAM M. HARDIN, ESQ. ROBERT G. DAY, ESQ.
CHRISTOPHER S. STACHOWIAK, ESQ. RICHARD JAY SILVERSTEIN, ESQ.
OSBORN MALEDON, P.A. ALLISON L. BERRY, ESQ.
2929 NORTH CENTRAL AVENUE WILSON SONSINI GOODRICH & ROSATI, PC
PHOENIX, ARIZONA 85012-2794 650 PAGE MILL ROAD
(602) 207-1288 PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
</TABLE>
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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
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.001 par value............................. $42,061,250 $11,694
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</TABLE>
(1) Estimated in accordance with Rule 457(o) solely for the purpose of
calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH , 1999
PROSPECTUS
SHARES
[SALES LOGIX LOGO]
COMMON STOCK
This is an initial public offering of common stock by SalesLogix
Corporation. We are selling shares of common stock. The estimated initial
public offering price is between $ and $ per share.
------------------
Prior to this offering, there has been no public market for the common
stock. The shares of common stock have been proposed to be listed for quotation
on the Nasdaq National Market under the symbol SLGX.
------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds to SalesLogix, before expenses..................... $ $
</TABLE>
SalesLogix has granted the underwriters an option for a period of 30 days
to purchase up to additional shares of common stock.
------------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
HAMBRECHT & QUIST BANCBOSTON ROBERTSON STEPHENS
U.S. BANCORP PIPER JAFFRAY
, 1999
<PAGE> 3
INSIDE FRONT COVER
[SALESLOGIX LOGO]
What you need to sell today.
<PAGE> 4
[INSIDE PULL-OUT]
[ARTWORK--INTERACTIVE SELLING NETWORK]
DESCRIPTION
Conceptual overview of the SalesLogix solution. Includes visual
representation of sales, marketing and customer service networked together
through multiple servers and the Internet to create a platform to serve a number
of clients. Five will be pictured in the visual--telesales, partner selling,
field selling, e-selling and customer service. All will include accompanying
text to explain a relevant component of the solution.
TEXT
Will include the following:
- HEADING--SalesLogix. Enabling mid-market companies to sell.
- COPY--Three blocks:
The future of the front office is here. It's SalesLogix. A solution that
has been designed from the start to enable mid-market companies to
automate their interactive selling networks. To build online communities
that link field sales, telesales, VARs, partners, commerce channels
together with the customers that require their products and services. To
create prospect and customer interactions that use the Internet to
streamline and personalize communications.
SalesLogix products make the selling process faster, easier and more
effective. Through a network that connects sales, marketing and support
operations across multiple channels of distribution. Using products that
automate all the key elements of selling, providing more time to build
long-lasting relationships.
It's a solution that enables mid-market companies to grow, innovate and
compete. Which is what a front office should be all about.
- TELESALES--graphic head with attached text:
Contact Management--captures leads automatically and trigger calls with
custom scripts/ fulfillment.
- VAR SALES--graphic head with attached text:
Account Management--integrates third party partners over the Web and
track account activities/forecasts.
- REMOTE FIELD SALES--graphic head with attached text:
Opportunity Management--synchronizes account activity and collaborate on
key management processes
- E-SELLING--graphic head with attached text:
Order Management--uses guided selling aids to close orders
- CUSTOMER SERVICE--graphic head with attached text:
Relationship Management--enables self-service updates and a dynamic
support infrastructure
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Forward Looking Statements.................................. 12
Use of Proceeds............................................. 13
Dividend Policy............................................. 13
Corporate Information....................................... 13
Capitalization.............................................. 14
Dilution.................................................... 15
Selected Consolidated Financial Data........................ 16
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 17
Business.................................................... 27
Management.................................................. 43
Certain Transactions........................................ 51
Principal Stockholders...................................... 53
Description of Capital Stock................................ 55
Shares Eligible for Future Sale............................. 57
Underwriting................................................ 59
Legal Matters............................................... 61
Experts..................................................... 61
Where You Can Find More Information......................... 61
Index To Financial Statements............................... F-1
</TABLE>
Information contained on SalesLogix' website does not constitute part of
this prospectus.
SALESLOGIX and SUPPORTLOGIX are registered trademarks of SalesLogix
Corporation. This prospectus also contains trademarks and tradenames of other
companies.
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all the information you should consider
before investing in our common stock. You should read the entire prospectus
carefully, including "Risk Factors" and the financial statements, before making
an investment decision.
OUR BUSINESS
SalesLogix is a leading provider of software that enables mid-market
businesses to create interactive selling networks that automate prospect and
customer interactions. Our products leverage emerging technologies such as the
Internet to dynamically connect networks of mobile sales, internal telesales,
marketing and support organizations as well as third party resellers, supply
chain participants and other partners. Our products enhance the speed, quality
and effectiveness of selling through this network by:
- Providing salespeople with personalized and easy to use sales automation
software that uses our guided selling technology to streamline prospect
interactions;
- Automating the key elements of selling--marketing, contact management,
account management, opportunity management, order management and customer
support;
- Integrating processes for selling through multiple channels--direct
sales, telesales, indirect sales and e-commerce; and
- Synchronizing records generated from selling activities into a customer
interaction repository, which enables collaborative selling, marketing
and customer support.
Sales automation software has recently emerged as a critical requirement
for organizations seeking to gain a competitive advantage in their front office
operations. While a number of applications designed to automate the front office
have been introduced over the past decade, a majority of them have been targeted
at large corporations and have been expensive and time consuming to deploy and
maintain. As a result, many businesses, particularly in the mid-market, have not
implemented these applications. We believe that there is a strong demand among
mid-market businesses for sales automation software that addresses the
limitations of the current generation of applications.
Mid-market businesses, which are becoming the driving forces of growth and
innovation in many industries, have adopted dynamic business models that
leverage interactive selling networks to compete with larger organizations. For
example, many of these businesses now seek to use the Internet as a low-cost,
global infrastructure through which they can easily share information across the
enterprise as well as with outside partners. The Internet has also created an
entirely new and fast growing channel for mid-market businesses to reach and
cost-effectively support their customers directly. We believe mid-market
businesses increasingly require sales automation software that is easy to use,
cost-effective and can support new models of collaborative and Internet-based
selling.
SalesLogix provides sales automation software designed specifically for the
mid-market. We have built our software to be easy to use, rapid to deploy and
implement and to deliver high performance with a low total cost of ownership.
Our software provides both the out-of-the-box functionality necessary to quickly
derive benefits as well as the flexibility to create a solution tailored to the
specific and evolving requirements of our customers. Our award-winning remote
software includes synchronization technology to provide high performance for
remote users, as well as patented guided selling technology to standardize and
automate complex selling processes. We recently signed a term sheet to acquire
Enact Incorporated, a provider of sales configuration software for managing
product catalogs and marketing encyclopedias and generating proposals, quotes
and orders.
1
<PAGE> 7
We believe that a reseller channel is the best and most cost-effective way
to reach mid-market businesses. As a result, we sell our software primarily
through our network of more than 200 resellers, whom we refer to as "Business
Partners." Our Business Partners provide local implementation and customization
services, deliver specific vertical market expertise and extend our domestic and
international reach. We have built our products specifically for the channel by
making them easy to use and implement while at the same time making them highly
customizable and able to integrate with other systems. Through our Open CRM
Initiative, we have certified over 20 applications developed by our Business
Partners to extend our product. We intend to complement our reseller channel by
expanding our targeted direct sales force to pursue key strategic accounts. In
addition, we intend to further develop our telesales channel and establish an
e-commerce channel to sell entry-level and customer add-on products. We have
licensed our software to over 1,100 domestic and international customers in a
variety of industries, including high technology, financial services,
telecommunications, utilities, retail, banking, health care and real estate.
Our principal executive offices are located at 8800 N. Gainey Center Drive,
Suite 200, Scottsdale, Arizona 85258 and our telephone number is (602) 368-3700.
We were incorporated in Delaware in 1995.
THE OFFERING
Common stock offered by SalesLogix...... shares
Common stock to be outstanding after
this offering........................... shares(1)
Use of proceeds......................... For general corporate
purposes, including working
capital and capital
expenditures, and to repay
existing indebtedness. See
"Use of Proceeds."
Proposed Nasdaq National Market
symbol.................................. SLGX
- ------------------------------
(1) This information is based on the number of outstanding shares on December
31, 1998. It includes shares of common stock to be issued in
a private placement concurrent with this offering. It excludes 1,856,408
shares of common stock to be issued under outstanding options and warrants
granted at a weighted average exercise price of $0.95 a share.
Concurrent with this public offering, The Goldman Sachs Group, L.P., and
certain of its affiliates, all of which are existing stockholders of SalesLogix,
have agreed to purchase an aggregate of $3.5 million of our common stock in a
private placement at a price per share equal to the initial public offering
price, less 3.5%. The sale of these shares to Goldman Sachs will not be
registered in this offering and, unless registered, will be subject to the
one-year holding period requirement of Rule 144 under the Securities Act of
1933. See "Description of Capital Stock -- Registration Rights" and "Shares
Eligible For Future Sale."
2
<PAGE> 8
The summary consolidated financial data presented below is derived from the
consolidated financial statements of SalesLogix and its subsidiaries.
The pro forma consolidated balance sheet data summarized below gives effect
to (a) the conversion of all outstanding shares of preferred stock and Class B
common stock into shares of common stock, and (b) in connection with the
proposed acquisition of Enact, the payment of $4.1 million, the issuance of
407,531 shares of common stock, and the related estimated purchase accounting
adjustments.
The pro forma as adjusted consolidated balance sheet data summarized below
reflects the application of net proceeds from the sale of shares of
common stock offered by SalesLogix at an assumed initial public offering price
of $ and net proceeds from the concurrent $3.5 million private
placement of shares of common stock to The Goldman Sachs Group, L.P. and certain
of its affiliates.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1996 1997 1998
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<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues............................................ $ -- $ 4,779 $15,643
Loss from operations...................................... (3,543) (5,306) (6,722)
Net loss.................................................. (3,349) (5,140) (6,592)
Pro forma basic and diluted net loss per share............ $ (0.54)
Shares used in computation of pro forma net loss per
share................................................... 12,311
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
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SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1998 1998 1998 1998
--------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED QUARTERLY STATEMENT OF
OPERATIONS DATA:
Total revenues........................ $ 1,593 $2,527 $ 3,162 $ 3,014 $ 4,062 $ 5,405
Loss from operations.................. (1,047) (987) (994) (2,183) (2,089) (1,456)
Net loss.............................. (1,016) (995) (1,036) (2,181) (1,972) (1,403)
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
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<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $11,377 $ 7,327
Working capital........................................... 10,843 6,439
Total assets.............................................. 23,974 27,624
Stockholders' equity...................................... 16,600 19,853
</TABLE>
Unless stated otherwise, we present information in this prospectus assuming
(1) a two-for-three reverse stock split, which was effected on March 23, 1999,
(2) a net increase of 1,116,667 shares reserved for issuance under existing
stock option plans approved by the board of directors March 19, 1999, which is
subject to stockholder approval, (3) the conversion of all outstanding shares of
preferred stock and Class B common stock into a total of 10,118,263 shares of
common stock at the closing of this offering, (4) the concurrent $3.5 million
private placement of shares of common stock to Goldman Sachs and (5) no exercise
of the underwriters' over-allotment option.
3
<PAGE> 9
RISK FACTORS
You should consider carefully the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. Any of the
following risks, as well as other risks and uncertainties that are not yet
identified or that we currently think are immaterial, could harm our business,
financial condition and operating results and could result in a complete loss of
your investment.
WE HAVE A LIMITED OPERATING HISTORY
We commenced operations in January 1996 and released our first commercial
version of SalesLogix in April 1997. Accordingly, we have a limited operating
history and we face all of the risks and uncertainties encountered by early
stage software companies in rapidly evolving markets. These risks and
uncertainties include:
- significant fluctuations in quarterly operating results and expected
future losses;
- risks that competition, technological change or evolving customer
preferences could adversely affect market acceptance of our products;
- challenges we encounter in expanding and managing our sales, support and
distribution channels;
- risks that new products and product enhancements will not be timely
developed or introduced;
- significant dependence on our key personnel; and
- risks that management will not be able to effectively manage planned
growth and potential acquisitions.
Our limited operating history makes it difficult to forecast our future
operating results. The new, competitive, fragmented and rapidly changing nature
of our market increases these risks and uncertainties. We cannot assure you that
our business strategy will be successful or that we will successfully address
these risks and the risks detailed below.
WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR FUTURE LOSSES
We incurred net losses in each quarter from inception through December 31,
1998. As of December 31, 1998, we had an accumulated deficit of approximately
$17.3 million. We have not achieved profitability and expect to continue to
incur net losses for the foreseeable future. We expect to continue to devote
substantial resources to our product development, sales, marketing and customer
support activities. As a result, we will need to generate significant quarterly
revenues to achieve and maintain profitability. Although our revenues have
increased over recent quarters, we cannot assure you that we will realize
sufficient revenues to achieve and sustain profitability in any future period.
OUR FUTURE OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND MAY FAIL
TO MEET OR EXCEED THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS,
CAUSING OUR STOCK PRICE TO DECLINE
Our operating results are difficult to predict and are likely to fluctuate
significantly on a quarterly and an annual basis due to a number of factors,
many of which are outside of our control. It is particularly difficult to
predict the timing or amount of our license revenues because our products are
typically shipped shortly after orders are received and therefore the amount of
unfilled orders for our products is small. Furthermore, because of customer
buying patterns that we do not expect to change, we recognize a substantial
portion of our license revenues in the last month and often in the last
4
<PAGE> 10
weeks or days of a quarter. Other factors that may contribute to the difficulty
of predicting our operating results include, but are not limited to, the
following:
- the lengthiness and unpredictability of sales cycles for our products;
- the mix of revenues generated by product licenses and customer service
and support;
- the mix of sales channels through which our products are sold;
- new product announcements and introductions by our competitors; and
- our ability to develop, market and manage product transitions and
acquisitions.
Due to the foregoing factors, we believe that period-to-period comparisons
of our operating results should not be relied upon as indicative of future
performance.
We plan to increase our operating expenses to expand our product
development, sales, marketing and customer support activities. We base our
decisions regarding our operating expenses on anticipated revenue trends and
many of our expenses are relatively fixed in the short term. We may not be able
to reduce our expenses if our revenues are lower than anticipated, which could
cause our operating results to be below the expectations of public market
analysts or investors, causing the price of our common stock to fall.
SEASONALITY AFFECTS OUR REVENUES AND MAY NEGATIVELY IMPACT OUR OPERATING RESULTS
In the past, we have experienced significant seasonality in our quarterly
revenues. Our revenues have tended to be stronger in the fourth quarter than in
each of the first three quarters of a year. Our license revenues may be lower in
our first quarter than in the preceding fourth quarter. We believe that these
fluctuations are caused primarily by customer buying patterns, which are often
influenced by year-end budgetary pressures as well as by our sales force
compensation policies and those of our resellers, which tend to reward sales
personnel who meet or exceed year-end sales quotas. We expect this trend to
continue for the foreseeable future.
OUR OPERATING RESULTS PRIMARILY RELY ON MARKET ACCEPTANCE OF OUR SALESLOGIX
PRODUCT
During 1998, license revenues from our SalesLogix product accounted for
approximately 94% of our total license revenues. We expect product license
revenues from SalesLogix to continue to account for a substantial majority of
our revenues for the foreseeable future. Widespread market acceptance of
SalesLogix is critical to our future success. As a result, factors adversely
affecting the pricing or demand for SalesLogix, such as competition,
technological change or evolution in customer preferences, could materially
adversely affect our business, financial condition and operating results. Many
of these factors are beyond our control and difficult to predict. Our future
financial performance will depend substantially on our ability to develop and
maintain market acceptance of new and enhanced versions of SalesLogix and other
new products.
WE RELY PRIMARILY UPON OUR RESELLERS FOR THE SALE AND IMPLEMENTATION OF OUR
PRODUCTS
Our sales and distribution strategy focuses primarily on developing and
expanding indirect distribution channels through our network of resellers and,
to a lesser extent, expanding our direct sales organization. Sales to our
resellers, whom we refer to as our Business Partners, accounted for 89% of
license revenues in 1998 and we expect that a substantial majority of our
license revenues will continue to be generated by our resellers. Our success
will continue to depend significantly on our ability to develop and cultivate
relationships with our resellers, as well as on the success of their sales
efforts. Our reliance on an indirect sales channel makes it more difficult to
maintain quality control
5
<PAGE> 11
and forecast sales. Our focus on indirect distribution may adversely affect our
business, financial condition and operating results if we are unable to:
- adequately train and certify a sufficient number of resellers;
- provide adequate incentives to our resellers;
- provide adequate service and support to our end users through our
resellers;
- retain company and brand loyalty with our resellers and end user
customers;
- manage conflict among our resellers, whose contracts with us are
generally non-exclusive; or
- manage collection of receivables from resellers on a timely basis.
Many of our resellers also sell products that compete with our products and
we cannot assure you that our resellers will continue to devote the resources
necessary to provide us with effective sales, marketing and technical support.
We are currently investing, and intend to continue to invest, significantly to
support and expand our reseller channels. We cannot assure you that we will be
able to retain our existing resellers or add new resellers and distributors to
market, sell, implement and support our products effectively. Our failure to do
so could materially adversely affect our business.
IF WE EXPERIENCE DIFFICULTY EXPANDING OUR DIRECT SALES CAPABILITY, WE MAY NOT BE
ABLE TO EXPAND OUR BUSINESS AS PLANNED
In mid-1998, we established a direct sales organization to focus on key
strategic accounts and larger opportunities and we plan to expand the size of
our direct sales force. We have limited experience in establishing and
maintaining a direct sales force. Accordingly, this internal expansion may not
be successfully completed and the cost of this expansion may exceed the revenues
generated. Our expanded sales organization may not be able to compete
successfully against the significantly more extensive and well-funded sales and
marketing operations of many of our current or potential competitors. In
addition, expansion of our direct sales force may lead to conflict with our
resellers. We have experienced and continue to experience difficulty in
recruiting qualified sales personnel. We cannot assure you that we will be able
to effectively maintain and grow our direct sales force.
WE FACE INTENSE COMPETITION THAT COULD ADVERSELY AFFECT OUR BUSINESS
The market for front office automation software is intensely competitive,
fragmented and rapidly changing. We primarily compete with a variety of software
vendors that provide marketing, sales and customer support automation products.
While numerous solutions can be cited as potential competitors, direct
competitors of SalesLogix can be broadly segmented into three groups:
- Enterprise Front Office Vendors such as Aurum, Onyx, Pivotal, Siebel and
Vantive. These companies generally seek to provide automated selling
solutions to large enterprises through direct sales forces. They also
offer customized solutions through consulting services. Several of these
companies have announced strategies to target the mid-market
opportunities we are pursuing.
- Low-end Contact Manager Vendors such as Symantec with its ACT! product,
Goldmine and Microsoft with its Outlook product. These products support a
single user or small workgroup of users and are sold primarily through a
retail channel. Several of these companies have also announced strategies
to target the mid-market opportunities we are pursuing.
- Internal Development by our customers' or potential customers' own
technology departments. These organizations have invested significant
resources in developing their own proprietary selling systems.
6
<PAGE> 12
Many of our competitors have longer operating histories and significantly
greater resources and name recognition. We cannot assure you that we will
compete successfully against these companies. We expect that competition will
increase as other established and emerging companies enter our market and as new
products and technologies are introduced. For example, several back office
software companies have built or acquired sales automation and other front
office products. Increased competition may result in price reductions, lower
gross margins, loss of our market share and loss of resellers and personnel, any
of which could materially adversely affect our business, financial condition and
operating results.
THE MARKET FOR SALES AUTOMATION SOLUTIONS IS EMERGING AND BROAD MARKET
ACCEPTANCE OF OUR PRODUCTS IS UNCERTAIN
The market for sales automation products is still emerging and continued
growth in demand for and acceptance of sales automation products remains
uncertain. The success of our business in the face of intense competition will
depend on growth of the overall market for sales automation products. We have
spent, and will continue to spend, considerable resources targeting the
mid-market segment of the sales automation market, educating potential customers
about our products and sales automation software solutions in general and
developing products that are compatible with Microsoft's browser technology and
the Internet. However, even with these efforts, sales of our products may not
increase unless the market for our products continues to grow. If the market for
our products does not grow or grows more slowly than we anticipate, the demand
for Internet-related front office products and services does not continue to
grow, or the mid-market segment turns out to have significantly less potential
than we estimate, our business, financial condition and operating results would
be materially adversely affected.
WE DEPEND ON MICROSOFT TECHNOLOGY
We have designed our products to operate using Microsoft technologies,
including Windows NT, Windows 98 and SQL Server. Although we believe that
Microsoft technologies are and will continue to be widely utilized by mid-market
businesses, no assurance can be given that these businesses will actually adopt
such technologies as anticipated or will not in the future migrate to other
computing technologies that we do not support. Moreover, our strategy requires
us to enhance our products and technology to be compatible with new developments
in Microsoft's technology.
WE MAY EXPERIENCE DIFFICULTIES MANAGING OUR GROWTH
Our recent growth has placed significant demands on management as well as
on our administrative, operational and financial resources. We intend to
continue to expand our operations to pursue existing and potential market
opportunities. To manage additional growth, we must expand our sales, marketing
and customer support organizations and improve our operational processes,
systems and management controls on a timely basis.
Our inability to sustain or manage additional growth could materially and
adversely affect our business, financial condition and operating results.
WE DEPEND ON KEY PERSONNEL FOR OUR FUTURE SUCCESS AND WE MAY NOT BE ABLE TO
RECRUIT AND RETAIN THE PERSONNEL WE NEED TO SUCCEED
Our future performance will largely depend on the continued efforts and
abilities of our key technical, customer support, sales and management
personnel, many of whom would be difficult to replace. In particular, we believe
that our future success is highly dependent on Patrick Sullivan, our Chief
Executive Officer and President. We experienced significant management changes
at the executive officer level during the fourth quarter of 1998 when we hired a
Vice President of Worldwide Sales and a Vice President of Marketing.
Accordingly, our executive management's ability to function effectively as a
team is unproven. Our success will depend on our ability to attract and retain
key
7
<PAGE> 13
personnel in the future. Competition for highly skilled employees with
technical, management, marketing, sales, product development and other
specialized training is intense and there can be no assurance that we will be
successful in attracting and retaining such personnel. In addition, we may
experience increased costs in order to attract and retain skilled employees. The
loss of any of our senior management or other key technical, customer support,
sales and marketing personnel, particularly if lost to competitors, could
materially and adversely affect our business, financial condition and operating
results. See "Management."
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE ENACT AND FUTURE ACQUISITIONS
In March 1999, we executed a term sheet to acquire Enact, a privately-held
provider of sales configuration technology. After the transaction closes, we
will begin the process of integrating the Enact business with our business. This
process will be subject to risks commonly encountered in integrating
acquisitions, including, among others, risk of loss of key personnel;
difficulties associated with assimilating technologies, products, personnel and
operations; potential disruption of our ongoing business; the ability of our
sales force, resellers, consultants and development staff to adapt to the new
product line and unanticipated costs associated with the acquisition. We may not
successfully overcome these risks or any other problems encountered in
connection with the acquisition of Enact. As part of our business strategy, we
expect to consider acquiring other companies. In the event of such acquisitions,
we could issue equity securities which would dilute current stockholders'
percentage ownership, incur substantial debt or assume contingent liabilities.
Additionally, we may not be able to successfully integrate any technologies,
products, personnel or operations of companies that we may acquire in the
future. These difficulties could disrupt our ongoing business, distract our
management and employees and increase our expenses. If we are unable to
successfully address any of these risks, our business, financial condition and
operating results could be materially adversely affected.
OUR ABILITY TO GROW OUR BUSINESS WILL DEPEND IN PART ON SUCCESSFUL EXPANSION OF
OUR INTERNATIONAL OPERATIONS
To date, we have sold our products internationally primarily through our
resellers located in other countries and have supported our international
customers with our domestic customer support staff. Recently we opened a sales
office in the United Kingdom and we intend to continue to expand our
international operations and enter new international markets, primarily through
existing and new resellers and, to a lesser extent, through direct sales. This
expansion will require significant management attention and financial resources
and may not produce desired levels of revenue. We currently have limited
experience in marketing and distributing our products internationally and have
not yet developed non-U.S. versions of our products. In addition, our
international business is subject to certain inherent risks which could
materially and adversely affect our business, financial condition and operating
results, including:
- longer accounts receivable collection cycles;
- difficulties in managing operations across disparate geographic areas;
- difficulties in enforcing agreements and intellectual property rights;
- fluctuations in local economic, market and political conditions;
- need for compliance with a wide variety of U.S. and foreign export
regulations;
- potential adverse tax consequences; and
- currency exchange rate fluctuations.
We are still assessing the impact and cost that conversion to the Euro will have
on both our internal systems and the products we sell. We will attempt
appropriate corrective actions based on the results of our assessment. This
issue and its related costs could materially adversely affect our business,
financial condition and operating results.
8
<PAGE> 14
WE MAY NOT RECOGNIZE REVENUE WHEN ANTICIPATED
The sales cycles for our products are variable, typically ranging between a
few weeks to six months from initial contact with the customer to the signing of
a license agreement, although occasionally sales require substantially more
time. Delays in executing customer contracts may affect revenue recognition and
may cause our operating results to vary widely. We believe that an enterprise's
decision to purchase sales automation software is discretionary, involves a
significant commitment of its resources and is influenced by its budget cycles.
To successfully sell our products, we and our resellers generally must educate
our potential customers regarding the use and benefit of our products, which can
require significant time and resources. Consequently, the period between initial
contact and the purchase of our products is often long and subject to delays
associated with the lengthy budgeting, approval and competitive evaluation
processes that typically accompany significant capital expenditures.
WE RELY ON SOFTWARE LICENSED TO US BY THIRD PARTIES
We incorporate into our products certain software that is licensed to us by
third parties, including Inprise Corporation, Verity, Inc. and IQ Software
Corporation, and we intend to expand this practice in the future. Because our
products incorporate, or are created using, software developed and maintained by
third parties, we depend on such parties' abilities to deliver, support and
enhance reliable products, develop new products and respond to emerging industry
standards and other technological changes. We also rely heavily on Inprise
Corporation's Delphi Rapid Application Development (RAD) tool to build many key
components of our application programs. The RAD tools market is constantly
evolving and highly competitive as Microsoft and other well-financed competitors
develop and market competing tools. If Delphi becomes unavailable, we may be
required to adopt a replacement RAD tool and substantially modify our
application programs, requiring a substantial amount of time to rewrite our
products in a new language, which could have a material adverse effect on our
business, financial condition and operating results. The third-party software
currently incorporated into or used in our products may become obsolete or
incompatible with future versions of our products. Our sales could be materially
adversely affected if we are unable to replace the functionality of that
software. See "Business--Products."
OUR PRODUCTS MAY SUFFER FROM DEFECTS OR ERRORS, RESULTING IN ADDITIONAL EXPENSES
OR LOST SALES
Software products as complex as ours frequently contain errors or defects,
especially when first introduced or when new versions are released. We have had
to delay commercial release of certain versions of our products until software
problems were corrected and in some cases have provided product enhancements to
correct errors in released products. Our current and future products or releases
may not be free from errors after commercial shipments have begun. Any errors
that are discovered after commercial release could result in loss of revenues or
delay in market acceptance, diversion of development resources, damage to our
reputation or increased service and warranty costs, all of which could
materially adversely affect our business, financial condition and operating
results.
WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS OR AVOID
INFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS
Our success depends in part on our ability to protect our proprietary
rights. To protect our proprietary rights, we rely primarily on a combination of
copyright, patent, trade secret and trademark laws, confidentiality agreements
with employees and third parties and protective contractual provisions such as
those contained in license agreements with consultants, resellers and customers,
although we have not signed such agreements in every case. Despite our efforts
to protect our proprietary rights, unauthorized parties may copy aspects of our
products and obtain and use information that we regard as proprietary. Other
parties may breach confidentiality agreements and other protective contracts
with us and we may not become aware of, or have adequate remedies in the event
of, such breach. We employ shrink-wrap licenses designed to restrict the
unauthorized use of
9
<PAGE> 15
our products but such licenses may be difficult to enforce. It may be more
difficult to protect our proprietary rights outside the United States. We also
cannot assure you that a third party will not assert a claim that our technology
violates its intellectual property rights. As the number of software products in
our markets increases and product functionalities increasingly overlap,
companies such as ours may become increasingly subject to infringement claims.
Any claims relating to the infringement of proprietary rights of third parties,
regardless of their merit, could result in costly litigation, divert our
management's attention and our company's resources, cause us to delay product
shipments or require us to pay damages or enter into royalty or license
agreements on terms that are not advantageous to us. Any of these results could
materially adversely affect our business, financial condition and operating
results.
OUR EXECUTIVE OFFICERS AND DIRECTORS WILL BE ABLE TO SUBSTANTIALLY INFLUENCE
MATTERS REQUIRING STOCKHOLDER APPROVAL
We anticipate that the executive officers, directors and entities
affiliated with them will, in the aggregate, beneficially own approximately
% of our outstanding common stock following the completion of this
offering. These stockholders may be able to exercise substantial influence over
all matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. This concentration of
ownership may also have the effect of delaying or preventing a change in control
of SalesLogix. See "Management" and "Principal Stockholders."
OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER
Certain provisions of our restated certificate of incorporation and bylaws
and Delaware law may discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable. These provisions:
- authorize our board of directors to issue up to 20,000,000 additional
shares of preferred stock;
- limit the persons who may call special meetings of stockholders;
- prohibit stockholder action by written consent;
- require advance notice for nominations for election of our board of
directors or for proposing matters that can be acted on by stockholders
at stockholders meetings; and
- establish a classified board of directors as of the first annual meeting
of stockholders following this offering.
For a further description of provisions which could discourage a takeover,
see "Description of Capital Stock--Anti-Takeover Effects of Certain Provisions
of Restated Certificate and Restated Bylaws" and "-- Effect of Delaware
Antitakeover Statute."
10
<PAGE> 16
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
After this offering, we will have outstanding shares of
common stock. Sales of a substantial number of shares of common stock in the
public market following this offering could materially adversely affect the
market price of our common stock. All of the shares sold in this offering will
be freely tradable. The remaining shares of common stock outstanding after this
offering will be available for sale in the public market as follows:
ELIGIBILITY OF RESTRICTED SHARES
FOR SALE IN THE PUBLIC MARKET
<TABLE>
<S> <C>
At effective date...................................... 0
180 days after the effective date...................... 12,612,280
After 180 days post-effective date (upon expiration of
one year holding periods)............................ 732,641
</TABLE>
See "Shares Eligible for Future Sale" and "Underwriting."
PURCHASERS OF SALESLOGIX COMMON STOCK IN THIS OFFERING WILL EXPERIENCE IMMEDIATE
AND SUBSTANTIAL DILUTION
The initial public offering price is substantially higher than the net
tangible book value per share of the outstanding common stock immediately after
the offering. Accordingly, purchasers of common stock will experience immediate
and substantial dilution of approximately $ in net tangible book value per
share, or approximately % of the offering price of $ per share.
YEAR 2000 ISSUES MAY EXPOSE US TO LIABILITY OR ADVERSELY AFFECT REVENUES
Many existing computer systems and software products do not properly
recognize and process dates after December 31, 1999. This "Year 2000" problem
could result in miscalculations, data corruption, system failures or disruptions
of operations. We are subject to potential Year 2000 problems affecting our
products, our customers' systems, our internal systems and the systems of our
vendors, any of which could have a material adverse effect on our business,
financial condition and operating results.
We have conducted a review of the current versions of our products and have
researched or sought assurances from vendors of the third-party products
embedded into our products and believe that our products are substantially Year
2000 compliant--that is, they are capable of adequately distinguishing and
interjecting dates falling after December 31, 1999. We expect that modifications
with respect to any remaining Year 2000 issues will be made by the end of
calendar year 1999. However, there can be no assurances that the implementation
of modifications to any embedded products will not be delayed or that we will
not experience unexpected Year 2000 problems with our products. Although we
believe the current versions of our software products are Year 2000 compliant,
we may face claims based on Year 2000 issues arising from the integration of
multiple products within an overall system. We may also experience reduced sales
of our products, especially in the last two calendar quarters of 1999, as
potential customers reduce their budgets for sales automation software due to
increased expenditures on their own Year 2000 compliance efforts, or are
generally unwilling to purchase any software systems until after January 1, 2000
when the adverse effects of Year 2000 issues are known. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Compliance."
11
<PAGE> 17
CHANGES IN ACCOUNTING STANDARDS COULD AFFECT OUR FUTURE OPERATING RESULTS
We recognize revenues from software license agreements based upon the
following criteria:
- persuasive evidence of an arrangement exists (such as an executed license
agreement, unconditional purchase order or contract);
- delivery of the product has occurred;
- collection of the resulting receivable is probable; and
- the fee is fixed or determinable based upon vendor-specific objective
evidence of the elements of the arrangement.
We recognize customer support (maintenance) revenues ratably over the
contract term--typically one year--and recognize revenues for consulting and
training services as such services are performed.
Statement of Position 97-2 ("SOP 97-2"), "Software Revenue Recognition,"
was issued in October 1997 by the American Institute of Certified Public
Accountants and amended by Statement of Position 98-4 ("SOP 98-4"). We adopted
SOP 97-2 effective January 1, 1998. Based on our interpretation of SOP 97-2 and
SOP 98-4, we believe our current revenue recognition policies and practices are
consistent with SOP 97-2 and SOP 98-4. However, full implementation guidelines
for this standard have not yet been issued. Once available, such implementation
guidance could lead to unanticipated changes in our current revenues accounting
practices, which changes could materially adversely affect our business,
financial condition and operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Additionally, the accounting standard setters, including the Securities and
Exchange Commission and the Financial Accounting Standards Board, are reviewing
the accounting standards related to business combinations and stock-based
compensation. Any changes to either of these standards or any other accounting
standards could materially adversely affect our operating results.
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus (and in the
documents that are incorporated by reference) that are subject to risks and
uncertainties. Forward-looking statements include information concerning
possible or assumed future results of operations of SalesLogix. Also, when we
use words such as "believes," "expects," "anticipates" or similar expressions,
we are making forward-looking statements. You should note that an investment in
securities of SalesLogix involves certain risks and uncertainties that could
affect the future financial results of SalesLogix. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth in "Risk Factors" and
elsewhere in this prospectus.
There may be events in the future that we are not able to predict
accurately or over which we have no control. The risk factors listed above, as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus could
materially and adversely affect our business, financial condition and operating
results.
12
<PAGE> 18
USE OF PROCEEDS
Assuming an initial public offering price of $ per share, we will
receive net proceeds of approximately $ million from the sale of
shares of common stock ($ million if the underwriters
exercise their over-allotment option in full).
We intend to use the net proceeds of this offering primarily for general
corporate purposes, including working capital and capital expenditures, and for
the retirement of an existing bank term loan of approximately $1.2 million at
December 31, 1998. This term loan is payable in equal monthly installments of
principal plus interest at the bank's prime rate plus 1% through December 31,
2001. We may also use a portion of the net proceeds to acquire additional
businesses, products and technologies or to establish joint ventures that we
believe will complement our current or future business. However, except with
respect to Enact, we have no specific plans, agreements or commitments, oral or
written, to do so and are not currently engaged in any negotiations for any such
acquisition or joint venture. The amounts that we actually expend for working
capital purposes will vary significantly depending on a number of factors,
including future revenue growth, if any, the amount of cash we generate from
operations and the progress of our product development efforts. As a result, our
management will retain broad discretion in the allocation of the net proceeds of
this offering. Pending use of net proceeds for the above purposes, we intend to
invest in short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
currently intend to retain any future earnings to fund the development and
growth of our business. Therefore, we do not currently anticipate paying any
cash dividends in the foreseeable future. In addition, the terms of our current
credit facility prohibit us from paying dividends without our lender's consent.
CORPORATE INFORMATION
SalesLogix Corporation has three wholly owned subsidiaries, Opis Support
Express, Inc., SalesLogix International, Inc. and SalesLogix Europe, Ltd. and
upon completion of our acquisition of Enact Incorporated, we will have a fourth.
Our principal executive offices are located at 8800 N. Gainey Center Drive,
Suite 200, Scottsdale, Arizona 85258 and our telephone number is (602) 368-3700.
We were initially incorporated in Delaware in 1995 under the name Quest Sales
Software, Inc.
13
<PAGE> 19
CAPITALIZATION
The following table sets forth our cash position and total capitalization
at December 31, 1998:
- On an actual basis, giving effect to a two-for-three reverse stock split,
which was effected March 23, 1999;
- On a pro forma basis to give effect to the conversion of all 15,140,949
outstanding shares of convertible preferred stock and Class B common
stock into 10,118,263 shares of common stock and to reflect the payment
of $4.1 million and the issuance of 407,531 shares of common stock to be
issued in connection with our acquisition of Enact and the estimated
effect of the related purchase accounting adjustments; and
- On a pro forma as adjusted basis to reflect (a) net proceeds from the
sale of shares of common stock at an assumed initial public
offering price of $ per share and (b) net proceeds from the sale of
shares of common stock in the concurrent $3.5 million private placement
to The Goldman Sachs Group, L.P. and certain of its affiliates.
The outstanding share information excludes 114,559 shares of common stock
reserved for issuance under outstanding options and warrants to purchase
preferred stock with a weighted average common share exercise price of $1.57 and
3,645,008 shares of common stock reserved for issuance under our employee
incentive and Business Partner stock plans. Of the common stock reserved under
our employee incentive and Business Partner stock plans, options to purchase
1,741,849 shares with a weighted average exercise price of $0.91 are
outstanding, 336,985 of which are currently exercisable.
This information is qualified by and should be read in conjunction with our
historical financial statements and related notes included in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-----------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
-------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............................... $ 11,377 $ 7,327
======== ========
Long-term debt and capital lease obligations, net of
current portion....................................... $ 1,241 $ 1,241
Stockholders' equity:
Convertible Preferred Stock, par value $0.001 per
share, issuable in series; 15,900,000 shares
authorized, 15,068,122 shares issued and
outstanding, actual; none pro forma or pro forma as
adjusted........................................... 33,483 --
Class A Common Stock, par value $0.001 per share,
17,900,000 shares authorized, 3,228,325 issued and
3,226,658 outstanding, actual; 13,754,119 shares
issued and 13,752,452 shares outstanding, pro
forma; shares issued and
shares outstanding, pro forma as
adjusted........................................... 3 14
Class B Common Stock, par value $0.001 per share;
authorized 2,280,000 shares; 72,827 shares issued
and outstanding, actual; none pro forma or pro
forma as adjusted.................................. -- --
Additional paid-in capital............................ 1,738 39,363
Accumulated deficit................................... (17,330) (18,230)
Less unearned compensation............................ (1,293) (1,293)
Less shares of common stock held in treasury; 1,667
shares at cost..................................... (1) (1)
-------- --------
Total stockholders' equity.................... 16,600 19,853
-------- --------
Total capitalization.......................... $ 17,841 $ 21,094
======== ========
</TABLE>
14
<PAGE> 20
DILUTION
The pro forma net tangible book value of SalesLogix at December 31, 1998,
after assuming the conversion of all outstanding shares of redeemable
convertible preferred stock and Class B common stock into shares of common stock
and the issuance of 407,531 shares of common stock for the proposed acquisition
of Enact and the related purchase accounting adjustments, was $7.9 million, or
$0.57 per share. Net tangible book value per share represents the amount of
total tangible assets less total liabilities divided by 13,752,452, the number
of shares of common stock treated as outstanding. After giving effect to the
sale of the shares of common stock at an assumed initial public offering
price of $ per share (less underwriting discounts and commissions and
estimated expenses we expect to pay in connection with this offering) and the
sale of shares of common stock to be issued in a concurrent private
placement to The Goldman Sachs Group, L.P. and certain of its affiliates at the
assumed initial public offering price (less a 3.5% discount), the pro forma as
adjusted net tangible book value of SalesLogix at December 31, 1998 would be
$ million, or $ per share. This represents an immediate increase in the
as adjusted pro forma net tangible book value of $
per share to existing stockholders and an immediate dilution of $ per share
to new investors, or approximately % of the assumed offering price of
$ per share. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share at December
31, 1998............................................... $ 0.57
Increase per share attributable to new investors..........
Pro forma as adjusted net tangible book value per share
after this offering.......................................
Dilution per share to new investors......................... $
</TABLE>
The following table sets forth on a pro forma as adjusted basis as of
December 31, 1998, after giving effect to the 407,531 shares to be issued in
connection with the acquisition of Enact (included in existing stockholders
amounts), and the number of shares of common stock purchased from us; the total
consideration paid to us; and the average price paid per share by existing
stockholders and by new investors purchasing common stock in this offering and
the concurrent Goldman Sachs private placement:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
--------------------- --------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 13,752,452 % 37,716,677 % $2.74
New stockholders........... % %
---------- --- ---
Total............ 100% 100%
========== === ========== ===
</TABLE>
The foregoing computations assume the exercise of no stock options after
December 31, 1998. At December 31, 1998, we had outstanding options to purchase
a total of 1,741,849 shares of common stock at a weighted average exercise price
of $0.91 per share, as illustrated below:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------
<S> <C> <C>
1996 option plan................................... 1,654,346 $0.80
1998 Business Partner option plan.................. 87,503 $2.95
--------- -----
Total.................................... 1,741,849 $0.91
=========
</TABLE>
In the event that SalesLogix issues additional shares of common stock in
the future, purchasers of common stock in this offering may experience further
dilution.
15
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA
In the table below, we provide you with selected consolidated financial
data of SalesLogix. We have prepared this information using the historical
consolidated financial statements of SalesLogix for the three years ended
December 31, 1998. The consolidated financial statements for the three years
ended December 31, 1998 have been audited by Ernst & Young LLP, independent
auditors. The Company commenced operations in January 1996 and has never paid
dividends.
When you read this selected consolidated financial data, it is important
that you read along with it the historical financial statements and related
notes included in this prospectus, as well as the section of this prospectus
titled "Management's Discussion and Analysis of Financial Condition and Results
of Operations." Historical results are not necessarily indicative of future
results. See Note 1 of Notes to Consolidated Financial Statements for an
explanation of the method used to calculate pro forma basic and diluted net loss
per share.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Licenses............................................... $ -- $ 3,505 $10,105
Services............................................... -- 1,274 5,538
------- ------- -------
Total revenues....................................... -- 4,779 15,643
Costs of revenues:
Licenses............................................... -- 118 604
Services............................................... -- 1,733 4,299
------- ------- -------
Total costs of revenues.............................. -- 1,851 4,903
------- ------- -------
Gross profit.............................................. -- 2,928 10,740
Operating expenses:
Sales and marketing.................................... 1,009 4,953 10,030
Research and development............................... 1,290 1,865 3,845
General and administrative............................. 902 1,056 2,151
Amortization of acquisition related intangible
assets............................................... 342 360 1,436
------- ------- -------
Total operating expenses............................. 3,543 8,234 17,462
------- ------- -------
Loss from operations...................................... (3,543) (5,306) (6,722)
Interest and other income, net............................ 194 166 130
------- ------- -------
Loss before provision for income taxes.................... (3,349) (5,140) (6,592)
Provision for income taxes................................ -- -- --
------- ------- -------
Net loss.................................................. $(3,349) $(5,140) $(6,592)
======= ======= =======
Pro forma basic and diluted net loss per share............ $ (0.54)
=======
Weighted average shares used in calculating pro forma
basic and diluted net loss per share................... 12,311
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1996 1997 1998
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $1,975 $3,189 $11,377
Working capital........................................... 1,401 1,650 10,843
Total assets.............................................. 2,596 12,948 23,974
Long-term debt and capital lease obligations, less current
portion................................................ 259 1,608 1,241
Total stockholders' equity................................ 1,586 7,075 16,600
</TABLE>
16
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the Consolidated
Financial Statements of SalesLogix and the notes thereto and the Pro Forma
Condensed Consolidated Financial Statements and notes thereto included elsewhere
in this prospectus. Our discussion contains forward-looking statements based
upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. SalesLogix' actual results and
the timing of certain events could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those
set forth under "Risk Factors," "Business" and elsewhere in this prospectus.
OVERVIEW
SalesLogix is a leading provider of software that enables mid-market
businesses to create interactive selling networks that automate prospect and
customer interactions.
SalesLogix was incorporated in September 1995 and commenced operations in
January 1996. From January 1996 until April 1997, our operating activities
related primarily to research and development and the initial development of our
independent Business Partner channel. In April 1997, we released the first
commercial version of SalesLogix, our client-server based sales automation
solution. Thereafter, we continued to focus on developing the Business Partner
channel, marketing the SalesLogix brand and developing new and enhanced versions
of our product. In December 1997, we acquired Opis Corporation, a customer
support automation software company, to expand our product offering to include
an integrated sales and support automation solution. We changed the name of
Opis' product to SupportLogix and developed a link to SalesLogix.
During the second half of 1998, we established a direct sales force to
focus on key strategic accounts and work with our Business Partners on larger
opportunities. In 1998, we also hired managers in the United Kingdom and
Australia to commence the recruitment and training of international Business
Partners. In December 1998, we released the first major upgrade of SalesLogix
and a version of the product that can be deployed over the Internet. Since
inception, we have incurred significant losses and as of December 31, 1998 we
had an accumulated deficit of $17.3 million.
We derive revenues principally from the sale of software licenses and fees
for maintenance, technical support, consulting and training services. We market
and sell our products primarily through our Business Partners and to a lesser
extent through our direct sales force. Sales to our Business Partners accounted
for 89% of license revenues in 1998 and we expect that a substantial majority of
our license revenues will continue to be generated from sales to our Business
Partners. The contractual arrangements we enter into with our Business Partners
provide for license fees payable to us based upon a percentage of our list
price.
We recognize revenue in accordance with the provisions of the American
Institute of Certified Public Accountants Statement of Position 97-2, "Software
Revenue Recognition," which we adopted beginning January 1, 1998. We sell our
products under perpetual licenses and recognize license revenues when all of the
following conditions are met: an executed license agreement, unconditional
purchase order or contract has been received; the product has been delivered to
the customer; collection of the receivable is deemed probable; and the fee is
fixed or determinable based upon vendor specific objective elements of the
arrangements. Maintenance and technical support revenues are recognized ratably
over the contract term, typically one year. Revenues for consulting and training
services are recognized as such services are provided.
Acquisitions
In connection with the Opis acquisition in December 1997, we paid $801,559
in cash, issued 1,228,654 shares of Series D convertible preferred stock and
granted options to purchase 96,836 shares
17
<PAGE> 23
of Series D convertible preferred stock. We also entered into employment
agreements with certain officers of Opis. The transaction was recorded under the
purchase method of accounting and the results of operations of Opis and the fair
value of the assets acquired and liabilities assumed were included in our
consolidated financial statements beginning on the acquisition date. In
connection with this acquisition, we recorded $5.9 million in capitalized
technology and other intangible assets that are being amortized over periods of
up to five years.
In March 1999, we signed a term sheet with Enact Incorporated in which we
agreed to acquire Enact in a merger transaction. Enact is a privately-held
provider of sales configuration software for managing product catalogs and
marketing encyclopedias and generating proposals, quotes and orders. We
anticipate that the Enact products will be sold and serviced by our direct sales
force and consulting services group and Business Partner channel. In connection
with the Enact acquisition, we expect to issue 609,424 shares of our common
stock, of which 201,893 shares are restricted subject to three year monthly
vesting based upon the continued employment of certain officers of Enact. We
expect to pay $4.1 million in cash for merger consideration, plus transaction
expenses, repayment of certain debt of Enact and out-of-pocket expenses
associated with the integration of Enact's business into ours. We also intend to
enter into employment agreements with certain officers of Enact in connection
with the acquisition. The transaction will be recorded under the purchase method
of accounting and the results of operations of Enact and the fair value of the
assets acquired and liabilities assumed will be included in our consolidated
financial statements beginning on the date the transaction closes. In connection
with this acquisition, based on financial information of Enact as of December
31, 1998, we anticipate recording approximately $7.5 million in capitalized
technology and other intangible assets that will be amortized over periods of up
to five years, and expensing approximately $900,000 of in-process research and
development based upon an independent appraisal. For the fiscal years ended
December 31, 1997 and 1998, Enact had revenues of approximately $521,000 and
$564,000, respectively and net losses of approximately $502,000 and $1,280,000,
respectively.
18
<PAGE> 24
HISTORICAL RESULTS OF OPERATIONS
The following table sets forth certain historical operating results for
SalesLogix as a percentage of total revenues. We believe that period-to-period
comparisons of our operating results are not indicative of results for any
future period.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998
------ ------
<S> <C> <C>
Revenues:
Licenses............................................ 73.3% 64.6%
Services............................................ 26.7 35.4
------ ------
Total revenues................................... 100.0 100.0
Costs of revenues:
Licenses............................................ 2.5 3.8
Services............................................ 36.3 27.5
------ ------
Total costs of revenues.......................... 38.8 31.3
------ ------
Gross profit.......................................... 61.2 68.7
Operating expenses:
Sales and marketing................................. 103.7 64.1
Research and development............................ 39.0 24.6
General and administrative.......................... 22.1 13.8
Amortization of acquisition related intangible
assets........................................... 7.5 9.2
------ ------
Total operating expenses......................... 172.3 111.7
------ ------
Loss from operations.................................. (111.1) (43.0)
Interest and other income, net........................ 3.5 0.9
------ ------
Loss before provision for income taxes................ (107.6) (42.1)
Provision for income taxes............................ 0.0 0.0
------ ------
Net loss.............................................. (107.6)% (42.1)%
====== ======
</TABLE>
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Revenues
SalesLogix was a development stage company during 1996 and, accordingly,
did not record revenues. Total revenues increased from $4.8 million in 1997 to
$15.6 million in 1998, an increase of 227%. No customer accounted for more than
10% of revenues in 1997 or 1998. Our revenues outside of North America increased
from approximately $60,000 in 1997 to $1.2 million in 1998.
License Revenues. Our license revenues increased from $3.5 million in 1997
to $10.1 million in 1998, an increase of 188%. The increase in license revenues
was due primarily to increases in the size and productivity of our Business
Partner network, increased market awareness and acceptance of our products and,
to a lesser extent, the establishment of our direct sales force in the second
half of 1998. Our license revenues represented 73.3% of our total revenues in
1997 and 64.6% in 1998.
Service Revenues. Service revenues include fees for maintenance, technical
support, consulting and training services. Our service revenues increased from
$1.3 million in 1997 to $5.5 million in 1998, an increase of 334%. The increase
from 1997 to 1998 resulted primarily from the increase in the number of licenses
sold in 1998 as well as renewals of existing maintenance and technical support
contacts from the growing installed base of SalesLogix customers. Our service
revenues represented 26.7% of our total revenues in 1997 and 35.4% in 1998.
19
<PAGE> 25
Costs of Revenues
Cost of License Revenues. Cost of licenses includes the cost of media,
product packaging, documentation and other production costs and third party
royalties. Cost of license revenues increased from $118,000 in 1997 to $604,000
in 1998, representing 3.4% of license revenues in 1997 and 6.0% of license
revenues in 1998. Cost of licenses as a percentage of license revenues has
increased as a result of increased product royalties for third-party technology,
primarily report writing software, embedded in our products.
Cost of Service Revenues. Cost of service revenues consists of the costs
of providing technical support, training and consulting services to SalesLogix
customers and Business Partners. Cost of service revenues increased from $1.7
million in 1997 to $4.3 million in 1998. The increase was primarily attributable
to hiring and training of additional personnel to support our growing customer
base and Business Partner network. Cost of service revenues as a percentage of
related service revenues represented 136.0% in 1997 and 77.6% in 1998. This
decrease is the result of the growth of service revenues and a reduction in the
time and expenses our consulting organization incurred while providing free
support to Business Partners in their early implementations of our product.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of
personnel-related expenses, costs related to the recruitment and support of our
Business Partner channel and marketing and promotional costs to increase brand
awareness in the marketplace and to generate leads for our sales channels. Sales
and marketing expenses increased from $1.0 million in 1996 to $5.0 million in
1997, an increase of 391%, and to $10.0 million in 1998, an increase of 102%.
The increases in sales and marketing expenses from 1996 to 1998 reflected the
hiring of additional sales and marketing personnel, expanded advertising and
other promotional activities and increased sales commissions and bonuses related
to increased license revenues. Sales and marketing expenses represented 103.7%
of our total revenues in 1997 and 64.1% of our total revenues in 1998. The
decrease in sales and marketing expenses as a percentage of total revenues from
1997 to 1998 primarily reflected the more rapid growth of revenues compared to
the growth of sales and marketing expenses during this period. We anticipate
that we will continue to invest significantly in sales and marketing and that
these expenses will increase in absolute dollars.
Research and Development. Research and development expenses consist
primarily of personnel-related costs for software developers, quality assurance
and product documentation personnel and payments to outside contractors.
Research and development expenses increased from $1.3 million in 1996 to $1.9
million in 1997, an increase of 45%, and to $3.8 million in 1998, an increase of
106%. The increases from 1996 through 1998 were primarily due to an increase in
the number of software developers, quality assurance personnel and outside
developers to support our product development, testing and documentation
activities related to the development and release of both the client-server and
Internet versions of SalesLogix. Research and development expenses represented
39.0% of our total revenues in 1997 and 24.6% of our total revenues in 1998. The
decrease was primarily attributable to the more rapid growth of revenues
compared to the growth of research and development expenses during this period.
We anticipate that we will continue to invest significantly in research and
development and that these expenses will increase in absolute dollars.
General and Administrative. General and administrative expenses consist
primarily of salaries and related expenses for executive, finance and
administrative personnel, as well as outside professional fees. General and
administrative expenses increased from $902,000 in 1996 to $1.1 million in 1997
and to $2.2 million in 1998. These increases from 1996 to 1998 were primarily
due to increased staffing and related expenses necessary to manage and support
the expansion of our operations as well as increased legal fees in 1998. General
and administrative expenses represented 22.1% of our total revenues in 1997 and
13.8% of our total revenues in 1998. The decrease was primarily attributable to
the more rapid growth of revenues compared to the growth of general and
administrative expenses
20
<PAGE> 26
during this period. We believe that general and administrative expenses will
continue to increase in absolute dollars as a result of the anticipated
expansion of our administrative staff and the expenses associated with becoming
a public company, including but not limited to annual and other public reporting
costs, directors' and officers' liability insurance, investor relations programs
and professional service fees.
In December 1998, we recorded unearned compensation of $1.3 million
representing the difference between the exercise price of options granted to
acquire shares of stock during 1998 and the deemed fair value for financial
reporting purposes of our common stock on the dates of grant. Unearned
compensation is amortized over the vesting periods of the options, generally
four years.
Amortization of Acquisition Related Intangible Assets. Amortization of
acquisition related intangible assets consists primarily of amortization of
intangible assets and goodwill and to a lesser extent acquired in-process
research and development from our acquisitions. Amortization of acquisition
related intangible assets increased from $342,000 in 1996 to $360,000 in 1997
and to $1.4 million in 1998. The 342,000 in 1996 represented the full
amortization of intangible assets acquired from Kennedy Systems, Inc. in January
1996. The increase from 1996 to 1997 was related to a charge for in-process
research in development of $360,000 relating to the December 1997 acquisition of
Opis. The increase from 1997 to 1998 was attributable to a full years'
amortization of intangible assets and goodwill acquired in the Opis acquisition
in 1998. Acquisition related intangible assets are amortized over the estimated
useful life of the acquired assets, over periods of up to five years.
Income Taxes. As of December 31, 1998, we had net operating loss
carryforwards for federal and state income tax reporting purposes of
approximately $13.3 million. The federal carryforwards expire at various dates
beginning 2011. The Internal Revenue Code contains provisions that limit the use
in any future period of net operating loss and tax credit carryforwards upon the
occurrence of certain events, including a significant change in ownership
interests. We had deferred tax assets, including net operating loss and tax
credit carryforwards, totaling approximately $6.2 million as of December 31,
1998. A valuation allowance has been recorded for the entire net deferred tax
asset balance as a result of uncertainties regarding its realization. See Note
13 to Consolidated Financial Statements.
21
<PAGE> 27
SELECTED UNAUDITED HISTORICAL QUARTERLY RESULTS OF OPERATIONS
The following table presents selected unaudited consolidated statement of
operations data for the six quarters ended December 31, 1998. You should read
the following table in conjunction with our Consolidated Financial Statements
and related notes thereto included elsewhere in this prospectus. We have
prepared this unaudited information on the same basis as the audited
Consolidated Financial Statements. This table includes all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
a fair presentation of our financial position and operating results for the
quarters presented. You should not draw any conclusions about our future results
from the results of operations for any historical quarter.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1998 1998 1998 1998
--------- -------- -------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Licenses.................................................. $ 1,101 $2,040 $ 2,088 $ 1,810 $ 2,583 $ 3,624
Services.................................................. 492 487 1,074 1,204 1,479 1,781
------- ------ ------- ------- ------- -------
Total revenues.......................................... 1,593 2,527 3,162 3,014 4,062 5,405
------- ------ ------- ------- ------- -------
Costs of revenues:
Licenses.................................................. 30 81 91 103 118 292
Services.................................................. 504 628 886 1,052 1,120 1,241
------- ------ ------- ------- ------- -------
Total costs of revenues................................. 534 709 977 1,155 1,238 1,533
------- ------ ------- ------- ------- -------
Gross profit................................................ 1,059 1,818 2,185 1,859 2,824 3,872
------- ------ ------- ------- ------- -------
Operating expenses:
Sales and marketing....................................... 1,372 1,433 1,762 2009 2,946 3,313
Research and development.................................. 483 597 671 959 1,086 1,129
General and administrative................................ 251 415 387 715 522 527
Amortization of acquisition related intangible assets..... -- 360 359 359 359 359
------- ------ ------- ------- ------- -------
Total operating expenses................................ 2,106 2,805 3,179 4,042 4,913 5,328
------- ------ ------- ------- ------- -------
Loss from operations........................................ (1,047) (987) (994) (2,183) (2,089) (1,456)
Interest and other income, net.............................. 31 (8) (42) 2 117 53
------- ------ ------- ------- ------- -------
Loss before provision for income taxes...................... (1,016) (995) (1,036) (2,181) (1,972) (1,403)
Provision for income taxes.................................. -- -- -- -- -- --
------- ------ ------- ------- ------- -------
Net loss.................................................... $(1,016) $ (995) $(1,036) $(2,181) $(1,972) $(1,403)
======= ====== ======= ======= ======= =======
</TABLE>
22
<PAGE> 28
<TABLE>
<CAPTION>
AS A PERCENTAGE OF TOTAL REVENUES
----------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1998 1998 1998 1998
--------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Licenses.......................................... 69.1% 80.7% 66.0% 60.1% 63.6% 67.0%
Services.......................................... 30.9 19.3 34.0 39.9 36.4 33.0
----- ----- ----- ----- ----- -----
Total revenues.................................. 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- -----
Costs of revenues:
Licenses.......................................... 1.9 3.2 2.9 3.4 2.9 5.4
Services.......................................... 31.6 24.9 28.0 34.9 27.6 23.0
----- ----- ----- ----- ----- -----
Total costs of revenues......................... 33.5 28.1 30.9 38.3 30.5 28.4
----- ----- ----- ----- ----- -----
Gross profit........................................ 66.5 71.9 69.1 61.7 69.5 71.6
----- ----- ----- ----- ----- -----
Operating expenses:
Sales and marketing............................... 86.1 56.7 55.7 66.7 72.5 61.3
Research and development.......................... 30.3 23.6 21.2 31.8 26.7 20.9
General and administrative........................ 15.8 16.4 12.2 23.7 12.9 9.8
Amortization of acquisition related intangible
assets.......................................... 0.0 14.2 11.4 11.9 8.8 6.6
----- ----- ----- ----- ----- -----
Total operating expenses........................ 132.2 110.9 100.5 134.1 120.9 98.6
----- ----- ----- ----- ----- -----
Loss from operations................................ (65.7) (39.0) (31.4) (72.4) (51.4) (27.0)
Interest and other income, net...................... 1.9 (0.3) (1.4) 0.0 2.9 1.0
----- ----- ----- ----- ----- -----
Loss before provision for income taxes.............. (63.8) (39.3) (32.8) (72.4) (48.5) (26.0)
Provision for income taxes.......................... 0.0 0.0 0.0 0.0 0.0 0.0
----- ----- ----- ----- ----- -----
Net loss............................................ (63.8%) (39.3%) (32.8%) (72.4%) (48.5%) (26.0%)
===== ===== ===== ===== ===== =====
</TABLE>
The trends discussed in the annual comparisons of operating results from
1996 through 1998 generally apply to the quarterly comparisons of operating
results for the six quarters ended December 31, 1998.
During the quarter ended June 30, 1998, license sales declined from the
previous quarter. This decline was primarily attributable to two factors. First,
the capacity of our Business Partner channel to make new sales was restricted by
a large backlog of customer project implementations. Second, purchase decisions
were affected by the expectations of our Business Partners and end users as to
the timing of a major new product upgrade, which was ultimately delayed until
later in 1998.
During the quarter ended March 31, 1998, service revenues increased
significantly from the previous quarter. This increase was attributable to
consulting service revenues related to the substantial increase in the software
licenses sold in the previous quarter as well as the increase in customer
support and maintenance revenues resulting from the full quarter's amortization
of prepaid support and maintenance contracts sold with software licenses in the
previous quarter.
During the quarter ended June 30, 1998, general and administrative expenses
increased significantly from the previous quarter. This increase was primarily
attributable to legal fees incurred in connection with a lawsuit involving a
former officer of SalesLogix that was settled in July 1998.
While our limited operating history, rapid growth in software license sales
and factors involving the rate of growth and productivity of our evolving
Business Partner channel have made it more difficult to discern and predict
seasonality, we have noted greater demand for our products in the fourth quarter
than in other quarters. For example in 1998, 35% of total revenues were
recognized in the fourth quarter, including 36% of license revenues and 32% of
service revenues. We believe that these fluctuations are caused primarily by
customer buying patterns, which are often influenced by year-end budgetary
pressures, as well as our sales force compensation policies and those of our
Business Partners, which tend to reward sales personnel who meet or exceed sales
quotas. We have no reason to expect that seasonal trends will not continue for
the foreseeable future.
23
<PAGE> 29
Our quarterly operating results have fluctuated significantly in the past
and will continue to fluctuate in the future, as a result of a number of
factors, many of which are outside our control. These factors include: demand
for our products and services; size and timing of specific sales; level of
product and price competition; timing and market acceptance of new product
introductions and product enhancements by us and our competitors; changes in
pricing policies by us and our competitors; our ability to attract, hire, train
and retain sales and consulting personnel to meet the demand, if any, for our
products; the length of sales cycles; our ability to establish and maintain
relationships with our Business Partners, third-party implementation services
providers and strategic partners; mix of distribution channels through which
products are sold; mix of international and domestic revenues; software defects
and other product quality problems; personnel changes; general domestic and
international economic and political conditions; and budgeting cycles of our
customers. We have in the past experienced delays in the planned release dates
of new software products or upgrades and have discovered software defects in new
products after their introduction. There can be no assurance that new products
or upgrades will be released according to schedule, or that when released they
will not contain defects. Either of these situations could result in adverse
publicity, loss of revenues, delay in market acceptance or claims by customers
brought against us, any of which could have a material adverse effect on our
business, results of operations and financial condition. In addition, the timing
of individual sales has been difficult for us to predict and large individual
sales have, in some cases, occurred in quarters subsequent to those we
anticipated. There can be no assurance that the loss or deferral of one or more
significant sales will not have a material adverse effect on our quarterly
operating results.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have primarily financed operations through private
placements of our preferred stock. Through December 31, 1998, proceeds from
private placements of preferred stock totaled $29.5 million. To a lesser extent,
we have financed our operations through equipment financing and traditional bank
financing arrangements.
As of December 31, 1998, we had cash and cash equivalents of $11.4 million,
an increase of $8.2 million from December 31, 1997. Our working capital at
December 31, 1998 was $10.8 million, compared to $1.7 million at December 31,
1997. We have a working capital revolving line of credit with a financial
institution that is secured by our accounts receivable. This facility allows us
to borrow up to the lesser of 75% of our eligible accounts receivable or $1.5
million. As of December 31, 1998, we had borrowed $300,000 under the facility.
The agreement under which the line of credit was established contains certain
covenants, including a provision requiring us to maintain specified financial
ratios. We were in compliance with these covenants at December 31, 1998.
Our operating activities resulted in net cash outflows of $2.9 million in
1996, $5.6 million in 1997 and $5.4 million in 1998. The operating cash outflows
resulted primarily from significant investments in sales, marketing and product
development, which led to operating losses. The cash outflows from operating
losses, increases in accounts receivable, prepaid expenses and other current
assets were partially offset by increases in accounts payable and accrued
expenses and deferred revenues.
Cash used in investing activities was $36,000 in 1996, $793,000 in 1997 and
$1.7 million in 1998, resulting primarily from the purchase of capital equipment
and the total cash consideration and related expenses paid in connection with
the Opis acquisition.
Cash provided by financing activities totaled $4.9 million in 1996, $7.6
million in 1997 and $15.3 million in 1998, resulting primarily from the issuance
of Series A, C and E preferred stocks, respectively, and $1.5 million proceeds
from a bank term loan received in December 1997 payable in equal monthly
installments of principal plus interest at the bank's prime rate plus 1% through
December 31, 2001, partially offset by payments on capital equipment lease
obligations and the bank term loan.
24
<PAGE> 30
We currently anticipate that we will continue to experience significant
growth in our operating expenses for the foreseeable future as we strive to:
- enter new markets and increase penetration of existing markets for our
products and services;
- introduce new products and product enhancements;
- increase our product development, sales, marketing and customer support
activities;
- develop and expand our network of Business Partners and direct sales
force; and
- expand our international operations.
Such operating expenses will consume a material amount of our cash
resources, including a portion of the net proceeds of this offering. We believe
that the net proceeds of this offering, together with our existing cash and cash
equivalents and available bank borrowings, will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at least
the next twelve months. Thereafter, we may require additional funds to support
our working capital requirements or for other purposes.
We require substantial capital to fund our business, particularly to
finance inventories and accounts receivable and for capital expenditures and
potential acquisitions. Our future capital requirements will depend on many
factors, including the rate of revenue growth, the timing and extent of spending
to support product development efforts and expansion of sales and marketing, the
timing of introductions of new products and enhancements to existing products
and market acceptance of our products. As a result, we could be required to
raise substantial additional capital. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, the issuance
of these securities could result in dilution to existing stockholders. If
additional funds are raised through the issuance of debt securities, the debt
would have certain rights, preferences and privileges senior to holders of
common stock and the terms of the debt could impose restrictions on our
operations. We cannot assure you that such additional capital, if required, will
be available on acceptable terms, or at all. If we are unable to obtain needed
additional capital, we may be required to reduce the scope of our planned
product development and sales and marketing efforts, which would materially
adversely affect our business, financial condition and operating results.
YEAR 2000 COMPLIANCE
Many existing computer systems and software products do not properly
recognize and process dates after December 31, 1999. This "Year 2000" problem
could result in miscalculations, data corruption, system failures or disruptions
of operations. We are subject to potential Year 2000 problems affecting our
products, our customers' systems, our internal systems and the systems of our
vendors, any of which could have a material adverse effect on our business,
operating results and financial condition. Significant uncertainty exists in the
software industry and other industries concerning the scope and magnitude of the
Year 2000 problem. We recognize the need to take reasonable steps to reduce the
risk that our operations will be adversely affected by Year 2000 software
failures.
We have completed our initial assessment of the potential overall impact of
the Year 2000 problem on our products, business, financial condition and
operating results. We have conducted a review of the current versions of our
products and have researched or sought assurances from vendors of the
third-party products embedded into our products and believe that our products
are substantially Year 2000 compliant--that is, they are capable of adequately
distinguishing and interpreting dates falling after December 31, 1999. We expect
that modifications with respect to any remaining Year 2000 issues will be made
by the end of calendar year 1999. Nevertheless, there can be no assurances that
the implementation of modifications to any embedded products will not be delayed
or that we will not experience unexpected Year 2000 problems with our products.
Although we believe the current versions of our software products are Year 2000
compliant, our customers often integrate our products
25
<PAGE> 31
into enterprise systems involving sophisticated hardware and complex software
products that we cannot adequately evaluate for Year 2000 compliance. We may
face claims based on Year 2000 problems in other companies' products, or issues
arising from the integration of multiple products within an overall system.
Although we have not been a party to any litigation or arbitration proceeding
involving our products or services related to Year 2000 compliance issues, we
may in the future be required to defend our products or services in such
proceedings, or to negotiate resolutions of claims based on Year 2000 issues.
The costs of defending and resolving Year 2000-related disputes, regardless of
the merits of such disputes and any liability we have for Year 2000-related
damages, including consequential damages, could materially adversely affect our
business, financial condition and operating results.
In addition, the pressing need of many customers and potential customers to
address Year 2000 issues is affecting their purchasing patterns as they focus
their existing manpower and reallocate information technology and other
significant resources to inventory, assess, test, correct, upgrade and replace
their current software systems for Year 2000 compliance. In particular, to the
extent our business targets larger customers we may encounter greater resistance
to the purchase of new software products and systems by such customers until
they have completed or resolved their outstanding Year 2000 programs. These
changes in purchasing patterns, which may increase in the last two calendar
quarters of 1999, may result in reduced funds available to purchase software
products such as those we offer. To the extent Year 2000 issues cause a
significant delay in, or cancellation of, decisions to purchase our products or
services, our business, financial condition and operating results would be
materially adversely affected.
We have reviewed and continue to review our internal management information
and other critical business systems to identify any Year 2000 problems relating
to those systems. We also have communicated and are continuing to communicate
with the owner and manager of our headquarters building, external vendors that
supply us with material software and information systems and with our other
significant suppliers to determine their potential exposure to Year 2000
problems and any resulting impacts such problems could have on our business. In
the course of these investigations to date, we have not encountered any material
Year 2000 problems with these third-party products and services.
We have not incurred to date and do not anticipate incurring in the future,
any material costs directly associated with our Year 2000 compliance efforts,
except for compensation expenses associated with our salaried employees who have
devoted some of their time to our Year 2000 assessment and remediation efforts.
As discussed above, we do not expect the total cost of Year 2000 problems to be
material to our business, financial condition and operating results. However, we
have not completed our risk assessment for potential Year 2000 problems and
cannot be certain at this time that any later discovered Year 2000 problems will
not require material costs to address. During the months prior to the century
change, we will continue to evaluate new versions of our software products, new
software and information systems provided to us by third parties and any new
infrastructure systems that we acquire to determine whether they are Year 2000
compliant. Despite our current assessment, we may not identify and correct all
significant Year 2000 problems on a timely basis. Year 2000 compliance efforts
may involve significant time and expense and unremediated problems could
materially adversely affect our business, financial condition and operating
results. Although we have adopted and are in the process of improving a disaster
recovery plan to allow our business to continue in the event of a failure of our
internal information systems, we currently have no Year 2000-specific
contingency plans to address the risks associated with unremediated Year 2000
problems. We are in the process of reviewing the need for a Year 2000-specific
contingency plan and, if such a plan is advisable, we expect to adopt such a
plan no later than June 30, 1999.
26
<PAGE> 32
BUSINESS
OVERVIEW
SalesLogix is a leading provider of software that enables mid-market
businesses to create interactive selling networks that automate prospect and
customer interactions. Our products leverage emerging technologies such as the
Internet to dynamically connect networks of mobile sales, internal telesales,
marketing and support organizations as well as third party resellers, supply
chain participants and other partners. Our products enhance the speed, quality
and effectiveness of selling through this network by:
- Providing salespeople with personalized and easy to use sales automation
software that uses our guided selling technologies to streamline prospect
interactions;
- Automating the key elements of selling--marketing, contact management,
account management, opportunity management, order management and customer
support;
- Integrating processes for selling through multiple channels--direct
sales, telesales, indirect sales and e-commerce; and
- Synchronizing records generated from selling activities into a customer
interaction repository, which enables collaborative selling, marketing
and customer support.
We sell our software primarily through our network of more than 200
resellers, whom we refer to as our "Business Partners." Our Business Partners
provide the local support and implementation services required to install,
configure and customize our products. We have designed our software to be easy
to use, rapid to deploy and implement and to deliver high performance with a low
total cost of ownership. We believe that our software provides the
out-of-the-box functionality necessary to quickly derive benefits, as well as
the flexibility to create a solution tailored to the specific and evolving
requirements of our customers. We now have licensed our software to more than
1,100 domestic and international customers in a variety of industries, including
high technology, financial services, telecommunications, utilities, retail,
banking, health care and real estate.
INDUSTRY BACKGROUND
Sales automation software has recently emerged as a critical requirement
for organizations seeking to gain a competitive advantage in their front office
operations. Many businesses spend considerable time and resources implementing
software applications aimed at increasing the efficiency of selling processes
and improving the effectiveness of customer interactions. In recent years,
selling processes have begun to include increased interaction among marketing,
sales, service and support organizations, as well as executive and finance
staff, independent partners, resellers and even the customers themselves. These
interactions provide windows of opportunity for collecting and using information
to facilitate selling activities. As a result, businesses are looking for
technology solutions that can help them more effectively utilize new and
established selling resources and to better leverage sales information to
increase revenues.
The market for these software applications, often described as "front
office" or "customer relationship management" software, is large and growing
rapidly. AMR Research estimates that the size of this market will increase from
approximately $1.2 billion in license revenues in 1997 to more than $7.5 billion
in 2002. AMR also estimates that sales force automation is the fastest growing
segment of this market with an annual growth rate of 64%.
A number of applications designed to address the front office automation
market have been introduced over the past decade, the majority of which were
targeted at Fortune 1000 companies. While many of these applications have
achieved some degree of market acceptance, significant limitations remain. These
applications are typically very expensive and difficult to deploy and support.
They generally entail substantial investments, often millions of dollars, to
cover new software,
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hardware and implementation services. Also, many salespeople resist using these
applications because they are complex and cannot be easily adapted or customized
to personal selling processes or methodologies. The often extensive
customization and integration work required results in long implementation
cycles that can range from six to 18 months or more and makes these applications
poorly suited to address rapidly changing business environments.
As a result, many businesses have failed to implement first or second
generation versions of these applications successfully. The Gartner Group has
estimated that over 50% of front office automation projects fail to produce
measurable returns on investment. Accordingly, many businesses, particularly in
the mid-market, have not implemented these applications. The Gartner Group
estimates that less than 4% of businesses or divisions of large organizations
with $25 million to $500 million in annual revenues have adopted front office
applications. We believe that there is a strong demand among mid-market
businesses for sales automation software that addresses the limitations of the
current generation of these applications.
The Emerging Mid-Market Opportunity
Mid-market businesses are becoming the driving forces of growth and
innovation in many industries. To compete with larger organizations with greater
resources, many mid-market businesses have adopted dynamic business models that
leverage partnership networks to scale their operations. As a result, these
models of doing business require sales automation solutions that provide
extensive functionality to support team selling, collaborative marketing and
indirect selling models. These solutions need to be rapidly implemented and
easily customized and supported because mid-market businesses typically have
limited information technology resources.
To accomplish their growth objectives, many mid-market businesses are
turning to the Internet. The Internet provides a unique opportunity for
mid-market businesses to create competitive advantages that were previously only
available to larger corporations. It substantially alters the way businesses can
communicate internally and externally and execute sales. By providing a
low-cost, global infrastructure, the Internet also allows mid-market businesses
to share information easily across the enterprise as well as with outside
partners and customers. In addition, the Internet enables mid-market businesses
to integrate their selling cycles across broad networks of partners,
distributors and resellers.
The Internet has also created an entirely new and fast growing channel for
mid-market businesses to reach and cost-effectively support their customers
directly. Forrester Research estimates that by the year 2002, more than $327
billion in goods and services will be sold over the Internet. The ubiquitous
nature of the Internet provides mid-market companies with the ability to extend
the geographic breadth of their sales and marketing operations without large
investments in people and IT resources. Through their web sites, mid-market
businesses can now reach and sell to customers worldwide as well as launch
highly targeted marketing campaigns that deliver higher returns. In addition,
mid-market businesses can interact with their customers in a personalized and
relevant context and support and service them around the clock.
We believe that mid-market businesses seek to establish interactive selling
networks that automate prospect and customer interactions through networks of
mobile sales, internal telesales, marketing and support organizations as well as
third party resellers, supply chain participants and other partners. These
mid-market businesses require software that:
- is easy for salespeople and partners to use;
- is designed to leverage the Internet and mobile technologies;
- can be easily extended and customized to meet specific and evolving
business needs;
- can be deployed rapidly and at a low cost;
- seamlessly integrates with back office systems and corporate information
databases; and
- can support new models of collaborative and Internet-based selling.
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We believe that most existing solutions for sales, marketing and customer
support automation have failed to address these requirements.
THE SALESLOGIX SOLUTION
SalesLogix provides software that enables mid-market businesses to enhance
the speed, quality and effectiveness of selling through their interactive
selling networks. Our products integrate the key elements of contact management,
account management, opportunity management, order management and relationship
management functions. We support multiple selling channels, including direct
sales, telesales, indirect sales and e-commerce and enable collaborative team
selling. Finally, our patented guided selling technology allows customers to
define and automate complex selling processes and to deploy customized sales
automation solutions.
We believe our software delivers the following benefits:
- Complements the way selling professionals work. We designed our software
to be intuitive, using simple navigational commands to present key
selling and customer information in a single view. Our products
incorporate popular Microsoft user interface standards and the
ease-of-use functions of leading contact management programs. In
addition, the flexibility of our software enables salespeople to
customize the functionality to support their individual methods of
selling. We believe this not only adds value to the selling process, but
also increases the rate of adoption among salespeople.
- Leverages the Internet and mobile technologies. SalesLogix can be
deployed over the Internet and we use Internet technologies to provide
web-based online lead capture, partner management, product knowledge
bases and order entry functionality. Our remote client, which Microsoft
recently awarded Best Mobile Sales Solution, uses our synchronization
technology to enable remote users to easily access our software through
mobile devices such as laptops and personal digital assistants. Our
robust, multi-level security allows key sales management functions to be
distributed while addressing customers' concerns about the integrity of
the database.
- Deploys rapidly at a low cost. Our products and services are designed to
ensure that the software is implemented and deployed quickly--typically
in a few weeks--to deliver a rapid return on investment. The suggested
retail price of our software is less than $1,000 per end user. SalesLogix
software provides out-of-the-box functionality and requires little
customization. In addition, our synchronization technology facilitates
the distribution of relevant updates to users across the enterprise,
thereby reducing maintenance costs. We use industry standard technologies
and leverage the Microsoft Windows NT and Microsoft BackOffice platforms
to deliver a low total cost of ownership.
- Can be easily extended and customized to support new selling models. Our
flexible architecture and authoring tools enable customers to easily
adapt our software to reflect their unique selling processes and business
rules. Our authoring tools and guided selling technology allow Business
Partners and customers to develop extensions and interfaces for specific
vertical markets. Using a graphical design interface, administrators can
create workflow diagrams that define dynamic selling processes and
automation steps to guide new users or invoke automated responses to
certain selling events.
- Scales to support large selling operations and integrates with back
office systems. Our technology foundation enables hundreds of users to
access our software locally, remotely or over the Internet. Our software
leverages the scalability of Microsoft SQL Server and Oracle databases.
To date, customer implementations have ranged from as small as 10 users
to over 400 users. To meet the needs of rapidly growing, dynamic
mid-market businesses, we have designed our software to integrate
seamlessly to back office enterprise resource planning and accounting
systems and other databases with information relevant to the selling
process.
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BUSINESS STRATEGY
Our objective is to be the leading provider of software that addresses the
key aspects of selling for mid-market businesses. The following are elements of
our strategy:
- Target the large mid-market opportunity. Our target market is
businesses, including divisions of larger companies, with annual revenues
between $10 million and $1 billion. We believe that there are
approximately 150,000 organizations in North America that comprise this
market. We also believe that our products and business model are uniquely
suited to address this market opportunity. We intend to continue to focus
on developing software that targets the needs of mid-market businesses
and on selling through channels that can best reach and support this
market segment.
- Focus on automating interactive selling networks. We believe that
selling is a uniquely important and rapidly evolving business process and
that automating this process can result in rapid and significant return
on investment. We are focused on building marketing, customer support,
e-commerce and team selling functionality around SalesLogix and intend to
continue to add features to increase the speed, effectiveness and quality
of selling network interactions.
- Expand our network of Business Partners. We believe that utilizing a
reseller channel is the best way to reach mid-market businesses.
Accordingly, we have focused on rapidly capturing market share by
building a network of more than 200 Business Partners to sell our
products. Our Business Partners provide a cost-effective means to provide
local implementation and customization services, deliver specific
vertical market expertise and extend our domestic and international
reach. We have built our products specifically for the channel by making
them easy to use and implement while at the same time making them highly
customizable and able to integrate with other systems. We have a formal
certification program and offer our Business Partners ongoing training.
We plan to increase the number of Business Partners in the channel and
focus on adding partners with vertical specialization.
- Leverage the Internet for faster growth. We believe that the Internet is
a key enabling technology for mid-market companies. The recent
introductions of our Web Client, Web Viewer+, Web Lead Capture and Web
Knowledge Base reflect our strategy to rely primarily on an
Internet-based architecture and infrastructure. We intend to provide
additional products that leverage Internet technologies to support and
enhance all aspects of interactive selling and the web browser will
increasingly represent the standard user interface for our software.
- Broaden our direct sales channel and international presence. We intend
to complement our Business Partner channel by expanding our targeted
direct sales force to pursue key strategic accounts and by further
developing our telesales channels and establishing an e-commerce channel
to sell entry-level and customer add-on solutions. We believe that there
is a strong demand for our software internationally. We currently sell
our products internationally in both Europe and the Pacific Rim through
Business Partners located in 12 countries. We intend to continue to
pursue international opportunities aggressively by expanding our network
of international Business Partners, entering new markets, localizing our
software to support additional languages and currencies and increasing
our direct presence.
- Expand our technology partner program. Our software provides an open,
extensible platform for third party software vendors, service providers,
Business Partners and customers to develop add-on products that extend
our software. To date, we have certified more than 20 applications
developed by third parties through our Open CRM Initiative. We intend to
increase the number of third party developers of extensions and add-ons
for our software and actively market these solutions across our customer
base.
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PRODUCTS
Our software for automating the interactive selling network currently
consists of two major products: SalesLogix, a distributed multi-user sales
information system and SupportLogix, an online customer service and support
environment for customer support and help desk professionals. We also offer
CrossLogix, a platform for integrating third party databases, as well as other
integration and customization products for extending SalesLogix. In addition, we
recently entered into a letter of intent to acquire Enact Incorporated, a
provider of sales configuration technology used to manage product catalogs,
marketing encyclopedias and generate proposals, quotes and orders. We intend to
build an integrated suite of applications around our core SalesLogix product
that leverages our centralized Customer Interaction Repository to address the
key aspects of an interactive selling network.
Our products enable each individual involved in the interactive selling
network to automate and leverage prospect and customer interactions to sell more
effectively. Our software supports the day-to-day interactions of sales,
marketing and support professionals by:
- Capturing information on all contacts (individuals), accounts (companies
or divisions of companies), opportunities (potential deals) and
relationships (service and support histories) in the Customer Interaction
Repository; and
- Using this information to automate a variety of selling cycle activities,
from the design and execution of marketing campaigns, to the generation
of qualified leads, to the management of direct and indirect sales
processes, to order management and post-sales support.
Our applications use a variety of client interfaces, including industry
standard Web browsers, Windows-based laptops and desktops and personal digital
assistants, to ensure high availability and ease-of-use. We also provide tools
and extensions to centrally implement, configure, customize and manage our
applications. The Administrator console allows customers to centrally manage the
SalesLogix system and includes user administration, system administration
(configuration of synchronization servers and remote office servers), database
administration and the installation and update of third party and custom
components.
SALESLOGIX AUTOMATES THE INTERACTIVE SELLING NETWORK
[INTERACTIVE SALES CHAIN FLOWCHART]
[GRAPHICAL DEPICTION OF THE INTERACTIVE SELLING PROCESS LEVELS WITH THE
FOLLOWING COPY: SALESLOGIX AUTOMATES THE INTERACTIVE SELLING NETWORK; PROSPECTS;
FIELD SALES, TELESALES, PARTNERS, ESELLING, CUSTOMERS; INTERNET/WINDOWS/PDAS;
SALES, MARKETING, SUPPORT; CUSTOMER INTERACTION REPOSITORY, MS SQL OR ORACLE;
ADMINISTRATION/SECURITY/CONFIGURATION.]
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SalesLogix
SalesLogix can be deployed as a client/server application, an
Internet-based application, or both simultaneously to automate the
business-critical daily activities of front line sales and marketing
professionals. The product includes contact, account and opportunity management
along with a variety of analysis and reporting templates and integrated guided
selling processes that streamline prospect and customer interactions. SalesLogix
provides a comprehensive view of all customer communication, sales cycle
activities, forecasted opportunities, analysis statistics, management reports
and a consolidated view of all notes and schedules of individuals connected to
the system. In addition, SalesLogix provides organizations with guided selling
technology to create processes that standardize and automate any aspect of the
selling cycle. SalesLogix also includes fast, reliable and adaptable
synchronization technology and an extensive data security model for
consolidating and distributing sales information across the enterprise.
SalesLogix includes the following client interfaces:
Sales Client is a client/server direct channel application for sales
professionals connected remotely or centrally located. This application
offers integrated account, contact and opportunity management,
scheduling, reporting, email, faxing, word processing and sales library
access. Telesales professionals are supported by our guided selling
technology, which automates lead qualification and follow-up activities.
Remote Sales Client is a client/server application for mobile sales
professionals. This application offers integrated account, contact and
opportunity management, scheduling, reporting, email, faxing, word
processing and sales library access. Synchronization technology
efficiently manages the distribution of database updates across LAN,
WAN, email or Internet connections.
Web Sales Client is a web-based direct channel solution for
professionals connected remotely or centrally located that offers
integrated account, contact and opportunity management, scheduling,
reporting and sales library access using a Microsoft Internet Explorer
or Netscape 4.0+ browser.
Web Partner Client is a web-based indirect channel solution that
provides reseller channels and marketing partners with lead, contact,
account and opportunity management information using a Microsoft
Internet Explorer or Netscape 4.0+ browser.
Web Viewer+ Client is a web-based solution for sales support users
who need limited access to information in SalesLogix. It includes the
ability to schedule activities, write notes and view account, contact
and opportunity information using a Microsoft Internet Explorer or
Netscape 4.0+ browser.
SalesLogix also includes the following products:
Web Lead Capture collects prospect information from a web site and
directly populates the SalesLogix database. This client interface also
automates qualification and lead distribution using our guided selling
technology.
Back Office Integration provides extensive integration with Dynamics,
Great Plains' ERP software for the mid-market. This integration is
differentiated by its support of remote disconnected users and LAN and
WAN users. Integration with Dynamics allows users of SalesLogix to
access important product, pricing and inventory information when making
quotes or taking orders. It also provides SalesLogix users with customer
information such as credit status, invoices, payments, credit card data
and account balances. Dynamics account and contact information is
automatically updated from SalesLogix reducing the time and cost of
duplicate data entry.
Integration and Customization Tools enable customers and resellers to
customize and integrate our software with other software applications
and systems.
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The following table describes significant features of SalesLogix.
<TABLE>
<S> <C>
CONTACT MANAGEMENT
-----------------------------------------------------------------------------------------------
Lead Management Supports collection of prospect information, including
prospects captured from the web. Automates the qualification
and lead distribution processes and follow up activities.
-----------------------------------------------------------------------------------------------
Scheduling & Graphic Calendar Supports activity and event scheduling, on an individual and
group basis. Provides integration with Microsoft Outlook,
GroupWise and Lotus Notes.
-----------------------------------------------------------------------------------------------
Communication and Notes Allows users to attach any file or document to accounts,
contacts and opportunities. Supports integrated faxing,
email and word processing. Records notes of customer
interactions or other important information.
-----------------------------------------------------------------------------------------------
ACCOUNT MANAGEMENT
-----------------------------------------------------------------------------------------------
Relationships Defines the relationships between an account, related
contacts and opportunities and associated information,
providing a comprehensive picture of customer interactions.
-----------------------------------------------------------------------------------------------
Accounting Information Provides users with customer outstanding balance,
receivables aging, credit term, credit card, invoice and
payment information.
-----------------------------------------------------------------------------------------------
Team Selling Supports management of customers and opportunities by
individual sales representatives or sales teams.
-----------------------------------------------------------------------------------------------
OPPORTUNITY MANAGEMENT
-----------------------------------------------------------------------------------------------
Opportunity Assessment Enables the qualification of sales opportunities and the
assignment of characteristics such as probability of closing
the sale, revenue potential, estimated and actual closing
dates and competitor information. Tracks related activities
and history.
-----------------------------------------------------------------------------------------------
Sales Process Definition, Allows sales managers to establish highly structured selling
Management and Analysis processes that embody best selling practices to guide the
salesperson through the sales cycle. Improves forecasting
accuracy by providing consistent information for analysis.
-----------------------------------------------------------------------------------------------
Quote Generation, Order Entry Creates sales orders and quotes and applies business rules
and Advanced Pricing Model to improve accuracy of orders. Manages and organizes large
numbers of products, supports multiple price schedules,
pricing programs and customer based pricing. Provides
product substitution and inventory information.
-----------------------------------------------------------------------------------------------
ANALYSIS AND REPORTING
-----------------------------------------------------------------------------------------------
Graphical Forecasting Provides the ability to graphically organize and analyze
lead sources, the impact of competitors, product lines and
many other factors on the sales pipeline.
-----------------------------------------------------------------------------------------------
Reporting (IQ Software Allows users to create reports using an object-based,
Corporation) graphical, report designer that delivers a broad range of
functionality, including centralized or decentralized report
management distribution.
-----------------------------------------------------------------------------------------------
What's New (Change Tracks additions, updates and deletions to a user's local
Notification) database, sales library and report deliveries.
</TABLE>
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<TABLE>
<S> <C>
INFORMATION AND WORKFLOW MANAGEMENT
-----------------------------------------------------------------------------------------------
Guided Selling Technology Provides a visual environment that allows sales
administrators to quickly and easily define processes that
automate any aspect of the selling cycle. This includes any
series of tasks that must be executed in a specific order in
a specific timeframe. Tasks may include scheduling meetings,
phone calls, to-dos, literature requests, logging notes,
sending letters, faxing, emailing, testing for changes in
data, changing data, running reports or running a
sub-process. Customers use these processes to automate
repetitive tasks, implement sales processes, provide a
consistent way of following up with customers and for
marketing automation.
-----------------------------------------------------------------------------------------------
List Management Organizes subsets of contact, account or opportunity
information into lists that can prioritize leads,
opportunities and customers to help users focus on important
items.
-----------------------------------------------------------------------------------------------
Sales Library Provides a central repository for sales, marketing and
support information such as product details and price
sheets, sales literature, policies and procedures,
presentation and manuals accessible from the web or LAN by
the entire user community. Includes distribution mechanism
to support remote disconnected users.
-----------------------------------------------------------------------------------------------
</TABLE>
CUSTOMIZATION AND INTEGRATION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Architect Provides an easy to use visual development tool for creating
reports, customized data views, scripts and guided selling
processes.
-----------------------------------------------------------------------------------------------
CrossLogix Allows customers to exchange data between SalesLogix and
other Microsoft SQL Server or Oracle databases, to
consolidate separate databases, create a data warehouse,
link to back office applications and scale in large
environments.
-----------------------------------------------------------------------------------------------
Software Development A set of high-level functions that allow other applications
Kit to interact with the SalesLogix database and client.
-----------------------------------------------------------------------------------------------
Computer Telephony Allows SalesLogix to work with telephone systems to manage
Integration inbound and outbound calling activity, route calls and
trigger events.
-----------------------------------------------------------------------------------------------
Bundler Provides the ability to package custom components created by
partners, third party integrators or SalesLogix for
simplified installation and management in a SalesLogix
production system.
-----------------------------------------------------------------------------------------------
</TABLE>
SupportLogix
SupportLogix extends SalesLogix to provide an integrated client/server
customer support application for managing customer accounts after the sale.
SupportLogix provides customer support professionals with a comprehensive view
of customer information (including key contact data and call status summaries),
problem tracking and status information (including records of resolutions and
upgrades) and relationship management information (including service statistics
and contractual obligations). SupportLogix also provides knowledge management
tools to assist with problem resolution including the search and retrieval of
previous incidents, product knowledge and external sources. For management, the
system provides categorization, statistics and reporting for staffing, training,
resource planning, utilization and cost analysis. In addition, web-based tools
are available for customers to interact with the support system via the
Internet.
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The following table describes significant features of the SupportLogix
product.
<TABLE>
<S> <C>
PROBLEM MANAGEMENT
-----------------------------------------------------------------------------------------------
Call and Incident Tracking Tracks problems reported by customers, supports searches for
solutions and automates customer follow-up.
-----------------------------------------------------------------------------------------------
Escalation Ensures customer expectations and service agreements are met
by triggering notifications for time sensitive or critical
issues.
-----------------------------------------------------------------------------------------------
Product Returns Authorizes and tracks defective products and returns.
-----------------------------------------------------------------------------------------------
Telephone Link Integrates SupportLogix with a telephone system to
streamline customer support interaction by automatically
creating trouble tickets pre-filled with customer details on
inbound calls and auto dialing on outbound calls.
-----------------------------------------------------------------------------------------------
Workflow Automation Routes tickets to individuals or teams based on the type of
request. Emails responses to customers when requests are
closed or status changes.
-----------------------------------------------------------------------------------------------
Contract Management Monitors customer support agreements and work performed
against those agreements for billing purposes.
-----------------------------------------------------------------------------------------------
Defect Tracking/Quality Tracks defects, product changes and feature requests as
Assurance products pass through the development and testing process
and into production.
-----------------------------------------------------------------------------------------------
Support Center Management Provides categorization, statistics and reporting for
training, resource planning, cost analysis and overall
support department management.
-----------------------------------------------------------------------------------------------
ASSISTED PROBLEM RESOLUTION
-----------------------------------------------------------------------------------------------
Dynamic Knowledge Collection Builds a knowledge base of standard problems and solutions
based on the resolution of incidents and trouble tickets.
-----------------------------------------------------------------------------------------------
SpeedSearch Performs indexed full text search and retrieval of the
knowledge base, previous incidents, defect reports and
external sources for quick, consistent problem resolution.
-----------------------------------------------------------------------------------------------
WEB-BASED CUSTOMER CARE
-----------------------------------------------------------------------------------------------
Web Knowledge Base Allows customers, partners and field staff to access the
knowledge base via the web to avoid call queues and to
search for their own support at their own pace.
-----------------------------------------------------------------------------------------------
Mail Link and Web Link Routes customer email messages to the support system and
allows representatives and customers to submit call tickets
and check their status with a standard web browser over an
intranet or the Internet.
-----------------------------------------------------------------------------------------------
</TABLE>
Third-Party Solutions
Our Open CRM Initiative allows our Business Partners, third-party software
vendors and systems integrators, to cooperatively develop and certify their own
customer relationship management, or CRM, applications based on SalesLogix. This
initiative currently includes solutions from more than 20 partners providing
applications that operate as fully integrated extensions to SalesLogix for:
- marketing campaign management;
- computer telephony integration;
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- configuration management;
- fax and email services;
- SAP integration;
- enhanced security for e-commerce; and
- wireless communications.
Through the Open CRM initiative, SalesLogix becomes a platform for
integrating a broad portfolio of CRM applications that enable customers to grow
their front office sales, marketing and customer support organizations quickly
and cost-effectively, without investing sizable budgets and manpower in custom
consulting services. Through the relationships established in this initiative,
we expect to expand the base of products sold through our channels.
PRODUCTS IN DEVELOPMENT
Enact. We recently signed a term sheet to acquire Enact, a provider of
sales configuration software for managing product catalogs and marketing
encyclopedias and generating proposals, quotes and orders. Enact employs
configuration technology that can be used to create online sales solutions that
promote best practices and error free orders. We intend to develop various
products based on Enact technology, including a configuration tool to be used by
sales professionals, an electronic commerce solution accessible through the
Internet and a product knowledge base. The Enact solution is based on the
following two major components:
Author is a tool used to define the relationship between products,
product details and specifications, pricing, their application and rules
that govern how products are purchased.
Selector is an interactive selling tool used by a sales professional
guiding a customer or by a customer independently to navigate and select
products to purchase based on the relationships and rules defined in the
Author tool.
Web Order Capture. The web allows companies to cost-effectively offer
personalized services to customers and partners around the clock. An integral
part of that service is the ability to look at a product catalog and place an
order for products and services. SalesLogix will provide a product order system
that:
- publishes the products and services maintained in SalesLogix on the web;
- allows contacts managed in SalesLogix, including partners, customers or
internal employees, to access product and order information on the web
with a secure user name and password; and
- enables all authorized contacts to place an order that is posted in the
Customer Interaction Repository to be visible to SalesLogix users and
integrated directly with back-office accounting systems.
Web Order Capture facilities will integrate with our Web Lead Capture to
enable new customers to gain authorization for placing orders immediately upon
entering the system.
Localization. Our Localization Kit adds external language dictionaries and
currency conversion functionality to the standard solution, enabling Business
Partners and customers to translate SalesLogix products into their local
environments.
SERVICES
SalesLogix and SupportLogix are typically sold with bundled services that
are delivered either by SalesLogix or a certified third party implementation
provider. Services may include training, certification and project management
consulting. For customers requiring onsite services to install, implement and
customize our products, we offer both our own professional services group as
well as third party certified implementation specialists (many with vertical
industry specialization) to help ensure successful implementation of the
product.
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Our services are based on a rapid deployment and gradual customization
program. Typical SalesLogix implementations enable call center and mobile field
sales participants to integrate existing databases, install new client software
and synchronize updates within the first 30 days of the purchase of the
software.
Our Professional Services Group provides project implementation services to
supplement our Business Partners when needed, including the following services:
- analysis and requirements definition;
- system specification and design;
- project implementation;
- software installation;
- data conversion; and
- customization for external systems integration.
Our SalesLogix Systems Administrator Training class is designed for our
customers' IT professionals responsible for the maintenance, synchronization and
customization of the SalesLogix database and for administering the user settings
needed to manage the installation.
TECHNOLOGY
To create, maintain and expand SalesLogix, we use Delphi's rapid
application development tool. This significantly reduces development time and
enables us to respond rapidly to changing market demand in comparison to
applications that are built with traditional programming languages such as C and
C++.
Deployed as client server applications, SalesLogix and SupportLogix are
pure 32-bit applications that conform to open standards. They are Microsoft
BackOffice compatible and their user interfaces are consistent with technologies
currently used by Microsoft in its popular suite of office applications.
SalesLogix can be deployed as a true thin client that uses HTML and Java
Scripting. Our Web DLL is the interface between the web server and the
SalesLogix database that processes web templates on the server and generates web
pages in the user's browser. In addition, the Web DLL also handles data
integrity, security and synchronization functions for each of the records
written to the SalesLogix database. Our Internet-based products can be accessed
through Netscape (4.08 and 4.5) and Microsoft Internet Explorer (4.0) browsers
and support Netscape and Microsoft web servers.
Other key elements of our technology foundation include the following:
Sophisticated Data Model
At the core of SalesLogix is an object-oriented system that uses a
universal database engine to provide high performance and high throughput
connections to leading databases such as Microsoft SQL Server and Oracle. The
same technology is used whether users are working from their desktops with a
local database, or if they are working on their laptops at a remote location.
Users of SalesLogix Web Client work with the same database and data model as do
LAN and remote users. SalesLogix also uses a database scheme that can be easily
extended.
The SalesLogix database architecture is designed to be scalable, flexible
and highly configurable and supports the addition and deletion of tables and
fields. Database access queries are optimized for the database in use, resulting
in high speed and performance. SalesLogix supports Microsoft SQL Server, Oracle
and Inprise InterBase databases.
Synchronization Architecture
SalesLogix' Synchronization client and Synchronization server work together
to reconcile changing and disparate data residing on the host database, on
remote office databases or on remote user databases. SalesLogix employs an
offline "store and forward" scheme to collect, exchange, consolidate and apply
synchronization changes to the applicable databases using connect time only to
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exchange relevant data. Changes are applied to the database after the connection
is broken, significantly reducing connect time charges and making the computer
available for other purposes. The SalesLogix synchronization server can be
scheduled to run during off-peak hours, when the network traffic is minimal.
Data packets are compressed and encrypted for transmission to the remote users
when they dial in or connect through one of several supported connection
methods.
SalesLogix' Subscription mechanism and other tools allow the end user and
the system administrator to tailor the amount and type of data the remote user
receives giving significant control of the amount of information exchanged and
maintained on remote databases.
Security
SalesLogix includes several layers of security to control access to data,
aspects of the interface and underlying functionality. Accounts are owned by a
single user, a team of users or all users. Account ownership determines a user's
access to records. Each user has a default security profile that determines
their access (read, write, or view) to tables and fields for the accounts they
own, as well as the ability to create and maintain sales teams. Sales teams
contain users who need access to the same accounts. For example, a customer
might create teams based on region, territory, type of account or department.
Users can belong to more than one team and their security profiles can be
different for each team. Users can have different field level data security as a
member of a team or as an individual. Access to data is also based on a user's
position within the organization. In addition, SalesLogix supports the concept
of public and private accounts. Public accounts can be owned by an individual
user, a team of users, or all users, while personal contacts are kept private.
In addition, customers can also define each user's access to other users'
calendars. Access to aspects of the SalesLogix interface and underlying
functionality can also be controlled at a user level.
CUSTOMERS
We have licensed our software to more than 1,100 domestic and international
customers in a variety of industries including high-technology, financial
services, telecommunications, utilities, retail, banking, health care and real
estate. To date, customer implementations have ranged from as small as 10 users
to over 400 users. Set forth below is a representative list of customers that
have licensed our software.
ABN AMRO Asia Pacific
ADT Securities Services
Affiliated Research Centers
Anatol Automation
Anthony & Sylvan Pools
ADP
Blackbaud
Books Are Fun
Center for Creative Leadership
Century Business Services
CheckFree
Community Bank
CSK Auto
Del Webb
Dictaphone
Diversified Communications
DoubleClick
ESCO Electronics
First Sierra Financial
Frost & Sullivan
FullTime Software
Gensym
Global Asset Management
Hewlett-Packard
IKON Office Solutions
ILOG
Information Advantage
International Network Services
InterVoice
Iron Mountain
Kaplan Educational Centers
Lender's Service
Lexmark Canada
MCI WorldCom
McGraw-Hill
Medic Computer Systems
MicroWarehouse
Musco Lighting
NationsBank
net.Genesis
New York Stock Exchange
Nextel Communications
Novartis
P&O Nedlloyd
Paine Webber
Pennsylvania Physicians Care
PIMS UK
PPG Industries
Pyxis
Ronald Blue & Company
TELES AG
Stone Co.
The Finova Group
Tiffany & Co.
Time Distribution Services
U.S. Xchange
United Concordia Companies
Van Dyne-Crotty
Waterhouse Securities
Watlow Electric Manufacturing
Wyndham International
Workgroup Technology
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<PAGE> 44
SALES
We market and sell our software primarily through our indirect Business
Partner channel and, to a lesser extent, through our direct sales force.
Indirect Channels
We sell and implement our products primarily through our Business Partner
channel consisting of value added resellers, as well as systems integrators and
independent software vendors. Our Business Partners are independent
organizations that sell and market our products and perform implementation,
integration and customization services. We actively recruit Business Partners
through channel development groups within SalesLogix. More importantly, we
assist our Business Partners through comprehensive training and support and
cooperative marketing programs. All Business Partners are required to undergo
training and certification procedures before being authorized to sell and
implement our products and must maintain certain standards and sales volumes to
retain this authorization. As of December 31, 1998, we had more than 200
certified Business Partners, 12 of which are located internationally. We plan to
expand our international presence through recruiting of additional Business
Partners.
We typically enter into Software Business Partner Agreements with our
Business Partners, under which they purchase our products and sell our licenses
to designated end-users. No ownership rights are granted to our Business
Partners on any intellectual property relating to our products. Original
SalesLogix licenses are included in our product materials, which are provided
directly to end-users by our Business Partners. The Business Partners are solely
responsible for determining retail prices. However, our revenue from the sale of
our product to a Business Partner is based on a percentage of our list price and
is independent of the Business Partner's ability to collect payment from an end-
user. In addition, we generally provide the ongoing technical support and
maintenance for our products and our Business Partners are paid a commission if
they sell the support contract to the end-user. We have not granted exclusive
sales territories to our Business Partners, but may do so in the future if a
proposed distribution transaction merits such an arrangement.
We believe that our Business Partners have a significant influence over
product choices by customers and that our relationship with our Business
Partners is an essential element in our marketing, sales and implementation
efforts. Through our Business Partner network, we are able to provide customers
with trained and knowledgeable solution professionals who are available to
implement our systems locally. Many of our Business Partners customize our
systems to fit individual business needs and develop industry-specific
applications that integrate with and extend the functionality of our products.
See "Risk Factors -- We rely primarily on our resellers for the sale and
implementation of our products."
Direct Sales
We recently established a targeted direct sales force to complement our
indirect sales channel and pursue larger opportunities, typically companies with
over $250 million in revenue, as well as key strategic accounts in selected
vertical markets. As of December 31, 1998, we employed seven direct salespeople.
Our direct sales cycles average 90 to 120 days from initial contact to
close. We have four phone-based representatives to support our direct sales
effort and help generate leads for our Business Partners. We intend to further
develop our telesales and e-commerce channel to sell entry-level and customer
add-on solutions to our existing customer base and target small opportunities of
less than 10 seats.
MARKETING
Our marketing programs include a variety of advertising, telemarketing,
events, public relations and teleseminar campaigns that are designed to reach
target prospects in the mid-market and cultivate relationships with industry
leaders. These programs are targeted at key executives within
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<PAGE> 45
these mid-market companies such as the vice president of sales, vice president
of marketing, chief information officer and chief executive officer. As of
December 31, 1998, we employed 24 people in marketing, organized generally
around the areas of product management, marketing communications and channel
marketing.
Our marketing programs are designed to:
- Increase brand awareness for SalesLogix products -- We have implemented a
variety of brand awareness programs, including magazine advertising,
direct mail, public relations and trade show displays. These programs
have generated significant awareness for our products and a leading
position in brand recognition surveys.
- Generate leads for our channels -- Through targeted profiling techniques
and direct telemarketing calls from our database, we attempt to reach a
significant percentage of our target audience on a quarterly basis.
Through a variety of automated web and phone-based call scripts in our
contact center, we are able to rapidly qualify and assign leads across
our channels.
- Ensure efficient and effective partner-based sales cycles -- To take
advantage of the ease-of-use of our product and to improve selling
productivity, we have deployed a web infrastructure that enables dynamic
teleseminars, user-driven product demonstrations and an information
repository to automatically guide prospects and our Business Partners
through key decision points in the selling cycle.
Each of these programs leverage both our web-based marketing infrastructure
and our own implementations of SalesLogix products to streamline key prospect
and customer interactions and automate selling cycle activities.
COMPETITION
The market for front office automation software is intensely competitive,
fragmented and rapidly changing. We primarily compete with a variety of software
vendors that provide marketing, sales and customer support automation products.
While numerous solutions can be cited as potential competitors, direct
competitors of SalesLogix can be broadly segmented into three groups:
- Enterprise Front Office Vendors such as Aurum, Onyx, Pivotal, Siebel and
Vantive. These companies generally seek to provide automated selling
solutions to large enterprises through direct sales forces. They also
offer customized solutions through consulting services. Several of these
companies have announced strategies to target the mid-market
opportunities we are pursuing.
- Low-end Contact Manager Vendors such as Symantec with its ACT! product,
Goldmine and Microsoft with its Outlook product. These products support a
single user or small workgroup of users and are sold primarily through a
retail channel. Several of these companies have also announced strategies
to target the mid-market opportunities we are pursuing.
- Internal Development by our customers' or potential customers' own
technology departments. These organization have invested significant
resources in developing their own proprietary selling systems.
We believe that the principal competitive factors in our market include, or
are likely to include, product performance and features, price, ease-of-use,
quality of support and service, time to implement, ease of customization, sales
and distribution capabilities, strength of brand name and overall cost of
ownership. We believe that we compete effectively with our competitors with
respect to these factors. However, many of our competitors have longer operating
histories, significantly greater resources and greater name recognition. They
also may be able to devote greater resources to the development, promotion and
sale of their products than we can to ours, which could allow them to respond
more quickly than we can to new or emerging technologies and changes in customer
requirements. We cannot assure you that our competitors will not offer or
develop products that are superior to our products or that achieve greater
market acceptance.
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<PAGE> 46
We expect that competition will increase as other established and emerging
companies enter our market and as new products and technologies are introduced.
For example, several back-office software companies have built or acquired sales
automation and other front office products. Increased competition may result in
price reductions, lower gross margins and loss of our market share, any of which
could materially adversely affect our business, financial condition and
operating results.
RESEARCH AND DEVELOPMENT
As of December 31, 1998, SalesLogix employed 42 people in research and
development. This team is responsible for the design, development and release of
SalesLogix products. Research and development is organized into three groups:
development, quality assurance and documentation. Members from each of these
groups, along with a product manager from our marketing department, form
separate product teams that work closely with sales, marketing, Business
Partners, customers and prospects to better understand market needs and
requirements. When required, we use third-party development firms to expand the
capacity and technical expertise of our internal research and development team.
Additionally, we occasionally license third-party technology that is
incorporated into our products. We believe this approach significantly shortens
our time to market and we expect to continue to utilize third-party resources in
the foreseeable future.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
Our success depends in part on our ability to protect our proprietary
rights. To protect our proprietary rights, we rely primarily on a combination of
copyright, trade secret, patent and trademark laws, confidentiality agreements
with employees and third parties and protective contractual provisions such as
those contained in license agreements with our Business Partners, consultants,
vendors and customers, although we have not signed such agreements in every
case. Despite our efforts to protect our proprietary rights, unauthorized
parties may copy aspects of our products and obtain and use information that we
regard as proprietary. Other parties may breach confidentiality agreements and
other protective contracts we have entered into and we may not become aware of,
or have adequate remedies in the event of, such breach. We employ shrink-wrap
licenses designed to restrict the unauthorized use of our products, but such
licenses may be difficult to enforce.
We pursue the registration of certain of our trademarks and service marks
in the United States and in certain other countries, but we have not secured
registration of all our marks. In addition, the laws of some foreign countries
do not protect our proprietary rights to the same extent as do the laws of the
United States and effective copyright, trademark and trade secret protection may
not be available in other jurisdictions. We license certain proprietary rights
to third parties. Such licensees may not abide by compliance and quality control
guidelines with respect to such proprietary rights and may take actions that
would materially adversely affect our business, financial condition and
operating results.
The computer software market is characterized by frequent and substantial
intellectual property litigation, which is often complex and expensive and
involves a significant diversion of resources and uncertainty of outcome. We may
need to litigate to enforce and protect our intellectual property or to defend
against a claim of infringement or invalidity. We may be subject to legal
proceedings and claims from time to time in the ordinary course of our business,
including claims of alleged infringement of third-party proprietary rights by us
and our licensees. In addition, we expect that software developers will be
increasingly subject to infringement claims as the number of products and
competitors in our industry grows and the functionality of products in different
industry segments overlaps. Furthermore, former employers of our present and
future employees may assert claims that our employees have improperly disclosed
confidential or proprietary information to us. If we discover that any elements
of our products violate third-party proprietary rights, we may be unable to
obtain licenses on commercially reasonable terms, if at all and to avoid or
settle litigation without substantial expense and damage awards. Any claims
relating to the infringement of third-party proprietary rights, even if not
meritorious, could result in costly litigation, divert management's attention
and resources, cause product shipment delays or require us to pay damages or
enter into royalty or license
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<PAGE> 47
agreements on terms that are not advantageous to us. Any of these results could
materially adversely affect our business, financial condition and operating
results.
We rely on certain technology that we license from third parties, including
software that is integrated with internally developed software and used in our
products, to perform key functions. Although we are generally indemnified
against claims that such third-party technology infringes the proprietary rights
of others, such indemnification is not always available for all types of
intellectual property rights and in some cases the scope of such indemnification
is limited. Even if we receive broad indemnification, third-party indemnitors
are not always well capitalized and may not be able to indemnify us in the event
of infringement, resulting in substantial exposure to us. Infringement or
invalidity claims arising from the incorporation of third-party technology and
claims for indemnification from our customers resulting from such claims, may be
asserted or prosecuted against us. Such claims, even if not meritorious, could
result in the expenditure of significant financial and managerial resources in
addition to potential product redevelopment costs and delays and could
materially adversely affect our business, financial condition and operating
results.
EMPLOYEES
As of December 31, 1998, we had a total of 146 employees, excluding
independent contractors and other temporary employees, including 42 people in
research and development, 47 people in sales and marketing, 44 people in
professional services, customer support and training and 13 people in general
and administrative services. Our future performance depends in significant part
on the continued service of our key technical, sales, marketing and senior
management personnel. The loss of the services of one or more of our key
employees could have a material adverse effect on our business, financial
condition and operating results. Our future success also depends on our
continuing ability to attract, train and retain highly qualified technical,
sales, marketing and managerial personnel. Competition for such personnel is
intense. We cannot provide any assurance that we can retain our key technical,
sales, marketing and managerial personnel in the future. None of our employees
is represented by a labor union and we consider our employee relations to be
good.
FACILITIES
Our principal administrative, sales, marketing, support and research and
development facilities are located in approximately 41,200 square feet of space
in Scottsdale, Arizona and our lease expires on July 31, 2004. We also maintain
an international office in the United Kingdom.
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<PAGE> 48
MANAGEMENT
The following table sets forth certain information regarding the executive
officers and directors of SalesLogix as of March 31, 1999:
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Patrick M. Sullivan............ 45 President, Chief Executive Officer and Chairman of the
Board
Gary R. Acord.................. 46 Vice President, Chief Financial Officer, Secretary and
Treasurer
Kevin R. Bethke................ 34 Vice President, Worldwide Sales
R. Kevin Carson................ 39 Vice President, Professional Services
Philip J. Myers................ 40 Vice President, Marketing
Doug J. Nicholas............... 38 Vice President, Business Development
Sunil Padiyar.................. 38 Vice President, Product Development
Deepak Kamra(a)................ 42 Director
Harry D. Lambert(a),(b)........ 59 Director
Anthony P. Morris(b)........... 52 Director
David C. Schwab(b)............. 41 Director
Craig A. Conway(a)............. 44 Director
</TABLE>
- ------------------------------
(a) Member of compensation committee
(b) Member of audit committee
Patrick M. Sullivan is SalesLogix' founder and has served as SalesLogix'
President and Chief Executive Officer and as a member of SalesLogix' board of
directors since September 1995 and as Chairman of the board of directors since
March 1999. Prior to founding SalesLogix, Mr. Sullivan served as President and
Chief Executive Officer for Contact Software International, Inc., the developer
of ACT! Software, from October 1985 until June 1993, at which time Contact
Software was acquired by Symantec Corp. Mr. Sullivan continued as Vice President
of the Contact Management Division for Symantec until November 1993. Mr.
Sullivan holds a BS in Marketing from Eastern Illinois University.
Gary R. Acord has served as SalesLogix' Vice President and Chief Financial
Officer since September 1997. From April 1996 until September 1997, Mr. Acord
served as Vice President and CFO for Artisoft, Inc., which provides networking,
communications, computer telephony and Internet solutions for small and growing
businesses. From April 1995 until April 1996, Mr. Acord served as Senior Vice
President and CFO for Elsinore Corporation, a gaming company. From August 1979
until April 1995, Mr. Acord was employed by the international accounting firm of
KPMG, Peat Marwick. From July 1993 to April 1995, Mr. Acord served as managing
partner of the firm's Las Vegas office. Mr. Acord, a Certified Public
Accountant, holds a BS from James Madison University and a Master of Accountancy
from the University of Arizona.
Kevin R. Bethke has served as SalesLogix' Vice President of Worldwide Sales
since November 1998. From January 1994 until November 1998, Mr. Bethke served in
various capacities, most recently as Vice President of Sales, for QAD, Inc., a
leading provider of enterprise resource planning solutions for the mid-market.
Mr. Bethke holds a BS in Zoology from Southern Illinois University and an MBA
from Northern Illinois University.
R. Kevin Carson has served as SalesLogix' Vice President of Professional
Services since March 1996. From February 1986 until March 1996, Mr. Carson
served as President of Sales Automation, Inc., a systems implementation firm
focused on assisting corporations with complete turn-key sales automation
systems. Mr. Carson holds a BS in Computer Science from the Arizona Institute.
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<PAGE> 49
Philip J. Myers has served as SalesLogix' Vice President of Marketing since
December 1998. From October 1992 until December 1998, Mr. Myers served as Vice
President of Marketing for Novadigm, Inc. From August 1990 until November 1991,
Mr. Myers served as Vice President and General Manager of Workstation Products
for Pansophic Corp. From August 1986 until July 1990, he served as Director of
Product Marketing for Viasoft, Inc. Mr. Myers holds a BA in Accounting and an
MBA from Penn State University.
Doug J. Nicholas has served as SalesLogix' Vice President of Business
Development since December 1997. From October 1990 until its acquisition by
SalesLogix in December 1997, Mr. Nicholas served as President and CEO of Opis
Corporation, a developer of customer support applications, which he founded. Mr.
Nicholas holds a BA in Public Relations from the University of Northern Iowa.
Sunil Padiyar has served as SalesLogix' Vice President of Product
Development since February 1996. From March 1993 until February 1996, Mr.
Padiyar served as Vice President of Engineering for Artisoft, Inc. and most
recently as Senior Vice President of Technology and Business Development prior
to his joining SalesLogix. From December 1989 until March 1993, Mr. Padiyar
served in various development management roles at Novell, Inc., a leading
provider of networking and communication solutions to corporations and
enterprises. Mr. Padiyar holds a BSEE from Bangalore University in India and an
MBA from the University of Iowa.
Deepak Kamra has served as a member of SalesLogix' board of directors since
January 1996. Since March 1993, Mr. Kamra has been a principal of Canaan
Partners, a provider of consulting and venture financing to technology
companies. Mr. Kamra became a general partner of Canaan Partners in October
1995. Mr. Kamra also serves as a member of the board of directors for Concord
Communications, Inc., a developer of web-based network reporting and analysis to
evaluate the effectiveness of customers' IT investments. Mr. Kamra also serves
on the boards of directors for numerous privately-held technology companies. Mr.
Kamra holds a BS in Commerce from Carleton University and an MBA from Harvard
University.
Harry D. Lambert has served as a member of SalesLogix' board of directors
since January 1996. Since June 1993, Mr. Lambert has been a General Partner of
Innocal, L.P., a provider of venture financing to technology companies.
Previously, Mr. Lambert served as a general partner of two other venture capital
firms and as president of a telecommunications components company. Mr. Lambert
has served as a member of the board of directors for GeoCities, a leader in the
area of web-based communities online. He also serves on the board of directors
of Trega Biosciences, Inc. and several privately-held technology companies. Mr.
Lambert holds a BS from the U.S. Military Academy, West Point, New York and is a
graduate of the Columbia University Graduate School of Business Administration
Executive Program in Business Administration and the Harvard Graduate School of
Business Administration Advanced Management Program.
Anthony P. Morris has served as a member of SalesLogix' board of directors
since October 1996. Since 1998, Mr. Morris has been a principal in Morris &
Associates, a provider of strategy consulting and venture financing to
technology companies and investors. Mr. Morris also serves as a member of the
board of directors for Phoenix Technologies, Ltd., a developer of software
fundamental to the design and use of personal computers, information appliances
and peripherals. Mr. Morris holds an AB from the University of Pennsylvania and
an MBA from Stanford University.
David C. Schwab has served as a member of SalesLogix' board of directors
since March 1999. Since June 1996, Mr. Schwab has been a general partner of
Sierra Ventures, a provider of consulting and venture financing to technology
companies. From August 1991 until June 1996, Mr. Schwab served as Vice President
of Sales for Scopus Technologies, Inc. Mr. Schwab also serves as a member of the
board of directors for Micromuse, Inc., a provider of software solutions for
monitoring and management of IT infrastructure, Computer Literacy, Inc., an
online seller of computer and technical books, and numerous privately-held
technology companies. Mr. Schwab holds a BA from the University of California
San Diego, an MS and ENG in Aerospace Engineering from Stanford University and
an MBA from Harvard University.
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<PAGE> 50
Craig A. Conway has served as a member of SalesLogix' board of directors
since March 1999. From April 1997 until March 1999, Mr. Conway served as
President and Chief Executive Officer for One Touch Systems, Inc., a provider of
solutions to integrate video, voice and data over high bandwidth networks. From
November 1993 until May 1996, Mr. Conway served as President and CEO for TGV
Software, Inc., a developer of TCP/IP network protocol and application software
used to build corporate intranets. Prior to that Mr. Conway served as Executive
Vice President for Oracle Corporation. Mr. Conway holds a BS in Computer Science
from SUNY Brockport.
BOARD COMMITTEES
The compensation committee currently consists of Messrs. Kamra, Lambert and
Conway. The compensation committee reviews and approves the compensation and
benefits for our executive officers, reviews in general our overall employee
compensation policies and makes recommendations to our board of directors
regarding such matters. Upon request of our board of directors, the committee
may grant stock options under our stock plans.
The audit committee currently consists of Messrs. Lambert, Morris and
Schwab. The audit committee makes recommendations to our board of directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by our independent auditors and reviews
and evaluates our internal audit and control functions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between the compensation committee and
the board of directors or compensation committee of any other company, nor has
any such interlocking relationship existed in the past.
DIRECTOR COMPENSATION
We reimburse nonemployee directors for reasonable expenses they incur in
attending meetings of our board of directors and its committees. Directors of
SalesLogix are eligible to participate in our 1996 Equity Incentive Plan, but
have not received any awards as of December 31, 1998. Immediately following
consummation of this offering, we intend to grant options to purchase 12,500
shares of common stock to each of our non-employee directors under our 1999
Non-Employee Director Stock Option Plan. Following the completion of this
offering and as long as the Director Stock Option Plan remains in effect, each
non-employee director who remains a director immediately after each annual
meeting of our stockholders shall receive a non-discretionary option grant to
purchase 12,500 shares of our common stock. All non-employee director options
vest in sixteen equal quarterly installments following the date of grant and
have an exercise price equal to the fair market value of our common stock on the
date of grant. Vesting is automatically accelerated prior to a change in control
of SalesLogix. See "Incentive Stock Plans -- 1999 Non-Employee Director Stock
Option Plan."
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<PAGE> 51
EXECUTIVE COMPENSATION
The table below sets forth information concerning the compensation awarded
to, earned by or paid for services rendered to SalesLogix in all capacities
during the year ended December 31, 1998 by our President and Chief Executive
Officer and our next four most highly compensated executive officers whose
salary and bonus for 1998 exceeded $100,000. These executive officers are
referred to as the Named Executive Officers elsewhere in this prospectus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
------------------- SECURITIES
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS
- --------------------------- -------- ------- ------------------
<S> <C> <C> <C>
Patrick M. Sullivan
President and Chief Executive Officer........... $145,385 $52,083 --
Gary R. Acord
Secretary and Chief Financial Officer........... 122,596 16,250 --
R. Kevin Carson
Vice President--Professional Services........... 138,923 61,834 33,333
Doug J. Nicholas
Vice President--Business Development............ 100,944 18,334 --
Sunil Padiyar
Vice President--Product Development............. 160,000 63,334 33,333
</TABLE>
OPTION EXERCISES DURING 1998 AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding option
exercises during fiscal 1998 and the number and value of securities underlying
unexercised stock options held by our Named Executive Officers as of December
31, 1998. The calculations of the value realized and of the unexercised
in-the-money options are based on the midpoint of the proposed offering price
range, less the exercise price payable for such shares, multiplied by the number
of shares issuable upon exercise of the option.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
SHARES 1998 DECEMBER 31, 1998
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patrick M.
Sullivan........... -- $ -- -- -- $ -- $ --
Gary R. Acord........ -- -- 30,833 92,500
R. Kevin Carson...... 145,000 36,250 142,083
Doug J. Nicholas..... -- -- 16,667 50,000
Sunil Padiyar........ 199,375 -- 123,959
</TABLE>
OPTION GRANTS DURING 1998
The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during 1998, including
the potential realizable value over the 10 year term of the options based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
assumed rates of appreciation comply with the rules of the SEC and do not
represent our estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of our common
stock. In 1998, we granted options to acquire up to an aggregate of 911,171
shares to employees, all under our 1996 Equity Incentive Plan and all at an
exercise price equal to not less than the fair market value of our common stock
on the date of grant as
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<PAGE> 52
determined in good faith by the board of directors. Optionees may pay the
exercise price by cash, check, promissory note, delivery of already-owned shares
of SalesLogix common stock or, upon approval by our board of directors, pursuant
to a cashless exercise procedure. Options granted in 1998 vest over four years
with 25% of the shares subject to option vesting on the first anniversary of the
grant date and the remaining option shares vesting ratably quarterly thereafter.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERMS
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------
NAME GRANTED 1998 SHARE DATE 5% 10%
---- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Patrick M. Sullivan.......... -- --% $ -- -- $ -- $ --
Gary R. Acord................ -- -- -- -- -- --
R. Kevin Carson.............. 33,334 3.4 1.53 12/10/2008 32,074 81,282
Doug J. Nicholas............. -- -- -- -- -- --
Sunil Padiyar................ 33,334 3.4 1.53 12/10/2008 32,074 81,282
</TABLE>
INCENTIVE STOCK PLANS
1996 Equity Incentive Plan. Our 1996 Plan was adopted by our board in
January 1996 and subsequently approved by our stockholders. The purpose of our
1996 Plan is to enhance long-term stockholder value by offering opportunities to
employees, directors, officers, consultants, advisors and independent
contractors of SalesLogix and its subsidiaries to participate in SalesLogix'
growth and success and to encourage them to remain in the service of SalesLogix
and its subsidiaries and to own SalesLogix stock. Our 1996 Plan provides for
awards of stock options, stock appreciation rights, performance units,
restricted stock and other stock reference awards. A total of 3,366,667 shares
are reserved for issuance under the 1996 Plan. Subject to stockholder approval,
our board recently authorized an increase in the total number of shares issuable
under the 1996 Plan to 4,500,000 shares plus an automatic annual increase, to be
added on the first day of each fiscal year beginning in 2000, equal to the
lesser of (a) 1,500,000 shares, (b) 5% of the average common shares outstanding
used to calculate fully diluted earnings per share as reported in SalesLogix'
Annual Report for the preceding year, or (c) a lesser amount determined by our
board of directors. As of December 31, 1998, options to purchase 1,654,346
shares of common stock were outstanding under our 1996 Plan with exercise prices
ranging from $0.15 to $1.53 per share, options to purchase 707,329 shares were
available for grant and options to purchase 1,004,992 shares had been exercised.
The board of directors, or at its request, the compensation committee,
serves as the plan administrator of our 1996 Plan. The plan administrator has
the authority to select individuals to receive awards under the plan, to specify
the terms and conditions of each award granted and to modify (with optionholder
consent) the terms, conditions and exercise prices of outstanding options. The
1996 Plan does not limit our right to adopt other incentive compensation
arrangements, including, without limitation, the granting of stock options or
other rights otherwise than under the 1996 Plan.
In the event of a merger, consolidation or other reorganization, the board
may provide, without limitation, (a) for the continuation of outstanding options
by the company (if the company is a surviving corporation), (b) for their
assumption by the surviving corporation or its parent or subsidiary, (c) for the
substitution by the surviving corporation or its parent or subsidiary of its own
awards for such options, (d) for accelerated vesting, accelerated expiration
and/or lapse of restrictions, or (e) for settlement in cash or cash equivalents.
If the board does not provide for one of the alternatives in (a), (b), (c), (d)
or (e) above, then all outstanding options become fully exercisable upon the
effectiveness of such transaction.
1999 Employee Stock Purchase Plan. Our board of directors adopted our
Purchase Plan in March 1999, subject to stockholder approval. If our Purchase
Plan is approved by our stockholders, we will
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<PAGE> 53
implement it upon the consummation of this offering. We intend for this plan to
qualify under Section 423 of the Internal Revenue Code. The Purchase Plan
permits eligible employees of SalesLogix and its subsidiaries to purchase common
stock through payroll deductions of up to 15% of their compensation. Under this
plan, no employee may purchase common stock worth more than $25,000 in any
calendar year, valued as of the first day of each offering period. In addition,
owners of 5% or more of SalesLogix' or a subsidiary's common stock may not
participate in the Purchase Plan. We authorized the issuance under the Purchase
Plan of a total of 300,000 shares of common stock, plus an automatic annual
increase, to be added on the first day of each fiscal year beginning in 2000,
equal to the lesser of (a) 300,000 shares, (b) 1% of the adjusted average common
shares outstanding used to calculate fully diluted earnings per share as
reported in SalesLogix' annual report for the preceding year, or (c) a lesser
amount determined by our board of directors. Any shares from increases in
previous years that are not actually issued shall be added to the aggregate
number of shares available for issuance under the Purchase Plan.
We will implement our Purchase Plan with 24-month offering periods and
six-month purchase periods. The first offering period will commence on the
consummation of this offering and end on June 30, 2001. Subsequent overlapping
offering periods will begin on each January 1 and July 1 thereafter. The first
purchase period will commence on the consummation of this offering and end on
December 31, 1999. Subsequent purchase periods will begin on each January 1 and
July 1 thereafter. The price of the common stock purchased under the Purchase
Plan will be the lesser of 85% of the fair market value on the first day of an
offering period and 85% of the fair market value on the last day of a purchase
period, except that the purchase price for the first purchase period will be
equal to the lesser of 85% of the initial public offering price of the common
stock and 85% of the fair market value on December 31, 1999. The Purchase Plan
includes a reset provision pursuant to which a participating employee is
automatically withdrawn from his current 24 month offering period and reenrolled
in the subsequent offering period in the event that our stock price declines
during any six-month purchase period. Our board of directors has discretion to
modify certain provisions of the Purchase Plan, including the shortening of
offering periods, if it determines that its operation may result in unfavorable
accounting consequences. The Purchase Plan terminates ten years after the date
of adoption by our board of directors, but the board may terminate it at any
earlier time. We have not yet issued any shares of common stock under this plan.
In the event of a merger, consolidation or acquisition by another
corporation of all or substantially all of our assets, each outstanding option
to purchase shares under our Purchase Plan shall be assumed or an equivalent
option substituted by the successor corporation. If the successor corporation
refuses to assume or substitute for the option, the offering period during which
a participant may purchase stock will be shortened to a specified date before
the proposed merger or sale. Similarly, in the event of a proposed liquidation
or dissolution of SalesLogix, the offering period during which a participant may
purchase stock will be shortened to a specified date before the date of the
proposed liquidation or dissolution.
1998 Business Partner Stock Option Plan. Our board of directors and
stockholders adopted our Business Partner Option Plan in March 1998 and reserved
an aggregate of 150,000 shares of common stock for grants of stock options under
the plan. The Business Partner Option Plan provides for the grant of
non-qualified options to purchase common stock to consultants and advisors of
SalesLogix or its subsidiaries, including independent marketers and resellers of
SalesLogix' products. As of December 31, 1998, options to purchase 87,503 shares
of common stock were outstanding under this plan, 63,000 at an exercise price of
$0.60 per share and 24,503 at an exercise price of $9.00 per share, no options
have been exercised and options to purchase up to 62,497 shares remain available
for grant.
Our Business Partner Option Plan is administered by our board of directors.
Our board of directors has the authority to select individuals who are to
receive options under this plan and to specify the terms and conditions of each
option so granted. Options granted under the Business Partner Option Plan must
be exercised within 30 days after SalesLogix contractual relationship with the
Business Partner is terminated due to any reason other than for cause and are
not exercisable after termination if such termination is for cause.
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<PAGE> 54
In the event of a merger, consolidation or other reorganization, the board
may provide, without limitation, (a) for the continuation of outstanding options
by the company (if the company is a surviving corporation), (b) for their
assumption by the surviving corporation or its parent or subsidiary, (c) for the
substitution by the surviving corporation or its parent or subsidiary of its own
awards for such options, (d) for accelerated vesting, accelerated expiration
and/or lapse of restriction, or (e) for settlement in cash or cash equivalents.
If the board does not provide for one of the alternatives in (a), (b), (c), (d)
or (e) above, then all outstanding options become fully exercisable upon the
effectiveness of such transaction.
1999 Non-Employee Director Stock Option Plan. Our board of directors
adopted our Director Plan in March 1999, subject to stockholder approval. If our
Director Plan is approved by our stockholders, we will implement it upon
consummation of this offering. Immediately following consummation of this
offering, we intend to grant options to purchase 12,500 shares of common stock
to each of our non-employee directors under the Director Plan. Following the
completion of this offering and as long as the Director Plan remains in effect,
each non-employee director who remains a director immediately after each annual
meeting of our stockholders shall receive a non-discretionary option grant to
purchase 12,500 shares of our common stock. All non-employee director options
vest in sixteen equal quarterly installments following the date of grant and
have an exercise price equal to the fair market value of our common stock on the
date of grant. Vesting is automatically waived prior to a change in control of
SalesLogix. We reserved for issuance under the Director Plan a total of 200,000
shares of common stock, plus an automatic annual increase, to be added at the
conclusion of each annual meeting of our stockholders following the consummation
of this offering, equal to (a) the aggregate number of shares determined by
multiplying the total number of non-employee directors then in office by 12,500
or (b) a lesser amount determined by our board of directors. Any shares from
increases in previous years that are not actually issued shall be added to the
aggregate number of shares available for issuance under this plan. The plan does
not limit our right to adopt other incentive compensation arrangements,
including, without limitation, the granting of stock options or other rights
otherwise than under the Director Plan.
401(k) Plan. We maintain a 401(k) Plan that covers all our employees who
satisfy certain eligibility requirements relating to minimum age, length of
service and hours worked. We may make an annual contribution for the benefit of
eligible employees in an amount determined by our board of directors. We have
not made any such contribution to date and have no current plans to do so.
Eligible employees may make pretax elective contributions of up to 15% of their
eligible compensation, subject to maximum limits on contributions prescribed by
law.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
We generally require each employee to enter into a proprietary rights
agreement prohibiting the employee from disclosing or using any of our
confidential or proprietary information without our permission. In addition, the
agreements generally provide that the employee agrees to assign to SalesLogix
all inventions developed during the course of employment and not to work for a
competitor during his or her employment with SalesLogix. At the time of
commencement of employment, our key employees also generally sign offer letters
specifying certain basic terms and conditions of employment. Most of our
employees are not subject to written employment agreements. However, we have
employment agreements with Messrs. Sullivan and Nicholas that include a
non-compete provision and provide certain severance benefits and offer letters
with Messrs. Acord, Bethke and Myers that provide for six months' severance on
termination without cause.
Mr. Sullivan's agreement is dated January 17, 1996 and provides that if he
is terminated without cause or resigns for good reason, as defined in the
agreement, Mr. Sullivan is entitled to receive a payment equal to six months'
base salary. The agreement also includes Mr. Sullivan's covenants not to compete
or solicit customers for a period of two years following termination of
employment and his covenant not to solicit employees for a three year period
following such termination.
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<PAGE> 55
Mr. Nicholas' agreement, which was entered into in connection with our
acquisition of Opis in December 1997, provides certain benefits in the event of
termination within the four year period after the date of the agreement. If Mr.
Nicholas is terminated for performance reasons, we must pay him three months'
salary and benefits as severance and if he is terminated without cause, we must
pay him six months salary and benefits. The agreement also includes Mr.
Nicholas's covenants not to compete or solicit customers for a period of one
year following termination of his employment and his covenant not to solicit
employees or contractors for a three year period following such termination.
Our option award agreements provide for the waiver of vesting periods upon
a change in control of SalesLogix.
LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION
Our certificate of incorporation includes a provision that limits the
liability of directors to the fullest extent permitted by the Delaware general
corporate law as it currently exists or as it may be amended in the future.
Consequently, subject to the Delaware general corporate law, no director shall
be personally liable to SalesLogix or its stockholders for monetary damages
resulting from his or her conduct as a director of SalesLogix, except liability
for:
- breach of the director's duty of loyalty to SalesLogix or its
stockholders,
- acts or omissions not in good faith or involving intentional misconduct
or knowing violations of law,
- unlawful distributions, or
- transactions from which the director derived any improper personal
benefit.
Our certificate of incorporation provides that we will indemnify directors,
officers and their legal representatives to the fullest extent permitted by the
Delaware general corporate law. The Delaware general corporate law contains an
extensive indemnification provision which permits a corporation to 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 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), 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. In suits by or in the
right of a corporation, only expenses and not judgments, fines and amounts paid
in settlement may be indemnified against. In addition, if the director or
officer has been adjudged to be liable to the corporation in such a suit,
indemnification of expenses must be approved by a court. To the extent that a
director or officer is ultimately successful in defending against the foregoing
actions, the Delaware general corporate law provides that such persons shall be
indemnified against expenses. To the extent the provisions of our certificate of
incorporation provide for indemnification of directors for liabilities arising
under the Securities Act of 1933, those provisions are, in the opinion of the
Commission, against public policy as expressed in the Securities Act and they
are therefore unenforceable.
We maintain a liability insurance policy, pursuant to which our directors
and officers are indemnified against liability they may incur for serving in
their capacities as directors and officers of SalesLogix.
We believe that the limitation of liability and indemnification provisions
under the Delaware general corporate law and the liability insurance policy
facilitate our ability to continue to attract and retain qualified individuals
to serve as directors and officers of SalesLogix.
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CERTAIN TRANSACTIONS
Patrick M. Sullivan may be considered the "promoter" of SalesLogix within
the meaning of the rules and regulations promulgated under the Securities Act of
1933, as amended. In September 1995, we sold and issued 1,667 shares of common
stock to Mr. Sullivan for an aggregate purchase price of $3,000. In January
1996, Mr. Sullivan's shares were split into 2,280,000 shares of Class A common
stock. Also in January 1996, we acquired certain intellectual property rights
through a statutory merger with Kennedy Systems, Inc., an Illinois corporation.
In connection with this transaction, we issued 1,813,333 shares of Class B
Common Stock and 700,000 shares of Series B preferred stock to W. Daniel Kennedy
and certain trusts controlled by Mr. Kennedy or his family, the stockholders of
Kennedy Systems.
In connection with our merger with Kennedy Systems, Messrs. Sullivan and
Kennedy (and certain trusts controlled by Mr. Kennedy or his family) agreed to
deposit all of their shares into a voting trust, pursuant to a Voting Trust
Agreement designating Mr. Sullivan as Trustee with the power to vote the shares
in a certain manner under certain conditions. The Voting Trust Agreement was
agreed to by SalesLogix and the investors participating in our venture offering
of Series A preferred stock in January 1996. The parties to the Voting Trust
Agreement also entered into two other agreements, a Stockholders' Agreement that
provided SalesLogix and the investors with repurchase rights and rights of first
refusal and co-sale with respect to shares controlled by Messrs. Sullivan and
Kennedy and a Voting Agreement, which generally required Mr. Kennedy and Mr.
Sullivan to vote shares each controlled in accordance with the majority of
SalesLogix voting stock not including his shares. Investors in subsequent
venture financing transactions were granted rights under the Stockholders'
Agreement on par with the Series A preferred stock investors by executing a
Series A, C & E Sharing Agreement. Those investors also entered into a Series A,
C & E Voting Agreement, pursuant to which the investors were given approval
rights over the two at-large directorships elected pursuant to the Voting
Agreement and certificate of incorporation and agreed, with certain class
exceptions, to vote their shares in a manner consistent with the majority of
shares held by all venture investors. Each of the Voting Trust Agreement,
Stockholders' Agreement, Voting Agreement, Series A, C & E Sharing Agreement and
Series A, C & E Voting Agreement will terminate upon the consummation of this
offering.
In March 1996, Messrs. Sullivan and Kennedy each contributed 90,000 shares
of common stock back to SalesLogix in order to make additional shares available
under our 1996 Equity Incentive Plan. In July 1998, pursuant to the termination
of Mr. Kennedy's employment with SalesLogix and subsequent release of all claims
among SalesLogix and Messrs. Sullivan and Kennedy (and certain trusts controlled
by Mr. Kennedy or his family), we repurchased from Mr. Kennedy and those trusts
all but 72,827 shares of Class B common stock and 666,760 shares of Series B
preferred stock held by them.
In May 1996, we purchased certain sales forecasting software from R. Kevin
Carson, Laura P. Carson and Sales Automation, Inc., an entity controlled by Mr.
and Mrs. Carson, in exchange for 33,333 shares of our Class A common stock.
These shares were sold by the Carsons in the December 1998 transaction described
below.
In December 1997, in connection with our acquisition of Opis Corporation,
we issued to the former stockholders of Opis an aggregate of 1,228,654 shares of
Series D preferred stock at a purchase price of $3.21 per share and options to
purchase an aggregate of 96,836 shares of Series D preferred stock at an
exercise price of $.8515 per share. Doug Nicholas, our Vice President of
Business Development, received 528,463 shares of Series D preferred stock in the
transaction.
In December 1998, Sierra Ventures VI, L.P., SV Associates, L.P. and Canaan
Equity, L.P., Deepak Kamra, Eric Young and Gregory Kopchinski purchased an
aggregate of 474,667 shares of Class A common stock, 208,000 shares of Series B
preferred stock and 63,463 shares of Series D preferred stock from various
stockholders at a purchase price of $3.00 per share. These entities purchased
253,333 shares of Class A common stock from Patrick M. Sullivan and 208,000
shares of Series B preferred stock
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<PAGE> 57
from W. Daniel Kennedy and (various trusts controlled by Mr. Kennedy or his
family). We facilitated these transactions by agreeing to release the
transferred shares from various restrictions on transfer. As part of this
transaction, Sierra Ventures VI, L.P. and SV Associates VI, L.P. were granted
options to purchase 53,333 shares, 40,000 shares and 33,333 shares of Class A
Common Stock from Messrs. Padiyar, Head and Carson, executive officers of
SalesLogix, respectively. The option to purchase 53,333 shares from Mr. Padiyar
was exercised on March 9, 1999. The remaining options must be exercised, if at
all, on April 15, 1999, or within 15 days thereafter.
In January and October 1996, we sold 4,500,000 shares and 85,000 shares,
respectively, of our Series A preferred stock at a price of $1.00 per share. In
March 1997, we sold 4,031,057 shares of our Series C preferred stock at a price
of $1.61 per share. In June and December 1998, we sold 3,940,887 shares and
615,764 shares, respectively of our Series E preferred stock at a price of $4.06
per share. Upon the consummation of this offering, all outstanding shares of
preferred stock will automatically convert into shares of common stock on a
two-for-three basis. The following directors, executive officers and holders of
more than 5% of a class of voting securities have purchased shares of Series A
preferred stock, Series C preferred stock and Series E preferred stock:
<TABLE>
<CAPTION>
SERIES A SERIES C SERIES E
--------- --------- ---------
<S> <C> <C> <C>
NAMED EXECUTIVE OFFICERS AND DIRECTORS
Anthony Morris.......................................... 25,000 15,528 6,431
Deepak Kamra............................................ 25,000 6,211 5,020
FIVE PERCENT STOCKHOLDERS
Innocal, L.P............................................ 2,000,000 621,118 110,837
Canaan Partners affiliated persons...................... 1,500,000 621,118 646,917
Newtek Ventures II, L.P................................. 1,000,000 186,335 73,892
Sigma Partners III, L.P. and affiliated persons......... -- 1,086,957 295,567
Brinson Partners, Inc. affiliated persons............... -- 1,381,988 110,837
Sierra Ventures VI, L.P. and affiliated persons......... -- -- 2,535,068
</TABLE>
See the notes to the table of beneficial ownership in "Principal
Stockholders" for information relating to the beneficial ownership of such
shares.
In connection with the foregoing venture financing transactions, we entered
into an investors' rights agreement with the investors. The Amended and Restated
Investors' Rights Agreement dated June 4, 1998 grants to such investors certain
registration rights discussed below in "Description of Capital Stock," rights to
receive certain financial information and rights to purchase a pro rata share of
new issuances of capital stock. The rights to purchase a pro rata share of new
issuances will terminate upon consummation of this offering. Under the Amended
and Restated Investors' Rights Agreement, Sierra Ventures VI, L.P. and The
Goldman Sachs Group, L.P. and certain of its affiliates were granted certain
board observation rights. Pursuant to management rights agreements, Brinson,
Sigma and Sierra were granted certain additional board observation rights and
rights to consult with management and examine our books and records. These
management rights agreements will terminate upon consummation of this offering.
Prior to consummation of this offering, we will enter into a new management
rights agreement with Newtek Ventures II, L.P. and Brinson Partners, Inc. to
provide these investors with the same board observation rights granted to Sierra
and Goldman Sachs under the Amended and Restated Investors' Rights Agreement.
Concurrent with this public offering, The Goldman Sachs Group, L.P. and its
affiliates, all of which are existing stockholders, have agreed to purchase an
aggregate of $3.5 million of our common stock in a private placement at a price
per share equal to the initial public offering price, less 3.5%. The sale of
such shares to Goldman Sachs will not be registered in this offering.
In exchange for consulting and advisory services, SalesLogix pays $2,000
per month to Morris Ventures, an investor in SalesLogix of which Anthony Morris,
one of our directors, is a principal.
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<PAGE> 58
PRINCIPAL STOCKHOLDERS
The following table summarizes information regarding the beneficial
ownership of our outstanding common stock as of December 31, 1998 by (1) each
person or group that we know owns more than 5% of the common stock, (2) each of
our directors, (3) each of the Named Executive Officers and (4) all of our
directors and executive officers as a group. Unless otherwise indicated, the
following officers, directors and stockholders can be reached at the principal
offices of the Company.
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS
BENEFICIALLY OWNED(1)
NUMBER OF SHARES ----------------------
BENEFICIALLY OWNED BEFORE THE AFTER THE
PRIOR TO OFFERING OFFERING OFFERING
------------------ ---------- ---------
<S> <C> <C> <C>
FIVE PERCENT STOCKHOLDERS
Sierra Ventures VI, L.P.(2)................... 2,407,385 17.9%
Canaan Partners affiliated persons(3)......... 1,937,898 14.5%
Innocal, L.P.(4).............................. 1,821,305 13.6%
Brinson Partners, Inc. affiliated
persons(5)................................. 995,218 7.5%
Sigma Partners III, L.P.(6)................... 921,684 6.9%
Newtek Ventures II, L.P.(7)................... 840,153 6.3%
DIRECTORS AND EXECUTIVE OFFICERS
Deepak Kamra(8)............................... 1,937,898 14.5%
Patrick M. Sullivan(9)........................ 1,936,667 14.5%
Harry D. Lambert(10).......................... 1,821,305 13.6%
Doug J. Nicholas(11).......................... 361,185 2.7%
Sunil Padiyar(12)............................. 217,500 1.6%
R. Kevin Carson(13)........................... 202,708 1.5%
Anthony P. Morris(14)......................... 62,243 *
Gary R. Acord(15)............................. 38,542 *
All directors and executive officers as a
group (10 persons)(16)..................... 6,578,048 48.6%
</TABLE>
- ------------------------------
* Less than 1%.
(1) Applicable percentage ownership is based on 13,344,921 shares of common
stock outstanding as of December 31, 1998 and shares
outstanding immediately following the completion of this offering.
Beneficial ownership is determined in accordance with rules of the
Commission and includes shares over which the indicated beneficial owner
exercises voting and/or investment power. Shares of common stock subject to
options currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage ownership of the person holding
the options but are not deemed outstanding for computing the percentage
ownership of any other person. Except as otherwise indicated, we believe
the beneficial owners of the common stock listed below, based on
information furnished by them, have sole voting and investment power with
respect to the number of shares listed opposite their names.
(2) Represents 1,853,089 issuable upon conversion of the preferred stock and
includes shares held by affiliates: SV Associates VI, L.P. (171,814
shares); G&H Partners (8,210 shares); and Robert Simon (1,642 shares). Also
includes 117,067 shares subject to an option exercisable within 60 days and
9,600 shares subject to an option exercisable within 60 days held by SV
Associates VI, L.P. The address of Sierra Ventures VI, L.P. is 3000 Sand
Hill Road; Building 4, Suite 210; Menlo Park, CA 94025.
(3) Represents 1,937,891 shares issuable upon conversion of the preferred stock
held by the following affiliated persons: Canaan Ventures II Offshore
Limited Partnership (865,416 shares); Canaan Ventures II Limited
Partnership (548,663 shares); Canaan Equity, L.P. (486,504 shares); Deepak
Kamra, a SalesLogix director and principal of Canaan (27,405 shares); Eric
Young (4,955 shares); and Gregory Kopchinski (4,955 shares). The address of
Canaan Ventures Offshore Limited Partnership, C.V. is 2884 Sand Hill Road,
Suite 115; Menlo Park, CA 94025.
(4) Represents 1,821,305 shares issuable upon conversion of the preferred
stock. Harry Lambert, a SalesLogix director, is a principal of Innocal. The
address of Innocal, L.P. is 600 Anton Blvd., Suite 1270; Costa Mesa, CA
92626.
(5) Represents 995,218 shares issuable upon conversion of the preferred stock
and includes shares held by Brinson Partners, Inc. entities, including the
Brinson Venture Capital LP Fund III, (855,668 shares) and the Brinson Trust
Company as
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<PAGE> 59
Trustee of the Brinson MAP Venture Capital Fund III (139,550 shares). The
address of Brinson Partners, Inc. is 209 S. LaSalle Street, Chicago, IL
60604.
(6) Represents 921,684 shares issuable upon conversion of the preferred stock
and includes shares held by affiliates: Sigma Associates III, L.P. (178,898
shares); and Sigma Investors III, L.P. (19,909 shares). The address of
Sigma Partners III, L.P. is 2884 Sand Hill Rd., Suite 121; Menlo Park, CA
94025.
(7) Represents 840,153 shares issuable upon conversion of the preferred stock.
The address of Newtek Ventures II, L.P. is 500 Washington Street, Suite
720; San Francisco, CA 94111.
(8) Includes 25,053 shares issuable upon conversion of the preferred stock held
by Mr. Kamra and 1,910,488 shares held by or issuable upon conversion of
preferred stock held by Canaan and its affiliates other than Mr. Kamra. See
Footnote 3. Mr. Kamra disclaims beneficial ownership of shares held by
Canaan and its affiliates other than Mr. Kamra.
(9) Includes 426,067 shares held by The Sullifam Limited Partnership, 319,550
shares held by The Cyndee K. Sullivan Fifteen Year Grantor Retained Annuity
Trust, dated December 18, 1998, 319,550 shares held by The CyndeewK.
Sullivan Ten Year Grantor Retained Annuity Trust, 319,550 shares held by
The Patrick M. Sullivan Fifteen Year Grantor Retained Annuity Trust, dated
December 18, 1998, 319,550 shares held by the Patrick M. Sullivan Ten Year
Grantor Retained Annuity Trust, dated December 18, 1998 and 232,400 shares
held by The PCS Trust, dated September 10, 1998, trusts for the benefit of
Mr. Sullivan's children, for which Mr. Sullivan has sole voting power, all
of which shares are held in the name of the Trustee of The Quest Sales
Software, Inc. Voting Trust, for which Patrick Sullivan is Voting Trustee.
The Voting Trust will terminate upon the closing of this offering.
(10) Represents 1,821,305 shares issuable upon conversion of the preferred stock
held by Innocal. See Footnote 6. Mr. Lambert disclaims beneficial ownership
of such shares.
(11) Represents 316,333 shares issuable upon conversion of the preferred stock
held by Mr. Nicholas and 28,185 shares issuable upon conversion of
preferred stock held by Mr. Nicholas' spouse Susan Nicholas. Also includes
16,667 shares subject to options exercisable within 60 days of December 31,
1998.
(12) Includes 18,125 shares subject to an option exercisable within 60 days of
December 31, 1998.
(13) Includes 18,125 shares subject to an option exercisable within 60 days of
December 31, 1998 and 3,333 shares subject to an option held by Mr.
Carson's spouse Laura Carson exercisable within 60 days of December 31,
1998.
(14) Includes 2,812 shares subject to an option exercisable within 60 days of
December 31, 1998, 4,288 shares issuable upon conversion of preferred stock
held by Mr. Morris and 27,019 shares issuable upon conversion of preferred
stock held by Morris Ventures, an investor in which Mr. Morris is a
principal. Mr. Morris disclaims beneficial ownership of shares held by
Morris Ventures.
(15) Includes 38,542 shares subject to an option exercisable within 60 days of
December 31, 1998.
(16) Includes 62,904 shares subject to an option exercisable within 60 days of
December 31, 1998.
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DESCRIPTION OF CAPITAL STOCK
Following the closing of this offering, the authorized capital stock of
SalesLogix, after giving effect to the conversion of all outstanding preferred
stock and Class B common stock, will consist of 50,000,000 shares of common
stock, $0.001 par value per share and 20,000,000 shares of preferred stock,
$0.001 par value per share. As of December 31, 1998, there were approximately 77
stockholders of record. The following summary of certain provisions of the
common stock and preferred stock is not complete and may not contain all the
information you should consider before investing in the common stock. You should
read carefully our Restated Certificate, which is included as an exhibit to the
Registration Statement, of which this prospectus is a part.
COMMON STOCK
Following this offering and the concurrent $3.5 million private placement
with The Goldman Sachs Group, L.P. and its affiliates, there will be
shares of common stock outstanding (assuming no exercise of the
underwriters' over-allotment option and no exercise of outstanding options). The
holders of common stock are entitled to one vote per share on all matters to be
voted on by the stockholders. Subject to preferences of any outstanding shares
of preferred stock, the holders of common stock are entitled to receive ratably
any dividends our board of directors declares out of funds legally available for
the payment of dividends. If SalesLogix is liquidated, dissolved or wound up,
the holders of common stock are entitled to share pro rata all assets remaining
after payment of liabilities and liquidation preferences of any outstanding
shares of preferred stock. Holders of common stock have no preemptive rights or
rights to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable and the
shares of common stock to be issued following this offering will be fully paid
and nonassessable.
PREFERRED STOCK
Following the closing of this offering, our board of directors will have
the authority, without further action by the stockholders, to issue up to
20,000,000 shares of preferred stock in one or more series. The board also has
the right to fix the designations, powers, preferences, privileges and relative,
participating, optional or special rights and the qualifications, limitations or
restrictions of any preferred stock issues, including dividend rights,
conversion rights, voting rights, terms of redemption and liquidation
preferences, any or all of which may be greater than the rights of the common
stock. Our board of directors, without stockholder approval, can issue preferred
stock with voting, conversion or other rights that could adversely affect the
voting power and other rights of the holders of common stock. Preferred stock
could thus be issued quickly with terms that could delay or prevent a change in
control of SalesLogix or make removal of management more difficult.
Additionally, the issuance of preferred stock may decrease the market price of
the common stock and may adversely affect the voting and other rights of the
holders of common stock. We have no current plans to issue any preferred stock.
REGISTRATION RIGHTS
After this offering, the holders of 9,284,608 shares of common stock and
the shares of common stock issued in connection with the concurrent $3.5 million
private placement with The Goldman Sachs Group, L.P. and its affiliates will be
entitled to certain demand registration rights under an Amended and Restated
Investors' Rights Agreement, pursuant to which they may require us to file a
registration statement under the Securities Act at our expense with respect to
their shares of common stock. Further, those holders may require us to file
additional registration statements on Form S-3 at our expense. In addition, if
we propose to register any of our securities under the Securities Act, either
for our own account or for the account of other security holders exercising
registration rights, those holders, plus the holders of an additional 776,794
shares of common stock and the holders of warrants to purchase 71,225 shares of
common stock, are entitled to notice of the registration and to include
55
<PAGE> 61
shares of common stock in the registration at our expense. All of these
registration rights are subject to certain conditions and limitations, among
them the right of the underwriters of an offering to limit the number of shares
included in such registration.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF RESTATED CERTIFICATE AND RESTATED BYLAWS
As noted above, our board of directors, without stockholder approval, has
the authority under our certificate of incorporation to issue preferred stock
with rights superior to the rights of the holders of common stock. As a result,
preferred stock could be issued quickly and easily, could adversely affect the
rights of holders of common stock and could be issued with terms calculated to
delay or prevent a change in control of SalesLogix or make removal of management
more difficult.
Effective with the first annual meeting of stockholders following this
offering, our certificate of incorporation provides for the division of our
board of directors into three classes, as nearly as equal in number as possible,
with the directors in each class serving for a three-year term and one class
being elected each year by our stockholders. Directors may be removed only for
cause. Because this system of electing and removing directors generally makes it
more difficult for stockholders to replace a majority of our board of directors,
it may tend to discourage a third party from making a tender offer, commencing a
proxy contest or otherwise attempting to gain control of SalesLogix and may help
maintain the incumbency of our board of directors.
EFFECT OF DELAWARE ANTITAKEOVER STATUTE
Our certificate of incorporation also requires that, effective upon the
closing of this offering, any action required or permitted to be taken by our
stockholders must be effected at a duly called annual or special meeting of the
stockholders and may not be effected by a consent in writing. In addition,
special meetings of our stockholders may be called only by our board of
directors, the chairman of the board or the chief executive officer or holders
of at least 25% of the voting power of the outstanding shares. These provisions
may have the effect of delaying, deferring or preventing a change in control of
SalesLogix.
In addition, our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of our board of
directors or a committee thereof.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, an anti-takeover law. In general, the statute prohibits a
publicly held Delaware corporation 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. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.
TRANSFER AGENT
The transfer agent and registrar for our common stock is Chase Mellon
Shareholder Services, L.L.C., 400 South Hope Street, 4th Floor, Los Angeles, CA
90071.
56
<PAGE> 62
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market after
the offering could adversely affect the market price of our common stock and our
ability to raise equity capital in the future on terms favorable to us.
After the offering, shares of our common stock will be outstanding,
assuming that the underwriters do not exercise the over-allotment option. Of
these shares, all of the shares sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless these shares are purchased by "affiliates" as that term is defined
in Rule 144 under the Securities Act. The remaining shares of common stock held
by existing stockholders are "restricted securities" as that term is defined in
Rule 144 under the Securities Act. Restricted securities may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rules 144 or 701 under the Securities Act, which rules are
summarized below.
The following table indicates approximately when the 13,344,921 shares of
our common stock that are not being sold in this offering but which will be
outstanding when this offering is complete will be eligible for sale in the
public market:
<TABLE>
<CAPTION>
ELIGIBILITY OF RESTRICTED SHARES
FOR SALE IN THE PUBLIC MARKET
<S> <C>
At effective date...................................... 0
180 days after the effective date...................... 12,612,280
After 180 days post-effective date (upon expiration of
one year holding periods)............................ 732,641
</TABLE>
Most of the restricted shares that will become available for sale in the
public market starting 180 days after the effective date will be subject to
volume and other resale restrictions under Rule 144 because the holders are our
affiliates.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year is entitled to sell, within any three-month
period, a number of shares that is not more than the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this
offering; or
- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks before a notice of the
sale on Form 144 is filed.
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 us.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days before a sale and who has beneficially
owned the restricted shares for at least two years, is entitled to sell the
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect,
any of our employees, consultants or advisors who purchase shares from us under
a stock option plan or other written agreement can resell those shares 90 days
after the effective date of this offering in reliance on
57
<PAGE> 63
Rule 144, but without complying with certain restrictions, including the holding
period, contained in Rule 144.
LOCK-UP AGREEMENTS
Except for holders of 6,496 shares of our common stock, all of our
executive officers, directors, stockholders and optionees who will hold an
aggregate of 13,338,425 shares of our common stock after this offering are
subject to certain lock-up agreements under which they have agreed not to
transfer or dispose of, directly or indirectly, any shares of common stock or
any securities convertible into or exercisable or exchangeable for shares of
common stock, for a period of 180 days after the date of this prospectus.
Transfers or dispositions can be made sooner with the prior written consent of
SalesLogix and Hambrecht & Quist.
STOCK OPTIONS
Immediately after this offering we intend to file a registration statement
under the Securities Act covering shares of common stock reserved
for issuance under our stock option plans. Each year as the number of shares
reserved for issuance under our 1996 Equity Incentive Plan and 1999 Employee
Stock Purchase Plan increases, we will file an amendment to the registration
statement covering the additional shares. As of December 31, 1998, options to
purchase 1,741,849 shares of common stock were issued and outstanding. When the
lock-up agreements described above expire, 336,985 shares of common stock will
be subject to vested options (based on options outstanding as of December 31,
1998). This registration statement is expected to be filed and become effective
as soon as practicable after the effective date of this offering. Accordingly,
shares registered under that registration statement will, subject to vesting
provisions and Rule 144 volume limitations applicable to our affiliates, be
available for sale in the open market immediately after the 180 day lock-up
agreements expire.
58
<PAGE> 64
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below, through their representatives, Hambrecht & Quist LLC,
BancBoston Robertson Stephens Inc. and U.S. Bancorp Piper Jaffray, have
severally agreed to purchase from us the following respective numbers of shares
of common stock:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
Hambrecht & Quist LLC.......................................
BancBoston Robertson Stephens Inc. .........................
U.S. Bancorp Piper Jaffray..................................
-------
Total..................................................
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the
underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in our business and the receipt of certain
certificates, opinions and letters from us, our counsel and the independent
auditors. The nature of the underwriters' obligation is such that they are
committed to purchase all shares of common stock offered hereby if any shares
are purchased.
The following tables show the per share and total underwriting discounts
and commissions we will pay to the underwriters. These amounts are shown
assuming both no exercise and full exercise of the underwriters' over-allotment
option to purchase additional shares.
UNDERWRITING DISCOUNTS AND COMMISSIONS PAYABLE BY US
<TABLE>
<CAPTION>
WITH WITHOUT
OVER-ALLOTMENT EXERCISE OVER-ALLOTMENT EXERCISE
----------------------- -----------------------
<S> <C> <C>
Per Share......................... $ $
Total............................. $ $
</TABLE>
We estimate that the total expenses of this offering, excluding
underwriting discounts and commissions, will be approximately $ .
The underwriters propose to offer the shares of common stock directly 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 the dealers may
reallow a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the underwriters. The representatives have
informed us that the underwriters do not intend to confirm discretionary sales
of more than 5% of the shares of common stock offered in this offering.
We have granted to the underwriters an option, exercisable no later than 30
days after the date of this prospectus, to purchase up to additional
shares of common stock at the initial public offering price, less the
underwriting discount set forth on the cover page of this prospectus. To the
extent that the underwriters exercise this option, each of the underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of common stock to be purchased by it shown in the
above table bears to the total number of shares of common stock offered hereby.
We will be obligated, pursuant to the option, to sell shares to the underwriters
to the extent the option is exercised. The underwriters may exercise this option
only to cover over-allotments made in connection with the sale of shares of
common stock offered hereby.
59
<PAGE> 65
The offering of the shares is made for delivery when, as and if accepted by
the underwriters and subject to prior sale and withdrawal, cancellation or
modification of the offering without notice. The underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act and to contribute to payments the
underwriters may be required to make in respect thereof.
Our stockholders, including executive officers and directors and optionees
who will own in the aggregate shares of common stock after the
offering, have agreed not to, without the prior written consent of Hambrecht &
Quist LLC, offer, sell or otherwise dispose of any shares of common stock,
options or warrants to acquire shares of common stock or securities exchangeable
for or convertible into shares of common stock owned by them during the 180-day
period following the date of this prospectus. We have agreed that we will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of common stock, options or warrants to acquire
shares of common stock or securities exchangeable for or convertible into shares
of common stock during the 180-day period following the date of this prospectus,
except that we may issue shares upon the exercise of options granted prior to
the date hereof and may grant additional options under our stock option plans,
provided that, without the prior written consent of Hambrecht & Quist LLC, the
additional options shall not be exercisable during that period.
In connection with the concurrent $3.5 million private placement of shares
of common stock to The Goldman Sachs Group, L.P. and certain of its affiliates,
SalesLogix will pay to Hambrecht & Quist LLC, BancBoston Robertson Stephens Inc.
and U.S. Bancorp Piper Jaffray a placement fee equal to 3.5% of the gross
proceeds of the Goldman Sachs private placement.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price for the common stock will be determined
by negotiation among us 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, our revenues and earnings, market
valuations of other companies engaged in activities similar to ours, estimates
of our business potential and our prospects, the present state of our business
operations, our management and other factors deemed relevant.
Certain persons participating in this offering may over-allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the common stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the common stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of common stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq National Market, in the over-the-counter market, or otherwise. This
stabilizing, if commenced, may be discontinued at any time.
We intend to enter into an agreement with Hambrecht & Quist LLC, pursuant
to which Hambrecht & Quist LLC will provide investment banking services from
time to time.
60
<PAGE> 66
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed
upon for us by Osborn Maledon, P.A., Phoenix, Arizona. Certain legal matters
will be passed upon for the underwriters by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements and schedule of SalesLogix Corporation as of December 31,
1997 and 1998 and for each of the three years in the period ended December 31,
1998, as set forth in their report. We have included our financial statements
and schedule in this prospectus and elsewhere in the Registration Statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Opis Corporation as of October 31, 1997 and for the year then
ended and for the period from November 1, 1997 through December 30, 1997, as set
forth in their report. We have included these financial statements in this
prospectus and elsewhere in the Registration Statement in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Enact Incorporated as of December 31, 1997 and 1998 and for each
of the years then ended as set forth in their report. We have included these
financial statements in this prospectus and elsewhere in the Registration
Statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1. This prospectus, which forms a part of the Registration
Statement, does not contain all the information included in the Registration
Statement. Certain information is omitted and you should refer to the
Registration Statement and its exhibits. With respect to references made in this
prospectus to any contract or other document of SalesLogix, such references are
not necessarily complete and you should refer to the exhibits attached to the
Registration Statement for copies of the actual contract or document. You may
review a copy of the Registration Statement, including exhibits and schedule
filed therewith, at the Securities and Exchange Commission's public reference
facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Securities and Exchange Commission
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
You may also obtain copies of such materials from the Public Reference Section
of the Securities and Exchange Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Securities and
Exchange Commission maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as SalesLogix, that file electronically with the Securities
and Exchange Commission.
61
<PAGE> 67
SALESLOGIX CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF SALESLOGIX CORPORATION
AND SUBSIDIARIES
Report of Ernst & Young LLP, Independent Auditors......... F-2
Consolidated Balance Sheets as of December 31, 1997 and
1998................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1996, 1997 and 1998....................... F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996, 1997 and 1998........... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1997 and 1998....................... F-7
Notes to Consolidated Financial Statements................ F-8
FINANCIAL STATEMENTS OF OPIS CORPORATION
Report of Ernst & Young LLP, Independent Auditors......... F-22
Balance Sheet as of October 31, 1997...................... F-23
Statements of Operations for the fiscal year ended October
31, 1997 and the period from November 1, 1997 through
December 30, 1997...................................... F-24
Statement of Stockholders' Deficit for the fiscal year
ended October 31, 1997................................. F-25
Statements of Cash Flows for the fiscal year ended October
31, 1997 and the period from November 1, 1997 through
December 30, 1997...................................... F-26
Notes to Financial Statements............................. F-27
FINANCIAL STATEMENTS OF ENACT INCORPORATED
Report of Ernst & Young LLP, Independent Auditors......... F-31
Balance Sheets as of December 31, 1997 and 1998........... F-32
Statements of Operations for the years ended December 31,
1997 and 1998.......................................... F-33
Statements of Redeemable Convertible Common Stock and
Warrants and Stockholders' Deficit for the years ended
December 31, 1997 and 1998............................. F-34
Statements of Cash Flows for the years ended December 31,
1997 and 1998.......................................... F-35
Notes to Financial Statements............................. F-36
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Balance
Sheet.................................................. F-43
Unaudited Pro Forma Condensed Consolidated Statement of
Operations............................................. F-44
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements................................... F-45
</TABLE>
F-1
<PAGE> 68
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
SalesLogix Corporation
We have audited the accompanying consolidated balance sheets of SalesLogix
Corporation and subsidiaries as of December 31, 1997 and 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1998. 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 consolidated financial position of SalesLogix
Corporation and subsidiaries at December 31, 1997 and 1998 and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
January 29, 1999, except for Note 15 as
to which the date is March 24, 1999
F-2
<PAGE> 69
SALESLOGIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY
--------------------------- DECEMBER 31,
1997 1998 1998
----------- ------------ -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 3,189,473 $ 11,377,236
Accounts receivable, net of allowance for
doubtful accounts of $180,812 and $455,396 at
December 31, 1997 and 1998, respectively..... 2,153,505 4,569,719
Prepaid expenses and other current assets....... 572,696 922,380
----------- ------------
Total current assets.................... 5,915,674 16,869,335
Property and equipment, net....................... 1,126,731 2,544,086
Other assets...................................... 5,905,926 4,560,737
----------- ------------
$12,948,331 $ 23,974,158
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................ $ 1,044,523 $ 1,244,227
Accrued expenses................................ 1,307,866 1,773,939
Current portion of notes payable to bank........ 691,304 691,304
Current portion of capital lease obligations.... 360,727 558,082
Deferred revenues............................... 861,142 1,759,056
----------- ------------
Total current liabilities............... 4,265,562 6,026,608
Notes payable to bank, less current portion....... 1,108,696 782,609
Capital lease obligations, less current portion... 499,215 458,463
Deferred rental obligation........................ -- 106,390
Stockholders' equity:
Series A Convertible Preferred Stock............ 4,585,000 4,585,000 $ --
Series B Convertible Preferred Stock............ 70,000 66,676 --
Series C Convertible Preferred Stock............ 6,447,860 6,447,860 --
Series D Convertible Preferred Stock............ 3,943,980 3,943,980 --
Series E Convertible Preferred Stock............ -- 18,438,699 --
Class A Common Stock, par value $0.001 per
share; 17,900,000 shares authorized,
2,239,395 shares issued and outstanding at
December 31, 1997; 3,228,325 shares issued
and 3,226,658 shares outstanding at December
31, 1998; 50,000,000 shares authorized,
13,346,588 shares issued, 13,344,921 shares
outstanding pro forma (unaudited)............ 2,239 3,228 13,347
Class B Common Stock, par value $0.001 per
share; 2,280,000 shares authorized, 1,723,333
shares issued and outstanding at December 31,
1997; 72,827 shares issued and outstanding at
December 31, 1998; no shares issued or
outstanding pro forma (unaudited)............ 1,723 73 --
Additional paid-in capital...................... 512,912 1,738,343 35,210,512
Accumulated deficit............................. (8,488,856) (17,329,794) (17,329,794)
Less unearned compensation...................... -- (1,292,777) (1,292,777)
Less shares of common stock held in treasury;
1,667 shares at cost......................... -- (1,200) (1,200)
----------- ------------ ------------
Total stockholders' equity........................ 7,074,858 16,600,088 $ 16,600,088
----------- ------------ ============
Total liabilities and stockholders' equity........ $12,948,331 $ 23,974,158
=========== ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 70
SALESLOGIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Licenses.......................................... $ -- $ 3,504,419 $10,105,401
Services.......................................... -- 1,274,391 5,537,210
----------- ----------- -----------
Total revenues................................. -- 4,778,810 15,642,611
Costs of revenues:
Licenses.......................................... -- 117,808 604,039
Services.......................................... -- 1,733,018 4,299,004
----------- ----------- -----------
Total costs of revenues........................ -- 1,850,826 4,903,043
----------- ----------- -----------
Gross profit........................................ -- 2,927,984 10,739,568
Operating expenses:
Sales and marketing............................... 1,009,143 4,952,983 10,029,741
Research and development.......................... 1,290,512 1,865,000 3,845,179
General and administrative........................ 901,775 1,056,420 2,150,928
Amortization of acquisition related intangible
assets......................................... 342,000 360,000 1,436,185
----------- ----------- -----------
Total operating expenses....................... 3,543,430 8,234,403 17,462,033
----------- ----------- -----------
Loss from operations................................ (3,543,430) (5,306,419) (6,722,465)
Other income (expense):
Interest income................................... 151,882 189,343 362,507
Interest expense.................................. (11,451) (86,452) (254,897)
Other income, net................................. 54,125 63,546 23,017
----------- ----------- -----------
Loss before provision for income taxes.............. (3,348,874) (5,139,982) (6,591,838)
Provision for income taxes.......................... -- -- --
----------- ----------- -----------
Net loss............................................ $(3,348,874) $(5,139,982) $(6,591,838)
=========== =========== ===========
Pro forma basic and diluted net loss per share...... $ (0.54)
===========
Weighted average shares used in calculating pro
forma basic and diluted net loss per share........ 12,310,517
===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 71
SALESLOGIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE SERIES B CONVERTIBLE SERIES C CONVERTIBLE SERIES D CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
---------------------- --------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- --------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996..... -- $ -- -- $ -- -- $ -- -- $ --
Series B Preferred and Class
B Common Stock issued to
acquire intellectual
property................... -- -- 700,000 70,000 -- -- -- --
Cash proceeds from issuance
of Series A Preferred
Stock...................... 4,585,000 4,585,000 -- -- -- -- -- --
Class A Common Stock issued
for purchase of intangible
asset...................... -- -- -- -- -- -- -- --
Contribution of shares to
incentive stock option
plan....................... -- -- -- -- -- -- -- --
Equity based expenses........ -- -- -- -- -- -- -- --
Net loss..................... -- -- -- -- -- -- -- --
--------- ---------- ------- ------- --------- ---------- --------- ----------
Balance at December 31, 1996... 4,585,000 4,585,000 700,000 70,000 -- -- -- --
Cash proceeds from issuance
of Series C Preferred
Stock...................... -- -- -- -- 4,031,057 6,447,860 -- --
Exercise of Class A Common
Stock options.............. -- -- -- -- -- -- -- --
Series D Preferred Stock and
options issued for purchase
of business................ -- -- -- -- -- -- 1,228,654 3,943,980
Equity based expenses........ -- -- -- -- -- -- -- --
Net loss..................... -- -- -- -- -- -- -- --
--------- ---------- ------- ------- --------- ---------- --------- ----------
Balance at December 31, 1997... 4,585,000 4,585,000 700,000 70,000 4,031,057 6,447,860 1,228,654 3,943,980
Cash proceeds from issuance
of Series E Preferred
Stock...................... -- -- -- -- -- -- -- --
Exercise of Class A Common
Stock options.............. -- -- -- -- -- -- -- --
Purchase of treasury stock... -- -- -- -- -- -- -- --
Purchase of Series B
Preferred and Class B
Common Stock............... -- -- (33,240) (3,324) -- -- -- --
Equity based expenses........ -- -- -- -- -- -- -- --
Net loss..................... -- -- -- -- -- -- -- --
--------- ---------- ------- ------- --------- ---------- --------- ----------
Balance at December 31, 1998... 4,585,000 $4,585,000 666,760 $66,676 4,031,057 $6,447,860 1,228,654 $3,943,980
========= ========== ======= ======= ========= ========== ========= ==========
</TABLE>
See accompanying notes.
F-5
<PAGE> 72
<TABLE>
<CAPTION>
SERIES E CONVERTIBLE CLASS A CLASS B
PREFERRED STOCK COMMON STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------ -------------------- PAID-IN ACCUMULATED UNEARNED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT COMPENSATION
--------- ----------- --------- ------ ---------- ------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- $ -- 2,280,000 $2,280 -- $ -- $ (2,280) $ -- $ --
-- -- -- -- 1,813,333 1,813 270,187 -- --
-- -- -- -- -- -- -- -- --
-- -- 33,333 33 -- -- 4,967 -- --
-- -- (90,000) (90) (90,000) (90) 180 -- --
-- -- -- -- -- -- 3,250 -- --
-- -- -- -- -- -- -- (3,348,874) --
--------- ----------- --------- ------ ---------- ------- ---------- ------------ -----------
-- -- 2,223,333 2,223 1,723,333 1,723 276,304 (3,348,874) --
-- -- -- -- -- -- -- -- --
-- -- 16,062 16 -- -- 2,393 -- --
-- -- -- -- -- -- 232,406 -- --
-- -- -- -- -- -- 1,809 -- --
-- -- -- -- -- -- -- (5,139,982) --
--------- ----------- --------- ------ ---------- ------- ---------- ------------ -----------
-- -- 2,239,395 2,239 1,723,333 1,723 512,912 (8,488,856) --
4,556,651.. 18,438,699 -- -- -- -- -- -- --
-- -- 988,930 989 -- -- 149,941 -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- (1,650,506) (1,650) (245,926) (2,249,100) --
-- -- -- -- -- -- 1,321,416 -- (1,292,777)
-- -- -- -- -- -- -- (6,591,838) --
--------- ----------- --------- ------ ---------- ------- ---------- ------------ -----------
4,556,651.. $18,438,699 3,228,325 $3,228 72,827 $ 73 $1,738,343 $(17,329,794) $(1,292,777)
========= =========== ========= ====== ========== ======= ========== ============ ===========
<CAPTION>
TREASURY
----------------
SHARES AMOUNT TOTAL
------ ------- -----------
<S> <C> <C> <C>
-- $ -- $ --
-- -- 342,000
-- -- 4,585,000
-- -- 5,000
-- -- --
-- -- 3,250
-- -- (3,348,874)
----- ------- -----------
-- -- 1,586,376
-- -- 6,447,860
-- -- 2,409
-- -- 4,176,386
-- -- 1,809
-- -- (5,139,982)
----- ------- -----------
-- -- 7,074,858
-- -- 18,438,699
-- -- 150,930
1,667 (1,200) (1,200)
-- -- (2,500,000)
-- -- 28,639
-- -- (6,591,838)
----- ------- -----------
1,667 $(1,200) $16,600,088
===== ======= ===========
</TABLE>
F-6
<PAGE> 73
SALESLOGIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................................ $(3,348,874) $(5,139,982) $(6,591,838)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation, including amortization of leased
assets............................................. 31,945 253,920 786,529
Amortization of acquisition related intangible
assets............................................. 342,000 360,000 1,436,185
Provision for losses on accounts receivable........... -- 180,812 665,862
Warrant and option issuance expense................... 3,250 1,809 10,657
Amortization of unearned compensation................. -- -- 17,982
Changes in operating assets and liabilities, net of
effects from purchase of Opis Corporation:
Accounts receivable................................ -- (2,133,177) (3,082,076)
Prepaid expenses and other current assets.......... (181,189) (368,914) (349,684)
Accounts payable................................... 142,343 432,519 199,704
Accrued expenses................................... 78,101 225,782 466,073
Deferred revenues.................................. -- 570,901 897,914
Deferred rental obligation......................... -- -- 106,390
----------- ----------- -----------
Net cash used in operating activities................... (2,932,424) (5,616,330) (5,436,302)
INVESTING ACTIVITIES
Purchases of property and equipment..................... (35,918) (233,430) (1,596,630)
Payment for purchase of Opis Corporation, net of cash
acquired.............................................. -- (559,388) --
Increase in other assets................................ -- -- (90,996)
----------- ----------- -----------
Net cash used in investing activities................... (35,918) (792,818) (1,687,626)
FINANCING ACTIVITIES
Net proceeds (repayments) under bank line of credit..... 400,000 (100,000) --
Proceeds (repayments) from bank term loan............... -- 1,500,000 (326,087)
Principal payments under capital lease obligations...... (41,161) (227,145) (450,651)
Net proceeds from issuance of preferred stock........... 4,585,000 6,447,860 18,438,699
Purchase of Series B Preferred and Class B Common
Stock................................................. -- -- (2,500,000)
Purchase of treasury stock.............................. -- -- (1,200)
Proceeds from exercise of common stock options.......... -- 2,409 150,930
----------- ----------- -----------
Net cash provided by financing activities............... 4,943,839 7,623,124 15,311,691
----------- ----------- -----------
Net increase in cash and cash equivalents............... 1,975,497 1,213,976 8,187,763
Cash and cash equivalents, beginning of year............ -- 1,975,497 3,189,473
----------- ----------- -----------
Cash and cash equivalents, end of year.................. $ 1,975,497 $ 3,189,473 $11,377,236
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Assets acquired under capital lease obligations......... $ 430,348 $ 697,900 $ 607,254
=========== =========== ===========
Intangible assets acquired with common and preferred
stock and preferred stock options..................... $ 347,000 $ 4,176,386 $ --
=========== =========== ===========
Cash paid for interest.................................. $ 11,451 $ 86,452 $ 254,897
=========== =========== ===========
</TABLE>
See accompanying notes.
F-7
<PAGE> 74
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
SalesLogix Corporation (Company) is a leading provider of software that
enables mid-market businesses to create interactive selling networks that
automate prospect and customer interactions.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany accounts and transactions
have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid investments
with original maturities of three months or less when acquired and which are
readily convertible to cash. The Company's investments have consisted of
commercial paper, certificates of deposit with original maturities of three
months or less and money market accounts.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1998, the Company has the following financial instruments:
cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses, capital lease obligations and long-term debt. The carrying value of
cash and cash equivalents, accounts receivable, accounts payable and accrued
expenses approximates their fair value based on the liquidity of these financial
instruments or based on their short-term nature. The carrying value of capital
lease obligations and long-term debt approximates fair value based on the market
interest rates available to the Company for debt of similar risk and maturities.
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable. The
Company's customer base is dispersed across many different geographic areas
throughout North America, Europe and Asia-Pacific and consists of companies in a
variety of industries. No single customer accounted for 10% or more of total
revenues during 1997 or 1998. The Company does not require collateral or other
security to support credit sales, but provides an allowance for bad debts based
on historical experience and specifically identified risks.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Equipment held under capital
leases is stated at the lower of fair market value or the present value of
minimum lease payments at the inception of the lease. Depreciation of property
and equipment is calculated using the straight-line method over the estimated
useful lives of the assets, generally three years for furniture, computers and
other equipment. Equipment held under capital leases is amortized over the
shorter of the lease term or estimated useful life of the asset.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with the Financial Accounting Standards Board Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived
F-8
<PAGE> 75
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets to Be Disposed Of," the Company records impairment losses on long-lived
assets used in operations when events and circumstances indicate that the assets
might be impaired and the undiscounted cash flows estimated to be generated by
those assets are less than the carrying amounts of those assets. This
methodology includes intangible assets acquired. Goodwill relating to specific
intangible assets is included in the related impairment measurements to the
extent it is identified with such assets.
REVENUE RECOGNITION AND DEFERRED REVENUE
As of January 1, 1998, the Company adopted American Institute of Certified
Public Accountants' Statement of Position 97-2, "Software Revenue
Recognition"(SOP 97-2), as amended by SOP 98-4 which was effective for
transactions that the Company entered into in 1998. Prior years were not
restated. The adoption of SOP 97-2 had no effect on the revenues or earnings for
the period. The Company recognizes software license revenue when an executed
license agreement, unconditional purchase order or contract is received,
delivery of the product has occurred, collection of the resulting receivable is
assessed as probable and the fee is fixed or determinable based upon
vendor-specific objective evidence of the arrangement. Revenue from services
includes support and maintenance service contracts which are recorded as
deferred revenue when billed and recognized ratably over the contract period and
training and consulting services which are recognized as the services are
performed.
COSTS OF REVENUES
Cost of licenses includes the cost of media, product packaging,
documentation and other production costs and third-party royalties.
Cost of services consists primarily of salaries, related taxes and benefits
and allocated overhead costs related to consulting, training and customer
support personnel.
RESEARCH AND DEVELOPMENT
Research and development costs, which consist primarily of software
development costs, are expensed as incurred. Financial accounting standards
provide for the capitalization of certain software development costs after
technological feasibility of the software is established. Under the Company's
current practice of developing new products and enhancements, the technological
feasibility of the underlying software is not established until substantially
all product development is complete, including the development of a working
model. Accordingly, the Company has no capitalized software development costs.
ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising expense was
approximately $72,000, $872,000 and $1,200,000 for the years ended December 31,
1996, 1997 and 1998, respectively.
INCOME TAXES
Income taxes have been accounted for under the asset and liability method
in accordance with SFAS No. 109, "Accounting for Income Taxes" (Statement 109).
Under the asset and liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted
F-9
<PAGE> 76
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in operations in the period that includes the enactment date.
EARNINGS PER SHARE COMPUTATION
Earnings per share is computed in accordance with SFAS No. 128, "Earnings
per Share" as well as Staff Accounting Bulletin No. 98, which covers the
determination of and accounting for "cheap stock" in periods prior to an initial
public offering. Basic earnings per share is computed using the weighted average
number of common shares. Diluted earnings per share is computed using the
weighted average number of common share equivalents outstanding during the
period. Dilutive common share equivalents consist of stock options and warrants
using the treasury method and dilutive convertible securities using the
if-converted method.
Pro forma net loss per share presented in the consolidated statements of
operations has been computed as described above, but also gives effect to the
conversion of all outstanding shares of convertible preferred stock into common
stock upon the closing of the Company's initial public offering (determined
using the if-converted method).
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's foreign transactions is the U.S.
dollar. All income and expense items are translated at the prevailing exchange
rate when the transaction occurs. Gains and losses on foreign currency
transactions are included in the consolidated statement of operations as
incurred. To date, gains and losses on foreign currency transactions have not
been significant.
STOCK-BASED COMPENSATION
The Company has elected to follow the Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations, in accounting for its employee stock options rather than the
alternative fair value accounting allowed by SFAS No. 123 "Accounting for
Stock-Based Compensation" (Statement 123). APB 25 provides that the compensation
expense relative to the Company's employee stock options is measured based on
the intrinsic value of the stock option. Statement 123 requires companies that
continue to follow APB 25 to provide a pro forma disclosure of the impact of
applying the fair value method of Statement 123 (see Note 9).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities and 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.
COMPREHENSIVE LOSS
As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" (Statement 130). Statement 130 establishes new rules for
the reporting and display of comprehensive loss and its components.
Comprehensive loss for the Company is the same as net loss for all periods
presented.
F-10
<PAGE> 77
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Effective January 1, 1998, the Company adopted the SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" (Statement
131). Statement 131 established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. Statement 131 also establishes
standards for related disclosures about products and services, geographic areas
and major customers (see Note 12).
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 and 1997 consolidated
financial statements to conform to the 1998 presentation.
2. ACQUISITION
On December 30, 1997, the Company completed the acquisition of Opis
Corporation, a company engaged in the development, marketing and sales of
customer support automation software primarily to mid-sized organizations. The
Company paid $801,559 in cash and issued 1,228,654 shares of its Series D
Convertible Preferred Stock (Series D Preferred Stock) in exchange for all
outstanding capital stock of Opis. The Company also assumed all outstanding Opis
options, which were converted to options to purchase 96,836 shares of Series D
Preferred Stock at $.8515 per share. The aggregate cost of the acquisition was
approximately $6.3 million (including direct acquisition costs). The acquisition
was recorded under the purchase method of accounting and therefore the results
of operations of Opis and the fair values of the acquired assets and liabilities
were included in the Company's financial statements beginning on the acquisition
date. Upon consummation of the transaction, Opis was merged into a wholly-owned
subsidiary of the Company. In connection with the acquisition, the Company
received an independent appraisal of the intangible assets acquired.
The purchase price was allocated to the assets acquired and liabilities
assumed based on their respective fair values on the date of the acquisition as
follows:
<TABLE>
<S> <C>
Purchased technology........................................ $1,200,000
Customer list and other..................................... 320,000
Write-off of in-process research and development............ 360,000
Goodwill.................................................... 4,380,926
Net liabilities acquired, including costs of acquisition.... (1,282,981)
Less Series D Preferred Stock issued........................ (3,943,980)
Less fair value of options to purchase Series D Preferred
Stock..................................................... (232,406)
----------
Cash portion of purchase price.............................. $ 801,559
==========
</TABLE>
Approximately $5.6 million of the purchase price attributed to purchased
technology and goodwill is being amortized over its estimated useful life of
five years. The write-off of in-process research and development of $360,000 has
been included in amortization of acquisition related intangible assets for the
year ended December 31, 1997.
F-11
<PAGE> 78
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Furniture and fixtures.............................. $ 460,065 $ 825,770
Computers and other equipment....................... 925,055 2,673,891
Leasehold improvements.............................. 22,234 111,577
---------- ----------
1,407,354 3,611,238
Less accumulated depreciation and amortization...... 280,623 1,067,152
---------- ----------
$1,126,731 $2,544,086
========== ==========
</TABLE>
4. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Purchased technology................................ $1,200,000 $1,200,000
Customer list and other............................. 320,000 320,000
Goodwill............................................ 4,380,926 4,380,926
---------- ----------
5,900,926 5,900,926
Amortization........................................ -- 1,436,185
---------- ----------
Net intangible assets of acquired businesses........ 5,900,926 4,464,741
Recoverable deposits and other...................... 5,000 95,996
---------- ----------
$5,905,926 $4,560,737
========== ==========
</TABLE>
5. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Compensation........................................ $ 421,468 $ 685,896
Benefits............................................ -- 379,712
Direct costs of acquisition......................... 642,191 180,618
Other............................................... 244,207 527,713
---------- ----------
$1,307,866 $1,773,939
========== ==========
</TABLE>
6. NOTES PAYABLE TO BANK
The Company has a credit facility with a commercial bank in the aggregate
amount of $3,000,000. The credit facility provides a revolving line of credit in
the amount of $1,500,000 and a $1,500,000 acquisition term loan facility.
Borrowings under the arrangement are collateralized by substantially all of the
Company's assets and bear interest at the bank's prime rate plus 1%. The
revolving line of credit matures in March 1999 (see Note 15). The acquisition
term loan is payable in 48 equal monthly
F-12
<PAGE> 79
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. NOTES PAYABLE TO BANK (CONTINUED)
installments of principal plus interest through December 2001. The agreement
provides for certain financial and other covenants and restricts the Company's
ability to pay dividends. As of December 31, 1998, the Company had outstanding
advances under the revolving line of credit of $300,000 and had borrowed the
full $1,500,000 under the acquisition term loan facility used in connection with
the Opis acquisition (refer to Note 2).
The aggregate annual maturities of notes payable to bank as of December 31,
1998 are as follows:
<TABLE>
<CAPTION>
TERM LINE OF
LOAN CREDIT TOTAL
---------- -------- ----------
<S> <C> <C> <C>
1999............................................ $ 391,304 $300,000 $ 691,304
2000............................................ 391,304 -- 391,304
2001............................................ 391,305 -- 391,305
---------- -------- ----------
1,173,913 300,000 1,473,913
Less current portion............................ 391,304 300,000 691,304
---------- -------- ----------
$ 782,609 $ -- $ 782,609
========== ======== ==========
</TABLE>
7. LEASES
The Company leases furniture and equipment under capital leases that expire
in various years through December 2001. The Company also leases office
facilities under a noncancelable operating lease that expires in July 2004.
Property and equipment includes the following amounts for leases that have
been capitalized:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Furniture and equipment............................. $1,121,294 $1,728,548
Less accumulated amortization....................... 280,623 752,431
---------- ----------
$ 840,671 $ 976,117
========== ==========
</TABLE>
Amortization of leased assets is included in operating expenses in the
accompanying consolidated statements of operations.
F-13
<PAGE> 80
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LEASES (CONTINUED)
Future minimum annual payments under capital leases and the Company's
noncancelable operating lease with initial terms of one year or more consisted
of the following at December 31, 1998:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASE
---------- ----------
<S> <C> <C>
1999................................................ $ 627,663 $ 958,225
2000................................................ 375,510 962,519
2001................................................ 117,621 972,822
2002................................................ -- 983,126
2003................................................ -- 993,429
2004................................................ -- 583,006
---------- ----------
Total minimum lease payments........................ 1,120,794 $5,453,127
==========
Amounts representing interest....................... 104,249
----------
Present value of net minimum lease payments
(including current portion of $558,082)........... $1,016,545
==========
</TABLE>
Total rent expense for the operating lease amounted to approximately
$100,000, $273,000 and $685,000 for the years ended December 31, 1996, 1997 and
1998, respectively.
8. CAPITAL STOCK
In September 1995, the Company issued 2,280,000 shares of Class A Common
Stock to its founder to form the Company. Business operations did not commence
until January 1996 when the Company issued 700,000 shares of Series B
Convertible Preferred Stock (Series B Preferred Stock) and 1,813,333 shares of
Class B Common Stock in connection with its acquisition of certain intellectual
property rights through a statutory merger with Kennedy Systems, Inc. Prior to
the merger, Kennedy Systems, Inc. had been in the process of developing a sales
automation software product that the Company believed could accelerate the
release of its first product. Kennedy Systems, Inc. had no net assets at the
date of the merger. Accordingly, the fair value of the stock issued was
allocated to intangible assets that were amortized during 1996, the period in
which they were used. During 1996, the Company ceased development of the
technology acquired through Kennedy Systems, Inc. and began development of its
current software products.
In January 1996, the Company issued 4,500,000 shares of Series A
Convertible Preferred Stock (Series A Preferred Stock) to unrelated third-party
investors for cash of $4,500,000 in a private placement. Holders of Series A
Preferred Stock are entitled to receive noncumulative cash dividends at an
annual rate of nine percent prior to the payment of any dividends to Series B
and Series D Preferred or Common Stockholders. Series A Preferred Stock is
voting.
In February 1996, two of the Company's stockholders contributed 90,000
shares of Class A Common Stock and 90,000 shares of Class B Common Stock,
respectively, for no consideration and the reserved shares for the Company's
1996 Equity Incentive Plan were increased by 180,000 shares of common stock.
In May 1996, the Company issued 33,333 shares of Class A Common Stock to an
employee in exchange for proprietary intellectual property, valued at $5,000
based on the price of other third party equity transactions during 1996.
In October 1996, the Company issued 85,000 shares of Series A Preferred
Stock for cash of $85,000.
F-14
<PAGE> 81
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. CAPITAL STOCK (CONTINUED)
In March 1997, the Company issued 4,031,057 shares of Series C Convertible
Preferred Stock (Series C Preferred Stock) for net cash proceeds of $6,447,860.
Holders of the Series C Preferred Stock are entitled to receive noncumulative
cash dividends at an annual rate of nine percent prior to the payment of any
dividends to Series B and Series D Preferred Stock or Common Stockholders.
Series C Preferred Stock is voting.
In December 1997, the Company issued 1,228,654 shares of Series D Preferred
Stock in connection with the acquisition of Opis Corporation (see Note 2). The
Series D Preferred Stock does not bear dividends and is nonvoting.
In June 1998, the Company issued 3,940,887 shares of Series E Convertible
Preferred Stock (Series E Preferred Stock) for net cash proceeds of $15,945,985.
Holders of the Series E Preferred Stock are entitled to receive noncumulative
cash dividends at an annual rate of nine percent prior to the payment of any
dividends to Series B and Series D Preferred Stock or Common Stockholders.
Series E Preferred Stock is voting.
In July 1998, the Company repurchased 33,240 shares of Series B Preferred
Stock and 1,650,506 shares of Class B Common Stock at its fair value of
$2,500,000 in conjunction with the settlement of litigation involving the
termination of an officer of the Company whereby both parties released their
respective claims against each other.
In December 1998, the Company issued an additional 615,764 shares of Series
E Preferred Stock for net cash proceeds of $2,492,714.
Each share of Series A, B, C, D and E Preferred Stock has a par value of
$.001 per share and is convertible, at the option of the holder, into two-thirds
of a share of Class A Common Stock (Class B Common Stock for the Series B
Preferred Stockholders). All Series A, B, C, D and E Preferred Stock will
automatically be converted upon a public offering of common stock meeting
minimum price and proceeds criteria. Upon the conversion of the Class B
Preferred Stock into Class B Common Stock, the Class B Common Stock
automatically converts to Class A Common Stock.
Upon the liquidation, dissolution, or winding up of the Company, the Series
A, Series C and Series E Preferred Stockholders are entitled to receive, prior
to and in preference to any distribution made to other stockholders, a
liquidation preference equal to the $1.00, $1.61 and $4.06 per share issuance
prices of the Series A, Series C and Series E Preferred Stocks, respectively,
plus an amount equal to a cumulative annual return of nine percent on the
original issuance prices. Should the distributable net assets of the Company
exceed this amount, the Series D Preferred Stockholders are entitled to receive
up to $3.21 per share. Should the distributable net assets of the Company exceed
the aggregate preferences above, the Series A, Series C and Series E Preferred
Stockholders are also entitled to receive a pro rata portion of such
distribution calculated on an as if converted basis. Any remaining net assets
will be distributed pro rata on an as if converted basis to the Series B
Preferred and Common Stockholders, unless the Series B Preferred Stockholders
would receive less than $700,000 in aggregate, in which case the Series B
Preferred Stockholders would receive the entire remaining amount.
F-15
<PAGE> 82
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. CAPITAL STOCK (CONTINUED)
A summary of the Series A, B, C, D and E Convertible Preferred Stock, is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1998
---------- -----------
<S> <C> <C>
Series A Preferred Stock:
Authorized shares........................................ 4,650,000 4,650,000
Issued and outstanding shares............................ 4,585,000 4,585,000
Liquidation value of shares.............................. $5,387,919 $ 5,800,569
Series B Preferred Stock:
Authorized shares........................................ 700,000 700,000
Issued and outstanding shares............................ 700,000 666,760
Liquidation value of shares.............................. -- --
Series C Preferred Stock:
Authorized shares........................................ 4,100,000 4,100,000
Issued and outstanding shares............................ 4,031,057 4,031,057
Liquidation value of shares.............................. $6,930,077 $ 7,514,177
Series D Preferred Stock:
Authorized shares........................................ 1,700,000 1,700,000
Issued and outstanding shares............................ 1,228,654 1,228,654
Liquidation value of shares.............................. -- --
Series E Preferred Stock:
Authorized shares........................................ -- 4,750,000
Issued and outstanding shares............................ -- 4,556,651
Liquidation value of shares.............................. -- $19,333,428
</TABLE>
The Company has the following shares of Class A Common Stock reserved for
future issuance at December 31, 1998 with respect to issued common stock
equivalents:
<TABLE>
<S> <C>
Conversion of Preferred Stocks.............................. 10,045,436
Conversion of Class B Common Stock.......................... 72,827
Series A Preferred Stock warrants........................... 43,334
Series D Preferred Stock options............................ 64,558
Series D Preferred Stock warrants........................... 6,667
1996 Equity Incentive Plan.................................. 2,361,674
1998 Business Partner Stock Option Plan..................... 166,667
----------
Total............................................. 12,761,163
==========
</TABLE>
9. STOCK OPTIONS
The Company has elected to follow APB 25 in accounting for its employee
stock options. Under APB 25, as long as the exercise price of the Company's
employee stock options equals or exceeds the fair value of the underlying stock
on the date of the grant, no compensation expense is recognized. All of the
Company's employee stock option grants have been made at fair value for
accounting purposes with the exception of a December 10, 1998 grant of 442,000
shares at $1.53 per share. Subsequent to the date of grant, the Company
determined that the fair value for accounting purposes
F-16
<PAGE> 83
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTIONS (CONTINUED)
at the date of grant should have been $4.50 per share. This determination was
based upon third party transactions subsequent to but near the date of grant. In
December 1998, the Company recorded unearned compensation of $1,312,740 which is
being amortized over the four-year vesting period of these options.
During 1996, the Board of Directors authorized the implementation of an
equity incentive plan for certain employees, directors, consultants and
independent contractors. Under the plan, options to purchase stock of the
Company will be granted to participants at an exercise price to be determined by
the Board. Incentive stock options granted under the plan may be granted to
employees only and may not have an exercise price less than the fair value of
the stock as of the date of the grant. Incentive stock options have a term of
ten years and vest over four years from the date of grant, with initial vesting
on the one-year anniversary of the employee's hire date.
Pro forma information regarding net loss and net loss per share is required
by Statement 123, which also requires that the information be determined as if
the Company has accounted for all its employee stock options grants under the
fair value method of that Statement. The fair value for these options was
estimated at the date of grant using a minimum value pricing model with the
following weighted-average assumptions:
<TABLE>
<S> <C>
Expected life of the award............................... 4 years
Dividend yield........................................... 0 percent
Risk-free interest rate.................................. 5 percent
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Net loss as reported........................ $(3,348,874) $(5,139,982) $(6,591,838)
Pro forma Statement 123 expense............. (6,438) (16,336) (39,672)
APB 25 expense recognized................... -- -- 17,982
----------- ----------- -----------
Statement 123 Pro forma net loss............ $(3,355,312) $(5,156,318) $(6,613,528)
=========== =========== ===========
Statement 123 Pro forma basic and diluted
net loss per share........................ $ (.87) $ (1.31) $ (1.75)
=========== =========== ===========
Statement 123 Pro forma basic and diluted
net loss per share, assuming conversion of
preferred stock........................... $ (0.54)
===========
</TABLE>
Option activity under the equity incentive plan is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE EXERCISE
SHARES PRICE PRICE
--------- ----------- --------
<S> <C> <C> <C>
Outstanding at January 1, 1996................... -- --
Granted.......................................... 1,734,501 $ 0.15 $0.15
Exercised........................................ -- --
Expired or canceled.............................. (26,667) 0.15 0.15
--------- ----------- -----
</TABLE>
F-17
<PAGE> 84
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTIONS (CONTINUED)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE EXERCISE
SHARES PRICE PRICE
--------- ----------- --------
<S> <C> <C> <C>
Outstanding at December 31, 1996................. 1,707,834 0.15 0.15
Granted.......................................... 469,171 0.20-0.48 0.33
Exercised........................................ (16,062) 0.15 0.15
Expired or canceled.............................. (54,086) 0.15-0.24 0.18
--------- ----------- -----
Outstanding at December 31, 1997................. 2,106,857 0.15-0.48 0.19
Granted.......................................... 911,171 0.60-1.53 1.37
Exercised........................................ (988,930) 0.15-0.48 0.15
Expired or canceled.............................. (374,752) 0.15-1.53 0.50
--------- ----------- -----
Outstanding at December 31, 1998................. 1,654,346 $0.15-1.53 $0.80
========= =========== =====
Exercisable at December 31, 1998................. 249,482 $0.21
========= =====
</TABLE>
The weighted average fair value of options granted in 1996, 1997 and 1998
was $0.03, $0.06 and $0.24, respectively. The weighted average remaining
contractual life at December 31, 1998 was approximately 3.2 years.
At December 31, 1998, a warrant for the purchase of 65,000 shares of Series
A Preferred Stock is outstanding. The warrant issued in 1996 to facilitate a
leasing transaction, is exercisable at $1.00 per share and may be exercised on a
net basis. The warrant expires ten years from the date of grant. In addition,
options to purchase 96,836 shares of Series D Preferred Stock, issued in
connection with the Opis acquisition in 1997, are outstanding (see Note 2). The
options are exercisable at $.8515 per share and expire ten years from the date
of grant. Also in connection with the Opis acquisition, the Company issued
warrants to purchase 10,000 shares of Series D Preferred to the commercial bank
providing the acquisition financing. The warrants are exercisable at $3.21 per
share and expire five years from the date of grant.
The Company has a stock option grant program for its resellers (Business
Partners) entitled the 1998 Business Partner Stock Option Plan (Business Partner
Plan). Under the plan, options to purchase Class A Common Stock are issued to
Business Partners who meet certain minimum sales levels and certain other
performance standards. The Company has reserved 166,667 shares of Class A Common
Stock for issuance under the Plan. The options are granted at an exercise price
equal to the fair value of the Class A Common Stock at the date of grant. As the
Business Partners are not employees of the Company, expense is recognized at the
time the shares become issuable based upon the minimum value pricing model. At
December 31, 1998, the Company had issued and exercisable stock options under
the Business Partner Plan as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE EXERCISE
PERFORMANCE YEAR SHARES PRICE PRICE
- ---------------- ------ -------- --------
<S> <C> <C> <C>
1997................................................ 63,000 $0.60 $0.60
1998................................................ 24,503 9.00 9.00
------ -----
87,503 $2.95
====== =====
</TABLE>
F-18
<PAGE> 85
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net
loss per share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Numerator:
Net loss.................................. $(3,348,874) $(5,139,982) $(6,591,838)
Denominator:
Weighted--average common shares........... 3,871,507 3,950,913 3,770,703
----------- ----------- -----------
Basic and diluted net loss per share........ $ (0.87) $ (1.30) $ (1.75)
=========== =========== ===========
</TABLE>
11. CONTINGENCIES
The Company may, from time to time, become party to legal proceedings.
Based upon advice from outside legal counsel, management is of the opinion that
the Company is not involved in any litigation at December 31, 1998.
12. SEGMENT INFORMATION
The Company operates as a single business segment and licenses and markets
its products through direct and indirect channels in North America, Europe and
Asia-Pacific. Information regarding revenues in different geographic regions is
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
North America................................. $ -- $4,716,048 $14,492,485
International................................. -- 62,762 1,150,126
---------- ---------- -----------
Total revenues................................ $ -- $4,778,810 $15,642,611
========== ========== ===========
</TABLE>
13. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards
Company...................................... $ 2,629,000 $ 4,720,000
Opis......................................... 600,000 600,000
Other........................................... 999,000 880,000
----------- -----------
4,228,000 6,200,000
Less valuation reserve.......................... (3,700,000) (6,200,000)
----------- -----------
Net deferred tax assets........................... 528,000 --
Deferred tax liabilities.......................... (528,000) --
----------- -----------
Net deferred taxes................................ $ -- $ --
=========== ===========
</TABLE>
F-19
<PAGE> 86
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The valuation allowance increased by $1,900,000 and $2,500,000 at December
31, 1997 and 1998, respectively, due to the respective periods' losses. The
Company has fully reserved for its deferred tax assets due to the uncertainty of
recovery from future operations. The Company has no income tax expense or
benefit and therefore tax expense differs from the federal statutory rate by the
amount of such rate. The reason for such difference is an increase in valuation
reserves provided for deferred tax assets.
At December 31, 1998 the Company has net operating loss carryforwards for
federal income tax purposes of $13,300,000 which begin to expire in 2011, to the
extent not previously utilized. Approximately $1,500,000 of the net operating
loss is attributable to the Company's acquisition of Opis. These losses are
limited for tax purposes under both the separate return limitation year rules
and Internal Revenue Code section 382 which limit the annual utilization of net
operating losses.
14. BENEFIT PLANS
The Company has a 401(k) Retirement Savings Plan (Plan) covering
substantially all employees. Under terms of the Plan, employees may make
voluntary contributions, subject to Internal Revenue Service limitations. The
Company may make discretionary annual contributions to the Plan. However, no
contributions were made during 1996, 1997 or 1998.
15. SUBSEQUENT EVENTS
On March 19, 1999, the Company's Board of Directors authorized the Company
to file a Registration Statement with the Securities and Exchange Commission to
sell shares of its common stock in an underwritten initial public offering. The
Company's Board of Directors, subject to shareholder approval, also approved a
change in the articles of incorporation which eliminates the separate classes of
common stock, changes the number of authorized shares of undesignated preferred
stock to 20,000,000 shares and changes the number of authorized shares of common
stock to 50,000,000. These changes are expected to become effective concurrent
with the closing of the initial public offering.
In conjunction with the proposed initial public offering, the Board of
Directors and the shareholders authorized a two-for-three reverse split of its
Class A and Class B Common Stock which became effective on March 23, 1999. The
accompanying consolidated financial statements have been adjusted retroactively
to reflect the reverse split. The conversion ratios of the respective series of
convertible preferred stock were automatically adjusted to reflect the reverse
split.
If the initial public offering is consummated under terms presently
anticipated, all of the currently outstanding preferred stock will automatically
convert into two-thirds of a share of common stock and the Class B Common Stock
will automatically convert into one share of Common Stock. Unaudited pro forma
stockholders' equity as adjusted for the assumed conversion of the Preferred
Stock and Class B Common Stock is set forth in the accompanying balance sheet.
On March 19, 1999, the Company's Board of Directors adopted an employee
stock purchase plan. The plan is subject to shareholder approval. The Company
presently expects to initially authorize 300,000 shares of Common Stock for
issuance under the plan. The Company's Board of Directors also approved the
establishment of a directors stock option plan whereby 200,000 shares of common
stock would be authorized for issuance. Such plan is subject to shareholder
approval and is expected to become effective concurrent with the completion of
the proposed initial public offering.
On March 18, 1999, the Company signed a term sheet agreeing to the
acquisition of Enact Incorporated by the Company. Enact is a privately-held
provider of sales configuration software for managing product catalogs and
marketing encyclopedias and generating proposals, quotes and orders.
F-20
<PAGE> 87
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company expects to pay $4,100,000 in cash and issue 609,424 shares of its
common stock, of which 201,893 shares are subject to three year annual vesting.
The transaction is expected to be accounted for using the purchase method of
accounting.
On March 19, 1999, the Company's Board of Directors increased the total
number of shares of common stock reserved for issuance under the 1996 Equity
Incentive Plan from 3,366,666 to 4,500,000 and reduced the number of shares
available under the 1998 Business Partner Stock Option Plan from 166,667 to
150,000. These changes are to be effective upon subsequent shareholder approval
which the company anticipates in April 1999.
On March 24, 1999, the Company signed a letter of intent to sell either
common stock or newly created Series F Convertible Preferred Stock (Series F
Preferred Stock) to an investor. Pursuant to the letter of intent, the investor
has agreed to purchase $3,500,000 of common stock in a private placement
transaction concurrent with the Company's initial public offering at a price per
share equal to the initial public offering price less 3.5%. In the event that
the initial public offering does not occur by July 31, 1999, the investor will
purchase 666,667 shares of the Company's Series F Preferred Stock at $9.00 per
share.
In March 1999, the renewal date of the Company's revolving line of credit
was extended to March 2000. The amount available was increased from $1.5 million
to $2.5 million, and the interest rate was decreased to prime.
F-21
<PAGE> 88
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Opis Corporation
We have audited the accompanying balance sheet of Opis Corporation as of
October 31, 1997 and the related statements of operations, statement of
stockholders' deficit and cash flows for the fiscal year ended October 31, 1997
and the statements of operations and cash flows for the period from November 1,
1997 through December 30, 1997. 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 Opis Corporation at October
31, 1997 and the results of its operations and its cash flows for the fiscal
year ended October 31, 1997 and for the period from November 1, 1997 through
December 30, 1997, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
January 22, 1999
F-22
<PAGE> 89
OPIS CORPORATION
BALANCE SHEET
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 402,852
Accounts receivable, less allowance of $50,000............ 275,831
Inventories............................................... 13,563
Prepaid expenses and other................................ 4,986
-----------
Total current assets........................................ 697,232
Property and equipment, at cost:
Computer equipment and software........................... 268,752
Office equipment and furniture............................ 75,166
-----------
343,918
Less accumulated depreciation............................. 227,239
-----------
116,679
Other assets:
Deferred licensing costs, less amortization of $116,702... 17,846
Software development costs, less amortization of
$27,261................................................ 109,129
Deferred financing costs, less amortization of $5,313..... 21,349
-----------
Total assets................................................ $ 962,235
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 419,840
Accrued expenses.......................................... 40,646
Deferred revenue.......................................... 305,320
Current portion of long-term debt......................... 575,107
-----------
Total current liabilities................................... 1,340,913
Long-term debt, less current portion........................ 630,049
Commitments and contingencies
Stockholders' deficit:
Convertible preferred stock, no par or stated value;
1,000,000 shares authorized; 47,770 shares issued and
outstanding............................................ 150,000
Common stock, no par or stated value; 1,000,000 shares
authorized; 483,595 shares issued and outstanding...... 284,811
Accumulated deficit....................................... (1,443,538)
-----------
Total stockholders' deficit................................. (1,008,727)
-----------
Total liabilities and stockholders' deficit................. $ 962,235
===========
</TABLE>
See accompanying notes.
F-23
<PAGE> 90
OPIS CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL NOVEMBER 1,
YEAR ENDED 1997 THROUGH
OCTOBER 31, DECEMBER 30,
1997 1997
----------- ------------
<S> <C> <C>
Net revenues:
Licenses.................................................. $1,310,703 $ 119,388
Services.................................................. 674,520 80,174
---------- ---------
Total net revenues..................................... 1,985,223 199,562
Costs of revenues:
Licenses.................................................. 138,077 14,431
Services.................................................. 108,043 11,594
---------- ---------
Total costs of revenues................................ 246,120 26,025
---------- ---------
Gross profit................................................ 1,739,103 173,537
Operating expenses:
Sales and marketing....................................... 1,108,704 159,368
Research and development.................................. 579,989 134,846
General and administrative................................ 398,432 193,367
---------- ---------
Total operating expenses............................... 2,087,125 487,581
---------- ---------
Loss from operations........................................ (348,022) (314,044)
Other income (expense):
Interest income........................................... 1,314 306
Interest expense.......................................... (79,118) (7,383)
Other income.............................................. 4,012 2,818
---------- ---------
Loss before provision for income taxes...................... (421,814) (318,303)
Provision for income taxes.................................. -- --
---------- ---------
Net loss.................................................... $ (421,814) $(318,303)
========== =========
</TABLE>
See accompanying notes.
F-24
<PAGE> 91
OPIS CORPORATION
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK
-------------------- --------------------
NUMBER NUMBER
OF OF ACCUMULATED
SHARES AMOUNT SHARES AMOUNT DEFICIT TOTAL
--------- -------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 31,
1996....................... -- $ -- 469,620 $265,376 $(1,021,724) $ (756,348)
Preferred stock issued..... 47,770 150,000 -- -- -- 150,000
Net loss................... -- -- -- -- (421,814) (421,814)
Stock issued as
compensation............ -- -- 13,975 19,435 -- 19,435
------ -------- ------- -------- ----------- -----------
Balance at October 31,
1997....................... 47,770 $150,000 483,595 $284,811 $(1,443,538) $(1,008,727)
====== ======== ======= ======== =========== ===========
</TABLE>
See accompanying notes.
F-25
<PAGE> 92
OPIS CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL NOVEMBER 1,
YEAR ENDED 1997 THROUGH
OCTOBER 31, DECEMBER 30,
1997 1997
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(421,814) $(318,303)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization............................. 204,478 24,143
Non-cash equity compensation.............................. 19,435 45,530
Amortization of deferred licensing costs.................. 20,900 8,000
Changes in operating assets and liabilities:
Accounts receivable.................................... (122,834) 104,691
Inventories............................................ 14,708 (482)
Prepaid expenses and other current assets.............. 10,472 2,392
Accounts payable....................................... 81,351 49,820
Accrued expenses....................................... (869) 194,567
Deferred revenue....................................... 25,205 (15,079)
--------- ---------
Net cash provided by (used in) operating activities......... (168,968) 95,279
INVESTING ACTIVITIES
Purchases of property and equipment......................... (44,414) --
--------- ---------
Net cash used in investing activities....................... (44,414) --
FINANCING ACTIVITIES
Proceeds from long-term debt................................ 553,888 --
Payments on long-term debt.................................. (82,589) (416,287)
Payments for deferred financing costs....................... (11,000) --
Issuance of preferred stock................................. 150,000 --
Proceeds from exercise of common stock options.............. -- 160,327
--------- ---------
Net cash provided by (used in) financing activities......... 610,299 (255,960)
--------- ---------
Net increase (decrease) in cash............................. 396,917 (160,681)
Cash at beginning of period................................. 5,935 402,852
--------- ---------
Cash at end of period....................................... $ 402,852 $ 242,171
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest...................................... $ 79,118 $ 8,142
Noncash operating and investing activities--accounts payable
relating to:
Deferred licensing costs.................................. $ 52,678 $ --
</TABLE>
See accompanying notes.
F-26
<PAGE> 93
OPIS CORPORATION
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND ORGANIZATION
Opis Corporation (the Company), develops and markets customer request
tracking and resolution software for customer support centers and corporate help
desks. The Company also provides customer support, training and consulting
services related to its software products. Customers include companies in the
United States and resellers in Australia, Ireland, The Netherlands, Singapore,
South Africa and the United Kingdom.
Subsequent to year-end, the Company was acquired by SalesLogix Corporation
(see Note 7).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
ACCOUNTS RECEIVABLE
Concentrations of credit risk with respect to accounts receivables are
limited due to the number of customers and their geographic dispersion. The
Company performs initial and periodic credit evaluations of its customers and
generally does not require collateral.
INVENTORIES
Inventories are stated at the lower of first-in, first-out (FIFO) cost or
market.
DEPRECIATION
Depreciation of property and equipment is provided using straight-line and
accelerated methods over the estimated useful lives of the assets.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized over the related loan term.
DEFERRED LICENSING COSTS
Deferred licensing costs consist of sublicense fee payments made at the
inception of various license/royalty agreements and are amortized over the terms
of the agreements (ranging from 2 to 3 years) based on related unit sales. In
addition, under these agreements the Company pays ongoing royalties based on
unit sales or a percentage of net sales.
SOFTWARE DEVELOPMENT COSTS
The Company capitalizes software development costs in accordance with the
Financial Accounting Standards Board Statement of Financial Accounting Standards
(SFAS) No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed." The capitalization of costs begins when a
product's technological feasibility has been established and ends when the
product is available for general release to customers. The Company amortizes
these costs over the estimated economic life of the product. Amortization
expense recorded in 1997 was $27,670.
F-27
<PAGE> 94
OPIS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION AND DEFERRED REVENUE
Revenue from sales of software licenses is recognized upon delivery of the
software product to the customer and satisfaction of significant related
obligations, if any, in accordance with American Institute of Certified Public
Accountants' Statement of Position 91-1, which was effective for all periods
presented. Revenue from customer support is defined and recognized over the
period the customer support services are provided other service revenues are
recognized as services are performed.
ADVERTISING
The Company expenses advertising costs as incurred. Advertising expense was
approximately $104,000 in 1997.
INCOME TAXES
The Company uses the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are determined based on
the difference between financial reporting and income tax bases of assets and
liabilities using the enacted marginal tax rates. Deferred income tax expenses
or credits are based on changes in the asset or liability from period to period.
The temporary differences result primarily from certain reserves and accruals.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations, in accounting for its employee
stock options rather than the alternative fair value accounting allowed by SFAS
No. 123 "Accounting for Stock Based Compensation" (Statement 123). APB 25
provides that compensation expense relative to the Company's employee stock
options is measured based on the intrinsic value of the stock option.
2. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<S> <C>
Note payable to bank, due in monthly installments of $4,751
including interest at prime plus 1.5 percent (10 percent
at October 31, 1997), through March 18, 2001,
collateralized by a senior security interest in
substantially all assets of the Company, a life insurance
policy and personally guaranteed by the majority
stockholder............................................... $ 179,062
Note payable to bank, due in monthly installments of $7,870
including interest at prime plus 1.5 percent (10 percent
at October 31, 1997), through January 23, 2003,
collateralized by substantially all assets of the Company,
a life insurance policy and personally guaranteed by the
majority stockholder and a limited guaranty by another
stockholder............................................... 400,201
Note payable to investor, due on demand..................... 400,000
Note payable to Mid-Iowa Development Fund, due in monthly
installments of $3,600 including interest at 6 percent
through April 10, 2000, personally guaranteed by the
majority stockholder...................................... 100,000
</TABLE>
F-28
<PAGE> 95
OPIS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT (CONTINUED)
<TABLE>
<S> <C>
Note payable to State of Iowa, bearing no interest and due
in monthly installments of $1,083 through September 15,
2001, collateralized by certain property and personally
guaranteed by the majority stockholder.................... 58,288
Note payable to City of Des Moines, due in annual
installments of $14,193 including interest at 3 percent
through April 1, 2001, collateralized by substantially all
assets of the Company and personally guaranteed by the
majority stockholder...................................... 65,000
Note payable to bank, due in monthly installments of $61
including interest at the bank's base rate plus 2.4
percent (10.9 percent at October 31, 1997) through April
1, 2002................................................... 2,605
----------
1,205,156
Less amounts due within one year............................ 575,107
----------
Long-term debt, less current portion........................ $ 630,049
==========
</TABLE>
Aggregate future maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1998................................................... $ 575,107
1999................................................... 154,614
2000................................................... 196,513
2001................................................... 122,859
2002................................................... 77,852
Thereafter............................................. 78,211
----------
$1,205,156
==========
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
The Company leases office space, vehicles and other equipment under
operating leases expiring at various times through May 2000. Rental expense for
all operating leases was approximately $44,000 in 1997.
At October 31, 1997, the Company's approximate future minimum lease
commitments under operating leases are as follows:
<TABLE>
<S> <C>
1998.................................................... $ 43,000
1999.................................................... 39,000
2000.................................................... 22,000
--------
$104,000
========
</TABLE>
4. EMPLOYEE BENEFIT PLAN
All employees who have attained the age of twenty and have completed two
years of service are eligible for the Company's 401(k) profit sharing plan.
Employee contributions are limited to 20 percent of compensation and subject to
other IRS limitations. Discretionary company contributions to the plan may be
made annually. Plan expense for 1997 was not material.
F-29
<PAGE> 96
OPIS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES
At October 31, 1997, the Company had net operating loss (NOL) carryforwards
for income tax purposes of approximately $1,200,000 which begin to expire in
2009, to the extent not previously utilized. In addition the NOL could be
limited based upon changes in control that have already occurred, or may occur
in the future (see Note 7).
The components of the Company's deferred income taxes are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforward........................... $ 480,000
Other nondeductible reserves.............................. 20,000
---------
500,000
Less valuation reserve.................................... (456,000)
---------
Net deferred tax assets................................... 44,000
Deferred tax liabilities:
Software development costs................................ (44,000)
---------
Net deferred taxes.......................................... $ --
=========
</TABLE>
The Company's valuation reserve changed by $219,000 principally due to the
fiscal year ended October 31, 1997 losses. The Company has fully reserved for
its net deferred tax assets due to the uncertainty of recovery from future
operations.
The Company has no income tax expense or benefit and therefore tax expense
differs from the federal statutory rate by the amount of such rate. The reason
for such difference is an increase in valuation reserves provided for deferred
tax assets.
6. STOCKHOLDERS' DEFICIT
In December 1996, the Company authorized 1,000,000 shares of a new class of
convertible preferred stock and issued 47,770 shares for cash consideration of
$150,000. Each share of preferred stock is convertible into one share of common
stock. The convertible preferred stock provides for cumulative dividends at the
rate of 5 percent payable annually.
The Company has certain stock compensation arrangements pursuant to which
key employees may be granted common stock or options to acquire common stock in
lieu of compensation or bonus. Stock granted is at the discretion of the Board
of Directors and is restricted for transferability whereby the Company and/or
other stockholders have the first right of refusal to purchase stock before it
is sold to an outside investor.
Stock issued for compensation is recorded at its estimated fair market
value as determined by management and/or the Board of Directors. During 1997, a
total of 13,975 shares were issued resulting in compensation expense of $19,435.
Under Statement 123, certain pro forma information is required as if the
Company had accounted for the stock-based compensation under the alternative
fair value method of Statement 123. Pro forma stock compensation expense and net
loss for the fiscal year ended October 31, 1997 were not materially different
from amounts as reported.
7. SUBSEQUENT EVENTS
On December 30, 1997, the Company was merged into a newly formed subsidiary
of SalesLogix Corporation. The Company engaged a third-party to provide
assistance with locating a buyer and paid approximately $90,000 in December 1997
in connection with the service provided. This amount has been included in
general and administrative expenses for the period from November 1, 1997 through
December 30, 1997.
F-30
<PAGE> 97
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Enact Incorporated
We have audited the accompanying balance sheets of Enact Incorporated as of
December 31, 1997 and 1998 and the related statements of operations, redeemable
convertible common stock and warrants and stockholders' deficit and cash flows
for the years 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 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 Enact Incorporated at
December 31, 1997 and 1998 and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
As discussed in Note 9 to the financial statements, the Company's recurring
losses, decreasing revenues and net capital deficiency raise substantial doubt
about its ability to continue as a going concern. Management's plans as to these
matters are described in Note 9. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
March 15, 1999, except for Note 10
as to which the date is
March 24, 1999
F-31
<PAGE> 98
ENACT INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 311,595 $ 50,181
Accounts receivable....................................... 19,200 43,520
Prepaid rent.............................................. 4,318 --
----------- -----------
Total current assets........................................ 335,113 93,701
Property and equipment, net................................. 101,654 118,227
Other assets................................................ 4,594 --
----------- -----------
$ 441,361 $ 211,928
=========== ===========
LIABILITIES, REDEEMABLE CONVERTIBLE COMMON STOCK AND WARRANTS AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 20,361 $ 99,991
Accrued expenses.......................................... 5,239 24,410
Deferred revenue.......................................... 44,750 122,743
Note payable to stockholders.............................. -- 150,000
----------- -----------
Total current liabilities................................... 70,350 397,144
Class B redeemable convertible common stock -- no par value;
20,000 shares authorized; 15,000 shares issued and
outstanding............................................... 1,460,783 1,472,255
Class C redeemable convertible common stock -- no par value;
7,500 shares authorized, issued and outstanding........... -- 676,269
Warrants for Class B redeemable convertible common stock.... 25,000 65,000
Stockholders' deficit:
Class A common stock -- no par value; 132,500 shares
authorized; 50,000 shares issued and outstanding....... 58,555 58,555
Accumulated deficit....................................... (1,173,327) (2,457,295)
----------- -----------
Total stockholders' deficit....................... (1,114,772) (2,398,740)
----------- -----------
$ 441,361 $ 211,928
=========== ===========
</TABLE>
See accompanying notes.
F-32
<PAGE> 99
ENACT INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1997 1998
--------- -----------
<S> <C> <C>
Net revenues:
Licenses.................................................. $ 133,000 $ 224,175
Services.................................................. 388,033 339,660
--------- -----------
Total net revenues................................ 521,033 563,835
Costs of revenues:
Licenses.................................................. 2,660 4,484
Services.................................................. 192,789 322,202
--------- -----------
Total costs of revenues........................... 195,449 326,686
--------- -----------
Gross profit................................................ 325,584 237,149
Operating expenses:
Sales and marketing....................................... 168,200 748,565
Product development....................................... 344,304 406,985
General and administrative................................ 337,954 361,843
--------- -----------
Total operating expenses.......................... 850,458 1,517,393
--------- -----------
Loss from operations........................................ (524,874) (1,280,244)
Other income (expense):
Interest income........................................... 23,147 2,896
Interest expense.......................................... -- (2,347)
--------- -----------
Loss before provision for income taxes...................... (501,727) (1,279,695)
Provision for income taxes.................................. -- --
--------- -----------
Net loss.................................................... $(501,727) $(1,279,695)
========= ===========
</TABLE>
See accompanying notes.
F-33
<PAGE> 100
ENACT INCORPORATED
STATEMENTS OF REDEEMABLE CONVERTIBLE COMMON STOCK AND WARRANTS AND STOCKHOLDERS'
DEFICIT
<TABLE>
<CAPTION>
CLASS B CLASS C WARRANTS FOR CLASS B STOCKHOLDERS' DEFICIT
REDEEMABLE REDEEMABLE REDEEMABLE -------------------
CONVERTIBLE CONVERTIBLE CONVERTIBLE COMMON CLASS A
COMMON STOCK COMMON STOCK STOCK COMMON STOCK
---------------------- -------------------- ---------------------- -------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT OF WARRANTS AMOUNT OF SHARES AMOUNT
--------- ---------- --------- -------- ----------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1997.................. 15,000 $1,449,311 -- $ -- 3,421 $ 25,000 50,000 $58,555
Accretion to
redemption value.... -- 11,472 -- -- -- -- -- --
Net loss.............. -- -- -- -- -- -- -- --
------ ---------- ----- -------- ------ -------- ------ -------
Balance at December 31,
1997.................. 15,000 1,460,783 -- -- 3,421 25,000 -- 58,555
Expiration of
warrants............ -- -- -- -- (3,421) (25,000) -- --
Issuance of Class C
redeemable
convertible common
stock............... -- -- 7,500 658,468 -- -- -- --
Issuance of
warrants............ -- -- -- -- 3,816 65,000 -- --
Accretion to
redemption value.... -- 11,472 -- 17,801 -- -- -- --
Net loss.............. -- -- -- -- -- -- -- --
------ ---------- ----- -------- ------ -------- ------ -------
Balance at December 31,
1998.................. 15,000 $1,472,255 7,500 $676,269 3,816 $ 65,000 50,000 $58,555
====== ========== ===== ======== ====== ======== ====== =======
<CAPTION>
STOCKHOLDERS' DEFICIT
-------------------------
ACCUMULATED
DEFICIT TOTAL
----------- -----------
<S> <C> <C>
Balance at January 1,
1997.................. $ (660,128) $ (601,573)
Accretion to
redemption value.... (11,472) (11,472)
Net loss.............. (501,727) (501,727)
----------- -----------
Balance at December 31,
1997.................. (1,173,327) (1,114,772)
Expiration of
warrants............ 25,000 25,000
Issuance of Class C
redeemable
convertible common
stock............... -- --
Issuance of
warrants............ -- --
Accretion to
redemption value.... (29,273) (29,273)
Net loss.............. (1,279,695) (1,279,695)
----------- -----------
Balance at December 31,
1998.................. $(2,457,295) $(2,398,740)
=========== ===========
</TABLE>
See accompanying notes.
F-34
<PAGE> 101
ENACT INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
--------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(501,727) $(1,279,695)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 63,147 81,346
Provision for bad debts................................... -- 20,015
Changes in operating assets and liabilities:
Accounts receivable.................................... (19,200) (44,335)
Prepaid rent........................................... (4,153) 4,318
Accounts payable and accrued expenses.................. 5,961 98,801
Deferred revenue....................................... 44,750 77,993
--------- -----------
Net cash used in operating activities....................... (411,222) (1,041,557)
INVESTING ACTIVITIES
Net purchases of property and equipment..................... (40,258) (93,325)
--------- -----------
Net cash used in investing activities....................... (40,258) (93,325)
FINANCING ACTIVITIES
Proceeds from note payable to stockholders.................. -- 150,000
Issuance of Class C redeemable convertible common stock..... -- 723,468
--------- -----------
Net cash provided by financing activities................... -- 873,468
--------- -----------
Net decrease in cash and cash equivalents................... (451,480) (261,414)
Cash and cash equivalents at beginning of year.............. 763,075 311,595
--------- -----------
Cash and cash equivalents at end of year.................... $ 311,595 $ 50,181
========= ===========
</TABLE>
See accompanying notes.
F-35
<PAGE> 102
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND ORGANIZATION
Enact Incorporated (the Company) is an Ohio company that provides sales
configuration software for managing product catalogs and marketing encyclopedias
and generating proposals, quotes and orders. The Company markets its products to
sales, distribution and resale organizations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of accounts receivable. The
Company's accounts receivable at December 31, 1997 and 1998 consisted entirely
of amounts due from one customer. In 1997, one customer represented 87 percent
of total revenues. In 1998, four individual customers represented 40 percent, 22
percent, 20 percent and 14 percent of total revenues.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and
equipment is provided using the straight-line method over the estimated useful
lives of the assets, which is three years for computer equipment, office
furniture and purchased software.
SOFTWARE DEVELOPMENT COSTS
Software development costs are expensed when incurred. Financial accounting
standards provide for the capitalization of certain software development costs
after technological feasibility of the software is established. Under the
Company's current practice of developing new products and enhancements, the
technological feasibility of the underlying software is not established until
substantially all product development is complete, including the development of
a working model.
REVENUE RECOGNITION
As of January 1, 1998, the Company adopted American Institute of Certified
Public Accountants' Statement of Position 97-2, "Software Revenue
Recognition"(SOP 97-2), as amended by SOP 98-4 which was effective for
transactions that the Company entered into in 1998. Prior years were not
restated. The adoption of SOP 97-2 had no effect on the revenues or earnings for
the period. The Company recognizes software license revenue when an executed
license agreement, unconditional purchase order or contract is received,
delivery of the product has occurred, collection of the resulting receivable is
assessed as probable and the fee is fixed or determinable based upon
vendor-specific objective evidence of the arrangement.
F-36
<PAGE> 103
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COST OF REVENUES
Cost of licenses includes documentation and other production costs.
Cost of services consists primarily of salaries, related taxes and benefits
and other allocated overhead costs.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid investments
with original maturities of three months or less when acquired and which are
readily convertible to cash.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1998, the Company has the following financial instruments:
cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses and notes payable. The carrying value of cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses approximates their
fair value based on the liquidity of these financial instruments or based on
their short-term nature. The carrying value of the notes payable approximates
fair value based on market interest rates and the short-term nature of the
notes.
INCOME TAXES
The Company accounts for income taxes in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes (Statement 109)." Statement 109 is an
asset and liability method whereby deferred tax assets and liabilities are
determined based upon differences between the financial reporting and income tax
basis of the underlying assets and liabilities using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
COMPREHENSIVE LOSS
As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income (Statement 130)." Statement 130 establishes new rules for
reporting and display of comprehensive loss and its components. Comprehensive
loss is the same as net loss for all periods presented.
STOCK-BASED COMPENSATION
The Company has elected to follow the Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations, in accounting for its employee stock options rather than the
alternative fair value accounting allowed by SFAS No. 123 "Accounting for
Stock-Based Compensation" (Statement 123). APB 25 provides that the compensation
expense relative to the Company's employee stock options is measured based on
the intrinsic value of the stock option. Statement 123 requires companies that
continue to follow APB 25 to provide a pro forma disclosure of the impact of
applying the fair value method of Statement 123 (see Note 9).
F-37
<PAGE> 104
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1998
--------- ---------
<S> <C> <C>
Computer equipment................................... $ 161,831 $ 214,279
Purchased software................................... 25,135 35,758
Office furniture and other........................... 18,011 48,265
--------- ---------
204,977 298,302
Less accumulated depreciation........................ (103,323) (180,075)
--------- ---------
$ 101,654 $ 118,227
========= =========
</TABLE>
3. NOTE PAYABLE TO STOCKHOLDERS
On November 2, 1998, the Company obtained financing in the form of a note
payable to the Class B and C redeemable convertible common (Class B and C)
stockholders. The note makes available $200,000, of which $150,000 was
outstanding at December 31, 1998. The note bears interest at 8 percent and is
due 90 days from the execution of the note. Borrowings under the note are
collateralized by substantially all assets of the Company. Payment of the note
is also personally guaranteed by the majority Class A stockholder of the Company
and secured by his pledge of 30,000 shares of Class A common stock. In exchange
for the financing, the Class B and C stockholders obtained the voting rights of
the majority Class A stockholder during the period the note is outstanding. The
note is convertible to an equity instrument at the option of the Class B and C
stockholders. The terms of the conversion are to be negotiated and executed at
the date the conversion option is exercised.
Subsequent to December 31, 1998, the Class B and C stockholders extended
the due date of the note payable to May 2, 1999. In the event of default, the
Class B and C stockholders have the option to exercise their rights under the
Company asset pledge or the personal guaranty of the majority Class A
stockholder. Also in the event of default, the interest rate increases to the
lesser of 15 percent or the highest interest rate available under the law.
4. COMMITMENTS AND CONTINGENCIES
The Company leases office space and certain office equipment under
operating lease agreements expiring through November 14, 1999. Expense
recognized under operating leases was $53,000 for the years ended December 31,
1997 and 1998.
Amounts due under operating lease commitments for years subsequent to 1998
amount to $44,000, all of which is due in 1999.
5. EMPLOYEE BENEFIT PLAN
All employees who have attained the age of 21 and have completed 1 year of
service are eligible for the Company's 401(k) retirement plan. Employee
contributions are limited to 15 percent of compensation and subject to other IRS
limitations. The Company does not contribute to the plan.
F-38
<PAGE> 105
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
The Company has net operating loss carryforwards at December 31, 1998, of
approximately $2.3 million that begin to expire in 2011. The net operating loss
carryforwards have been fully reserved by a valuation allowance due to the
uncertainties related to their future utilization. The valuation allowance
increased during 1997 and 1998 by $161,000 and $543,000, respectively. The
differences between the Company's effective tax rate and the statutory Federal
income tax rate of 34% is the Federal statutory rate. The reason for such
difference is an increase in the valuation reserves provided for deferred taxes.
The significant components of the Company's deferred tax asset are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1998
-------- --------
<S> <C> <C>
Book depreciation in excess of tax.......................... 6,000 8,000
Tax revenue in excess of book............................... (34,000) (1,000)
Net operating loss carryforward............................. 349,000 857,000
-------- --------
Total..................................................... 321,000 864,000
Less valuation allowance.................................. (321,000) (864,000)
-------- --------
Net deferred tax asset.................................... -- --
======== ========
</TABLE>
The Company paid no income taxes for the years ended December 31, 1997 and
1998.
7. REDEEMABLE CONVERTIBLE COMMON STOCK AND WARRANTS
On June 7, 1996, the Company issued 15,000 shares of Class B redeemable
convertible common stock (Class B Stock) to two third-party investors for net
cash proceeds of $1,467,619. On July 8, 1998, the Company issued 7,500 shares of
Class C redeemable convertible common stock (Class C Stock) to the same
third-party investors for net cash proceeds of $723,468. Each share of the Class
B and C common stock has no par value and is convertible, at the option of the
holder, into one share of Class A common stock. Upon the liquidation,
dissolution, or winding up of the Company, the Class B and C common stockholders
will be entitled to be paid an amount equal to their original investment, before
any distribution or payment is made to any other class of stockholders of the
corporation.
After June 7, 2001, holders of at least 20 percent of Class B and C stock
may require the Company to redeem all of their shares in eight quarterly
installments beginning with the quarter that notification of redemption was
received. The redemption will occur at the fair value of the shares as
determined by the Company and at least two-thirds of the stockholders of the
convertible stock that is being redeemed. The Company is accreting the Class B
and C stock to the redemption value on the straight-line method to June 7, 2001.
There has been no change in the estimated fair value of the Class B and C stock
since its issuance.
The Company has outstanding warrants which give the holder the right to
acquire 3,816 shares of the Company's Class B stock. The warrants may be
exercised in whole or in part (but not less than an amount equal to one percent
of the total common shares outstanding) at any time at $91.72 per share, and
expire if not exercised on June 7, 2000. The warrant agreement is structured
such that the Class B stock obtained on conversion is assured of being equal to
five percent of the total number of common shares (including Class A, B and C)
outstanding. If this results in an increase in the number of shares subject to
warrants, the $91.72 exercise price is decreased proportionately.
Warrants to acquire 3,421 shares of Class B stock were originally issued in
conjunction with the sale of the Class B stock in 1996. Class B stock proceeds
in the amount of $25,000 were allocated to the
F-39
<PAGE> 106
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. REDEEMABLE CONVERTIBLE COMMON STOCK AND WARRANTS (CONTINUED)
warrants based on an estimate of fair value. While the warrants were not
exercised by their expiration date, the Company agreed to issue new warrants in
conjunction with the sale of the Class C stock in 1998. Class C stock proceeds
in the amount of $65,000 were allocated to the warrants based on an estimate of
fair value. The $25,000 allocated to the expired warrants was reclassified to
accumulated deficit.
8. STOCK OPTIONS
The Company has elected to follow APB 25, in accounting for its employee
stock options. Under APB 25, as long as the exercise price of the Company's
employee stock options equals or exceeds the fair value of the underlying stock
on the date of the grant, no compensation expense is recognized.
In 1996, the Company implemented an incentive stock option program for
certain employees, directors, advisors and consultants. Under the plan, options
to purchase Class A common stock of the Company will be granted to participants
at an exercise price to be determined by the Board of Directors. Incentive stock
options granted under the plan shall be granted to employees only and may not
have an exercise price less than the per share fair market value of the Class A
common stock on the date of the grant. Incentive stock options have a term of
ten years and vest over four years commencing on the one-year anniversary of the
date of the grant.
Pro forma information regarding net loss and net loss per share is required
by Statement 123, which also requires that the information be determined as if
the Company has accounted for all its employee stock options grants under the
fair value method of that Statement. The fair value for these options was
estimated at the date of grant using a minimum value pricing model with the
following weighted-average assumptions:
<TABLE>
<S> <C>
Expected life of the award............................... 4 years
Dividend yield........................................... 0 percent
Risk-free interest rate.................................. 5 percent
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. For the year
ended December 31, 1998, the pro forma Statement 123 expense was $15,764 and the
pro forma Statement 123 net loss was $1,381,459.
Option activity under the incentive stock option program is as follows:
<TABLE>
<CAPTION>
PER SHARE WEIGHTED
EXERCISE AVERAGE
SHARES PRICE EXERCISE PRICE
------ --------- --------------
<S> <C> <C> <C>
Outstanding at January 1, 1998........................ -- -- --
Granted............................................. 4,875 $100 $100
Exercised........................................... -- -- --
Expired or canceled.................................
----- ---- ----
Outstanding at December 31, 1998...................... 4,875 $100 $100
===== ==== ====
</TABLE>
The weighted average fair value of options granted in 1998 was $22.12, with
a weighted average contractual life of approximately 5 years.
F-40
<PAGE> 107
ENACT INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. GOING CONCERN
The Company has incurred operating losses to date and has negative net
worth and negative working capital at December 31, 1998. To date, the Company
has been funded through debt and equity infusions from certain principal
shareholders. The inability of the Company to attract additional capital and
ultimately, to achieve profitability, could result in discontinuation of the
Company's business.
The Company's ultimate ability to continue as a going concern depends on
the market acceptance of products utilizing its proprietary technology and the
achievement of operating profits and positive cash flow. Management believes
that the Company will be able to attract additional debt or equity financing in
amounts adequate to continue operating through 1999. In addition, the Company
will continue to work with its Class B and C stockholders to extend the due date
of the note payable. Any limitations on the Company's ability to obtain
financing will result in reduction of operating expenses.
10. SUBSEQUENT EVENT
Subsequent to year end, the Company and its shareholders have executed a
letter of intent to be acquired by a third party.
F-41
<PAGE> 108
SALESLOGIX CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma condensed consolidated financial statements give
effect to the proposed acquisition of Enact Incorporated ("Enact") by
SalesLogix. SalesLogix' proposed acquisition of Enact will be accounted for
using the purchase method of accounting. The assets acquired and liabilities
assumed will be recorded based on their estimated fair values at the date of the
acquisition.
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1998 gives effect to the acquisition of Enact as if
it had occurred on January 1, 1998 and includes adjustments directly
attributable to the acquisition of Enact and expected to have a continuing
impact on the combined company. The unaudited pro forma condensed consolidated
balance sheet as of December 31, 1998 gives effect to the acquisition of Enact
as if it occurred on December 31, 1998 and reflects the SalesLogix and Enact
balance sheets both as of December 31, 1998, the most recent historical balance
sheets for both companies. As the pro forma financial statements have been
prepared based on estimated fair values, amounts actually recorded may change
upon determination of the total purchase price and additional analysis of
individual assets acquired and liabilities assumed. There can be no assurance
that actual pro forma adjustments will not vary significantly from the estimated
adjustments reflected in the unaudited pro forma condensed consolidated
financial statements.
The unaudited pro forma information is derived from historical financial
statements of the SalesLogix and Enact and should be read in conjunction with
the historical consolidated financial statements and related notes thereto of
the SalesLogix and the historical financial statements and related notes thereto
of Enact. The unaudited pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations that would have been reported if the acquisition had been
consummated as presented in the accompanying unaudited pro forma condensed
consolidated financial statements.
F-42
<PAGE> 109
SALESLOGIX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
SALESLOGIX ENACT ADJUSTMENTS
HISTORICAL HISTORICAL NOTE 2 PRO FORMA
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............. $11,377,236 $ 50,181 $ (4,099,999)(a) $ 7,327,418
Accounts receivable, net.............. 4,569,719 43,520 4,613,239
Other current assets.................. 922,380 -- 922,380
----------- ----------- ------------ -----------
Total current assets.......... 16,869,335 93,701 (4,099,999) 12,863,037
Property and equipment, net............. 2,544,086 118,227 2,662,313
Other assets, net....................... 4,560,737 -- 7,538,114(b) 12,098,851
----------- ----------- ------------ -----------
Total assets.................. $23,974,158 $ 211,928 $ 3,438,115 $27,624,201
=========== =========== ============ ===========
Current liabilities:
Accounts payable and accrued
expenses........................... $ 3,018,166 $ 124,401 $ 3,142,567
Current portion of notes payable...... 691,304 150,000 841,304
Current portion of capital lease
obligations........................ 558,082 -- 558,082
Deferred revenue...................... 1,759,056 122,743 1,881,799
----------- ----------- ------------ -----------
Total current liabilities..... 6,026,608 397,144 6,423,752
Notes payable, less current portion..... 782,609 -- 782,609
Capital lease obligations, less current
portion............................... 458,463 -- 458,463
Deferred rental obligation.............. 106,390 -- 106,390
Redeemable convertible common stock..... -- 2,213,524 $ (2,213,524)(c) --
Total stockholders' equity (deficit).... 16,600,088 (2,398,740) 5,651,639(d) 19,852,987
----------- ----------- ------------ -----------
$23,974,158 $ 211,928 $ 3,438,115 $27,624,201
=========== =========== ============ ===========
</TABLE>
See accompanying notes
F-43
<PAGE> 110
SALESLOGIX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
SALESLOGIX ENACT ADJUSTMENTS
HISTORICAL HISTORICAL NOTE 2 PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Licenses............................ $10,105,401 $ 224,175 $10,329,576
Services............................ 5,537,210 339,660 5,876,870
----------- ----------- ----------- -----------
Total revenues................... 15,642,611 563,835 16,206,446
Costs of revenues
Licenses............................ 604,039 4,484 608,523
Services............................ 4,299,004 322,202 4,621,206
----------- ----------- ----------- -----------
Total costs of revenues.......... 4,903,043 326,686 5,229,729
----------- ----------- ----------- -----------
Gross profit.......................... 10,739,568 237,149 10,976,717
Operating expenses
Sales and marketing................. 10,029,741 748,565 10,778,306
Research and development............ 3,845,179 406,985 4,252,164
General and administrative.......... 2,150,928 361,843 2,512,771
Amortization of acquisition related
intangible assets................ 1,436,185 -- 1,507,623(e) 2,943,808
----------- ----------- ----------- -----------
Total operating expenses......... 17,462,033 1,517,393 1,507,623 20,487,049
----------- ----------- ----------- -----------
Loss from operations.................. (6,722,465) (1,280,244) (1,507,623) (9,510,332)
Interest and other income, net........ 130,627 549 131,176
----------- ----------- ----------- -----------
Loss before provision for income
taxes............................... (6,591,838) (1,279,695) (1,507,623) (9,379,156)
Provision for income taxes............ -- -- -- --
----------- ----------- ----------- -----------
Net loss.............................. $(6,591,838) $(1,279,695) $(1,507,623) $(9,379,156)
=========== =========== =========== ===========
Pro forma basic and diluted net loss
per share........................... $ (0.54) $ (0.74)
=========== ===========
Shares used in computation of pro
forma basic and diluted net loss per
share............................... 12,310,517 407,531(f) 12,718,048
=========== =========== ===========
</TABLE>
See accompanying notes
F-44
<PAGE> 111
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Company has executed a letter of intent to acquire Enact Incorporated
("Enact").
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1998 reflects the effects of the proposed
acquisition of Enact, assuming the acquisition had occurred as of January 1,
1998. The unaudited pro forma condensed consolidated balance sheet as of
December 31, 1998 reflects the effects of the proposed acquisition of Enact,
assuming the acquisition had occurred on December 31, 1998. The unaudited pro
forma information presented is not necessarily indicative of future consolidated
results of operations of SalesLogix or the condensed consolidated results of
operations that would have resulted had the acquisition taken place on January
1, 1998.
2. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL ADJUSTMENTS
The accompanying unaudited pro forma condensed consolidated financial
statements reflect the following pro forma adjustments.
(a) Represents the cash portion of the purchase price.
(b) The preliminary allocation of the purchase price resulted in
intangible assets, primarily capitalized technology and goodwill, of
$7,538,114, which are amortized on a straight-line basis over five years.
In connection with the acquisition, SalesLogix estimates that it will
record a charge of approximately $900,000 for in-process research and
development upon closing of the acquisition. In-process research and
development charges have not been reflected in the pro forma condensed
consolidated statement of operations for the year ended December 31, 1998
as they are considered a nonrecurring charge.
(c) To reflect the retirement of the outstanding redeemable convertible
Class B and Class C common shares of Enact.
(d) To reflect the retirement of the outstanding Class A common stock of
Enact and the issuance of 407,531 shares of SalesLogix common stock and
37,282 common stock options. Also gives effect to the write-off of $900,000
of acquired in-process research and development.
(e) To reflect the amortization of acquisition related intangible
assets.
(f) To reflect additional shares to be issued in the acquisition.
3. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED NET LOSS PER SHARE
The net loss per share and shares used in computing the net loss per share
for the year ended December 31, 1998 are based upon historical weighted average
common shares outstanding adjusted to reflect the issuance, as of January 1,
1998 of shares as described in Note 2 to these Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements. The SalesLogix common stock
issuable upon the exercise of stock options have been excluded as the effect
would be anti-dilutive.
F-45
<PAGE> 112
SALESLOGIX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. ALLOCATION OF THE PURCHASE PRICE
The following table represents the preliminary allocation of the purchase
price (in thousands):
<TABLE>
<S> <C>
Purchased technology........................................ $2,800,000
Goodwill.................................................... 4,738,114
Write-off of in-process research and development............ 900,000
Net liabilities acquired, excluding costs of acquisition.... (185,216)
Less: common stock issued................................... (4,052,899)
Less: value of common stock options issued.................. (100,000)
----------
Cash portion of purchase price.............................. $4,099,999
==========
</TABLE>
SalesLogix is in process of obtaining a final valuation of the intangible
assets acquired from an independent third party. Purchased technology and
goodwill will be amortized over five years. SalesLogix also expects that Enact
will continue to incur net losses from December 31, 1998 until the acquisition
is consummated. Such losses will have the effect of increasing the amount of net
liabilities to be acquired with a corresponding increase to goodwill and related
future amortization expense.
F-46
<PAGE> 113
INSIDE BACK COVER
[ARTWORK - SALESLOGIX SCREEN SHOTS]
DESCRIPTION
Conceptual overview of SalesLogix product. Includes visual
representations of product working in remote, networked, web-based or PDA
environment along with administrative view of patented guided selling process.
TEXT
SalesLogix. Everywhere you need it.
SalesLogix delivers a comprehensive interactive selling network solution that
delivers feature-rich sales automation tools to today's mobile sales force via
laptops, PalmPilot(TM) or Windows(R) CE devices. The SalesLogix system is easily
and quickly installed and a powerful database integration tool links SalesLogix
with legacy systems or external data sources.
[SCREEN CAPTIONS TO COME].
Labels and brief descriptions with each screen shot.
<PAGE> 114
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
[SALES LOGIX LOGO]
COMMON STOCK
--------------------
PROSPECTUS
--------------------
HAMBRECHT & QUIST BANCBOSTON ROBERTSON STEPHENS
U.S. BANCORP PIPER JAFFRAY
--------------------
, 1999
--------------------
YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL AND SEEKING OFFERS TO BUY,
SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF
THIS PROSPECTUS IN ANY SUCH JURISDICTION. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO
INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND
THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SHARES OF COMMON STOCK MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION
TO DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH THE RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 115
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the common stock being registered hereby. All amounts shown are
estimates, except the Securities and Exchange Commission registration fee, the
NASD filing fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $11,694
NASD filing fee............................................. $ 4,707
Nasdaq National Market listing fee.......................... $95,000
Blue Sky fees and expenses.................................. *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer Agent and Registrar fees........................... *
Miscellaneous expenses...................................... *
-------
Total............................................. $ *
=======
</TABLE>
- ------------------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's fifth restated certificate of incorporation ("Restated
Certificate") provides that the Company shall indemnify directors, officers and
their legal representatives to the fullest extent permitted by the Delaware
general corporate law ("DGCL"). The DGCL contains an extensive indemnification
provision which provides that a corporation shall have the power to 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 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), 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. In suits by or in the
right of a corporation, only expenses and not judgments, fines and amounts paid
in settlement may be indemnified against. In addition, if a director or
successfully defends against such action, suit or proceeding, such officer or
director must be indemnified against expenses.
The Restated Certificate also provides that directors of the Company shall
not be personally liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty. However, this provision does not eliminate or
limit the liability of a director for breach of the director's duty of loyalty
to the Company or its stockholders, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, for the
payment of dividends or distributions or the redemption or purchase of the
Company's shares of stock in violation of the DGCL, or for any transaction from
which the director derives an improper personal benefit. This provision does not
affect any liability of a director or officer under the federal securities laws.
The Restated Certificate requires and the DGCL authorizes, the Company to
indemnify directors and officers on terms sufficiently broad to permit
indemnification under certain circumstances for
II-1
<PAGE> 116
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). The directors and officers of the registrant also may be
indemnified against liability they may incur for serving in that capacity
pursuant to a liability insurance policy maintained by the registrant for such
purpose.
The underwriting agreement (Exhibit 1.1 hereto) provides for
indemnification by the underwriters of the registrant and its executive officers
and directors and by the registrant of the underwriters, for certain
liabilities, including liabilities arising under the Securities Act, in
connection with matters specifically provided in writing by the underwriters for
inclusion in this Registration Statement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since January 1996, the registrant has issued and sold unregistered
securities as follows:
1. In January 1996, the registrant issued 4,500,000 shares of Series A
Preferred Stock, which are convertible into 3,000,000 shares of Common
Stock, to four investors, consisting of InnoCal, L.P., Canaan Ventures II
Limited Partnership, Cannan Ventures Offshore Limited Partnership, C.V. and
Newtek Ventures II, L.P., for a consideration of $1.00 per share of Series
A Preferred Stock, or an aggregate of $4,500,000. The foregoing purchases
and sales were exempt from registration under the Securities Act pursuant
to Section 4(2) thereof on the basis that the transactions did not involve
a public offering.
2. In May 1996, the registrant issued 33,333 shares of Class A Common
Stock to an employee in exchange for proprietary intellectual property,
valued at $5,000 based on the price of other third party equity
transactions. The foregoing purchase and sale was exempt from registration
under the Securities Act pursuant to Section 4(2) thereof on the basis that
the transactions did not involve a public offering.
3. In October 1996, the registrant issued 85,000 shares of Series A
Preferred Stock, which are convertible into 56,669 shares of Common Stock,
to three investors, consisting of Deepak Kamra, Morris Ventures and John M.
Purtell, for a consideration of $1.00 per share of Series A Preferred
Stock, or an aggregate of $85,000. The foregoing purchases and sales were
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof on the basis that the transactions did not involve a public
offering.
4. In March 1997, the registrant issued 4,031,057 shares of Series C
Preferred Stock, which are convertible into 2,687,375 shares of Common
Stock, to thirteen investors, Sigma Partners III, L.P., Sigma Associates
III, L.P., Sigma Investors III, L.P., John R. Mandile, InnoCal, L.P.,
Canaan Ventures II Limited Partnership, Canaan Ventures Offshore Limited
Partnership, C.V., Newtek Ventures II, L.P., Comdisco, Inc., Morris
Ventures, Deepak Kamra, Brinson Venture Capital Fund III, L.P. and Brinson
Map Venture Capital Fund III Trust, for a consideration of $1.61 per share
of Series C Preferred Stock, or an aggregate of $6,490,002. The foregoing
purchases and sales were exempt from registration under the Securities Act
pursuant to Section 4(2) thereof on the basis that the transactions did not
involve a public offering.
5. In December 1997, the registrant issued 1,228,654 shares of Series D
Preferred Stock for a consideration of $3.21 per share of Series D
Preferred Stock, or an aggregate of $3,943,979 and options to purchase
96,836 shares of Series D Preferred Stock at an exercise price of $.8515
per share, which are convertible into an aggregate of 883,664 shares of
Common Stock, to stockholders and option holders of Opis Corporation in
connection with the acquisition of Opis by the Company. The foregoing
purchases and sales were exempt from registration under the Securities Act
pursuant to Section 4(2) thereof on the basis that the transactions did not
involve a public offering.
6. In June 1998, the registrant issued 3,940,887 shares of Series E
Preferred Stock, which are convertible into an aggregate of 2,627,264
shares of Common Stock, to nineteen investors, consisting of all of the
Series C investors, except that Canaan Equity L.P. replaced the two Canaan
II-2
<PAGE> 117
entities and Anthony P. Morris replaced Morris Ventures, plus Sierra
Ventures VI, L.P., SV Associates VI, L.P., G&H Partners, Robert Simon, The
Goldman Sachs Group, L.P., Stone Street Fund 1998, L.P. and Bridge Street
Fund 1998, L.P., for a consideration of $4.06 per share of Series E
Preferred Stock, or an aggregate of $16,000,000. The foregoing purchases
and sales were exempt from registration under the Securities Act pursuant
to Section 4(2) thereof on the basis that the transactions did not involve
a public offering.
7. In December 1998, the registrant issued 615,764 shares of Series E
Preferred Stock, which are convertible into an aggregate of 410,510 shares
of Common Stock, to six investors, consisting of Sierra Ventures VI, L.P.,
SV Associates VI, L.P., Canaan Equity, L.P., Deepak Kamra, Eric Young and
Gregory Kopchinski, for a consideration of $4.06 per share of Series E
Preferred Stock, or an aggregate of $2,500,000. The foregoing purchases and
sales were exempt from registration under the Securities Act pursuant to
Section 4(2) thereof on the basis that the transactions did not involve a
public offering.
8. From January 1996 through December 31, 1998, the registrant granted
stock options to purchase 3,114,843 shares of common stock, with exercise
prices ranging from $.15 to $1.53 per share, to employees and consultants
pursuant to its 1996 Equity Incentive Plan. Of these options, options for
455,505 shares have been canceled without being exercised, options for
1,004,992 shares have been exercised, options for 1,654,346 shares remain
outstanding and 1,840,662 shares remain available for future grant. The
sales and issuances of these securities were exempt from registration under
the Securities Act pursuant to Rule 701 promulgated thereunder on the basis
that these options were offered and sold either pursuant to a written
compensatory benefit plan or pursuant to written contracts relating to
consideration, as provided by Rule 701.
9. From January 1998 through December 31, 1998, the registrant granted
stock options to purchase 87,503 shares of common stock, with exercise
prices ranging from $.60 to $9.00 per share, to its Business Partners
pursuant to its 1998 Business Partner Stock Option Plan. Of these options,
no options have been canceled without being exercised, no options have been
exercised, options for 87,503 shares remain outstanding and 62,497 shares
remain available for future grant. The sales and issuances of these
securities were exempt from registration under the Securities Act pursuant
to Rule 701 promulgated thereunder on the basis that these options were
offered and sold either pursuant to a written compensatory benefit plan or
pursuant to written contracts relating to consideration, as provided by
Rule 701.
10. Concurrent with this public offering, The Goldman Sachs Group, L.P.
and two affiliates, all of whom are existing stockholders, have agreed to
purchase an aggregate of $ of our common stock in a private
placement at a price per share equal to our initial public offering price,
less 3 1/2%. This purchase and sale will be exempt from registration under
the Securities Act pursuant to Section 4(2) thereof on the basis that the
transaction does not involve a public offering.
11. In connection with the registrant's proposed acquisition of Enact
Incorporated, the registrant expects to issue 609,427 shares of its common
stock, of which 201,893 shares are restricted subject to three year annual
vesting based upon the continued employment of certain Enact officers. This
purchase and sale will be exempt from registration under the Securities Act
pursuant to Section 4(2) thereof on the basis that the transaction does not
involve a public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1* Form of underwriting agreement.
3.1 Fourth Restated Certificate of Incorporation of the
registrant.
</TABLE>
II-3
<PAGE> 118
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
3.2 Certificate of Amendment to Fourth Restated Certificate of
Incorporation of registrant dated December 23, 1998.
3.3 Certificate of Amendment to Fourth Restated Certificate of
Incorporation of registrant dated March 23, 1999.
3.4 Form of Fifth Restated Certificate of Incorporation of the
registrant to be filed in connection with the closing of
this offering.
3.5 Form of Second Restated Bylaws of the registrant to be
effective upon filing of the Fifth Restated Certificate.
4.1 Amended and Restated Investors' Rights Agreement, dated as
of June 4, 1998, by and among the registrant and the parties
named therein.
4.2 Opis Investors' Rights Agreement, dated as of December 30,
1997, among the registrant and the parties named therein.
4.3 Warrant to Purchase Stock, dated December 2, 1997, issued to
Silicon Valley Bank that includes piggyback registration
rights.
5.1* Opinion of Osborn Maledon, P.A. as to the legality of the
shares.
10.1 Office Lease Agreement, dated as of June 17, 1998, between
Gainey Ranch Corporate Center and the registrant.
10.2 Second Amended and Restated Loan and Security Agreement,
dated as of December 2, 1997, between Silicon Valley Bank
and the registrant and modifications thereto.
10.3 Master Equipment Lease dated June 7, 1996 between the
registrant and Comdisco, Inc., including subsequent
schedules of equipment.
10.4 1996 Equity Incentive Plan, as amended.
10.5 1998 Business Partner Stock Option Plan, as amended.
10.6 1999 Non-Employee Director Stock Option Plan, to be
effective on consummation of this offering.
10.7 1999 Employee Stock Purchase Plan, to be effective on
consummation of this offering.
10.8 Employment Agreement dated January 17, 1996 with Patrick M.
Sullivan.
10.9 Employment Agreement dated December 30, 1997 with Doug J.
Nicholas.
10.10 Form of employee proprietary rights agreement.
10.11 Software License Agreement dated February 19, 1997 between
the registrant and The McCosker Corporation.
10.12** Software Distribution License Agreement dated October 30,
1997 between the registrant and IQ Software.
10.13** Intellisync Runtime License Agreement dated December 18,
1998 between the registrant and Puma Technology.
10.14** No-Nonsense VAR Agreement dated September 10, 1996 between
the registrant and Borland International, as amended.
10.15 OEM License Agreement dated June 28, 1997 between Seagate
Software Information Management Group and Opis Corporation,
registrant's predecessor in interest, as amended.
10.16 OEM Agreement dated May 28, 1996 between Verity, Inc. and
Opis Corporation, registrant's predecessor in interest, as
amended.
10.17 Form of standard multi-user license and warranty agreement.
10.18 Form of extended software license agreement.
10.19 Form of software Business Partner agreement.
</TABLE>
II-4
<PAGE> 119
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
10.20 Form of OEM partner agreement.
10.21 Form of premium care maintenance and technical support
agreement.
10.22 Form of standard consulting agreement.
21.1 Subsidiaries of the registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Ernst & Young LLP, Independent Auditors
23.4* Consent of Osborn Maledon, P.A. (contained in the opinion
filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
** Confidential treatment has been requested with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.
(b) Financial Statement Schedules
Section II--Valuation and Qualifying Accounts
Other financial statement schedules have not been presented, as they are
not applicable.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a 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 of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the
underwriters, at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE> 120
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 Phoenix,
State of Arizona, on the 31st day of March, 1999.
SALESLOGIX CORPORATION
By: /s/ PATRICK M. SULLIVAN
------------------------------------
Patrick M. Sullivan
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Patrick M. Sullivan and Gary R. Acord and each of them, with full power
of substitution and resubstitution and full power to act without the other, as
his true and lawful attorney-in-fact and agent to act in his name, place and
stead and to execute in the name and on behalf of each person, individually and
in each capacity stated below and to file, any and all amendments to this
Registration Statement, including any and all post-effective amendments and
amendments thereto and any registration statement relating to the same offering
as this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under 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 attorneys-in fact and
agents and each of them, full power and authority to do and perform each and
every act and thing, ratifying and confirming all that said attorneys-in- fact
and agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue thereof.
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 indicated below on the 31st day of March, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ PATRICK M. SULLIVAN President, Chief Executive Officer and
- ----------------------------------------------------- Chairman of the Board (Principal Executive
Patrick M. Sullivan Officer)
/s/ GARY R. ACORD Vice President, Chief Financial Officer,
- ----------------------------------------------------- Secretary and Treasurer (Principal Financial
Gary R. Acord and Accounting Officer)
/s/ HARRY LAMBERT Director
- -----------------------------------------------------
Harry Lambert
/s/ DEEPAK KAMRA Director
- -----------------------------------------------------
Deepak Kamra
</TABLE>
II-6
<PAGE> 121
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ ANTHONY P. MORRIS Director
- -----------------------------------------------------
Anthony P. Morris
/s/ DAVID C. SCHWAB Director
- -----------------------------------------------------
David D. Schwab
/s/ CRAIG A. CONWAY Director
- -----------------------------------------------------
Craig A. Conway
</TABLE>
II-7
<PAGE> 122
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
SALESLOGIX CORPORATION
DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------- ------------ ----------------------- ------------ ----------
ADDITIONS
-----------------------
CHARGED TO
BALANCE OF CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS-- DEDUCTION -- END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE(1) PERIOD
- ----------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Year ended December
31, 1996 Deducted
from asset
accounts:
Allowance for
doubtful
accounts........ -- -- -- -- --
Year ended December
31, 1997 Deducted
from asset
accounts:
Allowance for
doubtful
accounts........ -- 181 -- -- 181
Year ended December
31, 1998 Deducted
from asset
accounts:
Allowance for
doubtful
accounts........ 181 666 -- 392 455
</TABLE>
- ------------------------------
(1) Uncollectible accounts written off, net of recoveries.
II-8
<PAGE> 123
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1* Form of underwriting agreement.
3.1 Fourth Restated Certificate of Incorporation of the
registrant.
3.2 Certificate of Amendment to Fourth Restated Certificate of
Incorporation of registrant dated December 23, 1998.
3.3 Certificate of Amendment to Fourth Restated Certificate of
Incorporation of registrant dated March 23, 1999.
3.4 Form of Fifth Restated Certificate of Incorporation of the
registrant to be filed in connection with the closing of
this offering.
3.5 Form of Second Restated Bylaws of the registrant to be
effective upon filing of the Fifth Restated Certificate.
4.1 Amended and Restated Investors' Rights Agreement, dated as
of June 4, 1998, by and among the registrant and the parties
named therein.
4.2 Opis Investors' Rights Agreement, dated as of December 30,
1997, among the registrant and the parties named therein.
4.3 Warrant to Purchase Stock, dated December 2, 1997, issued to
Silicon Valley Bank that includes piggyback registration
rights.
5.1* Opinion of Osborn Maledon, P.A. as to the legality of the
shares.
10.1 Office Lease Agreement, dated as of June 17, 1998, between
Gainey Ranch Corporate Center and the registrant.
10.2 Second Amended and Restated Loan and Security Agreement,
dated as of December 2, 1997, between Silicon Valley Bank
and the registrant and modifications thereto.
10.3 Master Equipment Lease dated June 7, 1996 between the
registrant and Comdisco, Inc., including subsequent
schedules of equipment.
10.4 1996 Equity Incentive Plan, as amended.
10.5 1998 Business Partner Stock Option Plan, as amended.
10.6 1999 Non-Employee Director Stock Option Plan, to be
effective on consummation of this offering.
10.7 1999 Employee Stock Purchase Plan, to be effective on
consummation of this offering.
10.8 Employment Agreement dated January 17, 1996 with Patrick M.
Sullivan.
10.9 Employment Agreement dated December 30, 1997 with Doug J.
Nicholas.
10.10 Form of employee proprietary rights agreement.
10.11 Software License Agreement dated February 19, 1997 between
the registrant and The McCosker Corporation.
10.12** Software Distribution License Agreement dated October 30,
1997 between the registrant and IQ Software.
10.13** Intellisync Runtime License Agreement dated December 18,
1998 between the registrant and Puma Technology.
10.14** No-Nonsense VAR Agreement dated September 10, 1996 between
the registrant and Borland International, as amended.
10.15 OEM License Agreement dated June 28, 1997 between Seagate
Software Information Management Group and Opis Corporation,
registrant's predecessor in interest, as amended.
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.16 OEM Agreement dated May 28, 1996 between Verity, Inc. and
Opis Corporation, registrant's predecessor in interest, as
amended.
10.17 Form of standard multi-user license and warranty agreement.
10.18 Form of extended software license agreement.
10.19 Form of software Business Partner agreement.
10.20 Form of OEM partner agreement.
10.21 Form of premium care maintenance and technical support
agreement.
10.22 Form of standard consulting agreement.
21.1 Subsidiaries of the registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Ernst & Young LLP, Independent Auditors.
23.4* Consent of Osborn Maledon, P.A. (contained in the opinion
filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
** Confidential treatment has been requested with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE> 1
Exhibit 3.1 - Fourth Restated Certificate of Incorporation
FOURTH RESTATED CERTIFICATE OF INCORPORATION
OF SALESLOGIX CORPORATION
A DELAWARE CORPORATION
SALESLOGIX CORPORATION a corporation organized and existing under the
laws of the state of Delaware, hereby certifies as follows:
1. The name of the corporation is SalesLogix Corporation. The
corporation was originally incorporated under the name Quest Sales Software,
Inc. The date the corporation filed its original Certificate of Incorporation
with the Secretary of State was September 29, 1995.
2. This Fourth Restated Certificate of Incorporation restates and
amends the provisions of the Third Restated Certificate of Incorporation of this
corporation as heretofore in effect, as amended, and was duly adopted by the
stockholders on June 3, 1998 in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
3. The text of the Third Restated Certificate of Incorporation is
hereby amended and restated to read as herein set forth in full:
ARTICLE I
The name of this corporation is SalesLogix Corporation.
ARTICLE II
The address of the corporation's registered office is Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware, 19801, New Castle County. The
name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
Delaware General Corporation Law.
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue three
classes of stock to be designated, respectively, "Class A Common Stock," "Class
B Common Stock" and "Preferred Stock." The total number of shares which the
corporation is authorized to issue is Forty Five Million One Hundred Thousand
(45,100,000) shares. Twenty Six Million Five Hundred Eighty Thousand
(26,580,000) shall be Class A Common Stock, $.001 par value per share, Three
Million Four Hundred Twenty Thousand (3,420,000) shall be Class B Common Stock,
$.001 par value per share, and Fifteen Million One Hundred Thousand (15,100,000)
shares shall be
<PAGE> 2
Preferred Stock, $.001 par value per share. The Class A Common Stock and Class B
Common Stock are hereinafter collectively referred to as "Common Stock." The
Preferred Stock authorized by this Restated Certificate of Incorporation shall
be issued in series as set forth herein. The first series of Preferred Stock
shall be designated "Series A Preferred Stock" and shall consist of Four Million
Six Hundred Fifty Thousand (4,650,000) shares. The second series of Preferred
Stock shall be designated "Series B Preferred Stock" and shall consist of Seven
Hundred Thousand (700,000) shares. The third series of Preferred Stock shall be
designated the "Series C Preferred Stock" and shall consist of Four Million One
Hundred Thousand (4,100,000) shares. The fourth series of Preferred Stock shall
be designated the "Series D Preferred Stock" and shall consist of One Million
Seven Hundred Thousand (1,700,000) shares. The fifth series of Preferred Stock
shall be designated the "Series E Preferred Stock" and shall consist of Three
Million Nine Hundred Fifty Thousand (3,950,000) shares.
B. Class A Common Stock and Class B Common Stock. The Class A Common
Stock and the Class B Common Stock shall be identical in all respects, the sole
purpose for distinguishing between such classes being to permit determination of
the liquidation preference of the Series B Preferred Stock as set forth in
Section 2 of Division (C) of this Article IV. The Class A Common Stock and the
Class B Common Stock shall vote as a single class for all purposes. The common
stock of the corporation issued and outstanding immediately prior to the
effectiveness of the Restated Certificate of Incorporation filed on January 16,
1996 shall be deemed to be Class A Common Stock. At such time, if all, but not
less than all, of the authorized and outstanding Series B Preferred Stock has
been converted into Class B Common Stock then automatically and without further
action or notice (i) the Class B Common shall become Class A Common Stock which
shall thereafter be known as "Common Stock", (ii) the total authorized number of
shares of Common Stock shall be Thirty Million (30,000,000) shares, and (iii)
issuance of Class B Common Stock shall no longer be authorized.
C. Rights, Preferences and Restrictions of Preferred Stock. The rights,
preferences, restrictions and other matters relating to the Preferred Stock are
as follows:
1. Dividend Provisions.
a. The holders of shares of Series A, C, and E
Preferred Stock shall be entitled to receive dividends, out of any assets
legally available therefor, prior and in preference to any declaration or
payment of any dividend (payable other than in Common Stock or other securities
and rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of this corporation) on the
Series B and Series D Preferred Stock and the Common Stock of this corporation,
at the rate of nine percent (9%) on the Original Issue Price (as defined below)
(subject to appropriate adjustments for stock splits, stock dividends,
combinations or other recapitalizations) per annum payable when, as and if
declared by the Board of Directors. Such dividends shall not be cumulative.
Should a dividend be paid to the holders of the Common Stock, the Series B and D
Preferred Stock shall be entitled to participate in such dividend on an
as-converted basis (i.e. assuming hypothetically the conversion of all Series B
and D Preferred Stock into Common Stock).
2
<PAGE> 3
2. Liquidation Preference.
a. In the event of any liquidation, dissolution or
winding up of this corporation, either voluntary or involuntary, the holders of
Series A, C and E Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Series B Preferred Stock, Series D Preferred Stock or Common Stock by
reason of their ownership thereof, an amount per share equal to the sum of (i)
the "Original Issue Price," as defined below, for each outstanding share of
Series A, C and E Preferred Stock, and (ii) an amount equal to a cumulative
annual return of 9% on the Original Issue Price for each outstanding share of
Series A, C and E Preferred Stock, calculated through the date of the
liquidation, dissolution or winding up of the corporation less the amount of any
dividend actually paid on such share of Series A, C or E Preferred Stock. If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A, C and E Preferred Stock shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amounts,
then, the entire assets and funds of the corporation legally available for
distribution shall be distributed ratably among the holders of the Series A, C
and E Preferred Stock in proportion to the preferential amount each such holder
is otherwise entitled to receive. The term "Original Issue Price," as it relates
to a series of Preferred Stock, shall mean $1.00 for each outstanding share of
Series A Preferred Stock, $1.00 for each outstanding share of Series B Preferred
Stock, $1.61 for each outstanding share of Series C Preferred Stock, $3.21 for
each outstanding share of Series D Preferred Stock, and $4.06 for each
outstanding share of Series E Preferred Stock, as applicable (subject to
appropriate adjustments for stock splits, stock dividends, combinations or other
recapitalizations).
b. Upon completion of the distribution required by
subparagraph (a) of this Section 2 to the holders of the Series A, C and E
Preferred Stock, the holders of the Series D Preferred Stock shall be entitled
to receive, prior and in preference to any distribution of any of the assets of
this corporation to the holders of Series B Preferred Stock or Common Stock by
reason of their ownership thereof, an amount per share equal to the Original
Issue Price for each outstanding share of Series D Preferred Stock. If upon the
occurrence of such event, the assets and funds available for distribution among
the holders of the Series D Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then, the
entire assets and funds of the corporation legally available for distribution to
the holders of the Series D Preferred Stock shall be distributed ratably among
the holders of the Series D Preferred Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive.
c. Upon completion of the distribution required by
subparagraphs (a) and (b) of this Section 2, all remaining assets of this
corporation, if any, shall be distributed in accordance with this Section 2(c).
Accordingly, if any assets remain in the corporation, the holders of the Series
A, B, C, D and E Preferred Stock and the holders of the Common Stock shall be
entitled to receive an amount per share determined in accordance with
subparagraphs (c)(i) and (c)(ii) of this Section 2.
i) The holders of the Series A, C and E
Preferred Stock shall be entitled to receive under this Section 2(c) the "Series
A/C/E Liquidation Price" (defined
3
<PAGE> 4
below) for each outstanding share of Series A, C or E Preferred Stock (subject
to appropriate adjustments for stock splits, stock dividends, combinations or
other recapitalizations), as applicable. Amounts distributed under this Section
2(c) shall be in addition to amounts distributed under Section 2(a), and the
amounts to be distributed to the holders of Series A, C and E Preferred Stock
under this Section 2(c) shall not be offset by any amounts distributed under
Section 2(a). The "Series A/C/E Liquidation Price" shall be the quotient
resulting from dividing the "Series A/C/E Distribution Amount" (defined below)
by the number of outstanding shares of Series A, C and E Preferred Stock as of
the date of the liquidation, dissolution or winding up of the corporation. The
"Series A/C/E Distribution Amount" shall equal the product of: (A) the amount
available for distribution under this Section 2(c) prior to any distribution to
holders of Series B Preferred Stock or Common Stock under Section 2(c)(ii)
below, multiplied by (B) a fraction (the "Series A/C/E Fraction"), the numerator
of which is the number of shares of Common Stock that the holders of Series A, C
and E Preferred Stock as of the date of the liquidation, dissolution or winding
up would own assuming hypothetically that such holders had converted their
Series A, C and E Preferred Stock to Common Stock and the denominator of which
is the number of shares of Common Stock outstanding as of the date of the
liquidation, dissolution or winding up (assuming hypothetically the conversion
of all outstanding shares of Series A, B, C, D and E Preferred Stock).
ii) For purposes of this Section 2(c)(ii),
the term "Available Junior Proceeds" shall mean the aggregate assets and funds
of the corporation available for distribution under this Section 2(c)(ii), after
taking into account any distributions required to be made to the holders of the
Series A, C and E Preferred Stock pursuant to Section 2(a) and Section 2(c)(i)
and the distributions required to be made to the Series D Preferred Stock
pursuant to Section 2(b), but before any distribution to the holders of the
Series B Preferred Stock or the holders of Common Stock and the term "Full
Preference Amount" shall mean the product of $1.00 (subject to appropriate
adjustments for stock splits, stock dividends, combinations or other
recapitalizations) multiplied times the total number of outstanding shares of
Series B Preferred Stock as of the date of the liquidation, dissolution or
winding up.
(A) If Available Junior Proceeds
are equal to or less than the Full Preference Amount as of the date of the
liquidation, dissolution or winding up, the holders of the Series B Preferred
Stock shall be entitled to receive all of the Available Junior Proceeds under
this Section 2(c)(ii), and the holders of the Common Stock shall not be entitled
to receive any amounts whatsoever.
(B) Subject to Section 2(c)(ii)(C)
below, if Available Junior Proceeds are greater than the Full Preference Amount,
then the holders of the Series B Preferred Stock shall be entitled to receive
pursuant to this Section 2(c) the "Series B Distribution Amount" (defined
below); the holders of the Class A Common Stock shall be entitled to receive, as
a class, the "Class A Distribution Amount" (defined below); and the holders of
the Class B Common Stock shall be entitled to receive, as a class, the "Class B
Distribution Amount" (defined below). The term "Class A Distribution Amount"
shall mean an amount equal to Available Junior Proceeds minus the Full
Preference Amount. The term "Class B Distribution Amount" shall mean the product
determined by multiplying the "Class A Distribution Amount" by a fraction, the
numerator of which is the total number of shares of Class
4
<PAGE> 5
B Common Stock then outstanding and the denominator of which is the total number
of shares of Class A Common Stock then outstanding. The term "Series B
Distribution Amount" shall mean the Full Preference Amount minus the Class B
Distribution Amount. The Series B Distribution Amount, the Class A Distribution
Amount and the Class B Distribution Amount shall each be distributed to the
holders of the Series B Preferred Stock, the Class A Common Stock and the Class
B Common Stock respectively, pro rata to the holders in each respective group as
of the date of the liquidation, dissolution or winding up.
(C) Notwithstanding Section
2(c)(ii)(B) above, if the sum of the amounts that the holders of the Series B
Preferred Stock and the Class B Common Stock as of the date of the liquidation,
dissolution or winding up, would receive if the Available Junior Proceeds were
distributed to the holders of the Series B Preferred Stock and the Common Stock
as of the date of the liquidation, dissolution or winding up, pro rata on an
as-converted basis (i.e., assuming hypothetically the conversion of all Series B
Preferred Stock into Common Stock), is greater than the Full Preference Amount,
then the holders of the Series B Preferred Stock shall not be entitled to
receive any preference in liquidation and the Available Junior Proceeds shall be
distributed to the holders of the Series B Preferred Stock and the Common Stock
as of the date of the liquidation, dissolution or winding up, pro rata on an
as-converted basis (i.e., assuming hypothetically the conversion of all Series B
Preferred Stock into Common Stock).
d. Unless waived by a majority of the holders of the
outstanding Series A, C and E Preferred Stock, voting together as a separate
class, and by the holders of sixty eight percent (68%) of the outstanding Series
E Preferred Stock, the consolidation or merger of the corporation into or with
any other entity or entities which results in the exchange of shares
representing 50% or more of the outstanding shares of voting capital stock of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof, and the sale or
transfer by the corporation of all or substantially all of its assets, shall be
deemed to be a liquidation, dissolution or winding up within the meaning of this
Section 2.
3. Conversion. The holders of the Series A, B, C, D and E
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights").
a. Right to Convert.
i) Subject to subsection 3(c), each share of
Series A, B, C, D and E Preferred Stock Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share, at the office of this corporation or any transfer agent for the Series A,
B, C, D and E Preferred Stock into such number of fully paid and nonassessable
shares of Class A Common Stock or Class B Common Stock, as the case may be, as
is determined by dividing the applicable Original Issue Price and all declared
but unpaid dividends on such share by the respective Conversion Price at the
time in effect for such share. The initial Conversion Price per share for shares
of Series A, B, C, D and E Preferred Stock shall be the applicable Original
Issue Price; provided, however, that the Conversion Price shall be subject to
adjustment as set forth in subsection 3(c).
5
<PAGE> 6
ii) Each share of Series A, B, C, D and E
Preferred Stock shall automatically be converted into shares of Common Stock as
set forth in subsection 3(a)(i), at the Conversion Price at the time in effect
for such Series A, B, C, D or E Preferred Stock as the case may be, immediately
upon the consummation of the corporation's sale of its Common Stock in a bona
fide, firm commitment underwriting pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), the public
offering price of which was not less than $6.00 per share (subject to
appropriate adjustments for stock splits, stock dividends, combinations or other
recapitalizations) and $20,000,000 in the aggregate.
b. Mechanics of Conversion. Before any holder of
Series A, B, C, D or E Preferred Stock shall be entitled to convert the same
into shares of Common Stock as set forth in subsection 3(a)(i), he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of this corporation or of any transfer agent for the Series A, B, C, D and E
Preferred and shall give written notice by mail, postage prepaid, to this
corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series A, B, C, D or E Preferred Stock or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Class A Common Stock or Class B Common Stock as applicable, to which such
holder shall be entitled as aforesaid. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series A, B, C, D or E Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offer of securities registered
pursuant to the Securities Act, the conversion may, at the option of any holder
tendering Series A, B, C, D or E Preferred Stock for conversion, be conditioned
upon the closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Series A, B, C, D or E Preferred Stock
shall not be deemed to have converted such Series A, B, C, D or E Preferred
until immediately prior to the closing of such sale of securities.
c. Conversion Price Adjustments of Preferred Stock.
For purposes of this Section (3)(c), the "Purchase Date" shall mean the date on
which any shares of a particular series of Preferred Stock were first purchased.
The Purchase Date for the Series A Preferred Stock is January 19, 1996; the
Purchase Date for the Series B Preferred Stock is January 15, 1996; the Purchase
Date for the Series C Preferred Stock is March 31, 1997; and the Purchase Date
for the Series D Preferred Stock is December 30, 1997. The Conversion Price of
the Series A, B, C, D and E Preferred, as applicable, shall be subject to
adjustment from time to time as follows:
i) (A) Upon each issuance by the corporation
during the Initial Period (as defined below) of any Additional Stock (as defined
below), without consideration or for a consideration per share less than the
Conversion Price for the Series A, C or E Preferred Stock in effect immediately
prior to the issuance of such Additional Stock, then as
6
<PAGE> 7
applicable, the Conversion Price for the Series A, C or E Preferred Stock in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price equal to the price
paid per share for such Additional Stock. The "Initial Period" for each such
Series shall mean that period beginning on the applicable Purchase Date for such
Series and ending on February 28, 1999.
(B) Upon each issuance by the
corporation of any Additional Stock after the Initial Period, without
consideration or for a consideration per share less than the Conversion Price
for the Series A, C or E Preferred Stock, as applicable, in effect immediately
prior to the issuance of such Additional Stock the Conversion Price for the
Series A, C or E Preferred Stock in effect immediately prior to each such
issuance shall, if applicable, forthwith (except as otherwise provided in this
clause (i)) be adjusted to a price determined by multiplying such Conversion
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance (including, the
number of shares of Common Stock issuable upon the conversion of the Preferred
Stock and the number of shares of Common Stock outstanding) plus the number of
shares of Common Stock which the aggregate consideration received by the
corporation for such issuance would purchase at such Conversion Price; and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (including the number of shares of Common
Stock issuable upon the conversion of the Preferred Stock and the number of
shares of Common Stock outstanding) plus the number of shares of such Additional
Stock.
(C) No adjustment of the Conversion
Price for the Series A, C and E Preferred Stock shall be made in an amount less
than one cent per share, provided that any adjustments which are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to 3 years from the
date of the event giving rise to the adjustment being carried forward, or shall
be made at the end of 3 years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (F)(3) and (F)(4), no adjustment of such Conversion Price pursuant
to this subsection 3(c)(i) shall have the effect of increasing the Conversion
Price above the Conversion Price in effect immediately prior to such adjustment.
(D) In the case of the issuance of
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by this corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.
(E) In the case of the issuance of
the Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors irrespective of any accounting treatment.
(F) In the case of the issuance
(whether before, on or after the Purchase Date) of options to purchase or rights
to subscribe for Common Stock or securities by their terms convertible into or
exchangeable for Common Stock or options to
7
<PAGE> 8
purchase or rights to subscribe for such convertible or exchangeable securities,
the following provisions shall apply for all purposes of this subsection 3(c)(i)
and subsection 3(c)(ii):
1. The aggregate maximum
number of shares of Common Stock deliverable upon exercise of
such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subsections 3(c)(i)(D) and (c)(i)(E)), if any, received by the
corporation upon the issuance of such options or rights plus
the minimum exercise price provided in such options or rights
(without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
2. The aggregate maximum
number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall
be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a
consideration equal to the consideration, if any, received by
the corporation for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the corporation
(without taking into account potential antidilution
adjustments) upon the conversion or exchange of such
securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subsections 3(c)(i)(D) and (C)(i)(E)).
3. In the event of any
change in the number of shares of Common Stock deliverable or
in the consideration payable to this corporation upon exercise
of such options or rights or upon conversion of or in exchange
for such convertible or exchangeable securities, including,
but not limited to, a change resulting from the antidilution
provisions thereof, the Conversion Price of the Series A, C
and E Preferred Stock to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment
shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such
options or rights or the conversion or exchange of such
securities.
4. Upon the expiration of
any such options or rights, the termination of any such rights
to convert or exchange or the expiration of any options or
rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A, C and E Preferred Stock
to the extent in any way affected by or computed using such
options, rights or securities or options or rights related to
such securities, shall be recomputed to reflect the issuance
of only the number of shares of Common Stock (and convertible
or exchangeable
8
<PAGE> 9
securities which remain in effect) actually issued upon the
exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the
options or rights related to such securities.
5. The number of shares of
Common Stock deemed issued and the consideration deemed paid
therefor pursuant to subsections 3(c)(i)(F)(l) and (2) shall
be appropriately adjusted to reflect any change, termination
or expiration of the type described in either subsection
3(c)(i)(F)(3) or (4).
ii) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to subsection
3(c)(i)(F)) by this corporation before, on or after the Purchase Date other than
(A) shares of Common Stock issued
pursuant to a transaction described in subsection 3 (c)(iii)
hereof,
(B) shares of Common Stock issued
upon conversion of the Series A, B, C, D and E Preferred
Stock,
(C) shares of Common Stock issuable
or issued to employees or consultants (including, without
limitation, distributors or resellers of the corporation,
which are sometimes referred to by the corporation as
"Business Partners") of this corporation directly or pursuant
to a stock option plan or agreement or restricted stock plan
or agreement approved by the Board of Directors of this
corporation at any time when the total number of shares of
Common Stock so issuable or issued (and not repurchased at
cost by the corporation in connection with the termination of
employment or service) does not exceed 3,641,845 (subject to
appropriate adjustments for stock splits, stock dividends,
combinations or other recapitalizations) since the effective
date of this Fourth Restated Certificate of Incorporation, or
(D) shares of Common Stock issued
or issuable in connection with a bona fide lease financing
transaction approved by the Board of Directors of this
corporation.
iii) In the event the corporation should at
any time or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
9
<PAGE> 10
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series A, B, C, D and E Preferred Stock then in
effect shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.
iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock then, following the record date of such
combination, the Conversion Price for the Series A, B, C, D and E Preferred then
in effect shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
d. Other Distributions. In the event this corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by this corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in subsection 3 (c)(iii),
then, in each such case for the purpose of this Subsection 3(d), the holders of
the Series A, B, C, D and E Preferred Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the number of
shares of Common Stock of the corporation into which their shares of Series A,
B, C, D and E Preferred Stock are convertible as of the record date fixed for
the determination of the holders of Common Stock of the corporation entitled to
receive such distribution.
e. Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3) provision shall be made so that the holders of
Series A, B, C, D and E Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series A, B, C, D and E Preferred Stock the number of
shares of stock or other securities or property of the Company or otherwise, to
which a holder of Common Stock deliverable upon conversion would have been
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3 with
respect to the rights of the holders of Series A, B, C, D and E Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Series A, B, C, D and E Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
f. No Impairment. This corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A, B, C, D and E Preferred Stock
against impairment.
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<PAGE> 11
g. No Fractional Shares and Certificate as to
Adjustments.
i) No fractional shares shall be issued upon
conversion of the Series A, B, C, D and E Preferred Stock and the number of
shares of Common Stock to be issued shall be rounded up to the nearest whole
share. Whether or not fractional shares are issuable upon such conversion shall
be determined on the basis of the total number of shares of Series A, B, C, D
and E Preferred Stock the holder is at the time converting into Common Stock and
the number of shares of Common Stock issuable upon such aggregate conversion.
ii) Upon the occurrence of each adjustment
or readjustment of the Conversion Price of Series A, B, C, D and E Preferred
Stock pursuant to this Section 3, this corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series A, B, C, D and E
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
This corporation shall, upon the written request at any time of any holder of
Series A, B, C, D or E Preferred furnish or cause to be furnished to such holder
a like certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series A, B, C, D and E Preferred
Stock.
h. Notices of Record Date. In the event of any taking
by this corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A, B, C, D and E Preferred Stock
at least 20 days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
i. Reservation of Stock Issuable Upon Conversion.
This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Series A, B, C, D and E Preferred
Stock such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A,
B, C, D and E Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series A, B, C, D and E Preferred Stock in
addition to such other remedies as shall be available to the holder of such
Preferred Stock this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
j. Notices. Any notice required by the provisions of
this Section 3 to be given to the holders of shares of Series A, B, C, D and E
Preferred Stock shall be deemed
11
<PAGE> 12
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of this corporation.
4. Voting Rights.
a. General Voting Rights. The holder of each share
Series A, B, C and E Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Series A, B, C and E Preferred Stock could
then be converted (with any fractional share determined on an aggregate
conversion basis being rounded to the nearest whole share), and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock and shall be entitled,
notwithstanding any provision hereof, to notice of any stockholders' meeting in
accordance with the by-laws of this corporation, and shall be entitled to vote,
together as a single class with holders of Common Stock with respect to any
question upon which holders of Common Stock have the right to vote; except for
the election of directors. Prior to the conversion of the Series D Preferred
Stock to Common Stock and to the fullest extent permitted under the General
Corporation Law of the State of Delaware, the Series D Preferred Stock shall not
be entitled to vote on any issue presented to the stockholders of the
corporation, including issues for which the Series D Preferred Stock might
otherwise be entitled to a separate class vote, except only as set forth in
Subsection 6 below. The number of authorized shares of the Series D Preferred
Stock may be increased or decreased (but not below the number of shares thereof
then outstanding) and additional Preferred Stock with rights superior to the
Series D Preferred Stock (whether pursuant to an existing series or a new
series) may be authorized for issuance upon the affirmative vote of the holders
of a majority of the Preferred Stock and Common Stock then outstanding, voting
together on an as converted basis, notwithstanding the requirements contained in
Section 242(b)(2) of the General Corporation Law of the State of Delaware.
b. Election of Directors. Upon issuance of the Series
A, C and E Preferred Stock and for so long as shares of Series A, C and E
Preferred Stock are outstanding, the authorized number of directors of this
Corporation shall be seven (7), and notwithstanding Section 4(a) above, the
holders of Series A and C Preferred Stock voting together as a separate class,
shall be entitled to elect two (2) directors of the corporation; the holders of
Series E Preferred Stock, voting as a separate class, shall be entitled to elect
one (1) director of the corporation; the holders of Series B Preferred Stock and
Common Stock voting together on an as converted basis, shall be entitled to
elect two (2) directors of the corporation; and the holders of Series A and B
Preferred Stock and Common Stock voting together on an as converted basis, shall
be entitled to elect two (2) directors of the corporation. At any meeting held
for the purpose of electing directors, the presence in person or by proxy of the
holders of a majority of the Series A and C Preferred Stock then outstanding
shall constitute a quorum of the Series A and C Preferred Stock for the election
of directors to be elected solely by the holders of Series A and C Preferred
Stock. At any meeting held for the purpose of electing directors, the presence
in person or by proxy of the holders of a majority of the Series E Preferred
Stock then outstanding shall constitute a quorum of the Series E Preferred Stock
for the election of directors to be elected solely by the holders of Series E
Preferred Stock. At any meeting held for the purpose of electing directors, the
presence in person or by proxy of the holders of a majority of the Series B
Preferred Stock and Common Stock then outstanding, on an as converted basis,
shall constitute
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<PAGE> 13
a quorum of the Series B Preferred Stock and Common Stock for the election of
directors to be elected solely by holders of Series B Preferred Stock and Common
Stock voting together on an as converted basis. At any meeting held for the
purpose of electing directors, the presence in person or by proxy of the holders
of a majority of the Series A and B Preferred Stock and Common Stock then
outstanding, on an as converted basis, shall constitute a quorum of the Series A
and B Preferred Stock and Common Stock for the election of directors to be
elected solely by the holders of the Series A and B Preferred Stock and Common
Stock voting together on an as converted basis. A vacancy in any directorship
elected by the holders of Series A and C Preferred Stock shall be filled only by
vote of the holders of Series A and C Preferred Stock; a vacancy in any
directorship elected by the holders of Series E Preferred Stock shall be filled
only by vote of the holders of Series E Preferred Stock; a vacancy in any
directorship elected by the holders of Series B Preferred Stock and Common Stock
shall be filled only by vote of the holders of Series B Preferred Stock and
Common Stock voting together as provided above; and a vacancy in any
directorship elected by the holders of Series A and B Preferred Stock and Common
Stock voting together shall be filled only by the vote of the holders of Series
A and B Preferred Stock and Common Stock voting together as provided above.
Except to the extent otherwise set forth herein, the number and election of
Directors shall be determined as set forth in the Bylaws of the corporation.
5. Series A, C and E Protective Provisions. The number of
authorized shares of the Series A, C and E Preferred Stock may be increased or
decreased by the affirmative vote of the holders of Sixty Six Percent (66%) of
the outstanding shares of the Series A, C and E Preferred Stock voting together
on an as converted basis, as set forth below, notwithstanding the requirements
contained in Section 242(b)(2) of the General Corporation Law of the State of
Delaware. So long as shares of Series A, C and E Preferred Stock are
outstanding, this corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of Sixty Six Percent
(66%) of the then outstanding shares of Series A, C and E Preferred Stock,
voting together as a separate class:
a. increase the authorized number of shares of
Preferred Stock or Common Stock;
b. pay or declare any dividend for distribution on
any securities of the corporation;
c. amend the Certificate of Incorporation of the
corporation; or
d. acquire another company or enter into a
fundamentally new line of business.
6. Series D Protective Provision. So long as shares of Series
D Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of more than Fifty Percent (50%) of the then outstanding shares of
Series D Preferred Stock, voting together as a separate class, alter or change
the rights, preferences (other than the creation of additional classes or series
of stock with rights superior to the Series D Preferred Stock) or privileges of
the shares of Series D Preferred
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<PAGE> 14
Stock so as to affect adversely the shares; provided, however, that the number
of authorized shares of the Series D Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding).
7. Series A Protective Provision. So long as shares of Series
A Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of more than Fifty Percent (50%) of the then outstanding shares of
Series A Preferred Stock, voting together as a separate class, (i) alter or
change the rights, preferences, or privileges of the shares of Series A
Preferred Stock so as to affect adversely the shares, (ii) increase the
authorized number of shares of Series A Preferred Stock, or (iii) create any new
class or series of stock or any other securities convertible into equity
securities of the corporation having a preference over, or being on a parity
with, the Series A Preferred Stock with respect to voting, dividends or upon
liquidation.
8. Series C Protective Provision. So long as shares of Series
C Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of more than Fifty Percent (50%) of the then outstanding shares of
Series C Preferred Stock, voting together as a separate class, (i) alter or
change the rights, preferences, or privileges of the shares of Series C
Preferred Stock so as to affect adversely the shares, (ii) increase the
authorized number of shares of Series C Preferred Stock, or (iii) create any new
class or series of stock or any other securities convertible into equity
securities of the corporation having a preference over, or being on a parity
with, the Series C Preferred Stock with respect to voting, dividends or upon
liquidation.
9. Series E Protective Provision. So long as shares of Series
E Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of more than Fifty Percent (50%) of the then outstanding shares of
Series E Preferred Stock, voting together as a separate class, (i) alter or
change the rights, preferences, or privileges of the shares of Series E
Preferred Stock so as to affect adversely the shares, (ii) increase the
authorized number of shares of Series E Preferred Stock, (iii) create any new
class or series of stock or any other securities convertible into equity
securities of the corporation having a preference over, or being on a parity
with, the Series E Preferred Stock with respect to voting, dividends or upon
liquidation, or (iv) for a period of twelve (12) months from the date that any
Series E Preferred Stock is first issued, sell, convey, or otherwise dispose of
or encumber all or substantially all of this corporation's property, technology
or business or merge into or consolidate with any other corporation (other than
a wholly owned subsidiary corporation) or effect any transaction or series of
related transactions in which more than 50% of the voting power of this
corporation is disposed of, or take any action to voluntarily dissolve or
liquidate the Company where aggregate proceeds per share to the holders of the
Series E Preferred Stock is less than $8.12 per share of Series E Preferred
Stock (subject to appropriate adjustment for stock splits, stock dividends,
combinations or other recapitalizations).
D. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common
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<PAGE> 15
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of any assets of the corporation legally available therefor, such
dividends as may be declared from time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (C) of this Article IV.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
shareholders' meeting in accordance with the Bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
A. Exculpation. A director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (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 intentionally misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to further reduce or to authorize, with the approval of the
corporation's stockholders, further reductions in the liability of the
corporation's directors for breach of fiduciary duty, then a director of the
corporation shall not be liable for any such breach to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
B. Indemnification. To the extent permitted by applicable law, this
corporation is also authorized to provide indemnification of (and advancement of
expenses to) such agents (and any other persons to which Delaware law permits
this corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
corporation, its stockholders, and others.
C. Effect of Repeal or Modification. Any repeal or modification of any
of the foregoing provisions of this Article V shall not adversely affect any
right or protection of a director, officer, agent or other person existing at
the time of or increase the liability of any director of the corporation with
respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
ARTICLE VI
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<PAGE> 16
The corporation shall have a perpetual existence.
ARTICLE VII
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors of this corporation is expressly authorized to make, alter, amend,
rescind or repeal the bylaws of the corporation.
ARTICLE VIII
Elections of directors need not be by written ballot except and to the
extent provided in the bylaws of the corporation.
ARTICLE IX
The corporation reserves the right to repeal, alter, amend or rescind
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE X
The corporation shall not be subject to the provisions of Section 203
of the Delaware General Corporation Law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE TO RESTATED CERTIFICATE OF INCORPORATION]
IN WITNESS WHEREOF, the undersigned has signed this Restated
Certificate of Incorporation as of this 3rd day of June, 1998.
/s/ Gary Acord
-------------------------------------------------
Gary Acord, Chief Financial Officer and Secretary
17
<PAGE> 1
Exhibit 3.2 - Certificate of Amendment to the Fourth Restated Certificate of
Incorporation
CERTIFICATE OF AMENDMENT TO FOURTH RESTATED CERTIFICATE
OF INCORPORATION OF SALESLOGIX CORPORATION
A DELAWARE CORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, SALESLOGIX CORPORATION, a corporation organized and existing under the
laws of the state of Delaware, hereby certifies as follows:
1. The name of the corporation is SALESLOGIX CORPORATION, the same name
under which the corporation was originally incorporated. The date the
corporation filed its original Certificate of Incorporation with the Secretary
of State was September 29, 1995.
2. The Fourth Restated Certificate of Incorporation of the Corporation
was filed with the Delaware Secretary of State on June 4, 1998.
3. The text of the Fourth Restated Certificate of Incorporation is
hereby amended as follows:
Paragraphs A and B of Article IV of the Fourth Restated
Certificate of Incorporation of the Corporation are hereby deleted in
their entirety and replaced with the following text:
"ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue
three classes of stock to be designated, respectively, "Class A Common
Stock," "Class B Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Forty-Seven
Million Seven Hundred Thousand (47,700,000) shares. Twenty-Eight
Million Three Hundred Eighty Thousand (28,380,000) shall be Class A
Common Stock, $.001 par value per share, Three Million Four Hundred
Twenty Thousand (3,420,000) shall be Class B Common Stock, $.001 par
value per share, and Fifteen Million Nine Hundred Thousand (15,900,000)
shares shall be Preferred Stock, $.001 par value per share. The Class A
Common Stock and Class B Common Stock are hereinafter collectively
referred to as "Common Stock." The Preferred Stock authorized by this
Restated Certificate of Incorporation shall be issued in series as set
forth herein. The first series of Preferred Stock shall be designated
"Series A Preferred Stock" and shall consist of Four Million Six
Hundred Fifty Thousand (4,650,000) shares. The second series of
Preferred Stock shall be designated "Series B Preferred Stock" and
shall consist of Seven Hundred Thousand (700,000) shares. The third
series of Preferred Stock shall be designated the "Series C Preferred
Stock" and shall consist of Four Million One Hundred Thousand
(4,100,000) shares. The fourth series of Preferred Stock shall be
designated the "Series D Preferred Stock" and shall consist of One
Million Seven
<PAGE> 2
Hundred Thousand (1,700,000) shares. The fifth series of Preferred
Stock shall be designated the "Series E Preferred Stock" and shall
consist of Four Million Seven Hundred Fifty Thousand (4,750,000)
shares.
B. Class A Common Stock and Class B Common Stock. The Class A
Common Stock and the Class B Common Stock shall be identical in all
respects, the sole purpose for distinguishing between such classes
being to permit determination of the liquidation preference of the
Series B Preferred Stock as set forth in Section 2 of Division (C) of
this Article IV. The Class A Common Stock and the Class B Common Stock
shall vote as a single class for all purposes. The common stock of the
corporation issued and outstanding immediately prior to the
effectiveness of the Restated Certificate of Incorporation filed on
January 16, 1996 shall be deemed to be Class A Common Stock. At such
time, if all, but not less than all, of the authorized and outstanding
Series B Preferred Stock has been converted into Class B Common Stock
then automatically and without further action or notice (i) the Class B
Common shall become Class A Common Stock which shall thereafter be
known as "Common Stock", (ii) the total authorized number of shares of
Common Stock shall be Thirty-One Million Eight Hundred Thousand
(31,800,000) shares, and (iii) issuance of Class B Common Stock shall
no longer be authorized."
Paragraph C of Article III(c)(ii) of the Fourth Restated
Certificate of Incorporation of the Corporation is hereby deleted in
its entirety and replaced with the following text:
"C. shares of Common Stock issuable or issued to
employees or consultants (including, without limitation, distributors
or resellers of the corporation, which are sometimes referred to by
the corporation as "Business Partners") of this corporation directly
or pursuant to a stock option plan or agreement or restricted stock
plan or agreement approved by the Board of Directors of this
corporation at any time when the total number of shares of Common
Stock so issuable or issued (and not repurchased at cost by the
corporation in connection with the termination of employment or
service) does not exceed 5,300,000 (subject to appropriate adjustments
for stock splits, stock dividends, combinations or other
recapitalizations) since the effective date of this Fourth Restated
Certificate of Incorporation, or"
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Amendment to Certificate of Incorporation as of the 23rd day of December, 1998.
/s/ Gary Acord
--------------------------
Gary Acord, Vice President
2
<PAGE> 1
EXHIBIT 3.3 - CERTIFICATE OF AMENDMENT TO FOURTH RESTATED CERTIFICATE
OF INCORPORATION
CERTIFICATE OF AMENDMENT TO FOURTH RESTATED CERTIFICATE
OF INCORPORATION OF SALESLOGIX CORPORATION
A DELAWARE CORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, SALESLOGIX CORPORATION, a corporation organized and existing under the
laws of the state of Delaware, hereby certifies as follows:
1. The name of the corporation is SALESLOGIX CORPORATION, the same name
under which the corporation was originally incorporated. The date the
corporation filed its original Certificate of Incorporation with the Secretary
of State was September 29, 1995.
2. The Fourth Restated Certificate of Incorporation of the Corporation was
filed with the Delaware Secretary of State on June 4, 1998, and was amended
pursuant to a Certificate of Amendment to Fourth Restated Certificate of
Incorporation of the Corporation filed with the Delaware Secretary of State on
December 23, 1998 (collectively, the "Fourth Restated Certificate").
3. This Certificate of Amendment was duly adopted and approved by written
consent of the stockholders of the corporation entitled to vote thereon, and
written notice of the action taken was provided to all non-consenting
stockholders, in accordance with the provisions of the Fourth Restated
Certificate, and Sections 228 and 242 of the General Corporation Law of the
State of Delaware.
4. The text of the Fourth Restated Certificate is hereby ratified and
approved in its entirety, and is further amended as follows:
FIRST: Paragraph B of Article IV of the Fourth Restated Certificate
is hereby amended by adding the following paragraph, to be inserted after
the end of the first paragraph of such Paragraph B of Article IV:
On the effective date of this Certificate of Amendment (the
"Effective Date"), the outstanding shares of the Class A Common
Stock and the Class B Common Stock of the corporation will, by
virtue of this amendment, be automatically reverse split on a
two-for-three basis so that each three shares of Class A Common
Stock and Class B Common Stock issued and outstanding immediately
before the Effective Date shall automatically be converted into and
reconstituted as two shares of Class A Common Stock or Class B
Common Stock, as applicable (the "Reverse Split"). No fractional
shares will be issued as a result of the Reverse Split, but in lieu
thereof, each stockholder whose shares of Class A Common Stock or
Class B Common Stock are not evenly divisible by one and one-half
(1.5) will receive one additional share of Class A Common Stock or
Class B
<PAGE> 2
Common Stock, as applicable, for the fractional share that such
stockholder would otherwise be entitled to as a result of the
Reverse Split.
SECOND: The first sentence of Paragraph C.4.b of Article IV of the
Fourth Restated Certificate is hereby deleted and replaced in its entirety
with the following:
Upon issuance of the Series A, C and E Preferred Stock and for so
long as shares of Series A, C and E Preferred Stock are outstanding, the
authorized number of directors of this Corporation shall be eight, and
notwithstanding Section 4(a) above, the holders of Series A and C
Preferred Stock voting together as a separate class, shall be entitled to
elect two (2) directors of the corporation; the holders of Series E
Preferred Stock, voting as a separate class, shall be entitled to elect
one (1) director of the corporation; the holders of Series B Preferred
Stock and Common Stock voting together on an as converted basis, shall be
entitled to elect two (2) directors of the corporation; and the holders of
Series A and B Preferred Stock and Common Stock voting together on an as
converted basis, shall be entitled to elect three (3) directors of the
corporation.
THIRD: Paragraph B of Article V of the Fourth Restated Certificate
is hereby deleted in its entirety and Paragraph C of such Article V is
hereby renumbered by be denominated as Paragraph B.
FOURTH: Article XI is hereby adopted in its entirety as follows:
ARTICLE XI
A. Right to Indemnification. Subject to the terms and conditions of
this Article 11, each officer or director of the corporation who was or is
made a party or witness or is threatened to be made a party or witness to
or is otherwise involved in any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he
or she is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans (hereinafter an "indemnitee"), whether the basis of such proceeding
is alleged action or inaction in an official capacity while serving as a
director, officer, employee or agent, will be indemnified and held
harmless by the corporation to the fullest extent authorized by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than such law permitted the corporation to provide
prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered
by such indemnitee in connection therewith and such indemnification will
continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and will inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided
in this Article 11 with respect to proceedings
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to enforce rights to indemnification, the corporation will indemnify any
such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Article 11 will include the right to be
paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the law requires,
an advancement of expenses incurred by an indemnitee will be made only
upon delivery to the corporation of an undertaking in the form then
required by the law (if any), by or on behalf of such indemnitee, with
respect to the repayment of amounts so advanced (hereinafter an
"undertaking").
B. Right of Indemnitee to Bring Suit. If a claim from an indemnitee
under Article 11(A) is not paid in full by the corporation within sixty
(60) days after a written claim has been received by the corporation,
except in the case of a claim for an advancement of expenses, in which
case the applicable period will be twenty (20) days, the indemnitee may at
any time thereafter bring a lawsuit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such
lawsuit or in a lawsuit brought by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
indemnitee will be entitled to be paid also the expenses of prosecuting or
defending such lawsuit. In (i) any lawsuit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a lawsuit brought
by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) any lawsuit by the corporation to
recover an advancement of expenses pursuant to the terms of an undertaking
the corporation will be entitled to recover such expenses upon a final
adjudication that, the indemnitee has not met the applicable standard of
conduct set forth in the law. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of
such lawsuit that indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable standard of
conduct set forth in the law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel
or its shareholders) that the indemnitee has not met such applicable
standard of conduct, will create a presumption that the indemnitee has not
met the applicable standard or conduct or, in the case of such a lawsuit
brought by the indemnitee, be a defense to such lawsuit. In any lawsuit
brought by the indemnitee to enforce a right hereunder, or by the
corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the burden of proving that the indemnitee is not entitled
to be indemnified or to such advancement of expenses under this Article or
otherwise will be on the corporation.
C. Specific Limitations on Indemnification. Notwithstanding anything
in this Article 11 to the contrary, the corporation will not be obligated
to make any payment to any indemnitee with respect to any proceeding (i)
to the extent that payment is actually made to the indemnitee under any
insurance policy, or is made to indemnitee by the corporation or an
affiliate thereof otherwise than pursuant to this Article, (ii) for any
expense, liability or loss in connection with a proceeding settled without
the corporation's
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written consent, which consent, however, must not be unreasonably
withheld, (iii) for an accounting of profits made from the purchase or
sale by the indemnitee of securities of the corporation within the meaning
of Article 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any state statutory or common law, or (iv) where
prohibited by applicable law.
D. Contract. The provisions of this Article 11 are a contract
between the corporation and each director and officer who serves in such
capacity at any time while such Article 11 is in effect, and any repeal or
modification of this Article 11 will not affect any rights or obligations
then existing with respect to any state of facts existing during or before
such repeal or modification or any action, lawsuit or proceeding brought
before or after such repeal or modification based in whole or in part upon
any such state of facts.
E. Partial Indemnity. If the indemnitee is entitled under any
provision of this Article 11 to indemnification by the corporation for
some or a portion of the expenses, liabilities or losses incurred in
connection with an action, lawsuit or proceeding but not, however, for all
of the total amount thereof, the corporation will nevertheless indemnify
the indemnitee for the portion thereof to which the indemnitee is
entitled. Moreover, notwithstanding any other provision of this Article
11, to the extent that the indemnitee has been successful on the merits or
otherwise in defense of any or all claims relating in whole or in part to
an action, lawsuit or proceeding or in defense of any issue or matter
therein, including dismissal without prejudice, the indemnitee will be
indemnified against all loss, expense and liability incurred in connection
with the portion of the action, lawsuit or proceeding with respect to
which the indemnitee was successful on the merits or otherwise.
F. Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred in this Article 11 will not be
exclusive of any other right which any person may have or acquire in the
future under any statute, the Certificate of Incorporation, bylaw,
agreement, vote of shareholders or disinterested directors or otherwise.
G. Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of
the corporation or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or not
the corporation would have the power to indemnify such person against such
expense, liability or loss under the law.
H. Indemnification of Employees and Agents of the corporation. The
corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of
expenses, to any employee or agent of the corporation to the fullest
extent of the provisions of this Article 11 with respect to the
indemnification and advancement of expenses of directors and officers of
the corporation, or to such lesser extent as may be determined by the
Board of Directors.
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<PAGE> 5
I. Notice by Indemnitee and Defense of Claim. The indemnitee must
promptly notify the corporation in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any matter, whether civil, criminal, administrative
or investigative. The omission so to notify the corporation will not
relieve it from any liability which it may have to the indemnitee if such
omission does not prejudice the corporation's rights. If such omission
does prejudice the corporation's rights, the corporation will be relieved
from liability only to the extent of such prejudice; nor will such
omission relieve the corporation from any liability which it may have to
the indemnitee otherwise than under this Article 11. With respect to any
actions, lawsuits or proceedings as to which the indemnitee notifies the
corporation of the commencement thereof:
(i) The corporation will be entitled to participate therein at
its own expense; and
(ii) The corporation will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to the indemnitee;
provided, however, that the corporation will not be entitled to
assume the defense of any proceeding (and this Article 11(I) will be
inapplicable to such proceeding) if the indemnitee will have
concluded reasonably that there may be a conflict of interest
between the corporation and the indemnitee with respect to such
action, lawsuit or proceeding. After notice from the corporation to
the indemnitee of its election to assume the defense thereof, the
corporation will not be liable to the indemnitee under this Article
11 for any expenses subsequently incurred by the indemnitee in
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below. The indemnitee will
have the right to employ its own counsel in such proceeding but the
fees and expenses of such counsel incurred after notice from the
corporation of its assumption of the defense thereof will be at the
expense of the indemnitee unless:
(a) The employment of counsel by the indemnitee has been
authorized by the corporation in writing; or
(b) The corporation has not employed counsel to assume
the defense in such proceeding within a reasonable period of
time after giving the indemnitee notice of its assumption of
the defense or has not assumed such defense and be acting in
connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel
shall be at the expense of the corporation.
(iii) The corporation will not settle any proceeding in any
manner which would impose any penalty or limitation on the
indemnitee without the
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indemnitee's written consent; provided, however, that the indemnitee
will not unreasonably withhold his consent to any proposed
settlement.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Amendment to Certificate of Incorporation as of the 23 day of March, 1999.
/s/ Gary Acord
--------------------------------
Gary Acord, Secretary
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EXHIBIT 3.4 - FORM OF FIFTH RESTATED CERTIFICATE OF INCORPORATION
FIFTH RESTATED CERTIFICATE OF INCORPORATION
OF SALESLOGIX CORPORATION
A DELAWARE CORPORATION
SALESLOGIX CORPORATION, a corporation organized and existing under the
laws of the state of Delaware, hereby certifies as follows:
1. The name of the corporation is SalesLogix Corporation. The corporation
was originally incorporated under the name Quest Sales Software, Inc. The date
the corporation filed its original Certificate of Incorporation with the
Secretary of State was September 29, 1995.
2. This Fifth Restated Certificate of Incorporation (the "Certificate of
Incorporation") restates and amends the provisions of the Fourth Restated
Certificate of Incorporation of this corporation as heretofore in effect, as
amended (the "Fourth Restated Certificate"), and was duly adopted and approved
by written consent of the stockholders of the corporation entitled to vote
thereon, and written notice of the action taken was provided to all
non-consenting stockholders, in accordance with the provisions of the Fourth
Restated Certificate and Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware.
3. The text of the Fourth Restated Certificate of Incorporation is hereby
amended and restated to read as herein set forth in full:
ARTICLE I
The name of this corporation is SalesLogix Corporation.
ARTICLE II
The address of the corporation's registered office is Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware, 19801, New Castle County. The
name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the Delaware
General Corporation Law.
ARTICLE IV
A. Authorized Capital. This corporation is authorized to issue seventy
million (70,000,000) shares, consisting of fifty million (50,000,000) shares
designated as common stock ("Common Stock") and twenty million (20,000,000)
shares designated as preferred stock ("Preferred Stock"), the par value of each
of which is $.001 per share. Common Stock is subject
<PAGE> 2
to the rights and preferences of Preferred Stock as hereinafter set forth.
Except to the extent such rights are granted to Preferred Stock or one or more
series thereof, holders of shares of Common Stock shall have unlimited voting
rights and are entitled to receive the net assets of the corporation upon
dissolution.
1. Issuance of Preferred Stock in Series. The corporation's Board of
Directors (the "Board") may designate one or more series of Preferred Stock, and
the designation and number of shares within each series, and shall determine the
preferences, limitations, and relative rights of any shares of Preferred Stock,
or of any series of Preferred Stock, before issuance of any shares of that class
or series. Preferred Stock, or any series thereof, may have rights which are
identical to those of Common Stock. Subject to compliance with the provisions of
any series of Preferred Stock, the Board is also authorized to increase or
decrease the number of shares of any series of Preferred Stock prior or
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
ARTICLE V
The number of directors of the corporation shall be determined in the
manner provided by the Bylaws and may be increased or decreased from time to
time in the manner provided therein. Unless a director earlier dies, resigns or
is removed, his or her term of office shall expire at the first annual meeting
of stockholders following the filing of this Fifth Restated Certificate of
Incorporation. At such first annual meeting, the Board shall be divided into
three classes, with said classes to be as equal in number as may be possible,
with any director or directors in excess of the number divisible by three being
assigned to Class 3 and Class 2, as the case may be. At the first election of
directors to such classified Board, each Class 1 director shall be elected to
serve until the next ensuing annual meeting of stockholders, each Class 2
director shall be elected to serve until the second ensuing annual meeting of
stockholders and each Class 3 director shall be elected to serve until the third
ensuing annual meeting of stockholders. At each annual meeting of stockholders
following the meeting at which the Board is initially classified, the number of
directors equal to the number of directors in the class whose term expires at
the time of such meeting shall be elected to serve until the third ensuing
annual meeting of stockholders. Notwithstanding any of the foregoing provisions
of this Article, directors shall serve until their successors are elected and
qualified or until their earlier death, resignation or removal from office.
Elections of directors need not be by written ballot except and to the
extent provided in the bylaws of the corporation.
The directors of the corporation may be removed only for cause; such
removal shall be in the manner provided by the Bylaws; provided that vacancies
on the Board, including newly created directorships, can be filled only by a
majority of the directors then in office.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability
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(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
intentionally misconduct or a knowing violation of law, (iii) under Article 174
of the Delaware General Corporation Law or (iv) for any transaction from which
the director derived any improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further reduce or to authorize, with the
approval of the corporation's stockholders, further reductions in the liability
of the corporation's directors for breach of fiduciary duty, then a director of
the corporation shall not be liable for any such breach to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
ARTICLE VI
A. Right to Indemnification. Subject to the terms and conditions of this
Article 6, each officer or director of the corporation who was or is made a
party or witness or is threatened to be made a party or witness to or is
otherwise involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action or inaction in an official
capacity while serving as a director, officer, employee or agent, will be
indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide broader
indemnification rights than such law permitted the corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification will continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and will inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in this Article 6 with respect to proceedings
to enforce rights to indemnification, the corporation will indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors of the corporation. The right to indemnification conferred in this
Article 6 will include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the law
requires, an advancement of expenses incurred by an indemnitee will be made only
upon delivery to the corporation of an undertaking in the form then required by
the law (if any), by or on behalf of such indemnitee, with respect to the
repayment of amounts so advanced (hereinafter an "undertaking").
B. Right of Indemnitee to Bring Suit. If a claim from an indemnitee under
Article 6(A) is not paid in full by the corporation within sixty (60) days after
a written claim has been received by the corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period will
be twenty (20) days, the indemnitee may at any time thereafter bring a lawsuit
against the corporation to recover the unpaid amount of the claim. If
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successful in whole or in part in any such lawsuit or in a lawsuit brought by
the corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the indemnitee will be entitled to be paid also the expenses of
prosecuting or defending such lawsuit. In (i) any lawsuit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a lawsuit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) any lawsuit by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the corporation
will be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the law.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
prior to the commencement of such lawsuit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in the law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel or its
shareholders) that the indemnitee has not met such applicable standard of
conduct, will create a presumption that the indemnitee has not met the
applicable standard or conduct or, in the case of such a lawsuit brought by the
indemnitee, be a defense to such lawsuit. In any lawsuit brought by the
indemnitee to enforce a right hereunder, or by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified or to such
advancement of expenses under this Article or otherwise will be on the
corporation.
C. Specific Limitations on Indemnification. Notwithstanding anything in
this Article 6 to the contrary, the corporation will not be obligated to make
any payment to any indemnitee with respect to any proceeding (i) to the extent
that payment is actually made to the indemnitee under any insurance policy, or
is made to indemnitee by the corporation or an affiliate thereof otherwise than
pursuant to this Article, (ii) for any expense, liability or loss in connection
with a proceeding settled without the corporation's written consent, which
consent, however, must not be unreasonably withheld, (iii) for an accounting of
profits made from the purchase or sale by the indemnitee of securities of the
corporation within the meaning of Article 16(b) of the Securities Exchange Act
of 1934, as amended, or similar provisions of any state statutory or common law,
or (iv) where prohibited by applicable law.
D. Contract. The provisions of this Article 6 are a contract between the
corporation and each director and officer who serves in such capacity at any
time while such Article 6 is in effect, and any repeal or modification of this
Article 6 will not affect any rights or obligations then existing with respect
to any state of facts existing during or before such repeal or modification or
any action, lawsuit or proceeding brought before or after such repeal or
modification based in whole or in part upon any such state of facts.
E. Partial Indemnity. If the indemnitee is entitled under any provision of
this Article 6 to indemnification by the corporation for some or a portion of
the expenses, liabilities or losses incurred in connection with an action,
lawsuit or proceeding but not, however, for all of the total amount thereof, the
corporation will nevertheless indemnify the indemnitee for the portion thereof
to which the indemnitee is entitled. Moreover, notwithstanding any other
provision of this Article 6, to the extent that the indemnitee has been
successful on the merits or otherwise in defense of any or all claims relating
in whole or in part to an action, lawsuit or proceeding or in defense of any
issue or matter therein, including dismissal without prejudice,
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the indemnitee will be indemnified against all loss, expense and liability
incurred in connection with the portion of the action, lawsuit or proceeding
with respect to which the indemnitee was successful on the merits or otherwise.
F. Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article 6 will not be exclusive of any
other right which any person may have or acquire in the future under any
statute, the Certificate of Incorporation, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise.
G. Insurance. The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the law.
H. Indemnification of Employees and Agents of the corporation. The
corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses,
to any employee or agent of the corporation to the fullest extent of the
provisions of this Article 6 with respect to the indemnification and advancement
of expenses of directors and officers of the corporation, or to such lesser
extent as may be determined by the Board of Directors.
I. Notice by Indemnitee and Defense of Claim. The indemnitee must promptly
notify the corporation in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
matter, whether civil, criminal, administrative or investigative. The omission
so to notify the corporation will not relieve it from any liability which it may
have to the indemnitee if such omission does not prejudice the corporation's
rights. If such omission does prejudice the corporation's rights, the
corporation will be relieved from liability only to the extent of such
prejudice; nor will such omission relieve the corporation from any liability
which it may have to the indemnitee otherwise than under this Article 6. With
respect to any actions, lawsuits or proceedings as to which the indemnitee
notifies the corporation of the commencement thereof:
(i) The corporation will be entitled to participate therein at its
own expense; and
(ii) The corporation will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to the
indemnitee; provided, however, that the corporation will not
be entitled to assume the defense of any proceeding (and this
Article 6(I) will be inapplicable to such proceeding) if the
indemnitee will have concluded reasonably that there may be a
conflict of interest between the corporation and the
indemnitee with respect to such action, lawsuit or proceeding.
After notice from the corporation to the indemnitee of its
election to assume the defense thereof, the corporation will
not be liable to the indemnitee under this Article 6 for any
expenses subsequently incurred by the indemnitee in connection
with the defense thereof, other than reasonable costs of
investigation or as
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otherwise provided below. The indemnitee will have the right
to employ its own counsel in such proceeding but the fees and
expenses of such counsel incurred after notice from the
corporation of its assumption of the defense thereof will be
at the expense of the indemnitee unless:
(a) The employment of counsel by the indemnitee has been
authorized by the corporation in writing; or
(b) The corporation has not employed counsel to assume the
defense in such proceeding within a reasonable period of
time after giving the indemnitee notice of its
assumption of the defense or has not assumed such
defense and be acting in connection therewith with
reasonable diligence;
in each of which cases the fees and expenses of such counsel
shall be at the expense of the corporation.
(iii) The corporation will not settle any proceeding in any manner
which would impose any penalty or limitation on the indemnitee
without the indemnitee's written consent; provided, however,
that the indemnitee will not unreasonably withhold his consent
to any proposed settlement.
ARTICLE VII
Any action required or permitted to be taken by stockholders of the
corporation shall be effected at a duly called annual or special meeting of the
stockholders and may not be effected by a consent in writing. Special meetings
of the stockholders shall be called in the manner set forth in this Article.
The Chairman of the Board, the President or the Board may call special
meetings of the stockholders for any purpose. Further, a special meeting of the
stockholders shall be held if the holders of not less than twenty-five percent
(25%) of all the votes entitled to be cast on any issue proposed to be
considered at such special meeting have dated, signed and delivered to the
Secretary of the corporation no later than 20 days prior to the date of such
meeting one or more written demands for such meeting, describing the purpose or
purposes for which it is to be held.
ARTICLE VIII
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors of this corporation is expressly authorized to make, alter, amend,
rescind or repeal the bylaws of the corporation.
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ARTICLE IX
The corporation reserves the right to repeal, alter, amend or rescind any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
ARTICLE X
The corporation shall be subject to the provisions of Article 203 of the
Delaware General corporation Law.
IN WITNESS WHEREOF, the undersigned has signed this Fifth Restated
Certificate of Incorporation as of this ____ day of __________, 1999.
_______________________________________
Gary Acord, Chief Financial Officer
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EXHIBIT 3.5 - FORM OF SECOND RESTATED BYLAWS
SECOND RESTATED BYLAWS
OF
SALESLOGIX CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
NAME AND OFFICES
SECTION 1. Name. The name of this corporation shall be SALESLOGIX
CORPORATION, a Delaware corporation.
SECTION 2. Registered Office. The registered office shall be at 1209
Orange Street, in the City of Wilmington, County of New Castle, State of
Delaware, and the name of the registered agent in charge thereof is The
Corporation Trust Company.
SECTION 3. Other Offices. The Corporation may also have an office or
offices at such other place or places, within or without the State of Delaware,
as the Board of Directors may from time to time designate as the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. Annual Meetings. The Annual Meeting of Stockholders, for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the last annual meeting of stockholders.
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If the election of directors shall not be held on the day designated
herein for any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be possible. At such meeting
the stockholders may elect the directors and transact other business with the
same force and effect as at an annual meeting duly called and held.
SECTION 2. Special Meetings. Special meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Delaware, or at
such other place within or without the State of Delaware as may be designated in
the notice of said meeting, upon call of the Board of Directors, or of the
chairman of the board or the president, or of at least twenty-five percent (25%)
of the issued and outstanding common stock of the Corporation.
SECTION 3. Notice and Purpose of Meetings. Notice of the purpose or
purposes and of the time and place within or without the State of Delaware of
every meeting of stockholders shall be given by the Chairman of the Board or by
the President or Vice President or the Secretary or an Assistant Secretary
either personally or by mail or by telegraph or by any other means of
communication not less than ten days nor more than sixty days before the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice is effective when deposited in the official government mail,
first-class postage prepaid, properly addressed to each stockholder at his
address as it appears on the stock book unless he shall have filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case it shall be mailed or transmitted to
the address designated in such request. Such further notice shall be given as
may be required by law. Except as otherwise expressly provided by statute, no
notice of a meeting of stockholders shall be required to be given to any
stockholder who shall attend such meeting in person or by proxy, or who shall,
in
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person or by attorney thereunto authorized, waive such notice in writing or by
telegraph, cable, radio, or wireless either before or after such meeting. Except
where otherwise required by law, notice of any adjourned meeting of the
stockholders of the Corporation shall not be required to be given.
SECTION 4. Quorum. Except as otherwise provided by law, by the Certificate
of Incorporation, or as provided below, the presence, in person or by proxy, of
the holders of record of shares of the capital stock of the Corporation
possessing a majority of the aggregate number of votes to which all outstanding
shares of the capital stock of the Corporation are entitled, shall constitute a
quorum at all meetings of stockholders. Where a separate vote by a class or
classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. In the absence
of a quorum at any meeting or any adjournment thereof, the holders of shares
possessing a majority of the aggregate number of votes present and entitled to
be cast at such meeting or adjournment thereof may adjourn such meeting or
adjournment from time to time. At any such adjourned meeting at which a quorum
is present, any business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 5. Organization. Meetings of the stockholders shall be presided
over by the Chairman of the Board, or if he is not present, by the President, or
if they are not present, by a Vice President. The Secretary of the Corporation,
or in his absence, an Assistant Secretary, shall act as secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary is present,
stockholders entitled to cast a majority of the votes present and entitled to be
cast at the meeting shall choose any person present to act as secretary of the
meeting.
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SECTION 6. Voting. Except as otherwise provided in the Bylaws, the
Certificate of Incorporation, or in the laws of the State of Delaware, at every
meeting of the stockholders, each stockholder of the Corporation entitled to
vote at such meeting shall have one vote in person or by proxy for each share of
stock having voting rights held by him and registered in his name on the books
of the Corporation. Any vote of stock of the Corporation may be given by the
stockholder entitled to vote in person or by a proxy authorized (1) by a writing
executed by such stockholder (or his duly authorized agent) or (2) in such other
manner as is permitted by the General Corporation Law of the State of Delaware,
and delivered to the secretary of the meeting. Except as otherwise required by
statute, by the Certificate of Incorporation or these Bylaws, or in electing
directors, all matters coming before any meeting of the stockholders shall be
decided by the affirmative vote of stockholders entitled to cast a majority of
the number of votes present and entitled to be cast thereat, a quorum being
present. At all elections of directors the voting may but need not be by ballot
and, unless otherwise provided in the Certificate of Incorporation or
Certificate of Designation relating to a series of Preferred Stock, a plurality
of the votes cast thereat shall elect.
SECTION 7. List of Stockholders. A complete list of the stockholders
entitled to vote at the ensuing election, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder shall be prepared at least ten days prior to such
election by the Secretary, or other officer of the Corporation having charge of
said stock ledger. Such list shall be open to the examination of any stockholder
during ordinary business hours, for a period of at least ten days prior to the
election, either at a place within the city, town or village where the election
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where said
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meeting is to be held, and the list shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
SECTION 8. Business for Shareholders' Meetings.
(a) Business at Annual Meetings. In addition to the election of
directors, other proper business may be transacted at an annual meeting of
shareholders, provided that such business is properly brought before such
meeting. To be properly brought before an annual meeting, business must be (a)
brought by or at the direction of the Board or (b) brought before the meeting by
a shareholder pursuant to written notice thereof, either by personal delivery or
by registered or certified mail, postage prepaid, to the Secretary at the
corporation's principal executive offices, and received by the Secretary not
fewer than 90 nor more than 120 days prior to the anniversary date of the prior
year's annual meeting; provided that with respect to the corporation's annual
meeting of the shareholders in the year 2000, notice by the shareholder to the
corporation must be so delivered on or before January 2, 2000. Any such
shareholder notice shall set forth (i) the name and address of the shareholder
proposing such business; (ii) a representation that the shareholder is entitled
to vote at such meeting and a statement of the number of shares of the
corporation which are beneficially owned by the shareholder; (iii) a
representation that the shareholder intends to appear in person or by proxy at
the meeting to propose such business; and (iv) as to each matter the written
notice proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting, the language of the proposal (if appropriate), and any
material interest of the shareholder in such business. No business shall be
conducted at any annual meeting of shareholders except in accordance with this
Section 8. If the facts warrant, the
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Board, or the chairman of an annual meeting of shareholders, may determine and
declare that (a) a proposal does not constitute proper business to be transacted
at the meeting or (b) that business was not properly brought before the meeting
in accordance with the provisions of this Section 8 and, if, in either case, it
is so determined, any such business shall not be transacted. In addition to the
procedures set forth in this Section 8, shareholders desiring to include a
proposal in the corporation's proxy statement must also comply with the
requirements set forth in Rule 14a-8 under Section 14 of the Securities Exchange
Act of 1934, as amended, or any successor provision.
(b) Business at Special Meetings. At any special meeting of the
shareholders, only such business as is specified in the notice of such special
meeting given by or at the direction of the person or persons calling such
meeting, in accordance with Section 2 of this Article, shall come before such
meeting.
SECTION 9. Record Date for Stockholder Notice; Voting; Giving Consents. 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
entitled to express consent to Corp-rate 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 (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
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(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.
A determination of stockholders of record 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.
ARTICLE III
DIRECTORS
SECTION 1. Management of Corporation. The property, affairs and business
of the Corporation shall be managed by its Board of Directors.
SECTION 2. Powers, Number, Qualification, Term, Quorum, and Vacancies. The
number of directors shall be determined by the Board, but no event shall the
number of directors exceed fifteen (15). Except as hereinafter provided,
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
qualify. The directors shall have power from time to time, and at any time, when
the stockholders as such are not assembled in a meeting, regular or special, to
increase or decrease
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their own number to the extent provided in these Bylaws. If the number of
directors be increased, the additional directors may be elected by a majority of
the directors in office at the time of the increase, or if not so elected prior
to the next annual meeting of the stockholders, they shall be elected by the
stockholders. No decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. Directors need not be
stockholders.
A majority of the members of the Board of Directors then in office shall
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at such meeting shall be the act of the Board. If at
any meeting of the Board of Directors there shall be less than a quorum present,
a majority of those present may adjourn the meeting, without further notice,
from time to time until a quorum shall have been obtained.
In case one or more vacancies shall occur in the Board of Directors by
reason of death, resignation, or otherwise, except insofar as otherwise provided
in the case of a vacancy or vacancies occurring by reason of removal by the
stockholders, the remaining directors, although less than a quorum, may, by a
majority vote, elect a successor or successors for the unexpired term or terms.
SECTION 3. Meetings. An annual meeting of the Board of Directors shall be
held without notice immediately after and at the same place as the annual
meeting of shareholders. Other meetings of the Board of Directors shall be held
at such place within or outside the State of Delaware, and at such times, as may
from time to time be fixed by resolution of the Board of Directors, or as may be
specified in the notice of the meeting. Notice need not be given of regular
meetings of the Board of Directors. Meetings may be held at any time without
notice if all the directors are present, or if at any time before or after the
meeting those not present waive notice of the meeting in writing. Upon the call
of the Chairman, the President, or the Secretary,
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or any two directors, notice of a special Board meeting stating the place, day
and hour of the meeting shall be given to each director in writing or orally, as
provided below. Neither the business to be transacted at nor the purpose of any
special meeting need be specified in the notice of such meeting.
(a) Personal Delivery. If notice is given by personal delivery, the
notice shall be delivered to a director at least two days before the meeting.
(b) Delivery by Mail. If notice is delivered by mail, the notice
shall be deposited in the official government mail at least five days before the
meeting, properly addressed to a director at his or her address shown on the
records of the corporation, with postage thereon prepaid.
(c) Delivery by Private Carrier. If notice is given by private
carrier, the notice shall be dispatched to a director at his or her address
shown on the records of the corporation at least three days before the meeting.
(d) Facsimile or Electronic Mail Notice. If notice is delivered by
wire or wireless equipment that transmits a facsimile or electronic (e-mail)
copy of the notice, the notice shall be dispatched at least two days before the
meeting to a director at his or her telephone number, e-mail address, or other
number appearing on the records of the corporation.
(e) Delivery by Telegraph. If notice is delivered by telegraph, the
notice shall be delivered to the telegraph company for delivery to a director at
his or her address shown on the records of the corporation at least three days
before the meeting.
(f) Oral Notice. If notice is delivered orally, by telephone, in
person or by wire or wireless equipment that does not transmit a facsimile of
the notice, the notice shall be communicated to the director at lest two days
before the meeting.
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SECTION 4. Committees. The Board of Directors may, in its discretion, by
the affirmative vote of a majority of the whole Board of Directors, appoint
committees which shall have and may exercise such powers as shall be conferred
or authorized by the resolutions appointing them. A majority of any such
committee, if the committee be composed of more than two members, may determine
its action and fix the time and place of its meetings, unless the Board of
Directors shall otherwise provide. The Board of Directors shall have power at
any time to fill vacancies in, to change the membership of, or to discharge any
such committee.
SECTION 5. Dividends. Subject always to the provisions of the law and the
Certificate of Incorporation, the Board of Directors shall have full power to
determine whether any, and if any, what part of any, funds legally available for
the payment of dividends shall be declared in dividends and paid to
stockholders; the division of the whole or any part of such funds of the
Corporation shall rest wholly within the lawful discretion of the Board of
Directors, and it shall not be required at any time, against such discretion, to
divide or pay any part of such funds among or to the stockholders as dividends
or otherwise; and the Board of Directors may fix a sum which may be set aside or
reserved over and above the capital paid in of the Corporation as working
capital for the Corporation or as a reserve for any proper purpose, and from
time to time may increase, diminish, and vary the same in its absolute judgment
and discretion.
SECTION 6. Removal of Directors. At any meeting of the stockholders, duly
called as provided in these Bylaws, any director or directors may by the
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote for the election of directors be removed from
office for cause only, and his successor or their successors may be elected at
such meeting, or the remaining directors may, to the extent vacancies are not
filled by such election, fill any vacancy or vacancies created by such removal.
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SECTION 7. Informal Action; Meetings by Telephone. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if prior to such action a written consent
thereto is signed by all members of the Board or the committee, as the case may
be, and such written consent is filed with the minutes of proceedings of the
Board or the committee.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, 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.
SECTION 8. Compensation. The members of the Board of Directors shall not
be entitled to fees, salaries, or other compensation for their services except
as determined by a majority vote of the Board. The members of the Board of
Directors shall be entitled to reimbursement for their reasonable expenses as
such members. Nothing contained herein shall preclude any director from serving
the Corporation, or any parent, subsidiary or affiliated Corporation, as officer
or in any other capacity and receiving proper compensation therefor.
ARTICLE IV
OFFICERS
SECTION 1. Election. The Board of Directors, as soon as may be practicable
after the annual meeting of stockholders held in each year, shall elect a
President, a Secretary and a Treasurer. Further, upon the nomination and
recommendation of the President, the Board of Directors may from time to time
elect a Chairman of the Board, a Chief Financial Officer, one or
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more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, and
such Assistant Secretaries, Assistant Treasurers, Controllers and other
officers, agents, and employees as may be necessary or appropriate. More than
one office may be held by the same person, but the offices of President and
Secretary shall not both be held simultaneously by the same person. If a
Chairman of the Board is to be chosen, such Chairman shall be chosen from among
the directors.
SECTION 2. Term and Removal. The term of office of all officers shall be
until their respective successors are elected and qualify, and any officer may
be removed from office, either with or without cause, at any time by the
affirmative vote of a majority of the members of the Board of Directors then in
office. A vacancy in any office arising from any cause may be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 3. The President; Chairman of the Board - Powers and Duties. The
President shall be the chief executive officer of the Corporation and, as such,
shall have such powers, authority and duties as ordinarily pertain to such
office and shall be responsible for the general supervision and coordination of
the affairs and operations of the Corporation. Further, the Chairman of the
Board shall preside over all meetings of the stockholders and directors of the
Corporation, except to the extent the Board of Directors determines otherwise.
The President's primary responsibilities shall be to supervise the affairs and
operations of the Corporation and to conduct the affairs of the Corporation to
achieve such objectives as may be established from time to time by the Board of
Directors and to ensure that the activities of the various subsidiaries,
divisions and other operating units of the Corporation are properly coordinated.
He shall have final authority over the affairs, operations and budgets of such
subsidiaries, divisions and other operating units, and shall keep the Board of
Directors advised. He shall sign or countersign certificates, contracts, and
other instruments of the Corporation as authorized by the Board of
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Directors, and shall perform all of the duties and enjoy all the powers which
are delegated to him by the Board of Directors, except in all instances as he
may delegate such authority and such duties to other officers of the
Corporation. In the event the Board of Directors elects a Chairman of the Board
of Directors who is not also the President, he shall have all the powers of the
President in the President's absence or inability to act and such other powers
as the Board of Directors shall designate.
SECTION 4. Vice Presidents - Powers and Duties. Each Vice President shall
have such powers and discharge such duties as may be assigned to him from time
to time by the President or by the Board of Directors upon recommendation of the
President. One or more Executive Vice Presidents and/or Senior Vice Presidents
may be appointed.
SECTION 5. Secretary - Powers and Duties. The Secretary shall issue
notices for all meetings except that notice for special meetings of directors
called at the request of four directors may be issued by such directors, shall
keep minutes of all meetings, shall have charge of the seal and the corporate
minute books, and shall make such reports and perform such other duties as are
incident to his office, or are properly required of him by the Board of
Directors.
SECTION 6. Assistant Secretaries - Powers and Duties. The Assistant
Secretaries in order of their seniority shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Board of Directors shall prescribe.
SECTION 7. Treasurer - Powers and Duties. The Treasurer shall have the
custody of all monies and securities of the Corporation and shall keep regular
books of account. He shall disburse the funds of the Corporation in payment of
the just demands against the Corporation or as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and
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shall render to the Board of Directors from time to time as may be required of
him, an account of all his transactions as Treasurer and of the financial
condition of the Corporation. He shall perform all duties incident to his office
or that are properly required of him by the Board of Directors.
SECTION 8. Assistant Treasurers - Powers and Duties. The Assistant
Treasurers in the order of their seniority shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer,
and shall perform such other duties as the Board of Directors shall prescribe.
SECTION 9. Chief Financial Officer - Powers and Duties. The Chief
Financial Officer shall keep full and accurate accounting records for the
Corporation, and shall render to the Board of Directors from time to time, as
may be required of him, reports of operations and financial condition of the
Corporation. He shall perform all duties incident to his office or that are
required of him from time to time by the Board of Directors.
SECTION 10. Voting Corporation's Securities. Unless otherwise ordered by
the Board of Directors, the President, or in the event of his inability to act
(or in the event the President so designates), such officer as may be designated
by the Board of Directors to act in the absence thereof (or as may be designated
by the President), shall have full power and authority on behalf of the
Corporation to attend and to act and to vote (whether in person or by proxy) at
any meetings of security holders of corporations in which the Corporation may
hold securities, and at such meetings shall possess and may exercise (whether in
person or by proxy) any and all rights and powers incident to the ownership of
such securities, which as the owner thereof the Corporation might have possessed
and exercised, if present. The Board of Directors by resolution from time to
time may confer like powers upon any other person or persons.
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SECTION 11. Divisional Officers. The Board of Directors may from time to
time establish and abolish one or more operating divisions of the Corporation.
The Board of Directors may assign one of the Vice Presidents of the Corporation
to any such division who shall, subject to the direction of the Board of
Directors and the President, supervise and control the business of such division
and all officers, agents, and employees of the Corporation whose principal
duties are in connection with the business of such division. The Vice President
so assigned to any such division may be appointed as the President of such
division in connection with the operation of its business. The Board of
Directors may also appoint one or more Vice Presidents, a Secretary, a
Treasurer, and one or more Assistant Treasurers or Secretaries of any such
division, who shall hold their offices for such terms and exercise such powers
and perform such duties as shall be determined by the Board or by the President
of such division. Persons so appointed by the Board of Directors as Vice
President, Treasurer, Secretary, Assistant Treasurer, or Assistant Secretary of
a division need not also be officers of the Corporation.
ARTICLE V
CERTIFICATES OF STOCK
SECTION 1. Form and Transfers. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock, certifying
the number of shares represented thereby and in such form not inconsistent with
the Certificate of Incorporation as the Board of Directors may from time to time
prescribe.
Transfers of shares of the capital stock of the Corporation shall be made
only on the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation, or with a transfer clerk or a transfer agent
appointed as in Section 3 of this Article provided, and on
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surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation; provided that whenever any transfer of
shares shall be made for collateral security, and not absolutely, such fact, if
known to the Secretary of the Corporation, shall be so expressed in the entry of
transfer. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer, and registration of certificates for shares of
the capital stock of the Corporation.
The certificates of stock shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and sealed with the seal of the Corporation. Such seal may
be a facsimile, engraved or printed. If such certificate is countersigned (1) by
a transfer agent or transfer clerk other than the Corporation or its employee,
or, (2) by a registrar other than the Corporation or its employee, any other
signature on the certificate may be a facsimile. In case any officer, transfer
agent, transfer clerk or registrar who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer,
transfer agent, transfer clerk 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, transfer clerk or registrar at the date of its issue.
SECTION 2. Lost, Stolen, Destroyed, or Mutilated Certificate. No
certificate for shares of stock in the Corporation shall be issued in place of
any certificate alleged to have been lost, destroyed, or stolen, except on
production of such evidence of such loss, destruction, or theft and on delivery
to the Corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount (not exceeding twice the value of the shares
represented by such certificate),
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upon such terms and secured by such surety as the Board of Directors may in its
discretion require.
SECTION 3. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates of stock to bear the signature
or signatures of any of them.
ARTICLE VI
MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
shareholders listing their names and addresses and the number and class of
shares held by each shareholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stock-holder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January
in each year and shall end on the thirty-first day of December next following,
unless otherwise determined by the Board of Directors.
ARTICLE VIII
CORPORATE SEAL
The Board may provide for a corporate seal of the Corporation that shall
consist of two concentric circles, between which shall be the name of the
Corporation, and in the center shall be inscribed the year of its incorporation
and the words, "Corporate Seal, Delaware."
ARTICLE IX
AMENDMENTS
The Bylaws of the Corporation shall be subject to alteration, amendment,
or repeal, and new Bylaws not inconsistent with any provision of the Certificate
of Incorporation or statute, may be made, either by the affirmative vote of the
stockholders entitled to cast a majority of the number of votes present and
entitled to be cast at any annual or special meeting of the stockholders, a
quorum being present, or by the affirmative vote of a majority of the whole
Board, given at any regular or special meeting of the Board, provided that
notice of the proposal so to make, alter, amend, or repeal such Bylaws be
included in the notice of such meeting of the Board or the stockholders, as the
case may be. Bylaws made, altered, or amended by the Board may be altered,
amended or repealed by the affirmative vote of stockholders entitled to cast a
majority of the number of votes present and entitled to be cast at any annual or
special meeting thereof.
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Exhibit 4.1 - Amended and Restated Investors' Rights Agreement
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this
"Agreement") is made as of the 4th day of June, 1998, by and among SALESLOGIX
CORPORATION, a Delaware corporation formerly known as Quest Sales Software, Inc.
(the "Company"), and the persons and entities listed on Schedule A hereto (the
"Investors").
RECITALS
A. As of January 17, 1996, the Company entered into that certain
Investors' Rights Agreement (the "Investors' Rights Agreement") with Innocal,
L.P., Canaan Ventures II Limited Partnership, Canaan Ventures II Offshore
Limited Partnership C.V., and Newtek Ventures II, L.P. (the "Initial Series A
Investors") in connection with the transactions contemplated by that certain
QUEST SALES SOFTWARE, INC. SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the
"First Series A Preferred Stock Purchase Agreement") dated as of January 17,
1996.
B. As of October 14, 1996, the Company entered into that certain
Amendment to Investors' Rights Agreement with the Initial Series A Investors and
Deepak Kamra, Morris Ventures and John Purtell (the "Subsequent Series A
Investors") in connection with the transactions contemplated by that certain
SALESLOGIX CORPORATION SECOND SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the
"Second Series A Preferred Stock Purchase Agreement") dated as of October 14,
1996.
C. As of March 24, 1997, the Company entered into that certain Second
Amendment to Investors' Rights Agreement with the Initial Series A Investors,
the Subsequent Series A Investors, and Brinson Venture Capital Fund III, L.P.,
Brinson Trust Company as Trustee for the Brinson Map Venture Capital Fund III
Trust, Sigma Partners III, L.P., Sigma Associates III, L.P., Sigma Investors
III, L.P., John R. Mandile, InnoCal, L.P., Canaan Ventures II Limited
Partnership, Canaan Ventures II Offshore Limited Partnership C. V., Newtek
Ventures II, L.P., Comdisco, Inc., Morris Ventures and Deepak Kamra (the "Series
C Investors") in connection with the transactions contemplated by that certain
SALESLOGIX CORPORATION SERIES C STOCK PURCHASE AGREEMENT (the "Series C Stock
Purchase Agreement") dated as of March 24, 1997.
D. Concurrent with the execution of this Agreement and pursuant to that
certain SALESLOGIX CORPORATION SERIES E PREFERRED STOCK PURCHASE AGREEMENT of
even date herewith (the "Series E Preferred Stock Purchase Agreement"), the
Initial Series A Investors, the Subsequent Series A Investors, the Series C
Investors and the investors set forth on Schedule A to the Series E Stock
Purchase Agreement (the "Series E
<PAGE> 2
Investors") wish to amend and restate the Investors' Rights Agreement, as
amended, to grant each of the Series E Investors all of the rights (and make
each of the Series E Investors subject to all of the obligations) as Investors
under the Investors' Rights Agreement, as amended, and to make certain
substantive amendments to the Investors' Rights Agreement, as amended.
ACCORDINGLY, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement agree that the Investors'
Rights Agreement, as amended, shall be amended and restated in its entirety to
read as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1. Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933,
as amended.
(b) The term "Form S-3" means such form under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
(e) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(f) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Company's Series A
Preferred Stock, Series C Preferred Stock and Series E Preferred Stock and (ii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of
the shares referenced in (i) above, excluding in all cases, however, shares of
Common Stock of the Company which have previously been registered or which have
been sold to the public, or any Registrable Securities sold by a person in a
transaction in which his rights under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
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<PAGE> 3
(h) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2. Request for Registration.
(a) If the Company shall receive at any time after
the earlier of (i) January 19, 1999 or (ii) one (1) year after the effective
date of the first registration statement for a public offering of securities of
the Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request from
the Holders of a majority of the Registrable Securities then outstanding that
the Company file a registration statement under the Act covering the
registration of at least fifty percent (50%) of the Registrable Securities then
outstanding in which the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $5,000,000, then the
Company shall:
(i) within ten (10) days of the receipt
thereof give written notice of such request to all Holders; and
(ii) effect as soon as practicable, and in
any event within 60 days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be
registered, subject to the limitations of subsection 1.2(b), within twenty (20)
days of the mailing of such notice by the Company in accordance with Section
3.5.
(b) If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection 1.2(a)
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). The underwriter will be selected by the Company and shall
be reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
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<PAGE> 4
(c) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2 a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than 120 days after receipt of the request of the Initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period.
(d) In addition, the Company shall not be obligated
to effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected two
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period starting with the
date thirty (30) days prior to the Company's good faith estimate of the date of
filing of and ending on a date one hundred eighty (180) days after the effective
date of a registration subject to Section 1.3 hereof; provided that the Company
is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to
dispose of shares of Registrable Securities that may be immediately registered
on Form S-3 pursuant to a request made pursuant to Section 1.12 below.
1.3. Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than (i) the initial public
offering of the Company's securities or (ii) a registration relating solely to
the sale of securities to participants in a Company stock plan, a registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall at such time promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4. Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall as expeditiously as reasonably possible:
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<PAGE> 5
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold; provided that Rule
415, or any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (I) includes any prospectus required by
Section 10(a)(3) of the Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such
5
<PAGE> 6
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 herein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.6. Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2 including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal the Holders have
learned of a material adverse change in the condition, business, or
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<PAGE> 7
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 1.2.
1.7. Expenses of Company Registration. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
1.8. Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities requested to be included therein owned by each
selling Stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall (i) the amount of securities
of the selling Holders included in the offering be reduced below thirty percent
(30%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities in which
case the selling stockholders may be excluded if the underwriters make the
determination described above and no other stockholders securities are included
or (ii) notwithstanding (i) above, any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons who is controlled by, or under common control
with a selling stockholder shall be deemed to be a single "selling stockholder,"
and any pro-rata reduction with respect to such "selling stockholder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling stockholder," as defined
in this sentence.
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<PAGE> 8
1.9. Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act, or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (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, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, 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 indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will, severally and not jointly, indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 1.10(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this
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<PAGE> 9
subsection 1.10(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection 1.10(b)
exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any action (including
any governmental action), such indemnified party will if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this
Section 1.10 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
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(f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11. Reports Under Securities Exchange Act of 1934 With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act ("SEC Rule 144") and any other rule or regulation of the SEC that
may at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12. Form S-3 Registration. In case the Company shall receive
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are
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<PAGE> 11
specified in such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in a written request given within 15 days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 1.12: (1) if Form S-3 is not available for such
offering by the Holders; (2) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 Registration statement for a
period of not more than 60 days after receipt of the request of the Holder or
Holders under this Section 1.12; provided, however, that the Company shall not
utilize this right more than once in any twelve month period; (4) if the Company
has, within the twelve (12) month period preceding the date of such request,
already effected two registrations on Form S-3 for the Holders pursuant to this
Section 1.12; or (5) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file
a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
a registration requested pursuant to Section 1.12, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling Holder
or Holders and counsel for the Company, but excluding any underwriters'
discounts or commissions associated with Registrable Securities, shall be borne
by the Company; provided, however, that the Company shall not be obligated to
bear such expenses in connection with more than one such Form S-3 Registration
within any twelve (12) month period. Registrations effected pursuant to this
Section 1.12 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.13. Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 100,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations) (or, if the transferee holds less than 100,000 Registrable
Shares, such transferee is a general partner or limited partner of an Investor
hereunder); provided: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions
11
<PAGE> 12
of Section 1.15 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
1.14. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which should result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred twenty (120) days after the effective date of any
registration effected pursuant to Section 1.2.
1.15. "Market Stand-Off" Agreement. Each Investor hereby
agrees that, during the period of duration specified by the Company and an
underwriter of common stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
common stock included in such registration; provided, however, that:
(a) such agreement shall be applicable only to the
first such registration statement of the Company which covers common stock (or
other securities) to be sold on its behalf to the public in an underwritten
offering;
(b) all officers and directors of the Company and all
other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements; and
(c) such market stand-off time period shall not
exceed 180 days.
(d) In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Investor (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period.
(e) Notwithstanding the foregoing, the obligations
described in this Section 1.15 shall not apply to a registration relating solely
to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-14 or Form S-15 or similar forms which may be
promulgated in the future.
12
<PAGE> 13
1.16. Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right
provided for in this Section 1 after six (6) years following the consummation of
the sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the initial firm commitment underwritten
offering of its securities to the general public.
(b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1.3 shall
terminate on the third anniversary of the closing of the first Company-initiated
registered public offering of Common Stock of the Company if all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder may immediately be sold under Rule 144 during any 90-day period, or on
such date after the third anniversary of the closing of the first
Company-initiated registered public offering of Common Stock of the Company as
all shares of Registrable Securities held or entitled to be held upon conversion
by such Holder may immediately be sold under Rule 144 during any 90-day period;
provided, however, that the provisions of this Section 1.16(b) shall not apply
to any Holder who owns more than two percent (2%) of the Company's outstanding
stock until such time as such Holder owns less than two percent (2%) of the
outstanding stock of the Company.
2. Covenants of the Company.
2.1. Delivery of Annual and Quarterly Financial Statements.
The Company shall deliver to each Investor who holds a minimum of 250,000 shares
of Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations):
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a schedule as to the
sources and applications of funds for such year, such year-end financial reports
to be in reasonable detail prepared in accordance with generally accepted
accounting principles ("GAAP"), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company; and
(b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, schedule
as to the sources and application of funds for such fiscal quarter and an
unaudited balance sheet as of the end of such fiscal quarter, and an instrument
executed by the Chief Financial Officer or President of the Company and
certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the exception
of footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period specified,
subject to year-end audit adjustment.
2.2. Delivery of Monthly Financial Statements and Financial
Plan. Upon written request, the Company shall deliver to each Investor who holds
at least 400,000 shares of
13
<PAGE> 14
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations):
(a) within thirty (30) days of the end of each month,
an unaudited statement of operations, balance sheet and cash flow statement for
and as of the end of such month, in reasonable detail, and an instrument
certifying such financials described in Section 2.1(b);
(b) as soon as practicable, but in any event prior to
the end of each fiscal year, an operating plan and forecast covering the next
fiscal year, prepared on a quarterly basis, including an unaudited statement of
operations, balance sheet and cash flow statement for such quarters and, as soon
as prepared, any other operating plans or forecasts prepared by the Company; and
(c) such other information relating to the results of
operations, financial condition, business, prospects or corporate affairs of the
Company as the Investor or any assignee of the Investor may from time to time
request; provided, however, that the Company shall not be obligated under this
subsection (c) or any other subsection of Section 2.2 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.3. Board Observation Rights; Inspection. For so long as they
individually continue to hold a minimum of 400,000 shares of Registrable
Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations, and other recapitalizations), each of Sierra Ventures VI L.P. and
The Goldman Sachs Group, L.P. shall be entitled to designate one (1) person to
receive copies of all notices, minutes, consents and other material that the
Company provides to its directors, and to attend meetings of the Company's Board
of Directors as an observer (the "Series E Observers"), provided that any or all
observers, including the Series E Observers may be excluded from access to any
material or meeting or portion thereof if the Board of Directors shall
determine, in its discretion, to meet in executive session to address matters
that it deems sensitive. The Company's obligations to the Series E Observers
under this Section shall be conditioned upon timely delivery to the Company of a
Confidentiality Agreement substantially in the form attached hereto as Exhibit
A. The Company shall permit each Investor, at such Investor's expense, to visit
and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.3 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information.
2.4. Assignment of Information Rights: Termination of
Information and Inspection Covenants. The right to receive information pursuant
to Section 2.1 or Section 2.2, and board observation rights pursuant to Section
2.3, may be assigned by a Holder to a transferee or assignee of such securities
who, after such assignment or transfer, holds the requisite number or percentage
of securities set forth in such Sections, as the case may be, provided: (a) the
Company is, within a reasonable time after such transfer, furnished with a
written notice of the
14
<PAGE> 15
name and address of such transferee or assignee; (b) such transferee or assignee
is not a competitor or potential competitor of the Company, as reasonably
determined by the Board of Directors of the Company; and (c) if the Company
reasonably believes that it is necessary to protect proprietary information,
such transferee or assignee executes a confidentiality agreement reasonably
acceptable to the Company as a condition to receiving such information. The
covenants set forth in subsections 2.2(a), (b), and (c) and Section 2.3 shall
terminate as to Investors and be of no further force or effect when the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.
2.5. Right of First Offer. Subject to the terms and conditions
specified in this Section 2.5, the Company hereby grants to each Investor a
right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). For purposes of this Section 2.5, Investor includes
any general partners and affiliates of an Investor. An Investor shall be
entitled to apportion the right of first offer hereby granted it among itself
and its partners and affiliates in such proportions as it deems appropriate to
the extent that such apportionment would not cause the Company to be in
violation of the Act.
Each time the Company proposes to offer any shares
of, or securities convertible into or exercisable for, any shares of any class
of its capital stock ("Shares"), the Company shall first make an offering of
such Shares to each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified
mail ("Notice") to the Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) Within 20 calendar days after receipt of the
Notice, the investor may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion of such Shares which equals
the proportion that the number of shares of common stock issued and held, or
issuable upon conversion of the Series A Preferred Stock, Series C Preferred
Stock and Series E Preferred Stock (collectively, the "Series A, C & E Preferred
Stock") then held, by such Investor bears to the total number of shares of
common stock of the Company then outstanding (assuming full conversion of all
shares of Series A, C & E Preferred Stock). The Company shall promptly, in
writing, inform each Investor which purchases all the shares available to it
("Fully-Exercising Investor") of any other Investor's failure to do likewise.
During the ten-day period commencing after receipt of such information, each
Fully-Exercising Investor shall be entitled to obtain that portion of the Shares
for which Investors were entitled to subscribe, but which were not subscribed
for by the Investors which is equal to the proportion that the number of shares
of common stock issued and held, or issuable upon conversion of Series A, C & E
Preferred Stock then held, by such Fully-Exercising Investor bears to the total
number of shares of common stock issued and held, or issuable upon conversion of
the Series A,
15
<PAGE> 16
C & E Preferred Stock then held, by all Fully-Exercising Investors who wish to
purchase some of the unsubscribed shares.
(c) If all Shares which Investors are entitled to
obtain pursuant to subsection 2.5(b) are not elected to be obtained as provided
in subsection 2.5(b) hereof, the Company may, during the 30-day period following
the expiration of the period provided in subsection 2.5(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree, than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within 30 days of the execution thereof the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first reoffered
to the Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.5
shall not be applicable (i) to the issuance or sale of shares of common stock
issuable or issued to employees or consultants and advisors of the Company
(including without limitation independent marketers and resellers of the
Company's products) directly or pursuant to a stock option plan or agreement or
restricted stock plan or agreement approved by the Board of Directors of the
Company at any time when the total number of shares of common stock so issuable
or issued (and not repurchased at cost by the Company in connection with the
termination of employment or service) does not exceed 3,641,845 (subject to
appropriate adjustments for stock splits, stock dividends, combinations or other
recapitalizations), (ii) consummation of a bona fide, firmly underwritten public
offering of shares of common stock, registered under the Act pursuant to a
registration statement on Form S-1, at an offering price of at least $6.00 per
share (appropriately adjusted for any stock split, dividend, combination or
other recapitalization) and $20,000,000 in the aggregate, (iii) the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities, (iv) the issuance of securities to strategic partners of the Company
primarily for strategic purposes other than raising capital, as so reasonably
determined by the Board of Directors of the Company, or (v) shares of common
stock issued in connection with a bona fide lease financing transaction approved
by the Board of Directors of the Company.
(e) The right of first offer set forth in this
Section 2.5 may not be assigned or transferred, except that (i) such right is
assignable by each Holder to any wholly owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Holder, and (ii) such right
is assignable between and among any of the Holders who hold at least 100,000
shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations).
2.6. Key-Man Insurance. The Company has as of the date hereof
or shall within 90 days of the date hereof use its best efforts to obtain from
financially sound and reputable insurers term life insurance on the life of
Patrick M. Sullivan in the amount of $2,500,000, except as otherwise decided in
accordance with policies adopted by the Company's Board of Directors. The
Company will cause to be maintained the term life insurance required by this
Section 2.6 hereof, except as otherwise decided in accordance with policies
adopted by
16
<PAGE> 17
the Company's Board of Directors. Such policies shall name the Company as loss
payee and shall not be cancelable by the Company without prior approval of the
Board of Directors.
2.7. IRC Section 305. So long as any shares of the Company's
Series A Preferred Stock, Series C Preferred Stock, or Series E Preferred Stock
remain outstanding, the Company will not, without approval of holders of a
majority of the Series A Preferred Stock, Series C Preferred Stock and Series E
Preferred Stock then outstanding, voting together on an as converted basis, do
any act or thing which would result in taxation of the holders of shares of the
Series A Preferred Stock, Series C Preferred or Series E Preferred Stock under
Section 305 of the Internal Revenue Code of 1986, as amended (the "IRC") (or any
comparable provision of the IRC as hereafter may from time to time be amended).
2.8. Director's and Officer's Liability Insurance. At the
request of a majority of the non-employee members of the Company's Board of
Directors, the Company shall obtain director's and officer's liability insurance
in such amounts and under such terms as may be satisfactory to the Board of
Directors.
2.9. Board Committees. So long as any shares of the Company's
Series A Preferred Stock, Series C Preferred Stock, or Series E Preferred Stock
remain outstanding, the Company will use its best efforts to have the Board of
Directors appoint and maintain a Compensation Committee and an Audit Committee.
Each such Committee shall contain no more than three members and shall include
no more than one member of management of the Company. The holders of a majority
of the Series A Preferred Stock, Series C Preferred Stock and Series E Preferred
Stock then outstanding, voting together on an as converted basis, shall
designate two of the members of the Compensation Committee.
2.10. Section 83(b) Elections. The Company shall use its best
efforts to ensure that all individuals who purchase shares of the Company's
Common Stock timely file elections under Section 83(b) of the Internal Revenue
Code of 1986, as amended and any analogous provisions of applicable state tax
laws.
2.11. Termination of Certain Covenants. The covenants set
forth in Sections 2.5, 2.7, 2.8 and 2.9 shall terminate and be of no further
force or effect upon the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public.
3. Miscellaneous.
3.1. Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
17
<PAGE> 18
3.2. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
3.3. 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.
3.4. Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5. Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or receipt
if sent by telecopy, nationally recognized overnight courier or first class or
by registered or certified mail postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof or
at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6. Expenses. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of each of (a) the Company, (b)
the holders of a majority of the Series A Preferred Stock of the Company, voting
together as a class, (c) the holders of a majority of the Series C Preferred
Stock of the Company, voting together as a class and (d) the holders of a
majority of the Series E Preferred Stock, voting together as a class. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
3.8. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9. Aggregation of Stock. All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
18
<PAGE> 19
3.10. Entire Agreement. This Agreement (including the Exhibits
hereto, if any) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE> 20
THE COMPANY:
SALESLOGIX CORPORATION, a Delaware
corporation
By: /s/ Gary Acord
------------------------------
Gary Acord, CFO and
Secretary
Address: 8800 N. Gainey Center Dr.,
Suite 200
Scottsdale, AZ 85258
INVESTORS:
INNOCAL, L.P., a Delaware Limited
Partnership
By: InnoCal Associates, L.P., a
Delaware Limited Partnership
By: /s/ Harry Lambert
--------------------------
Harry Lambert, General
Partner
Address: 600 Anton Blvd., Suite 1270
Costa Mesa, CA 92626
CANAAN VENTURES II LIMITED PARTNERSHIP
By: Canaan Venture Partners II
L.P.
By: /s/ Deepak Kamra
--------------------------
Deepak Kamra, General
Partner
Address: 2884 Sand Hill Road, Suite 115
Menlo Park, CA 94025
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
20
<PAGE> 21
CANAAN VENTURES II OFFSHORE LIMITED
PARTNERSHIP C.V.
By: Canaan Venture Partners II
L.P.
By: /s/ Deepak Kamra
--------------------------
Deepak Kamra, General
Partner
Address: 2884 Sand Hill Road, Suite 115
Menlo Park, CA 94025
NEWTEK VENTURES II, L.P.
By: /s/ Peter J. Wardle
------------------------------
Peter J. Wardle, General
Partner
Address: 500 Washington Street, Suite
720
San Francisco, CA 94111
/s/ Deepak Kamra
----------------------------------------
DEEPAK KAMRA
Address: 2884 Sand Hill Road, Suite 115
Menlo Park, CA 94025
MORRIS VENTURES, a Partnership
By: /s/ Anthony P. Morris
------------------------------
Anthony P. Morris, General
Partner
Address: 211 Congress Street, 2nd Floor
Boston, MA 02110
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
21
<PAGE> 22
/s/ John M. Purtell, Jr.
----------------------------------------
JOHN PURTELL
Address: 10580 Newkirk Street, # 100
Dallas, TX 75220
COMDISCO, INC., a Delaware corporation
By: /s/ James P. Labe
------------------------------
Name: James P. Labe
------------------------
Its: President
------------------------
Address: 6111 River Road
Rosemont, IL 60018
BRINSON VENTURE CAPITAL FUND III, L.P.
By: Brinson Partners, Inc., its
General Partner
By: /s/ David S. Timson
--------------------------
David S. Timson,
Partner
Address: 209 S. LaSalle Street
Chicago, IL 60604
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
22
<PAGE> 23
BRINSON TRUST COMPANY AS TRUSTEE FOR THE
BRINSON MAP VENTURE CAPITAL FUND III
TRUST
By: /s/ David S. Timson
------------------------------
David S. Timson, Trust
Officer
Address: 209 S. LaSalle Street
Chicago, IL 60604
SIGMA PARTNERS III, L.P.,
By: /s/ Cliff Haas
------------------------------
Cliff Haas, General
Partner
Address: 2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
SIGMA ASSOCIATES III, L.P.
By: /s/ Cliff Haas
------------------------------
Cliff Haas, General
Partner
Address: 2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
23
<PAGE> 24
SIGMA INVESTORS III, L.P.
By: /s/ Cliff Haas
------------------------------
Cliff Haas, General
Partner
Address: 2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
/s/ John R. Mandile
----------------------------------------
JOHN R. MANDILE
Address: Oak Knoll
Winchester, MA 01890
SIERRA VENTURES VI L.P.
By: /s/ David C. Schwab
------------------------------
Its General Partner
By: David C. Schwab
------------------------
Name: David C. Schwab
------------------------
Its: General Partner
------------------------
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
its General Partner
By: /s/ illegible
------------------------
Name:
------------------------
Its:
------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
24
<PAGE> 25
CANAAN EQUITY, L.P.
By: Canaan Equity Partners L.L.C.
By: /s/ Deepak Kamra
---------------------------
Name: Deepak Kamra
-------------------------
Its: Member/Manager
/s/ Anthony P. Moris
----------------------------------------
Anthony P. Morris
SV ASSOCIATES VI, L.P.
By: /s/ David C. Schwab
------------------------------
Name: David C. Schwab
------------------------
Its: General Partner
------------------------
Address: 3000 Sand Hill Road
Bldg. 4, Suite 210
Menlo Park, CA 94025
G & H PARTNERS
By: /s/ Gary S. Wohl
------------------------------
Name: Gary S. Wohl
------------------------
Its: Partner
------------------------
Address: 155 Constitution Drive
Menlo Park, CA 94025
Attn: Gary S. Wohl
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
25
<PAGE> 26
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Its: General Partner
By: /s/ illegible
------------------------------
Name:
------------------------------
Its: Vice President
Address: 85 Broad Street
New York, NY 10004
BRIDGE STREET FUND 1998, L.P.
By: Bridge Street Advantage Corp.
Its: Managing General Partner
By: /s/ illegible
------------------------------
Name:
------------------------------
Its: Vice President
Address: 85 Broad Street
New York, NY 10004
/s/ Robert Simon
----------------------------------------
Robert Simon
Address: 290 Green, #1
------------------------------
San Francisco, CA 94133
------------------------------
[SIGNATURE PAGE TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT]
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<PAGE> 27
SCHEDULE A
Schedule of Holders of Series A, Series B and Series C Preferred Stock
<TABLE>
<CAPTION>
Name of Stockholder Class of Preferred Stock Number of Shares
- ------------------- ------------------------ ----------------
<S> <C> <C>
InnoCal L.P. Series A 2,000,000
Canaan Ventures II Limited Partnership Series A 582,000
Canaan Ventures II Offshore Limited Partnership,
C.V. Series A 918,000
Newtek Ventures II, L.P. Series A 1,000,000
Deepak Kamra Series A 25,000
Morris Ventures, a Partnership Series A 25,000
John Purtell Series A 35,000
W. Daniel Kennedy Series B 200,000
The Dan Kennedy Family Trust Series B 200,000
The William W. Kennedy Revocable Living Trust Series B 33,240
The William W. Kennedy Family Trust Series B 266,760
InnoCal, L.P. Series C 621,118
Canaan Ventures II Limited Partnership Series C 240,994
Canaan Ventures Offshore Limited Partnership, C.V. Series C 380,124
Newtek Ventures II, L.P. Series C 186,335
Deepak Kamra Series C 6,211
Morris Ventures Series C 15,528
Comdisco, Inc. Series C 49,690
Brinson Venture Capital Fund III, L.P. Series C 1,188,207
Brinson Trust Company as Trustee for the Brinson
Map Venture Capital Fund III Trust Series C 193,781
Sigma Partners III, L.P. Series C 852,500
Sigma Associates III, L.P. Series C 210,978
Sigma Investors III, L.P. Series C 23,479
John R. Mandile Series C 62,112
TOTAL: 9,316,057
</TABLE>
27
<PAGE> 28
SCHEDULE OF HOLDERS OF SERIES E PREFERRED STOCK
<TABLE>
<CAPTION>
Name of Series E Investor Number of Shares of Series E Purchase Price for Shares of
Preferred Stock to be Purchased Series E Preferred Stock
------------------------- ------------------------------- ------------------------
<S> <C> <C>
Sierra Ventures VI L.P. 1,807,883 7,340,004.41
SV Associates VI, L.P., as nominee for its General
Partner UA dated January 14, 1997 147,783 599,998.93
G & H Partners 12,315 49,998.90
Robert Simon 2,463 9,999.78
The Goldman Sachs Group, L.P. 615,764 2,500,001.65
Stone Street Fund 1998, L.P. 94,602 384,084.09
Bridge Street Fund 1998, L.P. 28,550 115,912.99
Brinson Venture Capital Fund III, L.P. 95,295 $ 386,897.67
Brinson Trust Company as Trustee for the Brinson
MAP Venture Capital Fund III Trust 15,542 $ 63,100.52
Sigma Partners III, L.P. 231,814 $ 941,164.77
Sigma Associates III, L.P. 57,369 $ 232,918.12
Sigma Investors III, L.P. 6,384 $ 25,919.04
John R. Mandile 9,855 $ 40,011.30
InnoCal, L.P. 110,837 $ 449,998.19
Canaan Equity, L.P. 603,448 $2,449,998.69
Newtek Ventures II, L.P. 73,892 $ 300,001.50
Anthony P. Morris 6,431 $ 26,109.86
Deepak Kamra 2,463 $ 9,999.78
Comdisco, Inc. 18,197 $ 73,879.81
TOTALS: 3,940,887 $ 16,000,000
</TABLE>
28
<PAGE> 29
EXHIBIT A
Confidentiality Agreement
29
<PAGE> 1
Exhibit 4.2 - Opis Investors' Rights Agreement
OPIS INVESTOR RIGHTS AGREEMENT
THIS OPIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into
as of the 30th day of December, 1997, by and among SALESLOGIX CORPORATION, a
Delaware corporation (the "Parent"), and the individuals whose names, signatures
and addresses appear on the signature page of this Agreement (collectively, the
"OPIS Investors").
RECITALS
A. Parent, OPIS CORPORATION, an Iowa corporation ("OPIS"), and SLX
ACQUISITION CORPORATION, an Arizona corporation ("Newco") have simultaneously
herewith consummated the transactions contemplated by that certain Plan of
Reorganization and Agreement of Merger dated as of December 23, 1997 (the
"Merger Agreement"), pursuant to which OPIS will merge with and into Newco in a
tax-free reorganization pursuant to Section 368(a)(2)(A) of the Internal Revenue
Code of 1986, as amended. Capitalized terms used herein that are not otherwise
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
B. Immediately prior to the effective date of the Merger Agreement, the
OPIS Investors own, in the aggregate, one hundred percent (100%) of the issued
and outstanding shares of capital stock of OPIS and one hundred percent (100%)
of the issued and outstanding options and other rights of any kind
(collectively, the "OPIS Options") to purchase shares of capital stock of OPIS.
C. In exchange for one hundred percent (100%) of the issued and
outstanding shares of capital stock of OPIS and one hundred percent (100%) of
the OPIS Options, the OPIS Investors will receive in the aggregate: (i)
1,196,256 shares of fully paid and nonassessable Series D Convertible Preferred
Stock, $.001 par value (the "Series D Preferred Stock"), newly issued by Parent
(the "Minimum Merger Shares"), plus that portion of the Additional Merger
Consideration (as that term is defined in Section 2.1(c) of the Merger
Agreement), if any, to which the Shareholders shall be entitled (the "Additional
Merger Shares, and together with the Minimum Merger Shares, the "Total Merger
Shares"), and (ii) the right to purchase 94,284 shares of Series D Preferred
Stock (the "Minimum Option Shares") plus that portion of the Additional Merger
Consideration, if any, to which the Option Holders shall be entitled, under the
terms and conditions set forth in the OPIS Options and herein (the "Additional
Option Shares, and together with the Minimum Option Shares, the "Total Option
Shares"). The Minimum Merger Shares, the Minimum Option Shares and the
Additional Merger Consideration shall be referred to collectively as the
"Shares".
D. Pursuant to the Merger Agreement, certain of the Shares shall be
deposited into escrow (the "Escrowed Shares") pursuant to a certain Escrow
Agreement ("Escrow Agreement") entered into as of the date hereof between the
parties hereto. All Shares deposited into Escrow
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<PAGE> 2
pursuant to the Escrow Agreement shall be subject to the restrictions on
transferability described herein.
E. Parent has previously granted certain registration rights to the
holders the Series A and C Preferred Stock of Parent pursuant to that certain
Investors' Rights Agreement dated as of January 17, 1996, as amended as of
October 14, 1996 and March 24, 1997.
F. Parent and the OPIS Investors desire that OPIS Investors receive the
registration rights set forth in this Agreement and that the Shares be subject
to certain restrictions as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
Restrictions on Transferability
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, or
any similar or successor federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Act.
"Holder" shall mean any person holding Registrable Securities,
including without limitation, the OPIS Investors.
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses incurred by
Parent in complying with Section 1.6 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for Parent, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of Parent
which shall be paid in any event by Parent).
"Registrable Securities" means (a) any Common Stock of Parent
issued or issuable upon conversion of the Shares; (b) any Common Stock issued or
issuable in respect of
2
<PAGE> 3
other securities issued or issuable with respect to the Shares upon any stock
split, stock dividend, recapitalization, or similar event, or any Common Stock
otherwise issued or issuable with respect to the Shares; and (c) any Common
Stock of Parent with respect to which Parent has granted registration rights to
others; provided, however, that shares of Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(x) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (y) sold in a transaction
exempt from the registration and prospectus delivery requirements of the Act
under Section 4(l) thereof so that all transfer restrictions and restrictive
legends with respect thereto are removed upon the consummation of such sale.
"Registrable Securities" may include the Escrowed Shares, provided that the
proceeds from the sale of such Escrowed Shares shall remain subject to the
Escrow until qualified for release thereunder.
"Restricted Securities" shall mean the securities of Parent
required to bear the legend set forth in Section 1.4 hereof.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.2 Right of First Refusal. In the event any Shares or any interest
therein, are to be transferred in a bona fide arm's length transaction by an
OPIS Investor, voluntarily or involuntarily other than by will or the laws of
descent (including, without limitation, any sale, encumbrance, foreclosure or
transfer in lieu thereof, or by operation of law, any division of marital
property on account of divorce or legal separation being deemed a "transfer" for
purposes hereof), such OPIS Investor shall provide to Parent promptly written
notice describing in reasonable detail the disposition or transfer, including
without limitation the sale price, if any, and date of transfer or disposition,
and, whether or not such OPIS Investor provides such notice, Parent (or its
nominee) shall have a right of first refusal as follows:
(a) such OPIS Investor (or the holder of such Shares if not an
OPIS Investor) shall give Parent advance written notice detailing all the terms
of the proposed transfer. Parent (or its nominees) shall have the right (but not
the obligation), exercisable upon delivery to the transferring shareholder of
written notice of acceptance within thirty (30) days following receipt of the
notice of proposed transfer described in the preceding sentence, to repurchase
all or any of such Shares on the terms and conditions set forth in such notice;
(i) provided that the per share purchase price shall
be the price, plus the Fair Market Value of any non-cash consideration, stated
in the notice;
(ii) provided further that the purchase price shall
be payable, at the election of Parent (or its nominees), either on the terms set
forth in the transferor's notice or in installments with interest as set forth
in Section 1.2(e). Parent may, at its election, prepay amounts due under this
Section, without premium or penalty; and
(iii) provided further that if the Board in its good
faith determination believes that the purchase price or terms set forth in the
transferor's notice, or both, are not the
3
<PAGE> 4
result of a bona fide arm's length transaction, then such matter shall be
subject to the dispute resolution procedures set forth in Section 13.5 of the
Merger Agreement.
(b) The date for consummating such purchase shall be the
sixtieth (60th) day following delivery of Parent's (or its nominees') notice of
exercise. Failure by Parent (or its nominees) (without default by the
transferring shareholder) to close such purchase within the above 60-day period
shall give the transferring shareholder the right to transfer such Shares or
interest therein on the terms and to the person described in the notice, in
compliance with the requirements of Section 1.3 of this Agreement, during the 60
days following expiration of the original 60-day period; provided that the
Shares or interest therein to be transferred shall for all purposes remain
subject to this Agreement. If the transferring shareholder fails to close the
proposed transfer on those terms within such second 60-day period, the proposed
transfer shall again be subject to the terms of this Section 1.2.
Notwithstanding the foregoing, such Shares may be transferred or retransferred
without invoking this right of first refusal between such OPIS Investor and
trusts of which such OPIS Investor and/or such OPIS Investor's spouse and/or
children are the sole beneficiaries by giving prior written notice certifying
such a transfer is to be made; provided that following any such transfer, such
Shares shall remain subject to this right of first refusal and all the other
provisions of this Agreement.
(c) For so long as Parent's right of first refusal set forth
in Section 1.2 remains effective, neither any OPIS Investor, nor his/her/its
personal representative(s), devisee(s), heir(s), successor(s), or assignee(s)
shall sell, assign or otherwise transfer any Shares or interest therein without
obtaining the written agreement of the purchaser, assignee or transferee that
the Shares remain subject to this repurchase right, and each OPIS Investor
agrees that certificates evidencing the Shares may be legended to reflect the
foregoing restrictions. Section 1.2 shall terminate and be of no further force
or effect automatically upon the closing of an initial public stock offering of
Parent's common stock under the Act the result of which is that Parent's common
stock is traded, or quoted, as applicable, on a national securities exchange,
over the counter on NASDAQ, or through the NASD's National Market System (an
"IPO").
(d) The term "Fair Market Value" shall be the fair market
value of a share of Stock or the fair market value of any other asset, as
determined by the Board of Directors of Parent, acting in good faith, which
determination shall be subject to the dispute resolution procedures set forth in
Section 13.5 of the Merger Agreement.
(e) Payment on exercise by Parent pursuant to this Section 1.3
may be made by an initial payment on the Consummation Date (defined below) equal
to 20% of the purchase price, and the balance shall be made in four (4) equal
annual installments of principal and accrued interest commencing on the first
anniversary of the Consummation Date, and on the next four (4) anniversaries of
the Commencement Date. Interest shall commence to accrue from the Consummation
Date at the prime rate of interest in effect on the Consummation Date as
announced in the Wall Street Journal (or a reasonable substitute publication
selected by the Board), and it shall be adjusted annually thereafter to the
then-existing Wall Street Journal-announced prime rate (or a reasonable
substitute publication selected by the Board of
4
<PAGE> 5
Directors of Parent), which adjusted rate of interest shall remain in effect for
the entire year then beginning (interim changes in the prime rate during the
year being disregarded). The "Consummation Date" for purposes of this Paragraph
shall be the sixtieth (60th) day following delivery of Parent's notice of
exercise.
1.3 Other Restrictions. The Shares, as long as they are Restricted
Securities, shall not be sold, assigned, pledged, hypothecated or otherwise
transferred except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the Act.
Each OPIS Investor will cause any proposed purchaser, assignee, transferee or
pledgee of the Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
1.4 Restrictive Legend. Each certificate representing (a) the Shares
and (b) any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event,
shall (unless otherwise permitted by the provisions of Section 1.4 below) be
stamped or otherwise imprinted with a legend in substantially the following form
(in addition to any other legends required under applicable state securities
laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE
OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT."
"THE SHARES EVIDENCED HEREBY ARE CONVERTIBLE AT THE OPTION OF THE
HOLDER AT ANY TIME INTO SHARES OF COMMON STOCK OF THE COMPANY AND WILL
BE AUTOMATICALLY SO CONVERTED IN CERTAIN SITUATIONS, AT THE RATE OF ONE
SHARE OF COMMON STOCK FOR EACH SHARE OF SERIES D PREFERRED STOCK SO
SURRENDERED, SUBJECT TO ADJUSTMENT IN CERTAIN CIRCUMSTANCES. A FULL
STATEMENT OF RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS GRANTED
TO OR IMPOSED UPON THE RESPECTIVE CLASSES AND SERIES OF SHARES OF THE
COMPANY AND UPON THE HOLDERS THEREOF ARE SET FORTH IN ARTICLE IV OF THE
CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED. THE
CERTIFICATE OF INCORPORATION MAY BE OBTAINED FROM THE SECRETARY OF THE
COMPANY UPON REQUEST AND WITHOUT CHARGE."
5
<PAGE> 6
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
ORIGINAL SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY."
Each OPIS Investor and Holder consent to Parent making a notation on its records
and giving instructions to any transfer agent of the Restricted Securities in
order to implement the restrictions on transfer established in this Section 1.
1.5 Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Act covering the proposed transfer and
in addition to Holder's notice obligations under Section 1.2 above, the Holder
thereof shall give written notice to Parent of such Holder's intention to effect
such transfer, sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied at such Holder's expense by either
(a) an unqualified written opinion of legal counsel who shall, and whose legal
opinion shall be, reasonably satisfactory to Parent, addressed to Parent, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration or qualification under the Act and applicable state "blue
sky" statutes, rules and regulations ("Blue Sky Laws"), or (b) a "no action"
letter from the Commission and applicable state "blue sky" regulators (the
"Regulators") to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
or the Regulators that action be taken with respect thereto, or (c) any other
evidence reasonably satisfactory to counsel to Parent, whereupon the Holder of
such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the Holder to
Parent. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the appropriate restrictive legends set forth in this Section 1, except that
such certificate shall not bear such restrictive legend if, in the opinion of
counsel for such Holder and Parent, such legend is not required in order to
establish compliance with any provisions of the Act.
1.6 Company Registration. If (but without any obligation to do so)
Parent proposes to register any of its stock or other securities under the Act
in connection with the public offering of such securities solely for cash (other
than (i) the initial public offering of the Company's securities; (ii) a
registration relating solely to the sale of securities to participants in a
Parent stock plan; (iii) a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities; or (iv)
a registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being registered);
including any registration made pursuant to Section 1.2(a) of that certain
Investors' Rights Agreement dated as of January 17, 1996 (as amended as of
October 14, 1996 and March
6
<PAGE> 7
24, 1997, the "Existing Investors' Rights Agreement."), Parent shall at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
such notice by Parent in accordance with Section 2.5, Parent shall, subject to
the provisions of Sections 1.8 and 1.10, cause to be registered under the Act
all of the Registrable Securities that each such Holder has requested to be
registered.
1.7 Obligations of Parent. Whenever required under Section 1.6 to
effect the registration of any Registrable Securities, Parent shall as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for a period of up to one hundred twenty
(120) days or until the distribution contemplated in the Registration Statement
has been completed; provided, however, that such 120 day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of Parent; and provided
further that Parent reserves the right, in its discretion to terminate or delay
the registration efforts described in Section 1.6 at any time.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that Parent shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless Parent is already
subject to service in such jurisdiction and except as may be required by the
Act.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act
7
<PAGE> 8
of the happening of any event as a result of which the prospectus included 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 the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by Parent are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 1.6, on the date that
such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing Parent for the purposes of such registration, in form and substance
as is customarily given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of Parent, in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities.
1.8 Furnish Information. It shall be a condition precedent to the
obligations of Parent to take any action pursuant to Section 1.6 with respect to
the Registrable Securities of any selling Holder that such Holder shall furnish
to Parent such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
1.9 Expenses of Company Registration. Parent shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1.6 for each Holder, including (without limitation) all registration, filing,
and qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
1.10 Underwriting Requirements. In connection with any offering
involving an underwriting of Shares of Parent's capital stock, Parent shall not
be required under Section 1.6 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between Parent and the underwriters selected by it (or by other persons entitled
to select the underwriters), and then only in such quantity as the underwriters
8
<PAGE> 9
determine in their sole discretion will not, jeopardize the success of the
offering by Parent. If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering exceeds
the amount of securities sold other than by Parent that the underwriters
determine in their sole discretion is compatible with the success of the
offering, then Parent shall be required to include in the offering only that
number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities requested to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders, but in no event
shall the amount of securities of the selling Holders included in the offering
be reduced below thirty percent (30%) of the total amount of securities included
in such offering, unless such offering is the initial public offering of
Parent's securities in which case the selling stockholders may be excluded if
the underwriters make the determination described above and no other
stockholder's securities are included. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of Shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
1.11 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.12 Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 1.6:
(a) To the extent permitted by law, Parent will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (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, or (iii) any violation or alleged
violation by Parent of the Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and Parent will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other
9
<PAGE> 10
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.12(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of Parent (which
consent shall not be unreasonably withheld), nor shall Parent be liable in any
such case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or controlling
person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless Parent, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who controls
Parent within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.12(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.12(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 1.12(b) exceed the gross proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.12 of notice of the commencement of any action (including any
governmental action), such indemnified party will if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.12, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party
10
<PAGE> 11
under this Section 1.12, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.12
(d) If the indemnification provided for in this Section 1.12
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of Parent and Holders under this Section
1.12 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.13 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of Parent to the public without registration, Parent
agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by Parent for
the offering of its securities to the general public,
(b) file with the SEC in a timely manner all reports and other
documents required of Parent under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by Parent
that it has complied with the reporting requirements of SEC Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by Parent), the Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), (ii) a copy of the most recent
annual or quarterly
11
<PAGE> 12
report of Parent and such other reports and documents so filed by Parent, and
(iii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC which permits the selling of any
such securities without registration or pursuant to such form.
1.14 Assignment of Registration Rights. The rights to cause Parent to
register Registrable Securities pursuant to Section 1.6 may not be assigned by a
Holder, without the prior written consent of Parent, which may be granted or
withheld in its discretion.
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
during the period of duration specified by Parent and an underwriter of Common
Stock or other securities of Parent, following the effective date of a
registration statement of Parent filed under the Act, it shall not, to the
extent requested by Parent and such underwriter, directly or indirectly sell,
offer to sell contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of Parent held by it at
any time during such period except common stock included in such registration;
provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of Parent which covers common stock (or other securities)
to be sold on its behalf to the public in an underwritten offering;
(b) all officers and directors of Parent and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements; and
(c) such market stand-off time period shall not exceed 180
days.
In order to enforce the foregoing covenant, Parent may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the Shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in
this Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction.
1.16 Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right provided
for in this Section 1 after six (6) years following the consummation of the sale
of securities pursuant to a registration statement filed by Parent under the Act
in connection with the initial firm commitment underwritten offering of its
securities to the general public.
12
<PAGE> 13
(b) In addition, the right of any Holder to request inclusion
in any registration pursuant to Section 1.6 shall terminate on the second
anniversary of the closing of the first Parent-initiated registered public
offering of Common Stock of Parent if all Shares of Registrable Securities held
or entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90 day period, or on such date after the second
anniversary of the closing of the first Parent-initiated registered public
offering of Common Stock of Parent as all Shares of Registrable Securities held
or entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90 day period; provided, however, that the provisions
of this Section 1.16(b) shall not apply to any Holder who owns more than two
percent (2%) of Parent's outstanding stock until such time as such Holder owns
less than two percent (2%) of the outstanding stock of Parent.
1.17 Acknowledgment of Previous Grants of Registration Rights. OPIS
Investors acknowledge that Parent has previously granted registration rights
relating to Common Stock of Parent, and that OPIS Investors' rights are subject
to the rights of other rights holders.
SECTION 2
Miscellaneous
2.1 Assignment. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties hereto.
2.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein. "Holders" who are not parties to this Agreement, or successors or
assigns of such parties, are not third party beneficiaries of this Agreement and
may not enforce this Agreement without the prior written consent of Parent in
its discretion.
2.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Arizona as applied to agreements entered into and
performed in the State of Arizona solely by residents thereof.
2.4 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.
2.5 Notices. Any notice required or permitted by this Agreement shall
be in writing shall be sent by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address set forth below
such parties signature to this Agreement or at such other address for which such
party gives notice hereunder. Any party giving notice of a change in address
shall also concurrently deliver notice of such change to the Escrow Agent (as
that term
13
<PAGE> 14
is defined in the Merger Agreement). Such notice shall be effective when
received, but shall be deemed to have been received four (4) days after deposit
in the mail, postage prepaid.
2.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
2.7 Amendment and Waiver. Any provision of this Agreement may be
amended and any right waived with the written consent of Parent and the Holders
of at least two-thirds (2/3rds) of the Shares. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of the
Shares and Parent. In addition, Parent may waive performance of any obligation
owing to it, as to some or all of the Holders of the Shares, or agree to accept
alternatives to such performance, without obtaining the consent of any Holder of
Shares. In the event that an underwriting agreement is entered into between
Parent and any Holder, and such underwriting agreement contains terms differing
from this Agreement, as to any such Holder the terms of such underwriting
agreement shall govern.
2.9 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
2.10 Dispute Resolutions. The provisions of Section 13.5 of the Merger
Agreement are hereby incorporated into this Agreement.
[SIGNATURES APPEAR ON THE FOLLOWING SIGNATURE PAGES]
14
<PAGE> 15
[SIGNATURE PAGE TO THE OPIS INVESTOR RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have this Agreement as of the date
first above written.
SALESLOGIX CORPORATION
By: /s/ Patrick M. Sullivan
-----------------------------------------
Title: President
-----------------------------------------
8800 North Gainey Center Dr., Suite 200
Scottsdale, Arizona 85258
/s/Douglas J. Nicholas
--------------------------------------------------
DOUG NICHOLAS
26878 N. 73rd Street
Scottsdale, Arizona
[Address]
/s/ Susan Nicholas
--------------------------------------------------
SUSAN NICHOLAS
26878 N. 73rd Street
Scottsdale, Arizona
[Address]
/s/ Erich Lemke
--------------------------------------------------
ERICH LEMKE
574 Beachwood Drive
Cummmings, IA 50061
[Address]
IOWA SEED CAPITAL CORPORATION
By: /s/ illegible
---------------------------------------------
Title: President
200 East Grand Avenue, Suite 330
Des Moines, IA 50309
15
<PAGE> 16
[SIGNATURE PAGE TO THE OPIS INVESTOR RIGHTS AGREEMENT]
/s/ Saulene Richer
-------------------------------------------------
SAULENE RICHER
300 Walnut, Suite 215
Des Moines, IA 50309
[Address]
/s/ David C. Jackson
--------------------------------------------------
DAVID JACKSON
669 Polk Blvd
Des Moines, IA 50312
[Address]
/s/ Richard J. Allen
--------------------------------------------------
RICHARD ALLEN
917 South Kennedy Avenue, Box 15
Madrid, IA 50156
[Address]
/s/ Marge Bieler
--------------------------------------------------
MARGE BIELER
1445 Red Bud Way
Cumming, GA 30041
[Address]
/s/ Noel Nicholas
--------------------------------------------------
NOEL NICHOLAS
1448 48th Street
Des Moines, IA 50311
[Address]
/s/ Randy Pratti
--------------------------------------------------
RANDY PRATI
9601 Quail Run
Urbandale, IA 50322
[Address]
16
<PAGE> 17
[SIGNATURE PAGE TO THE OPIS INVESTOR RIGHTS AGREEMENT]
/s/ Norm Rice
--------------------------------------------------
NORM RICE
Rt 1 Box 59
Derby, IA
[Address]
/s/ Donna Zeephat
--------------------------------------------------
DONNA ZEEPHAT
1620 Danube Lane
Plano, TX 75075
[Address]
/s/ Paul Zimet
--------------------------------------------------
PAUL ZIEMET
1710 NW Pine
Ankeny, IA 50021
[Address]
/s/ Frank Russell
--------------------------------------------------
FRANK RUSSELL
13335 Lakeshore Drive
West Des Moines, IA 50325
[Address]
/s/ Craig Justice
--------------------------------------------------
CRAIG JUSTICE
1509 NE Trilein Drive
Ankeny, IA 50021
[Address]
17
<PAGE> 18
[SIGNATURE PAGE TO THE OPIS INVESTOR RIGHTS AGREEMENT]
DOMINION SECURITIES, INC.
By: /s/ Steven S. Michalicek
-----------------------------------------
Title: President
211 First Avenue S.E.
Cedar Rapids, IA 52401
/s/ Steven S. Michalicek
--------------------------------------------------
STEVEN S. MICHALICEK
211 First Avenue S.E.
Cedar Rapids, IA 52401
[Address]
/s/ William R. Barnes
--------------------------------------------------
WILLIAM R. BARNES
669 35th Street SE
Cedar Rapids, IA 52403
[Address]
/s/ Michael Vasquez
--------------------------------------------------
MICHAEL VASQUEZ
2909 Southern Hills Circle
Des Moines, IA 50321
[Address]
18
<PAGE> 1
Exhibit 4.3 - Warrant to Purchase Stock
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TOT HE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: SALESLOGIX CORPORATION, a Delaware corporation
Number of Shares: 10,000
Class of Stock: Series D Preferred Stock
Initial Exercise Price: $3.21 per share
Issue Date: December 2, 1997
Expiration Date: December 1, 2002
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering
a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising
the conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified
in Section 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of tone Share. The fair market value of the Shares shall be
determined pursuant to Section 1.4.
1.3 Intentionally Omitted
<PAGE> 2
1.4 Fair Market Value. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment
banking firm is greater than that determined by the Board of Directors, then all
fees and expenses of such investment banking firm shall be paid by the Company.
In all other circumstances, such fees and expenses shall be paid by Holder.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 Repurchase on Sale, Merger or Consolidation of the Company.
1.7.1. "Acquisition". For the purpose of this
Warrant, "Acquisition" means any sale, license or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2 Assumption of Warrant. Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant,
and his Warrant shall be exercisable for the same securities, cash and property
as would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding
2
<PAGE> 3
common stock into a grater amount of common stock, or, if the Shares are
securities other than common stock, subdivides the Shares in a transaction that
increases the amount of common stock into which the Shares are convertible, then
upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number and kind of securities to which Holder
would have been entitled had Holder owned the Shares of record as of the date
the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holders anew
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provision of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 No Impairments. The Company shall not, by amendment of its Articles
of Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.
2.5 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share
3
<PAGE> 4
interest by paying Holder amount computed by multiplying the fractional interest
by the fair market value of a full Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of
this Warrant is not greater than (i) the price per share at which the Shares
were last issued in an arms-length transaction in which at least $500,000 of the
Shares were sold and (ii) the fair market value of the Shares as of the date of
this Warrant.
(b) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions or transfer provided for herein or
under applicable federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
to declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
4
<PAGE> 5
3.3 Information Rights. So long as the Holder holds this Warrant and/or
any of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) such other financial statements required under and in accordance with any
loan documents between Holder and the Company (or if there are no such
requirements), then within forty-five (45) days after the end of each of the
first three quarters of each fiscal year, the Company's quarterly, unaudited
financial statements.
3.4 Registration Under Securities Act of 1933, as amended. The Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock shall be subject to the registration rights set
forth on Exhibit A, if attached.
ARTICLE 4. MISCELLANEOUS.
4.1 Term: Notice of Expiration. This Warrant is exercisable, in whole
or in part, at any time and from time to time on or before the Expiration Date
set forth above.
4.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder a notice of
proposed sale.
5
<PAGE> 6
4.4 Transfer Procedure. Subject to the provisions of Section 4.3 Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) at any time to Silicon Valley Bank shares or
the Silicon Valley Bank Foundation, or, to any other transferee by giving the
Company notice of the portion of the Warrant being transferred setting forth the
name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable). Unless the Company is filing financial information
with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall
have the right to refuse to transfer any portion of this Warrant to any person
who directly competes with the Company.
4.5 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished tot he Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 Attorney's Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
"COMPANY"
SALESLOGIX CORPORATION
By:___________________________
Name: ________________________
Print
Title: Chairman of the Board,
President or Vice President
6
<PAGE> 7
By: /s/ Gary R. Acord
Name: Gary R. Acord
Print
Title: Chief Financial Officer,
Secretary, Treasurer
7
<PAGE> 8
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _____ shares of the
Common/Preferred Series ______ [Strike one] Stock of SALESLOGIX CORPORATION
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one in the manner specified in the Warrant. This conversion
is exercised with respect to __________________ of the Shares covered by the
Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
______________________________________
(Name)
______________________________________
______________________________________
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
________________________________
(Signature)
_________________________
(Date)
<PAGE> 9
EXHIBIT A
Registration Rights
The Shares (if common stock), or the common stock issuable upon
conversion of the Shares, shall be deemed "registrable securities" or otherwise
entitled to "piggy back" registration rights in accordance with the terms of the
following agreement (the "Agreement") between the Company and its investor(s):
OPIS INVESTOR RIGHTS AGREEMENT DATED ON OR ABOUT THE DATE OF THIS WARRANT, AMONG
COMPANY AND CERTAIN OPIS INVESTORS (AS THAT TERM IS DEFINED THEREIN).
The Company agrees that no amendments will be made to the Agreement
which would have an adverse impact on Holder's registration rights thereunder
without the consent of Holder. By acceptance of the Warrant to which this
Exhibit A is attached, Holder shall be deemed to be a party to the Agreement,
unless Holder otherwise elects not to become or to cease being a party thereto.
If no Agreement exists, then the Company and the Holder shall enter
into Holder's standard form of Registration Rights Agreement as in effect on the
Issue Date of the Warrant.
<PAGE> 1
EXHIBIT 10.1
OFFICE LEASE AGREEMENT
GAINEY RANCH CORPORATE CENTER
OFFICE LEASE
<PAGE> 2
INDEX
GAINEY RANCH CORPORATE CENTER
OFFICE LEASE
Page
1. SUMMARY OF SELECTED MATTERS........................................1
2. DEFINITIONS........................................................2
3. TERM AND MEMORANDUM OF COMMENCEMENT................................2
4. RENT...............................................................2
5. OPERATING COSTS....................................................3
6. SECURITY DEPOSIT...................................................3
7. USE OF PREMISES....................................................3
8. BUILDING SERVICES..................................................4
9. TAXES..............................................................5
10. CONSTRUCTION, TENANT MAINTENANCE AND ALTERATIONS...................5
11. FIRE AND CASUALTY..................................................7
12. TENANT'S INSURANCE AND INDEMNITY...................................8
13. LANDLORD'S INSURANCE..............................................10
14. ASSIGNMENT AND SUBLETTING.........................................10
15. SUBORDINATION AND ATTORNMENT......................................11
16. ESTOPPEL CERTIFICATES.............................................12
17. CONDEMNATION......................................................13
18. SIGNS.............................................................13
19. BREACH, DEFAULT AND REMEDIES......................................14
20. NOTICES...........................................................15
21. SURRENDER AND HOLDOVER............................................16
22. RELOCATION........................................................16
23. GENERAL...........................................................16
24. PARKING...........................................................18
25. EXTENSION TERM....................................................18
26. EXPANSION.........................................................19
27. PRIOR LEASE TERMINATION...........................................19
Exhibit A - ......The Premises
Exhibit B - ......The Building
Exhibit C - ......Definition of Building Shell
Exhibit D - ......Gainey Ranch Corporation Center - Rules and Regulations
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<PAGE> 3
OFFICE LEASE
NATIONWIDE REALTY INVESTORS, LTD., an Ohio limited liability company which is
qualified to do business in Arizona as Nationwide Realty Investors, L.L.C.
("Landlord") hereby leases the Premises described below, for the term and on the
terms and conditions set forth in this Lease, to SALESLOGIX CORPORATION, a
Delaware corporation ("Tenant"), effective as of June 17, 1998.
ARTICLE 1
SUMMARY OF SELECTED MATTERS
1.01 The Premises: Suite 200 on the 2nd floor of the Building consisting of
41,214 rentable square feet of space as of the Commencement Date.
1.02 The term: 6 years, 0 months, beginning on the Commencement Date and ending
on the Expiration Date.
1.03 Commencement and Expiration Dates: August 1, 1998 and July 31, 2004.
However, Tenant will be allowed to occupy the area consisting of approximately
20,017 rentable square feet, formerly occupied by Unison Healthcare, on July 15,
1998 under all terms and conditions of this Lease except the payment of rent
which will begin August 1, 1998.
1.04 Tenant's Proportionate Share of Operating Costs: Beginning August 1, 2000,
$0.25 per rentable square foot per year (See Article 5).
1.05 [Intentionally deleted].
1.06 Base Rent: $79,852.12 per month beginning on the Commencement Date.
However, beginning August 1998 and continuing through December 1998, Tenant
will receive a monthly rent credit in the amount of Twenty-one Thousand Three
Hundred Twenty-eight Dollars ($21,328.00) representing rent abatement for 11,008
rentable square feet at Twenty-three Dollars and Twenty-five Cents ($23.25) per
square foot per year.
1.07 Tenant's Address for Pre-occupancy Notices:
8800 North Gainey Center Drive, Suite 200
Scottsdale, Arizona 85258
1.08 Tenant Improvement Allowance: $110,085.00
1.09 Date for Tenant's Submission of Space Plan: [Intentionally Deleted]
1.10 Security Deposit: $19,495.67
1.11 Description of Tenant's Business: Software development and distribution
company corporate offices.
1.12 [Intentionally deleted].
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ARTICLE 2
DEFINITIONS
2.01 "Building" means Phase III East of the Gainey Ranch Corporate Center,
consisting of the building located at 8800 North Gainey Center Drive,
Scottsdale, Arizona 85258, as depicted on Exhibit B hereto.
2.02 "Common Areas" means all portions of the Project made available by Landlord
for use in common by all tenants and their employees and invitees; provided,
however, that the use of parking facilities shall be subject to reservation and
the payment of fees or charges as established by Landlord from time to time; and
provided further that all of the Common Areas at all times remain subject to
Landlord's exclusive control and to Landlord's Rules and Regulations.
2.03 "Gainey Ranch Corporate Center" means the three-phase development located
at Gainey Center Drive and Doubletree Ranch Road in Scottsdale, Arizona,
including the buildings and all land and facilities used in connection therewith
as determined by Landlord from time to time.
2.04 "Lease years" means successive twelve month periods beginning on the first
day of the first full calendar month coinciding with or following the
commencement of the Lease Term.
2.05 "Project" means the Building and all lands and facilities used in
connection therewith as determined by Landlord from time to time. A site plan
for the Project in its current configuration is attached as Exhibit B.
ARTICLE 3
TERM AND MEMORANDUM OF COMMENCEMENT
3.01 The Term of this Lease and the Commencement and Expiration Dates are set
forth in Sections 1.02 and 1.03. Landlord shall not be liable for any direct or
consequential damages resulting from delayed delivery of the Premises, but the
Commencement Date and the Expiration Date shall be postponed by an amount equal
to the period of delay. At the request of either party at any time following
initial occupancy of the Premises by Tenant, Landlord and Tenant shall execute a
written memorandum reflecting the date of initial occupancy and confirming the
Commencement and Expiration Dates.
ARTICLE 4
RENT
4.01 Tenant shall pay to Landlord, in advance, on the first day of each calendar
month, without notice, demand, deduction or offset, beginning on the
Commencement Date and continuing throughout the Term, Base Rent in the amount
set forth in Section 1.06.
4.02 Tenant shall pay to Landlord a late charge equal to 5% of any amount not
paid within five days after it falls due to compensate Landlord for costs and
inconveniences of special handling and disruption of cash flow. The assessment
or collection of a late charge shall not constitute the waiver of a default and
shall not bar the exercise of other remedies for nonpayment.
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<PAGE> 5
4.03 Tenant shall pay to Landlord, in addition to the Base Rent and all other
sums payable by Tenant hereunder, all sales, use, transaction privilege or other
excise tax levied or imposed upon, or measured by, any amount payable by Tenant
under this Lease.
4.04 All amounts payable to Landlord under this Lease, except the Security
Deposit and except for any amounts payable by Tenant with respect to
construction of tenant improvements in the Premises, constitute rent and shall
be payable to such person and at such place as Landlord may from time to time
designate by written notice to Tenant.
4.05 Base Rent payable with respect to a period consisting of less than a fall
calendar month shall be prorated based on the actual number of days in such
month.
ARTICLE 5
OPERATING COSTS
5.01 Commencing August 1, 2000, Tenant shall pay to Landlord Tenant's
Proportionate Share of Operating Costs. For each month during the term hereof
(commencing August 2000), Tenant's Proportionate Share shall equal one-twelfth
(1/12) of the product of $ .25 (such sum to increase by an additional $.25 on
each anniversary of August 1, 2000 during the Term) multiplied by the rentable
area of the Premises during each month. Such sum shall be payable in advance in
equal monthly installments.
5.02 "Operating Costs" consist of all costs of operating, maintaining, repairing
and replacing any portion of the Project.
ARTICLE 6
SECURITY DEPOSIT
6.01 By its execution of this Lease, Landlord acknowledges receipt of a security
deposit in the amount set forth in Section 1. 10 to secure Tenant's performance
of this Lease. The security deposit shall not bear interest, may be commingled
with Landlord's other funds, and shall be returned, less any unpaid claims
against Tenant, within sixty (60) days following the expiration of this Lease
and the surrender of possession of the Premises, to Tenant or the last assignee
of Tenant's interest.
ARTICLE 7
USE OF PREMISES
7.01 Tenant shall use the Premises for the purposes set forth in Section 1.11
and for no other purpose. Tenant shall not use the Premises for any purpose in
violation of exclusive rights granted by Landlord from time to time to any other
tenant or occupant of any portion of the Gainey Ranch Corporate Center;
provided, however that Landlord shall not grant any exclusive right that would
prevent Tenant from conducting its business as described in Section 1.11.
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<PAGE> 6
7.02 Tenant shall comply and shall cause its employees to comply with all laws,
ordinances, orders, and restrictions imposed by any federal, state or local
government or governmental body having jurisdiction, with the Rules and
Regulations attached to this Lease as Exhibit D, and with such other or amended
rules and regulations as Landlord may from time to time reasonably establish by
notice to Tenant.
7.03 Tenant shall not perform any act in the Building which would increase any
insurance premiums related to the Building or would cause the cancellation of
any insurance policies related to the Building.
7.04 If solely due to Tenant's use of the Premises, improvements to the Project
are necessary to comply with any requirements imposed by law or with the
requirements of insurance carriers, Tenant shall pay the entire cost of the
improvements.
7.05 Tenant shall not abandon or vacate the Premises at any time during the
Term.
7.06 Tenant shall not cause or maintain any nuisance in or about the Premises
and shall keep the Premises free of debris, rodents, vermin and anything of a
dangerous, noxious or offensive nature or which would create a fire hazard
(through undue load on electrical circuits or otherwise) or undue vibration,
noise or heat. Tenant shall not process, release, discharge, use or store any
hazardous materials at or from the Premises and will indemnify and hold harmless
Landlord from and against any loss, liability, damages, actions or expenses
resulting from any breach of this obligation by Tenant or its agents, employees
or contractors. Tenant shall not cause the safe floor loading capacity to be
exceeded.
7.07 Tenant shall not disturb or interfere with the quiet enjoyment of the
premises of any other tenant.
ARTICLE 8
BUILDING SERVICES
8.01 Landlord shall supply to the Premises:
(a) Janitorial service five nights a week consisting of vacuuming carpets as
necessary, emptying wastepaper baskets, dusting and cleaning of restrooms.
(b) Heating, ventilation and air conditioning, between 7:00 a.m. and 6:00 p.m.
Monday through Friday, and between 8:00 a.m. to noon on Saturday, sufficient for
the comfortable use and enjoyment of the Premises.
(c) Periodic window washing.
(d) Electrical power for normal lighting and the operation of small business
office equipment.
8.02 Landlord shall maintain the Building and all Common Areas in good condition
and repair in accordance with standards then prevailing for first class office
buildings of like age and character. Landlord shall keep all building equipment
such as elevators, plumbing, heating, air
4
<PAGE> 7
conditioning and similar equipment in good repair but Landlord shall not be
liable or responsible for breakdowns or temporary interruptions in service where
reasonable efforts are used to restore service, nor for interference with
Tenant's business or Tenant's access to the Premises during the course of
repairs or remedial work.
8.03 By activation of the demand switch provided for that purpose, Tenant may
cause heating, air conditioning and ventilation to be provided to the Premises
outside of the business hours set forth in Section 8.01(b). Tenant shall pay for
the additional services at such hourly rates as Landlord may establish from time
to time, but in no event greater than the rate at which Landlord is charged by
the respective utility company. Landlord shall establish the rate to reflect
Landlord's good faith estimate of the cost of -providing the additional
services, excluding profit but including costs of electrical power and wear and
tear on equipment. Charges for additional services shall be paid upon receipt of
an invoice, which normally will be sent on a monthly basis.
8.04 Tenant shall not employ equipment which consumes more electrical power than
is normal for small business office equipment or which generates heat in a
quantity sufficient to materially affect the demand on air conditioning. Consent
for any such equipment may be requested in connection with the approval of the
plans and specifications for the initial tenant improvements. Landlord shall be
entitled to require, as a condition to its consent, that: (i) electrical power
supplied to the Premises or to the items of equipment involved be separately
metered, in which case Tenant shall upon receipt of monthly invoices reimburse
Landlord for the cost of the electrical power as measured by the meter or (ii)
supplemental cooling equipment be purchased, installed and operated at Tenant's
expense, or (iii) both of the foregoing.
8.05 Landlord shall at all times have access to the Premises for purposes of
inspection and performing Landlord's obligations and exercising its rights under
this Lease.
ARTICLE 9
TAXES
9.01 Landlord shall pay before delinquent all general and special real property
taxes assessed or levied on the Project, subject to reimbursement under Article
5.
9.02 Tenant shall pay before delinquent all taxes levied or assessed upon,
measured by, or arising from: (a) the conduct of Tenant's business; (b) Tenant's
leasehold estate; or (c) Tenant's property.
ARTICLE 10
CONSTRUCTION, TENANT MAINTENANCE AND ALTERATIONS
10.01 Tenant shall cause to be delivered to Landlord reasonably detailed space
plans pertaining to the Premises, prepared by an architect, showing the nature
and location of the improvements to be constructed in such portion of the
Premises. Tenant also shall deliver with the space plan any specifications or
other information relating to special requirements. Tenant's space plan shall
take into account the loading capacity of the Building. Tenant shall cause its
architect, if any, to meet with Landlord's architect to develop any information
needed for space planning purposes.
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<PAGE> 8
10.02 The space plan, specifications and special requirements shall be subject
to Landlord's approval and shall be modified to satisfy any reasonable
objections raised by Landlord.
10.03 Based upon the final space plan, specifications and special requirements,
Landlord shall cause working drawings to be prepared for all improvements to be
constructed in the Premises. The working drawings shall be subject to Tenant's
reasonable approval and shall be modified to satisfy any reasonable objection of
Tenant.
10.04 During the entire course of the process described above, both Landlord and
Tenant shall review and respond to submissions by the other party with
reasonable dispatch. From time to time at the request of either party Landlord
and Tenant shall devise, and revise as necessary, working schedules for the
preparation of the plans and the construction of the improvements.
10.05 Landlord shall cause the improvements as set forth in the final working
drawings to be constructed.
10.06 All costs of construction of the tenant improvements in excess of the
Tenant Improvement Allowance as set forth in Section 1.08, as estimated by
Landlord, shall be paid by Tenant to Landlord upon commencement of construction.
Any difference between actual and estimated costs shall be paid or refunded, as
the case may be, upon completion of construction and punchlist items. Costs of
construction of the tenant improvements shall not include costs of constructing
the Building Shell as defined in Exhibit C, but shall include architects' fees
incurred by Landlord for preparation of drawings except that Tenant shall bear
the cost of changes requested by Tenant after final working drawings were
completed and approved.
10.07 Within ten (10) days after tenant improvement completion, Tenant shall
deliver to Landlord a written punchlist specifying all defects in materials or
workmanship in the tenant improvements. Any defects not specified in the
punchlist, except latent defects not readily discoverable by inspection, are
waived. Landlord shall promptly cause all matters appearing on the punchlist to
be corrected.
10.08 Except to the extent that Landlord is specifically responsible therefor
under this Lease, Tenant shall make in compliance with Section 10.09 any and all
necessary repairs, replacements or alterations to the Premises, including
without limitation any alternations which are necessary to comply with the
requirements of any governmental authority having jurisdiction.
10.09 Tenant may from time to time at its own expense make changes, additions
and improvements in the Premises, provided that any such change, addition or
improvement shall:
(a) comply with the requirements of any government or quasi-governmental
authority having jurisdiction and with the requirements of Landlord's insurance
carriers;
(b) be made only with the prior written consent of Landlord (which may be
withheld in Landlord's sole discretion, to the extent it relates in Landlord's
opinion to the structure or electrical, HVAC, plumbing and sprinkler systems of
the Building, but which otherwise shall not be unreasonably withheld);
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<PAGE> 9
(c) conform to complete working drawings submitted to and approved by Landlord
in conjunction with Landlord's consent;
(d) equal or exceed the then current standard for the Building; and
(e) be carried out only by persons selected by Tenant and approved in writing by
Landlord, who shall deliver to Landlord before commencement of the work
performance and payment bonds as well as proof of worker's compensation and
public liability and property damage insurance coverage, with Landlord named as
an additional insured, in amounts, with companies, and in form reasonably
satisfactory to Landlord, which shall remain in effect during the entire period
in which the work will be carried out.
10.10 Tenant may install m the Premises its usual trade fixtures and personal
property in a proper manner provided that no installation shall interfere with
or damage the mechanical or electrical systems or the structure of the Building.
Landlord may require that any work that may affect structural elements or
mechanical, electrical, heating, air conditioning, plumbing or other systems be
performed by Landlord at Tenant's cost or by a contractor designated by
Landlord.
10.11 Tenant shall pay before delinquency all costs for work done or caused to
be done by Tenant in the Premises which could result in any lien or encumbrance
on Landlord's interest in the Project or any part thereof, shall keep the title
to the Project and every part thereof free and clear of any lien or encumbrance
in respect of such work, and shall indemnify and hold harmless Landlord against
any claim, loss, cost, demand and legal or other expense, whether in respect of
any lien or otherwise, arising out of the supply of material, services or labor
for such work. Tenant shall immediately notify Landlord of any such lien, claim
of lien or other action of which it has or reasonably should have knowledge and
which affects the title to the Project or any part thereof, and shall cause the
same to be removed by bonding or otherwise within five (5) days after Tenant has
knowledge thereof, failing which Landlord may take such action as Landlord deems
necessary to remove same and the entire cost thereof shall be immediately due
and payable by Tenant to Landlord.
10.12 Any change, addition or improvement constructed by or for Tenant which is
permanently attached to or becomes an integral portion of the Premises shall,
unless expressly rejected by Landlord in writing, become the property of
Landlord at such time as Tenant has given Landlord as-built drawings therefor
and a statement of the construction costs thereof or at such earlier time as
such alteration is accepted by Landlord in writing.
ARTICLE 11
FIRE AND CASUALTY
11.01 If all or part of the Premises is rendered untenantable by damage from
fire or other casualty which in Landlord's opinion can be substantially repaired
(employing normal construction methods without overtime or other premium) under
applicable laws and governmental regulations within one hundred twenty (120)
days from the date on which Landlord commences construction thereof, Landlord
shall, but only if and to the extent that Landlord has received insurance
proceeds therefor, promptly commence and thereafter diligently continue to
repair such damage, other than damage to improvements, furniture, chattels or
trade
7
<PAGE> 10
fixtures which do not belong to Landlord, which shall be repaired forthwith by
Tenant at its own expense.
11.02 If all or part of the Premises is rendered untenantable by damage from
fire or other casualty which in Landlord's opinion cannot be substantially
repaired (employing normal construction methods without overtime or other
premium) under applicable laws and governmental regulations within one hundred
twenty (120) days from the date on which Landlord commences construction
thereof, then either Landlord or Tenant may elect to terminate this Lease as of
the date of such casualty by written notice delivered to the other not more than
ten (10) days after notice of such determination has been given by Landlord. If
neither party exercises its right to terminate, Landlord shall, but only to the
extent that insurance proceeds are available therefor repair such damage other
than damage to improvements, furniture, chattels or trade fixtures which do not
belong to the Landlord, which shall be repaired forthwith by Tenant at its own
expense.
11.03 If Landlord is required to repair damage to all or part of the Premises
under Section 11.01 or 11.02, the Base Rent payable by Tenant shall be
proportionately reduced to the extent that the Premises are thereby rendered
untenantable from the date of such casualty until five days after completion by
Landlord of the repairs to the Premises (or the part thereof rendered
untenantable) or until Tenant again uses the Premises (or the part thereof
rendered untenantable) in its business, whichever first occurs.
11.04 Notwithstanding anything to the contrary in Section 11.01, if all or a
substantial part (whether or not including the Premises) of the Building is
rendered untenantable by damage from fire or other casualty to such a material
extent that in the reasonable opinion of Landlord the Building must be totally
or partially demolished, whether or not to be reconstructed in whole or in part,
Landlord may elect to terminate this Lease as of the date of such casualty (or
on the date of notice if the Premises are unaffected by such casualty) by
written notice delivered to Tenant not more than sixty days after the date of
such casualty.
11.05 Except as specifically provided in this Article 11, there shall be no
reduction of rent and Landlord shall have no liability to Tenant by reason of
any injury to or interference with Tenant's business or property arising from
fire or other casualty, howsoever caused, or from the making of any repairs
resulting therefrom in or to any portion of the Building or the Premises.'
Tenant waives any statutory or other rights of termination by reason of fire or
other casualty, it being the intention of the parties to provide specifically in
this Article 11 for all circumstances under which rights of termination shall
exist.
ARTICLE 12
TENANT'S INSURANCE AND INDEMNITY
12.01 Tenant shall, at its expense, take out and keep in full force and effect
and in the names of Tenant, Landlord and any holders of encumbrances on the
Project (a "Mortgagee"), as their respective interests may appear, the following
insurance:
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<PAGE> 11
(a) Fire and standard extended coverage insurance including sprinkler leakage in
an amount equal to the full replacement cost of all property owned by Tenant, or
for which the Tenant is responsible;
(b) Business interruption insurance in such amount as will reimburse Tenant for
direct or indirect loss of earnings attributable to all perils insured against
in Section 12.01(a) and other perils commonly insured against by prudent tenants
or attributable to prevention of access to the Premises as a result of such
perils; and
(c) Public liability and property damage insurance, including personal injury
liability, contractual liability, employers' liability, non-owned automobile
liability and owners' and contractors' protective insurance coverage, coverage
to include the activities and operations of Tenant and any other person on the
Premises or performing work on behalf of Tenant. Such policies shall: (i) be
written on a comprehensive basis with inclusive limits of not less than
$5,000,000 for bodily injury to any one or more persons, or property damage, and
such higher limits as the Landlord, acting reasonably, requires from time to
time; and (ii) contain a severability of interests clause and a cross-liability
clause.
12.02 Tenant's insurance policies shall:
(a) contain a standard mortgage clause endorsement in favor of Landlord's
Mortgagee and a waiver of any subrogation rights which Tenant's insurers may
have against Landlord, Landlord's Mortgagee and any party for whom. the Landlord
is responsible;
(b) be taken out with insurers reasonably acceptable to Landlord and be in a
form satisfactory from time to time to Landlord;
(c) be non-contributing and apply only as primary and not as excess to, any
other insurance available to the Landlord;
(d) not be invalidated with respect to the interests of the Landlord and
Landlord's Mortgagee by reason of any breach or violation by Tenant of any
warranties, representations, declarations or conditions contained in the
policies;
(e) contain an undertaking by the insurers to notify the Landlord and Landlord's
Mortgagee, in writing not less than thirty (30) days prior to any material
change, cancellation or termination.
12.03 Tenant shall deliver to Landlord certificates of insurance or, if required
by Landlord, certified copies of each such insurance policy: (a) as soon as
practicable after the placing of the required insurance, and (b) periodically
thereafter before expiration, renewal or replacement of the policies then in
force. No review or approval of any such insurance certificate by Landlord shall
derogate or diminish Landlord's rights or Tenant's obligations. Tenant shall not
take possession of the Premises without having complied with the requirements
for this section.
12.04 Landlord shall defend, indemnify and hold Tenant harmless from and against
any and all loss, claims, actions, damages, liability and expense in connection
with loss of life, personal injury, damage to property or any other loss or
injury whatsoever arising directly or indirectly from Landlord's active
negligence or willful misconduct. Landlord shall not be required,
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however, to indemnify Tenant against any claim arising from any matter as which
Tenant agrees to indemnify Landlord hereunder. Tenant shall defend, indemnify
and hold Landlord harmless, regardless of any negligence of or imputed to
Landlord as owner of the real property involved in an injury, from and against
any and all loss, claims, actions, damages, liability and expense in connection
with loss of life, personal injury, damage to property or any other loss or
injury whatsoever arising directly or indirectly from or out of this Lease or
any occurrence in, upon or at the Premises or the occupancy or use thereof by
the Tenant or any act or omission of Tenant, its agents, servants, employees or
invitees. Tenant shall not be required, however, to indemnify Landlord against a
claim arising from Landlord's negligence (except as hereinabove expressly
provided) or willful misconduct.
ARTICLE 13
LANDLORD'S INSURANCE
13.01 The Landlord will at all times throughout the Term carry: (a) insurance on
the Building (excluding the foundations and excavations), including without
limitation all tenant improvements belonging to Landlord and all machinery,
equipment and Building systems (but excluding any property belonging to Tenant
or other tenants or which any of them is obliged to insure pursuant to Articles
11 and 12 or similar articles of their respective leases) against damage by fire
and extended perils coverage in such reasonable amounts and with such reasonable
deductions as would be carried by a prudent owner of a reasonably similar office
building, having regard to size, age and location; (b) public liability and
property damage insurance in such amounts and with such deductions as Landlord
deems necessary or appropriate in light of the size, age, location, manner of
construction and tenant mix of the Building and other risk factors; and (c) such
other insurance as Landlord reasonably considers advisable. No insurable
interest is conferred upon Tenant under any policies of insurance carried by
Landlord, and Tenant shall not be entitled to share or receive proceeds of any
insurance policy carried by Landlord.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.01 Tenant shall not assign its interest under this Lease or sublet all or any
part of the Premises without Landlord's prior written consent, which shall not
be unreasonably withheld. Tenant shall not at any time pledge, hypothecate,
mortgage or otherwise encumber its interest under this Lease as security for the
payment of a debt or the performance of a contract. Tenant shall not permit its
interest under this Lease to be transferred by operation of law.
14.02 Landlord shall be under no obligation to decide whether consent will be
given or withheld unless Tenant has first provided to Landlord: (a) the name and
legal composition of the proposed assignee or subtenant and the nature of its
business; (b) the use to which the proposed assignee or subtenant intends to put
the Premises; (c) the terms and conditions of the proposed assignment or
sublease and of any related transaction between Tenant and the proposed assignee
or subtenant; (d) information related to the experience, integrity and financial
resources of the proposed assignee or subtenant; (e) such information as
Landlord may request to supplement, explain or provide details of the matters
submitted by Tenant pursuant to subparagraphs (a)
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through (d); and (f) reimbursement for all costs incurred by Landlord, including
attorneys' fees, in connection with evaluating the request and preparing any
related documentation.
14.03 Tenant shall remain fully liable for performance of this Lease,
notwithstanding any assignment or sublease, for the entire Lease Term.
14.04 Landlord, at its option, may elect, no later than ten (10) days after
Tenant has provided all necessary information, to give notice of cancellation of
this Lease with respect to the space affected by a proposed assignment or
sublease, which notice shall be effective thirty (30) days after it was given. A
cancellation relating to the entire Premises shall relieve Tenant of all
obligation under this Lease except obligations accruing prior to the date
possession is surrendered to Landlord and obligations related to the condition
in which the Premises are to be surrendered. Upon a cancellation relating to a
portion of the Premises, Tenant's rental obligations shall be reduced, as of the
effective date of the cancellation, in the proportion that the Rentable area of
the Premises has been reduced.
14.05 Landlord also shall have the option, in the case of a proposed sublease,
to sublease the affected space from Tenant on the same terms and conditions as
are being offered by the proposed subtenant. This option shall be exercised, if
at all, no later than ten (10) days after Tenant has provided all of the
information required by Section 14.01.
14.06 If consent to an assignment or sublease is given, Tenant shall pay to
Landlord, as additional rent, one half of all amounts received from the assignee
or subtenant in excess of the amounts otherwise payable by Tenant to Landlord
with respect to the space involved, measured on a per square foot basis.
14.07 It shall not be unreasonable for Landlord to withhold consent: (i) if the
proposed assignee or subtenant is a tenant in another building in the Phoenix
Metropolitan Area owned by Landlord or by an affiliate of Landlord or of any of
Landlord's constituent partners or principals; (ii) if the Landlord has
available a contiguous block of comparably dimensioned space in the Gainey Ranch
Corporate Center and is willing to match the terms of the proposed assignment or
sublease for such alternate space; or (iii) if the use by the proposed assignee
or subtenant would contravene this Lease or any restrictive use covenant or
exclusive rights granted by Landlord or if the proposed assignee or subtenant
does not intend to occupy the Premises for its own use.
14.08 No consent shall constitute consent to any further assignment or
subletting.
14.09 Upon a sale or other transfer of the Building by Landlord, Landlord's
interest in this Lease shall automatically be transferred to the transferee, the
transferee shall automatically assume all of Landlord's obligations under this
Lease, and the transferor shall be released of all obligations under this Lease
arising after the transfer. Tenant shall upon request attorn in writing to the
transferee.
ARTICLE 15
SUBORDINATION AND ATTORNMENT
15.01 This Lease is and shall be subject and subordinate in all respects to all
existing and future mortgages, deeds of trust or other liens or security
interests (any or all of which shall be referred
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to herein as a "Mortgage") now or hereafter encumbering the Project or any part
hereof; provided, however, that with respect to any such Mortgage that is
inferior in priority to this Lease, other than the first and highest priority of
such Mortgages, the subordination of this Lease shall be effective only if the
Mortgage or a separate instrument signed by the holder thereof provides that
Tenant's possession of the Premises shall not be disturbed upon any foreclosure
thereof So long as Tenant is not in default under this Lease. The holder of any
Mortgage may elect to be subordinate to this Lease.
15.02 Upon a transfer in connection with foreclosure or trustee's sale
proceedings or in connection with a default under an encumbrance, whether by
deed to the holder of the encumbrance in lieu of foreclosure or otherwise, the
transferee shall not be:
(a) subject to any offsets or defenses which Tenant might have against Landlord;
or
(b) bound by any prepayment by Tenant of more than one month's installment of
rent; or
(c) subject to any liability or obligation of Landlord except those arising
after the transfer.
15.03 The subordination provisions of this Article 15 shall be self-operating
and no further instrument shall be necessary. Nevertheless Tenant, on request,
shall execute and deliver any and all instruments further evidencing such
subordination.
15.04 Landlord may at any time 'and from time to time grant, receive, dedicate,
relocate, modify, surrender or otherwise deal with easements, rights of way,
restrictions, covenants, equitable servitudes or other matters affecting the
Project without notice to or consent by Tenant.
ARTICLE 16
ESTOPPEL CERTIFICATES
16.01 Tenant shall at any time within fifteen (15) days after written request
from Landlord execute, acknowledge and deliver to Landlord a statement in
writing: (a) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in fall force and effect) and the date to
which the rent and other charges are paid in advance, if any, (b) confirming the
Commencement and Expiration Dates, (c) confirming the amount of the security
deposit held by Landlord, (d) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder or specifying
such defaults if any are claimed, and (e) confirming such other matters as to
which Landlord may reasonably request confirmation. Any such statement may be
conclusively relied upon by a prospective purchaser or Mortgagee of the Project
or any portion thereof. Tenant's failure to deliver such statement within such
time shall be conclusive upon Tenant (i) that this Lease is in full force and
effect, without modification except as may be represented by Landlord; (ii) that
there are no uncured defaults in Landlord's performance; (iii) that not more
than one month's rent has been paid in advance, (iv) that the Commencement and
Expiration Dates and the amount of the security deposit are as stated by
Landlord, and (v) that all matters as to which Landlord requested confirmation
are true. If Landlord desires to finance or refinance the Building, Tenant
hereby agrees to deliver to any Mortgagee or prospective Mortgagee designated by
Landlord such financial statements of Tenant as may be reasonably required by
such Mortgagee. Such statement shall include the past
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three (3) years' financial statements of Tenant. All such financial statements
shall be received by Landlord in confidence and shall be used only for the
purposes herein set forth.
ARTICLE 17
CONDEMNATION
17.01 If during the Term all or any part of the Premises is permanently taken
for any public or quasi-public use under any statute or by right of eminent
domain, or purchased under threat of such taking, this Lease shall automatically
terminate on the date on which the condemning authority takes possession of the
Premises.
17.02 If during the term any part of the Project is taken or purchased by right
of eminent domain or in lieu of condemnation, whether or not the Premises are
directly affected, then if in the reasonable opinion of Landlord substantial
alteration or reconstruction of the Building is necessary or desirable as a
result thereof, or the amount of parking available to the Project is materially
and adversely affected, Landlord shall have the right to terminate this Lease by
giving Tenant at least thirty (30) days written notice of such termination.
17.03 Landlord shall be entitled to receive and retain the entire award or
consideration for the affected lands and improvements and Tenant shall not have
or advance any claims against Landlord for the value of its property or its
leasehold estate or the unexpired term of this Lease or for costs of removal or
relocation or business interruption expense or any other damages arising out of
the taking or purchase. Nothing herein shall give Landlord any interest in or
preclude Tenant from seeking and recovering on its own account from the
condemning authority any award of compensation attributable to the taking or
purchase of Tenant's chattels or trade fixtures or attributable to Tenant's
relocation expenses provided that any such separate claim by Tenant shall not
reduce or adversely affect the amount of Landlord's award. If any such award
made or compensation paid to Tenant specifically includes an award or amount for
Landlord, Tenant shall promptly account therefor to Landlord.
ARTICLE 18
SIGNS
18.01 Tenant shall not place or permit to be placed any sign, picture,
advertisement, notice, lettering or decoration on any part of the outside of the
Building or the Premises or anywhere in the interior of the Premises which is
visible from the outside of the Building or the Premises. Identification signs
to be placed on the outside of the doors leading into the Premises shall conform
to Landlord's sign criteria and are subject to Landlord's prior written
approval. Landlord shall bear the cost of the sign up to the cost of a building
standard-sign.
18.02 Tenant will be entitled to have its name shown on the directory board of
the Building and the Premises entry. Landlord will design the style of such
identification. Landlord shall bear the cost of the first directory entry and
the Premises entry signage, and Tenant shall bear the cost of any other
directory entries desired by Tenant and permitted under the uniform directory
policy. In addition, Tenant's existing exterior northeast kiosk signage will
remain in place throughout the Term.
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18.03 Landlord will make available to Tenant an exterior sign space location on
two panels of the project sign located at the northwest comer of Doubletree
Ranch Road and Gainey Center Drive. Tenant will be solely responsible for the
cost of labor and material for the fabrication and installation of the sign
letters, subject to Landlord's prior written approval of the design and material
specifications thereof. Tenant may use part of the tenant improvement allowance
for this expense.
ARTICLE 19
BREACH, DEFAULT AND REMEDIES
19.01 Me following shall constitute events of default:
(a) Tenant's failure to pay rent or any other amount due under this Lease within
five (5) days after notice of nonpayment; provided, however, that such failure
shall constitute an event of default without notice if Landlord has given notice
of a similar failure more than two (2) times within the previous twelve (12)
months.
(b) Tenant's failure to execute, acknowledge and return an estoppel certificate
under Article 16, within fifteen (15) days after request.
(c) Tenant's failure to perform any other obligation under this Lease within
fifteen (15) days after notice of nonperformance; provided, however, that such
failure shall constitute an event of default without notice if Landlord has
given notice of a similar failure more than two (2) times within the previous
twelve (12) months; and further provided that if the breach is of such a nature
that it is reasonably curable but cannot be cured within such fifteen (15) day
period, Tenant shall have such additional time as is reasonably necessary to
cure such default only if and so long as such cure is commenced promptly and
diligently pursued to completion; and further provided that in the event of a
breach involving an imminent threat to health or safety, Landlord may in its
notice of breach reduce the period for cure to such shorter period as may be
reasonable under the circumstances.
(d) Tenant vacates, abandons, or otherwise ceases to use the Premises on a
substantial continuing basis except temporary absence excused by reason of fire,
casualty, failure of Building services or other cause wholly beyond Tenant's
control.
(e) Any goods, chattels or equipment of Tenant is taken in execution ' or in
attachment or if a writ of execution is issued against Tenant or Tenant or any
guarantor becomes insolvent or commits an act of bankruptcy or becomes bankrupt
or takes the benefit of any statute that may be in force for bankrupt or
insolvent debtors or becomes involved in voluntary or involuntary winding-up
proceedings or if a receiver shall be appointed for the business, property,
affairs-or revenues of Tenant or any guarantor (provided, however that in the
case of involuntary proceedings, Tenant shall have sixty (60) days to cause them
to be dismissed), or Tenant makes a bulk sale of its goods or moves or
commences, attempts or threatens to move its goods, chattels and equipment out
of the Premises other than in the normal course of its business.
19.02 Upon the occurrence of any event of default, Landlord, at any time
thereafter without further notice or demand may exercise any one or more of the
following remedies concurrently or in succession:
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(a) Terminate Tenant's right to possession of the Premises by legal process or
otherwise, with or without terminating this Lease, and retake exclusive
possession of the Premises.
(b) From time to time relet all or portions of the Premises, using reasonable
efforts to mitigate Landlord's damages. In connection with any reletting,
Landlord may relet for a period extending beyond the term of this Lease and may
make alterations or improvements to the Premises without releasing Tenant of any
liability. Upon a reletting of all or substantially all of the Premises,
Landlord shall be entitled to recover all of its then prospective damages for
the balance of the Lease Term measured by the difference between amounts payable
under this Lease and the anticipated net proceeds of reletting, but in no event
less than zero.
(c) From time to time recover accrued and unpaid rent and damages arising from
Tenant's breach of the Lease, regardless of whether the Lease has been
terminated, together with applicable late charges and interest at the rate of
eighteen percent (18%) per annum or the highest lawful rate, whichever is less.
(d) Enforce the statutory Landlord's lien on Tenant's property.
(e) Recover all attorneys' fees incurred by Landlord in connection with
enforcing this Lease, recovering possession and collecting amounts owed.
(f) Perform the obligation on Tenant's behalf and recover from Tenant, upon
demand, the entire amount expended by Landlord plus twenty percent (20%) for
special handling, supervision, and overhead.
(g) Pursue other remedies available at law or in equity.
19.03 Upon a termination of Tenant's right to possession, whether or not this
Lease is terminated, at the election of Landlord, either (a) subtenancies and
other fights of persons claiming under or through Tenant shall be terminated, or
(b) Tenant's interest therein shall be assigned to Landlord. Landlord may
separately elect termination or assignment with respect to each such subtenancy
or other matter.
ARTICLE 20
NOTICES
20.01 Any notice from one party to the other shall be in writing and shall be
deemed duly served if delivered personally to a responsible employee of the
party being served, or if mailed by registered or certified mail addressed to
Tenant at the Premises or to Landlord at the place from time to time established
for the payment of rent with a copy to:
Nationwide Realty Investors, Ltd.
One Nationwide Plaza
Suite 34T
Columbus, Ohio 43216
Attn.: President
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<PAGE> 18
Any notice to Tenant prior to Tenant's taking possession of the Premises,
however shall instead be sent to the address set forth in Section 1.07. Any
notice shall be deemed to have been given when mailed, if mailed, and when
delivered, if personally delivered.
ARTICLE 21
SURRENDER AND HOLDOVER
21.01 Upon the expiration or termination of this Lease or of Tenant's right to
possession, Tenant shall surrender the Premises in a clean undamaged condition,
remove all of Tenant's equipment, fixtures and property and repair all damage
caused by the removal. Tenant shall not remove permanent improvements which were
provided by Landlord at the commencement of this Lease or permanent improvements
later installed by Landlord or Tenant which belong to Landlord.
21.02 If Tenant holds over without Landlord's consent, Tenant shall, without
limitation of any other right or remedy, be subject to summary eviction or, at
Landlord's election, constitute a tenant at will or a tenant from
month-to-month. In either case rent shall be payable monthly in advance at twice
the rate in effect immediately before the holdover began. A holdover
month-to-month tenancy may be terminated by either party as of the first day of
a calendar month upon at least ten (10) days prior notice. A holdover tenancy at
will is terminable at any time by either party without notice, regardless of
whether rent has been paid in advance.
ARTICLE 22
RELOCATION
22.01 [Intentionally Deleted]
ARTICLE 23
GENERAL
23.01 If any term, covenant or condition of this Lease, or the application
thereof is to any extent held or rendered invalid, it shall be and is hereby
deemed to be independent of the remainder of the Lease and to be severable and
divisible therefrom, and its invalidity, unenforceability or illegality does not
affect, impair or invalidate the remainder of the Lease or any part thereof.
23.02 If Tenant pays the rent and observes and performs the terms, covenants and
conditions contained in this Lease, Tenant will peaceably and quietly hold and
enjoy the Premises for the Term without hindrance or interruption by Landlord,
or any other person lawfully claiming by, through or under Landlord unless
otherwise permitted by the terms of this Lease. Tenant acknowledges that the
exercise by the Landlord of any of the fights conferred on Landlord under this
Lease and the entry upon the Premises for or in connection with such purposes
will not be deemed to be a constructive or actual eviction of the Tenant and
will not be considered to be a breach of Landlord's covenant of quiet enjoyment.
23.03 The waiver by Landlord of any breach of any term, covenant or condition
contained in this Lease is not deemed to be a waiver of such term, covenant or
condition or of any subsequent breach of the same or of any other term, covenant
or condition contained in the Lease. The subsequent acceptance of rent by
Landlord is not deemed to be a waiver of any preceding breach
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by Tenant of any term, covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of rent.
No term, covenant or condition of this Lease is deemed to have been waived by
Landlord unless such waiver is in writing by Landlord.
23.04 No payment by Tenant or receipt by the Landlord of a lesser amount than
the monthly payment of rent herein stipulated is deemed to be other than on
account of the earliest stipulated rent, nor is any endorsement or statement on
any check or any letter accompanying any check or payment of rent deemed an
acknowledgment of full payment or accord and satisfaction, and Landlord may
accept and cash any check or payment without prejudice to Landlord's right to
recover the balance of the rent due and pursue any other remedy provided in this
Lease.
23.05 If either party is bona fide delayed or hindered in or prevented from the
performance of any term, covenant or act required hereunder by reason of any
wrongful act or omission of the other party, strikes, labor troubles, inability
to procure materials or services, power failure, restrictive governmental laws
or regulations, riots, insurrection, sabotage, rebellion, war, act of God, or
other reason whether of a like nature or not which is beyond the control of the
party affected, financial inability excepted, then the performance of that term,
covenant or act is excused for the period of the delay and the party delayed
will be entitled to perform such term, covenant or act within the appropriate
time period after the expiration of the period of such delay. Nothing in this
Section, however shall excuse Tenant from the prompt payment of any amount
payable under this Lease.
23.06 In the event of a material default by Landlord of a sufficiently serious
nature that the utility of the Premises to Tenant to be significantly impaired,
Tenant shall give written notice of the default to Landlord and shall
simultaneously send a copy of the notice to any Mortgagee of Landlord whose name
and address have previously been furnished to Tenant. If Landlord fails to cure
the default within a reasonable time, Tenant shall send a second notice to that
effect to any such Mortgagee, with a copy to Landlord, and such Mortgagee shall
then have an additional reasonable time, not less than (30) thirty days, to
cause the default to be remedied.
23.07 The submission of this Lease for examination does not constitute a
reservation of an option to lease the Premises, and this Lease becomes effective
as a lease only upon its execution and delivery by Landlord and Tenant.
23.08 All rights and liabilities under this Lease extend to and bind the
successors and assigns of Landlord and permitted successors and assigns of
Tenant. No rights, however, will inure to the benefit of any transferee of the
Tenant unless the transfer has been consented to by the Landlord in writing as
provided in Section 14.01. If there is more than one Tenant, they are all bound
jointly and severally by the terms, covenants and conditions of this Lease.
23.09 This Lease will be construed in accordance with and governed by the laws
of the State of Arizona.
23.10 Time is of the essence of this Lease and of every part hereof.
23.11 [Intentionally deleted].
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23.12 This Lease and the Exhibits hereto set forth all the covenants, promises,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises, and there are no other covenants, promises, agreements,
representations, warranties, conditions or understandings, either oral or
written, between them pertaining to the subject matter hereof. No alteration,
amendment or addition to this Lease will be binding upon Landlord or Tenant
unless in writing and signed by Tenant and Landlord.
ARTICLE 24
PARKING
24.01 Tenant shall be entitled to lease up to 0 (0) covered reserved parking
spaces at no charge, up to one hundred sixty-six (166) covered unreserved
parking spaces. Tenant shall pay Landlord rental for the parking spaces in the
amount of $0.00 ($0.00) per covered reserved space per month and twenty-five
dollars ($25.00) per month per covered unreserved space per month, without
deduction, offset, notice or demand, in advance on the first day of each
calendar month. The number and type of spaces which Tenant elects to lease shall
be designated by Tenant in writing on or before the first day of the Lease Term.
Upon thirty (30) days written notice from Tenant, Landlord agrees to provide
Tenant with additional parking on a month-to-month basis, when and if available,
to be located at Phase I and/or Phase III of Gainey Ranch Corporate Center, at
the then prevailing rates for the respective Building.
24.02 Rental rates on all parking spaces leased by Tenant shall be adjusted
after the expiration of the initial Lease Term to the prevailing rates under new
agreements then being made by Landlord for similar parking spaces in the
Project. At any time after the end of the initial Term, Landlord shall advise
Tenant upon request of the applicable rates for each type of parking spaces for
the ensuing year, and at least thirty (30) days prior to the beginning of each
calendar year during any Renewal Term Tenant shall advise Landlord how many of
each type of space Tenant elects to rent for such year, which shall not be more
than the number then being rented by Tenant unless Landlord has additional
spaces reasonably available in accordance with sound parking garage management
practices after reserving an adequate number of space's for visitor or
short-term parking and for unoccupied space in the Building. After giving such
notice, Tenant shall be obligated to lease such spaces at such rates for the
ensuing calendar year pursuant to the terms of this Addendum, and Landlord may.
not increase the rates charged therefor during such year.
ARTICLE 25
EXTENSION TERM
25.01 Tenant shall have two options to extend the term of this Lease by a period
of three (3) years each (the "Extension Terms") the first, commencing on the day
following the Termination Date of the Term and expiring on July 31, 2007; and
the second, commencing on August 1, 2007 and expiring on July 31, 2010, by
giving Landlord written notice, at least six (6) months, but not more than
twelve (12) months, prior to the expiration of the original Term and/or the
first option Term, of Tenant's election to extend; provided, however, that the
option shall automatically and forever terminate if not exercised by written
notice in a timely manner or if Tenant is in default under the Lease at the time
the notice of extension is given.
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25.02 The amount of the monthly Base Rent during the Extension Term shall be the
greater of (i) the monthly Base Rent in effect immediately prior to the
expiration of the original Term, or (ii) the then current market rental rate
(under prevailing market conditions during the last year of the original Term)
for similar space in the Project as reasonably determined by Landlord. Landlord
shall, upon Tenant's request made within the three month period preceding the
deadline for the giving of Tenant's notice, make a reasonable determination with
respect to the market rental rate that would be applicable to the Premises
during the Extension Term.
ARTICLE 26
EXPANSION
26.01 Landlord shall not lease any space on the first floor or the third floor
of Gainey Ranch Corporate Center III East, other than to Scottsdale Insurance
Company, Colonial General Insurance Agency, Nationwide Enterprises or any of its
subsidiaries and affiliates in accordance with rights granted prior to the date
hereof, without offering to Lease to Tenant the same space on the same terms and
conditions. In the event Tenant does not notify Landlord within five (5) working
days following receipt of notice from Landlord specifying the terms and
conditions upon which Landlord purposes to lease the specified space to a third
party, with a "Letter of Interest" accepting Landlord's offer immediately
followed by fifteen (15) working days to complete a space plan and finalize a
lease expansion document, Tenant's failure to so respond shall be deemed a
rejection of the offer, and Landlord, at its option, may proceed to lease such
space to a thirty party on terms and conditions not materially more favorable to
the new tenant than to Tenant.
ARTICLE 27
PRIOR LEASE TERMINATION
27.01 That certain prior Lease executed July 1, 1997 by and between Landlord and
Tenant commencing January 1, 1997 for approximately 18,023 rentable square feet
known as suite 200 as amended by the First and Second Amendment To Lease is
hereby terminated in full effective July 31, 1998 upon final execution of this
Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands or caused this
Lease to be executed by their authorized agents.
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TENANT: LANDLORD:
SALESLOGIX CORPORATION, NATIONWIDE REALTY INVESTORS,
a Delaware corporation LTD., an Ohio limited liability company
which has qualified
to do business in
Arizona under the
name Nationwide
Realty Investors,
L.L.C.
By /s/ Patrick M. Sullivan By /s/ Brian J. Ellis
------------------------ ---------------------------------------
Brian J. Ellis
Its: President/CEO Its: President - Chief Operating Officer
------------------------ ---------------------------------------
Date: 6/15/98 Date: 6/17/98
------------------------ ---------------------------------------
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EXHIBIT C
DEFINITION OF BUILDING SHELL
1. FLOOR FINISHES
Concrete slab cleaned and level to 3/4" tolerance, cumulative as
provided in the Building Shell construction documents.
2. FLOOR LOADING
Floor design and loading criteria have exceeded all applicable codes.
Building Shell standard throughout provides live load capacity equal to
+/- 100 pounds per square foot.
3. WALL, COLUMN AND PERIMETER BULKHEAD CONSTRUCTION
All core walls, freestanding and engaged columns, and perimeter top and
bottom bulkheads to be furred, drywalled, taped and bedded with no
base.
4. OTHER PERIMETER FINISHES
Building perimeters will be fully finished as related to water
proofing, caulking, glazing and metal finishing including all required
glass replacement (in the event of defects or cracked or broken panes),
glass cleaning on exterior metal touch-up and cleaning, and any other
actions required to render the perimeters to a Tenant-ready condition.
5. OTHER CORE FINISHES
Fire fighting equipment enclosures, drinking fountains, janitor's
closets, electrical and mechanical rooms, toilets, fire exit enclosures
and related areas shown on the Plans to be finished to Building Shell
standards.
Specifically, the following will be provided in accordance with the
Building Shell construction documents:
(a) Ladies' and Men's room complete.
(b) Telephone closets complete.
(c) Janitor closets complete.
(d) Electrical closets complete with service and 277/480v and 120/208v
panelboard and 480v - 120/208v transformers, lighting (277v) and power
(120v) grids. Distribution within Tenant's space for connection to
grids or in excess of grids capacity shall be paid for by Tenant.
(e) Core walls with drywall, taped and bedded, no base.
(f) Drinking fountain (3 per floor).
(g) Fire hose cabinets finished and extinguishers as required by code.
(h) Exit signs (as per code).
Ex. C-1
<PAGE> 24
(i) Lobby - elevator doors finished with 9010 Bronze.
(j) Core corridor doors, finished to building standard.
(k) Stairwell doors, finished to building standard.
(l) Locking devices and closers for all exit, stair-well and
electrical/telephone doors and ladies' and gentlemen's toilets.
(m) Finish paint exit corridor walls.
(n) Space clear of all pipes, ductwork, etc., for maximum ceiling height in
accordance with the Plans.
(o) All pipe sleeves in beams and walls to be packed airtight.
(p) Fire and Life Safety requirements per City and State Codes.
(q) Ground level complete (elevator lobbies, landscaping, fan rooms, etc.).
(r) Mechanical, electrical, elevator, etc., Building Shell systems, all
complete and operating, or brought to Tenant's space, ready for
operation after distribution by Tenant.
(s) All general exhaust requirements.
(t) Certificate of Occupancy for Building Shell.
6. SPRINKLER SYSTEM
Landlord to provide sprinkler piping to include main runs of branch
piping, drops, and heads, per Building Shell construction, prior to
installation of Tenant building-out. Fully recessed heads at the
density required per building code to be located, at Landlord's
expense, in the centers of suspended acoustical tiles per Tenant's
final space plans.
7. HEATING, VENTILATION AND AIR CONDITIONING
Landlord shall at Landlord's sole cost and expense, provide the
Building Shell HVAC consisting of condenser, water and condensate drain
- piping loops and branches for installation of hydronic heat pump
units, fresh air fan-coil units, and a central station equipment
including cooling towers, boiler pumps, water treatment and energy
management system, all as indicated in the Building Shell construction
documents. Landlord shall cause the appropriate mechanical and
electrical engineers for the Building Shell work, to prepare the plans
for the HVAC distribution system for the leased premises, which plans
shall meet the following criteria:
(a) The plans shall provide the installation of an approved
manufacturer's hydronic heat pump on nominal three-tons
cooling capacity for each zone to be occupied as indicated on
the Building Shell construction documents. These units shall
be provided with microprocessor control compatible with the
Building Shell energy
Ex. C-2
<PAGE> 25
management system, hose kits with Griswold-type automatic flow control
valves and shutoff valves, space mounted temperature sensors, factory
mounted motor starters and vibration isolator hanger kits. In addition,
the plans shall provide a system of distribution ducts, supply
registers and diffusers, return grilles and associated fixtures and
equipment designed and installed on each floor of the leased premises
to provide individual control of cooling, ventilation and heating. The
plans shall state that the Landlord's contractor will have a Test and
Balance contractor balance the air distribution system for the leased
premises.
(b) The systems shall be designed to conform. to Tenant's reasonable plans
to operate so that sound transmission levels do not exceed NC35
(standard sound transmission level for Class A Office buildings).
Landlord shall diligently take appropriate corrective measures to
eliminate any disturbing noise or vibration of any mechanical equipment
or system furnished and installed by Landlord.
(c) The occupancy schedule of particular areas shown on Tenant's Plans may
vary between one person per 50 Rentable Square Feet and one person per
250 Rentable Square Feet, provided that the entire floor division of
the leased premises does not exceed one person per 150 Rentable Square
Feet and that such variances are reasonably distributed. The heating,
ventilating and air condition system shall meet the following design
conditions, as the stated outside design conditions:
(1) Summer - 109 degrees Fahrenheit dry bulb, 76 degrees
Fahrenheit wet bulb outside (22% coincidence); 75 degrees
Fahrenheit dry bulb, 50% relative humidity maximum inside.
(2) Winter - 31 degrees Fahrenheit dry bulb outside; 72 degrees
Fahrenheit dry bulb, inside.
(3) At all times, 72 degrees Fahrenheit to 75 degrees Fahrenheit
dry bulb inside.
(4) Based upon a lighting allowance of 2.5 watts per square foot
and a power allowance of 0.5 watts per square foot.
(d) All reception areas shall be air conditioned to the same degree as
office space. All interior areas shall be suitably zoned, with
independent zone controls, in accordance with the Working Drawings and
good practice.
(e) Supply outlets shall be selected for minimum drafts and noiseless and
good air distribution.
(f) The type, size and arrangement of the diffusers shall be determined by
Landlord.
(g) Where required, all supply and/or return ducts shall be equipped with
fusible link dampers as prescribed by applicable laws, if any.
Ex. C-3
<PAGE> 26
The portions of the HVAC systems included as part of the Building Shell
work shall be compatible with the above. Distribution of the HVAC
systems throughout the leased premises, relocation of any Building
Shell piping or equipment and HVAC systems not previously identified as
Building Shell equipment shall be at Tenant's cost.
8. ELECTRICAL DISTRIBUTION AND SERVICE
As part of the Building Shell work, Landlord shall provide an
electrical service system as follows:
(a) Provide electrical service 277/480 volts, 3 phase 4 wire, 60
cycles through panelboards suitable for such service.
(b) Distribution voltages shall be 277/480 volts, 4 wire, 3 phase
for fluorescent lighting and integral horsepower motors; and
102/208 volts 4 wire, 3 phase for receptacle circuits,
fractional horsepower motors and limited incandescent
lighting.
(c) The electrical service provided by the electric user system
shall be 3.0 watts for 277 volts and 2.5 watts for 120 volts
per Rentable Square Foot for Tenant's lighting and receptacles
only.
(d) Circuit breaker panelboards shall be located on each floor to
serve electrical loads and the portion of the leased premises
on the flow as follows:
(1) 480/277 volt panelboards shall be 20 AMP circuit size
and have at least 30 circuit breakers and 12 spaces
for 20 AMP/single pole circuit breakers.
(2) 120/208 volt panelboards shall be 10 AMP circuit size
and have at least 30 circuit breakers and 12 spaces
for 20 AMP/single pole circuit breakers.
Distribution of the electrical service via an electrical empty conduit
system installed in the ceiling space carrying power from the
panelboards to the Tenant, spaced throughout the leased premises, shall
be at Landlord's cost. Landlord shall pay for building standard costs
of electrical connections from the junction boxes on 277 volts lighting
and wire from conduit stubs to electrical room on 120/208 volts system
for distribution and outlets servicing the tenant premises.
9. CEILINGS
Complete and laser leveled grid suspension system (2'0" x TO") shall be
installed at Landlord's sole expense. Armstrong Artran wrapped linear
tile, as identified in the construction documents shall be stacked on
the floor and supplied by Landlord at its sole expense. Installation of
the ceiling tile shall be at Tenant's expense.
Landlord shall provide, at Landlord's cost, air handling (return air only),
parabolic, 2' x 4', building standard three AMP fluorescent fixtures
manufactured by Lithonia, which shall be stacked on the floor. Installation of
fixtures shall be at Tenant's expense.
Ex. C-4
<PAGE> 27
Tenant may apply any available portion of the Tenant Improvement Allowance
provided in the Lease to the costs of any items referred to in this Exhibit C as
"Tenant's expense".
Ex. C-5
<PAGE> 28
EXHIBIT D
GAINEY RANCH CORPORATE CENTER
RULES AND REGULATIONS
1. When electric wiring of any kind is introduced it must be connected as
directed by the Landlord, and no boring or cutting for wires will be
allowed except with the consent of the Landlord. No apparatus, other
than normal office machines and equipment of any kind, shall be
connected with the electric wiring without the written consent of the
Landlord.
2. Tenants shall not do anything in the premises, or bring or keep
anything therein, which will in any way increase or tend to increase
the risk of fire, or which shall conflict with any fire laws or the
rules and the regulations of the Fire Department or the Board of
Health. Tenants shall not use any machinery which may cause any
objectionable noise, jar or tremor to the floors or walls or which by
its weight might injure the floors of the Building.
3. Tenants shall not conduct any auction on their premises and shall not
store goods, wares or merchandise therein, except for the personal use
of such tenants.
4. All freight and furniture must be moved into, within and out of the
Building under the supervision of the Landlord and according to such
regulations as may be posted in the office of the Building.
5. Employees of Landlord's property manager shall not be required to
perform any work or do anything outside of their regular duties unless
under special instruction from such manager, and no employee shall
admit any person (Tenant or otherwise) to any area under lease to a
tenant without specific instructions from such manager.
6. All keys shall be obtained from the Landlord and all keys shall be
returned to the Landlord upon the termination of this Lease. No tenant
shall change its locks, or install other locks, on the doors without
written consent of Landlord.
7. Tenant shall see that the windows and doors of its premises are closed
and securely locked before leaving the Building and that all lights are
properly turned off.
8. Tenant shall give prompt notice of any accident to, or defects in, the
Building, the plumbing, electric wiring, or air conditioning.
9. All cleaning and janitorial services for the building and the Premises
shall be provided exclusively through Landlord.
10. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord.
Ex. D-1
<PAGE> 29
11. Each tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing blinds and other window
coverings when the sun's rays fall on the windows of its premises.
Tenant shall not tamper with or change the setting of any thermostats
or temperature control valves.
12. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner act in
violation of any of the Rules and Regulations of the Building.
13. Landlord reserves the right to exclude from the Building at all times,
other than the reasonable hours of the generally recognized business
day as determined by Landlord, all persons who do not present a pass or
other identification acceptable to Landlord.
14. Canvassing, soliciting and peddling in the Building are prohibited and
each tenant shall cooperate to prevent same.
15. There shall not be used in any tenant space or other area of the
Building, either by any tenant or others, any hand trucks unless
equipped with rubber fires and side guards.
16. The toilets, wash basins and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and
no sweepings, rubbish, rags or other substances shall be thrown
therein. All damage resulting from any misuse of fixtures shall be
borne by the tenant who, or whose employees, agents or visitors shall
have caused the same.
17. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Building or any leased premises except in bicycle
racks provided by Landlord, and no cooking shall be done or permitted
by any tenant except the preparation of coffee, tea, hot chocolate and
similar items for such tenant, its employees and business visitors and
except the use of consumer-sized microwave ovens within galley areas
designated for such purpose. No tenant shall cause or permit any
unusual or objectionable odors to escape from its premises.
18. No tenant shall engage in advertising which, in Landlord's opinion,
tends to impair the reputation or desirability of Gainey Ranch
Corporate Center.
19. Smoking shall not be permitted in (i) any interior area of the Gainey
Ranch Corporate Center, except within the interior of areas rented to
tenants, or (ii) at any exterior location, except as designated by
Landlord from time to time. Landlord may further restrict smoking from
time to time if required by law or applicable standards of property
management. If and so long as smoking is permitted within interior
areas under lease to tenants, the occupant thereof shall be solely
responsible for any necessary ashtrays or other facilities and shall
indemnify and hold Landlord harmless from any loss, liability, claim or
expense of any kind resulting therefrom.
20. Landlord reserves the right at any time to amend or rescind any one or
more of these Rules and Regulations, or to make such additional
reasonable rules. and regulations as in the
Ex. D-2
<PAGE> 1
Exhibit 10.2 - Second Amended and Restated Loan and Security Agreement
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1 ACCOUNTING AND OTHER TERMS........................................... 4
2 LOAN AND TERMS OF PAYMENT............................................ 4
2.1 Advances...................................................... 4
2.2 Overadvances.................................................. 5
2.3 Interest Rate, Payments....................................... 5
2.4 Fees.......................................................... 5
3 CONDITIONS OF LOANS.................................................. 6
3.1 Conditions Precedent to Initial Advance....................... 6
3.2 Conditions Precedent to all Advances.......................... 6
4 CREATION OF SECURITY INTEREST........................................ 6
4.1 Grant of Security Interest.................................... 6
5 REPRESENTATIONS AND WARRANTIES....................................... 6
5.1 Due Organization and Authorization............................ 6
5.2 Collateral.................................................... 7
5.3 Litigation.................................................... 7
5.4 No Material Adverse Change in Financial Statements............ 7
5.5 Solvency...................................................... 7
5.6 Regulatory Compliance......................................... 7
5.7 Subsidiaries.................................................. 7
5.8 Full Disclosure............................................... 8
6 AFFIRMATIVE COVENANTS................................................ 8
6.1 Government Compliance......................................... 8
6.2 Financial Statements, Reports, Certificates................... 8
6.3 Inventory; Returns............................................ 8
6.4 Taxes......................................................... 9
6.5 Insurance..................................................... 9
6.6 Primary Accounts.............................................. 9
6.7 Financial Covenants........................................... 9
6.8 Registration of Intellectual Property Rights.................. 9
6.9 Further Assurances........................................... 10
7 NEGATIVE COVENANTS.................................................. 10
7.1 Dispositions................................................. 10
7.2 Changes in Business, Ownership, Management or
Business Locations........................................... 10
7.3 Mergers or Acquisitions...................................... 10
7.4 Indebtedness................................................. 10
7.5 Encumbrance.................................................. 10
7.6 Distributions; Investments................................... 10
7.7 Transactions with Affiliates................................. 11
7.8 Subordinated Debt............................................ 11
7.9 Compliance................................................... 11
8 EVENTS OF DEFAULT................................................... 11
8.1 Payment Default.............................................. 11
8.2 Covenant Default............................................. 11
8.3 Material Adverse Change...................................... 11
8.4 Attachment................................................... 11
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
8.5 Insolvency................................................... 12
8.6 Other Agreements............................................. 12
8.7 Judgments.................................................... 12
8.8 Misrepresentations........................................... 12
9 BANK'S RIGHTS AND REMEDIES.......................................... 12
9.1 Rights and Remedies.......................................... 12
9.2 Power of Attorney............................................ 13
9.3 Accounts Collection.......................................... 13
9.4 Bank Expenses................................................ 13
9.5 Bank's Liability for Collateral.............................. 13
9.6 Remedies Cumulative.......................................... 13
9.7 Demand Waiver................................................ 14
10 NOTICES............................................................. 14
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER.......................... 14
12 GENERAL PROVISIONS.................................................. 14
12.1 Successors and Assigns....................................... 14
12.2 Indemnification.............................................. 14
12.3 Time of Essence.............................................. 14
12.4 Severability of Provision.................................... 14
12.5 Amendments in Writing, Integration........................... 15
12.6 Counterparts................................................. 15
12.7 Survival..................................................... 15
12.8 Confidentiality.............................................. 15
12.9 Effect of Amendment and Restatement.......................... 15
13 DEFINITIONS......................................................... 15
13.1 Definitions.................................................. 15
</TABLE>
3
<PAGE> 4
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated
December 2, 1997, between SILICON VALLEY BANK ("Bank"), whose corporate
headquarters is located at 3003 Tasman Drive, Santa Clara, CA 95054 with a loan
production office located at East 4455 Camelback Road, Suite E - 290, Phoenix,
AZ 85018 and SALESLOGIX CORPORATION ("Borrower"), whose address is 8800 North
Gainey Center Drive, Suite 200, Scottsdale, Arizona 85258.
RECITALS
A. Bank and Borrower are parties to that certain QuickStart Loan and
Security Agreement dated September 27, 1996, and all schedules and attachments
thereto, as amended from time to time, including, without limitation, by the
Amended and Restated Loan and Security Agreement dated July 3, 1997, and all
schedules and attachments thereto, as may be further amended from time to time
(the "Original Agreement").
B. Borrower and Bank desire in this Agreement to set forth their
agreement with respect to a working capital line and an acquisition loan and to
amend and restate in its entirety without novation the Original Agreement in
accordance with the provisions herein.
AGREEMENT
The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
2.1 ADVANCES.
Borrower will pay Bank the unpaid principal amount of all Advances and
interest on the unpaid principal amount of the Advances.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base, whichever is less. Advances
may be repaid and reborrowed during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower's deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances and other amounts due under this Agreement are
immediately payable.
4
<PAGE> 5
2.1.2 ACQUISITION ADVANCE.
(a) Through December 31, 1997, Bank will make advances (each, an
"Acquisition Advance" and collectively, "Acquisition Advances") not exceeding
the Committed Acquisition Loan. The Acquisition Advances may only be used to
pay-off existing long term debt acquired by Borrower as well as additional
direct acquisition costs pursuant to Borrower's acquisition of Opis Corporation.
(b) Interest accrues from the date of each Acquisition Advance at the
rate in Section 2.3(a) and is payable in 48 equal monthly installments of
principal, plus accrued interest, beginning on the last day of January, 1998 and
ending on December 31, 2001 (the "Acquisition Loan Maturity Date"). Any
Acquisition Advance when repaid may not be reborrowed.
(c) To obtain an Acquisition Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 3:00 p.m. Pacific time 1
Business Day before the day on which the Acquisition Advance is to be made. The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee.
2.2 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1 exceed the lesser of
either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower
must immediately pay Bank the excess.
2.3 INTEREST RATE, PAYMENTS.
(a) Interest Rate. (i) Advances accrue interest on the outstanding
principal balance at a per annum rate of 1.00 percentage point above the Prime
Rate; and (ii) Acquisition Advances accrue interest on the outstanding principal
balance at a per annum rate of 1.00 percentage point above the Prime Rate. After
an Event of Default Obligations accrue interest at 5.00 percentage points above
the rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
on the 1st of each month. Interest due on the Acquisition Advances is payable as
set-forth in Section 2.1.2 (b). Bank may debit any of Borrower's deposit
accounts including Account Number ____________________________ for principal and
interest payments or any amounts Borrower owes Bank. Bank will notify Borrower
when it debits Borrower's accounts. These debits are not a set-off. Payments
received after 12:00 noon Pacific time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest accrue.
2.4 FEES.
Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $2,000
for the Committed Revolving Line and the Committed Acquisition Loan due on the
Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the date of this Agreement, are
payable when due.
5
<PAGE> 6
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE.
Bank's obligation to make the initial Advance is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Bank's obligations to make each Advance, including the initial Advance,
is subject to the following:
(a) Bank's receipt and review of the results of an accounts receivable
audit which results shall be satisfactory to Bank;
(b) timely receipt of any Payment/Advance Form; and
(c) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance is Borrower's representation and warranty on that
date that the representations and warranties of Section 6 remain true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. All prior agreements, understandings, representations, warranties
and negotiations between the parties hereto with respect to the subject matter
of this Agreement if any, are merged into this Agreement provided, that any
UCC-1 financing statements, or amendments thereto, or filings with respect to
Borrower's Intellectual Property, filed by Bank to secure the Obligations of
Borrower shall remain in full force and effect. All security interests granted
under the Original Agreement are hereby confirmed and ratified and shall
continue to secure all Obligations under this Agreement.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.
6
<PAGE> 7
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. Borrower has no notice of any actual or imminent Insolvency Proceeding
of any account debtor whose accounts are an Eligible Account in any Borrowing
Base Certificate. All Inventory is in all material respects of good and
marketable quality, free from material defects. Borrower is the sole owner of
the Intellectual Property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. Each Patent is valid and
enforceable and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
any laws, ordinances or rules, the violation of which could cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all taxes, except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
7
<PAGE> 8
5.8 FULL DISCLOSURE.
No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements misleading.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on Borrower's business or operations. Borrower will comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm acceptable to Bank; (iii) within 5 days of filing, copies
of all statements, reports and notices made available to Borrower's security
holders or to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt
report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of $100,000 or more; (v) budgets, sales projections, operating plans or other
financial information Bank requests; and (vi) prompt notice of any material
change in the composition of the Intellectual Property, including any subsequent
ownership right of Borrower in or to any Copyright, Patent or Trademark not
shown in any intellectual property security agreement between Borrower and Bank
or knowledge of an event that materially adversely affects the value of the
Intellectual Property.
(b) Within 20 days after the last day of each month, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C, with aged listings of accounts receivable and accounts
payable.
(c) Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit D.
(d) Bank has the right to audit Borrower's Accounts at Borrower's
expense, but the audits will be conducted no more often than every 6 months
unless an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary
8
<PAGE> 9
practices as they exist at execution of this Agreement. Borrower must promptly
notify Bank of all returns, recoveries, disputes and claims, that involve more
than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments and will deliver
to Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least 20 days notice before canceling
its policy. At Bank's request, Borrower will deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
will, at Bank's option, be payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts
with Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO [ADJUSTED]. A ratio of Quick Assets to Current
Liabilities minus Deferred Maintenance Revenue (maintenance and support) of at
least 1.75 to 1.00.
(ii) LIQUIDITY COVERAGE. Unrestricted cash (and equivalents) plus 50%
of net trade accounts receivable less than 90 days from the invoice of at least
2 times the outstanding Acquisition Advance through the month ended November 30,
1997. Beginning with the month ending December 31, 1997, unrestricted cash (and
equivalents) plus eligible borrowings under the Committed Revolving Line less
any outstanding Advance of at least 2 times the outstanding Acquisition Advance.
Once Borrower had maintained a Debt Service Coverage of 1.50 to 1.00 for 2
consecutive quarters, the Liquidity Coverage covenant will be replaced with the
following Debt Service Coverage covenant
(iii) DEBT SERVICE COVERAGE. A ratio of earnings before interest,
taxes, depreciation and amortization less capital expenditures and capitalized
software to current maturities of long term debt of at least 1.50 to 1.00. To be
maintained by Borrower upon replacement of the Liquidity Coverage covenant.
(iv) PROFITABILITY. Borrower will be profitable each quarter, except
that Borrower may suffer Maximum Losses not to exceed: $1,200,000 for the
quarter ending December 31, 1997; $300,000 for the quarter ending March 31,
1998; and $200,000 for the quarter ending June 30, 1998.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower will register with the United States Patent and Trademark
Office or the United States Copyright Office Intellectual Property rights on
Exhibits A, B, C, and D to the Intellectual Property Security Agreement within
30 days of the date of this Agreement, and additional Intellectual Property
rights developed or acquired including revisions or additions with any product
before the sale or licensing of the product to any third party; provided that
such registration shall only be required one (1) time every six (6) months
through the term of this Agreement.
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Borrower will (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property and promptly advise Bank in writing
of material infringements and (ii) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower will not do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its- business or property, other than Transfers (i) of Inventory in the ordinary
course of business, (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business, or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Other than the acquisition of all or substantially all of the capital
stock and assets of Opis Corporation, engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower or have a material change in its ownership of greater
than 25%. Borrower will not without at least 30 days prior written notice,
relocate its chief executive office or add any new offices or business
locations.
7.3 MERGERS OR ACQUISITIONS.
Other than the acquisition of the assets of Opis Corporation (i) Merge
or consolidate, or permit any of its Subsidiaries to merge or consolidate, with
any other Person, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person or (ii)
merge or consolidate a Subsidiary into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
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7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business, on terms less favorable to Borrower than would be obtained in an arm's
length transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could have a material adverse effect on Borrower's business or operations or
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations;
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in Section 6 or violates
any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts within 10 day period, and the default may be
cured within a reasonable time, then Borrower has an additional period (of not
more than 30 days) to attempt to cure the default. During the additional time,
the failure to cure the default is not an Event of Default (but no Advances will
be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
(i) If there occurs a material impairment in the perfection or priority
of the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower will fail to
comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrowers assets, or if a
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notice of lien, levy, or assessment is filed against any of Borrower's assets by
any government agency and not paid within 10 days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Advances will be made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
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(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Advances terminates.
9.3 ACCOUNTS COLLECTION.
When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices it is not liable:
for (a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other person. Borrower bears
all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
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9.7 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A Party may change its notice address by giving the other Party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa Clara County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
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12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing. This Agreement
represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge into this Agreement and the Loan
Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 EFFECT OF AMENDMENT AND RESTATEMENT.
This Agreement is intended to and does completely amend and restate,
without novation, the Original Agreement. All advances or loans outstanding
under the Original Agreement are and shall continue to be outstanding under this
Agreement. All security interests granted under the Original Agreement are
hereby confirmed and ratified and shall continue to secure all Obligations under
this Agreement.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ACQUISITION ADVANCE" is defined in Section 2.1.2.
"ACQUISITION LOAN MATURITY DATE" means the 48h month following the date
of the Acquisition Advance.
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"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BORROWING BASE" is 75% of Eligible Accounts as determined by Bank from
Borrower's most recent Borrowing Base Certificate.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CAPITALIZED PRODUCT DEVELOPMENT COSTS" are all costs associated with
the development of Borrower's product, including, but not limited to software,
that are not recorded as an expense and have been classified as an asset
account.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED ACQUISITION LOAN" is a Credit Extension of up to $1,500,000
for the sole purpose of financing Borrower's acquisition of Opis Corporation.
"COMMITTED REVOLVING LINE" is a Credit Extension of up to $1,500,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations
and like protections in each work or authorship or derivative work owned by
Borrower, whether published or not (whether or not it is a trade secret) now or
later existing, created, acquired or held.
"CREDIT EXTENSION" means each Advance, Acquisition Advance or any other
extension of credit by Bank for the benefit of Borrower.
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"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's
business that meet all Borrower's representations and warranties in Section 5.2;
but Bank may change eligibility standards by giving Borrower notice. Unless Bank
agrees otherwise in writing, Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within 90 days of
invoice date;
(b) Accounts for an account debtor, 50% or more of whose Accounts have
not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose total
obligations to Borrower exceed 25% of all Accounts, for the amounts
that exceed that percentage, unless Bank approves in writing;
(e) Accounts for which the account debtor does not have its principal
place of business in the United States;
(f) Accounts for which the account debtor is a federal, state or local
government entity or any department, agency, or instrumentality;
(g) Accounts for which Borrower owes the account debtor, but only up to
the amount owed (sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which
goods are consigned, sales guaranteed, sale or return, sale on
approval, bill and hold, or other terms if account debtor's payment may
be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate,
officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes
any claim and Bank believes there may be a basis for dispute (but only
up to the disputed or claimed amount), or if the Account Debtor is
subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
(k) Accounts for which Bank reasonably determines collection to be
doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
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"INTELLECTUAL PROPERTY" shall be all of the following rights that are
owned by Borrower:
(a) Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer
software and computer software products now or later existing, created, acquired
or held;
(c) All design rights which may be available to Borrower now or later
created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement
of any of the rights above, with the right, but not the obligation, to sue and
collect damages for use or infringement of the intellectual property rights
above;
All proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower, and any other present or future agreement
between Borrower and/or for the benefit of Bank in connection with this
Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired owned by
Borrower.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MAXIMUM LOSSES" means net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
exchange contracts and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower assigned to Bank.
"ORIGINAL AGREEMENT" has the meaning set forth in recital paragraph A.
"PATENTS" are all patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same owned by Borrower.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or any other
Loan Document;
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(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness incurred in the acquisition of Opis Corporation; and
(f) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing
Date;
(b) Investments consisting of the acquisition of Opis Corporation,
including SLX Acquisition Corporation, a wholly owned subsidiary of Borrower
formed to facilitate the acquisition of Opis Corporation; and
(c) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business and any interest or title of a lessor,
licensor or under any lease or license, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
(f) Liens arising by statutory rule.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
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"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of fewer than 12 months determined according to
GAAP.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President and the Chief Financial Officer.
"REVOLVING MATURITY DATE" is December 1, 1998.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities plus Subordinated Debt.
"TRADEMARKS" are all trademark and servicemark rights, registered or
not, applications to register and registrations and like protections, and the
entire goodwill of the business of Borrower connected with the trademarks owned
by Borrower.
BORROWER:
SALESLOGIX CORPORATION
By: /s/Gary R. Acord
-------------------------------------------------
Title: CFO
-------------------------------------------------
BANK:
SILICON VALLEY BANK
By: /s/ Stephen D. Todd
-------------------------------------------------
Title: Sr. Vice President
-------------------------------------------------
20
<PAGE> 21
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.
21
<PAGE> 22
EXHIBIT C
BORROWING BASE CERTIFICATE
- --------------------------------------------------------------------------------
Borrower: SALESLOGIX CORPORATION Lender: Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Commitment Amount: $1,500,000
- --------------------------------------------------------------------------------
<TABLE>
ACCOUNTS RECEIVABLE
<S> <C> <C>
1. Accounts Receivable Book Value as of ____ $____________
2. Additions (please explain on reverse) $____________
3. TOTAL ACCOUNTS RECEIVABLE $____________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $____________
5. Balance of 50% over 90 day accounts $____________
6. Credit balances over 90 day $____________
7. Concentration Limits $____________
8. Foreign Accounts $____________
9. Government Accounts $____________
10. Contra Accounts $____________
11. Promotion or Demo Accounts $____________
12. Intercompany/Employee Accounts $____________
13. Other (please explain on reverse) $____________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $____________
15. Eligible Accounts (#3 minus #14) $____________
16. LOAN VALUE OF ACCOUNTS (75% of #15) $____________
BALANCES
17. Maximum Loan Amount $____________
18. Total Funds Available [Lesser of #17 or #16] $____________
19. Present balance owing on Line of Credit $____________
20. Outstanding under Sublimits ( ) $____________
21. RESERVE POSITION (#18 minus #19 and #20) $____________
</TABLE>
The undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Second Amended and Restated Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
<TABLE>
<S> <C>
------------------------
COMMENTS:
BANK USE ONLY
Rec'd By: ____________
Auth. Signer
SALESLOGIX CORPORATION Date: ________________
Verified:_____________
By: ____________________ Auth. Signer
Authorized Signer Date: ________________
______________________
------------------------
</TABLE>
<PAGE> 23
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
FROM: SALESLOGIX CORPORATION
The undersigned authorized officer of SALESLOGIX CORPORATION certifies
that under the terms and conditions of the Second Amended and Restated Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ____________ with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required documents supporting the certification. The Officer
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C> <C>
Monthly financial statements+CC Monthly within 30 days Yes No
Annual (Audited) FYE within 90 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
A/R & A/P Agings +BBC Monthly within 20 days Yes No
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
Maintain on a Monthly Basis beginning with the month ending December 31, 1997:
<S> <C> <C> <C> <C>
Minimum Quick Ratio* 1.75:1.00 _____:1.0 Yes No
Minimum Liquidity Coverage** 2 times the outstanding $_______ Yes No
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 _____:1.00 Yes No
Profitability: Quarterly $_______ Yes No
Maximum Losses not to
exceed ****: $1,200,000 for the quarter ending December
31, 1997; $300,000 for the quarter ending
March 31, 1998; and $200,000 for the quarter
ending June 30, 1998.
</TABLE>
*net of deferred revenue (maintenance and support)
**Through the period ending November 30, 1997, Liquidity to be defined as
unrestricted cash (and equivalents) plus 50% of net trade accounts receivable
less than 90 days from the invoice date. Beginning with the period ending
December 31, 1997, Liquidity to be defined as unrestricted cash (and
equivalents) plus eligible borrowings under the Committed Revolving Line less
any Advances. Once Borrower has maintained a Debt Service Coverage ratio of 1.50
to 1.00 for 2 consecutive quarters, the Liquidity Coverage covenant will be
replaced with the Debt Service Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
<PAGE> 24
<TABLE>
<S> <C>
---------------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Sincerely, RECEIVED BY:___________________
AUTHORIZED SIGNER
DATE:__________________________
VERIFIED:______________________
AUTHORIZED SIGNER
SALESLOGIX CORPORATION
DATE:__________________________
______________________________ COMPLIANCE STATUS: YES NO
SIGNATURE
______________________________
TITLE
---------------------------------
______________________________
DATE
</TABLE>
2
<PAGE> 25
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of December 1,
1998, by and between SalesLogix Corporation ("Borrower") and Silicon Valley Bank
("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Second Amended and Restated Loan and Security Agreement, dated
December 2, 1997, as may be amended from time to time, (the "Loan Agreement").
The Loan Agreement provided for, among other things, a Committed Acquisition
Loan in the original principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Acquisition Loan") and a Committed Revolving Line in
the original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Revolving Line"). Defined terms used but not otherwise
defined herein shall have the same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement and by an
Intellectual Property Security Agreement, dated July 3, 1997.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment 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 Loan Agreement.
1. The Profitability covenant as described in Section 6.7 entitled
"Financial Covenants" is hereby amended to read as follows:
(iv) PROFITABILITY. Borrower will be profitable each quarter, except
that Borrower may suffer Maximum Losses not to exceed: $2,100,000 for
the quarter ended June 30, 1998; $2,000,000 for the quarter ended
September 30, 1998; $1,800,000 for the quarter ending December 31,
1998; and $1,000,000 for the quarter ending March 31, 1999. Borrower
shall achieve a minimum quarterly profits of $1 beginning with the
quarter ending June 30, 1999 and each quarter ending thereafter.
2. Notwithstanding the terms and conditions contained in Section 7.6
entitled "Distributions; Investments", Borrower shall be allowed a one
time repurchase of stock from a former employee of Borrower in
accordance with the terms of repurchase resulting from litigation with
such employee in an aggregate amount not to exceed $2,510,000,
provided, however, that immediately prior to and following such
repurchase there exists no Event of Default under the Loan Documents.
3. The term "Revolving Maturity Date" as defined in Section 13.1 entitled
"Definitions" is hereby amended to mean March 31, 1999.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Two
Thousand Dollars ($2,000) (the "Loan Fee") plus all out-of-pocket expenses.
<PAGE> 26
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
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. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank 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 Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
SALESLOGIX CORPORATION SILICON VALLEY BANK
By: /s/ J. Valenzuela By: /s/ Amy Lou Blunt
------------------- -------------------------
Name: James E. Valenzuela Name: Amy Lou Blunt
------------------- -------------------------
Title: VP Finance Title: Assistant Vice President
------------------- -------------------------
<PAGE> 27
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
<TABLE>
<S> <C> <C>
BORROWER: SALESLOGIX CORPORATION
LOAN OFFICER: AMY BLUNT
DATE: DECEMBER 29,1998
LOAN FEE $2,000.00
DOCUMENTATION FEE 250.00
TOTAL FEE DUE $2,250.00
------------- =========
</TABLE>
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{X} DEBIT DDA# 3300016396 FOR THE TOTAL AMOUNT.
BORROWER:
BY: /S/JAMES E. VALENZUELA
-----------------------------------
(AUTHORIZED SIGNER)
BANK:
/S/ AMY LOU BLUNT 12/30/98
- ----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
<PAGE> 28
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
Credit Department
3003 Tasman Drive
Santa Clara, CA 95054
FROM: SALESLOGIX CORPORATION
The undersigned authorized Officer of SALESLOGIX CORPORATION ("Borrower"),
hereby certifies that in accordance with the terms and conditions of the Second
Amended and Restated Loan and Security Agreement, as modified from time to time,
the Borrower is in complete compliance for the period ending
_____________________ of all required conditions and terms except as noted
below. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistent from one period to the next except as explained in an accompanying
letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C>
Interim Financial Statements + CC Monthly within 30 days YES / NO
Annual F/S (AUDITED) FYE within 90 days YES / NO
10-Q, 10-K & 8-K Within 5 days after filing with SEC YES / NO
AR & AP Agings + BBC Monthly within 20 days YES / NO
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
TO BE TESTED ON A MONTHLY BASIS, UNLESS OTHERWISE NOTED:
<S> <C> <C> <C>
Minimum Quick Ratio* 1.50:1.00 ____:1.00 YES / NO
Minimum Liquidity Coverage** 1.40 times the outstanding ____:1.00 YES / NO
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 ____:1.00 YES / NO
Profitability (Quarterly) $1 $___________ YES / NO
Maximum Losses not to exceed****: $2,100,000
for the quarter ended June 30, 1998;
$2,000,000 for the quarter ended September
30,1998; $1,800,000 for the quarter ending
December 31, 1998; and $1,000,000 for the
quarter ending March 31, 1999.
</TABLE>
*net of deferred revenue (maintenance and support)
**Liquidity to be defined as unrestricted cash (and equivalents) plus eligible
borrowings under the Committed Revolving Line less any Advances. Once Borrower
has maintained a Debt Service Coverage ratio of 1.50 to 1.00 for 2 consecutive
quarters, the Liquidity Coverage covenant will be replaced with the Debt Service
Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
COMMENTS REGARDING FINANCIAL COVENANTS:
================================
BANK USE ONLY
RECEIVED BY: _________________
DATE: ________________________
REVIEWED BY: _________________
COMPLIANCE STATUS: YES / NO
================================
Very truly yours,
SALESLOGIX CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE> 29
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of April 6, 1998,
by and between SalesLogix Corporation ("Borrower") whose address is 8800 North
Gainey Center Drive, Suite 200, Scottsdale, AZ 85258 and Silicon Valley Bank
("Bank") whose corporate headquarters is located at 3003 Tasman Drive, Santa
Clara, CA 95054 with a loan production office located at 4455 East Camelback
Road, Suite E - 290, Phoenix, AZ 85018.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Second Amended and Restated Loan and Security Agreement, dated
December 2, 1997, as may be amended from time to time, (the "Loan Agreement").
The Loan Agreement provided for, among other things, a Committed Acquisition
Loan in the original principal amount of One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00),(the "Acquisition Loan") and a Committed
Revolving Line in the original principal amount of One Million Five Hundred
Thousand and 00/100 Dollars ($1,500,000.00) (the "Revolving Line"). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment 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 Loan Agreement.
1. Section 2.1.2 entitled "Acquisition Advance" is hereby amended in
part to provide that Borrower hereby acknowledges that any
payment under this Section 2.1.2 of all or a portion of the
amount owed earlier than it is due through the period ending
September 30, 1998, will be subject to a prepayment fee in an
amount equal to 2% of any prepaid amount.
2. Section 6.7 entitled "Financial Covenants" is hereby amended in
its entirety to read as follows:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current
Liabilities minus Deferred Maintenance Revenue (maintenance and
support) of at least 1.50 to 1.00.
(ii) LIQUIDITY COVERAGE. Unrestricted cash (and equivalents) plus
eligible borrowings under the Committed Revolving Line less any
outstanding Advance of at least 1.40 times the outstanding
Acquisition Advance.
(iii) DEBT SERVICE COVERAGE. A ratio of earnings before interest,
taxes, depreciation and amortization less capital expenditures
and capitalized software to current maturities of long term debt
of at least 1.50 to 1.00. To be maintained by Borrower upon
replacement of the Liquidity Coverage covenant.
<PAGE> 30
(iv) PROFITABILITY. Borrower will be profitable each quarter,
except that Borrower may suffer Maximum Losses not to exceed:
$1,200,000 for the quarter ending December 31, 1997; $1,000,000
for the quarter ending March 31, 1998; and $800,000 for the
quarter ending June 30, 1998 (provided that Borrower's closes its
pending equity round prior to June 30, 1998).
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Indebtedness, Bank 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. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank 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 Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
SALESLOGIX CORPORATION SILICON VALLEY BANK
By: /s/ Gary R. Acord By: /s/ Amy Lou Blunt
--------------------- -------------------------
Name: Gary R. Acord Name: Amy Lou Blunt
--------------------- -------------------------
Title: CFO Title: Assistant Vice President
--------------------- -------------------------
2
<PAGE> 31
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
Credit Department
3003 Tasman Drive
Santa Clara, CA 95054
FROM: SALESLOGIX CORPORATION
The undersigned authorized Officer of SALESLOGIX CORPORATION ("Borrower"),
hereby certifies that in accordance with the terms and conditions of the Second
Amended and Restated Loan and Security Agreement, as modified from time to time,
the Borrower is in complete compliance for the period ending
____________________ of all required conditions and terms except as noted below.
Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) and are consistent from one
period to the next except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C>
Interim Financial Statements + CC Monthly within 30 days YES / NO
Annual F/S (AUDITED) FYE within 90 days YES / NO
10-Q, 10-K & 8-K Within 5 days after filing with SEC YES / NO
AR & AP Agings + BBC Monthly within 20 days YES / NO
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
TO BE TESTED ON A MONTHLY BASIS, UNLESS OTHERWISE NOTED:
<S> <C> <C> <C>
Minimum Quick Ratio* 1.50:1.00 ____:1.00 YES / NO
Minimum Liquidity Coverage** 1.40 times the outstanding ____: 1.00 YES / NO
Acquisition Advance
Minimum Debt Service*** 1.50:1.00 ____ :1.00 YES / NO
Profitability Quarterly $___________ YES / NO
Maximum Losses
not to exceed****: $1,200,000 for the quarter ended December 31,
1997; $1,000,000 for the quarter ending
march 31, 1998; $800,000 for the quarter
ending June 30, 1998 (provided Borrower
closes its pending Series C round of equity
prior to June 30, 1998).
</TABLE>
*net of deferred revenue (maintenance and support)
**Liquidity to be defined as unrestricted cash (and equivalents) plus eligible
borrowings under the Committed Revolving Line less any Advances. Once Borrower
has maintained a Debt Service Coverage ratio of 1.50 to 1.00 for 2 consecutive
quarters, the Liquidity Coverage covenant will be replaced with the Debt Service
Coverage covenant.
***To be maintained upon replacement of the Liquidity Coverage covenant. Debt
Service Coverage is defined as earnings before interest, taxes, depreciation and
amortization minus capital expenditures and capitalized software divided by
current maturities of long term debt.
****Maximum Losses defined as net income plus non-cash charges from the
write-off of in-process technology related to the acquisition of Opis
Corporation minus any increases in capitalized software.
COMMENTS REGARDING FINANCIAL COVENANTS:
================================
BANK USE ONLY
RECEIVED BY: _________________
DATE: ________________________
REVIEWED BY: _________________
COMPLIANCE STATUS: YES / NO
================================
<PAGE> 32
Very truly yours,
SALESLOGIX CORPORATION
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
<PAGE> 33
[LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
<TABLE>
<S> <C> <C>
BORROWER: SALESLOGIX CORPORATION
LOAN OFFICER: AMY BLUNT
DATE: APRIL 6, 1998
DOCUMENTATION FEE 200.00
TOTAL FEES $200.00
---------- =======
</TABLE>
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{X} DEBIT DDA# 3300016396 FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
BORROWER:
BY: /S/ GARY ACORD 5/22/98
- -----------------------------------------
BORROWER (DATE)
/S/ AMY LOU BLUNT 5/26/98
- -----------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
<PAGE> 1
Exhibit 10.3 - Master Lease Agreement
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (the "Master Lease") dated June 7, 1996 by and between
COMDISCO, INC. ("Lessor") and SALESLOGIX CORPORATION ("Lessee").
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.18):
1. PROPERTY LEASED.
Lessor leases to Lessee all of the Equipment described on each Summary Equipment
Schedule. In the event of a conflict, the terms of the applicable Schedule
prevail over this Master Lease.
2. TERM.
On the Commencement Date, Lessee will be deemed to accept the Equipment, will be
bound to its rental obligations for each item of Equipment and the term of a
Summary Equipment Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. RENT AND PAYMENT.
Rent is due and payable in advance on the first day of each Rent Interval at the
address specified in Lessor's invoice. Interim Rent is due and payable when
invoiced. If any payment is not made when due, Lessee will pay a Late Charge on
the overdue amount. Upon Lessee's execution of each Schedule, Lessee will pay
Lessor the Advance specified on the Schedule. The Advance will be credited
towards the final Rent payment if Lessee is not then in default. No interest
will be paid on the Advance.
4. SELECTION; WARRANTY AND DISCLAIMER OF WARRANTIES.
4.1 SELECTION. Lessee acknowledged that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor, other than as set
forth in the Schedule.
4.2 WARRANTY AND DISCLAIMER OF WARRANTIES. Lessor warrants to Lessee that, so
long as Lessee is not in default, Lessor will not disturb Lessee's quiet and
peaceful possession, and unrestricted use of the Equipment. To the extent
permitted by the manufacturer, Lessor assigns to Lessee during the term of the
Summary Equipment Schedule any manufacturer's warranties for the Equipment.
LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any liability,
claim, loss, damage or expense of any kind (including strict liability in tort)
caused by the Equipment except for any loss or damage caused by the willful
misconduct or negligent acts of Lessor. In no event is Lessor responsible for
special, incidental or consequential damages.
5. TITLE; RELOCATION OR SUBLEASE; AND ASSIGNMENT.
5.1 TITLE. Lessee holds the Equipment subject and subordinate to the rights of
the Owner, Lessor, and Assignee and any Secured Party. Lessee authorizes Lessor,
as Lessee's agent, and at Lessor's expense, to prepare, execute and file in
Lessee's name precautionary Uniform Commercial Code Financing statements showing
the interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Summary Equipment Schedules as
appropriate. Lessee will, at its expense, keep the Equipment free and clear from
any liens or encumbrances of any kind (except any caused by Lessor) and will
indemnify and hold the Owner, Lessor, any Assignee and Secured Party harmless
from and against any loss caused by Lessee's failure to do so, except where such
is caused by Lessor.
5.2 RELOCATION OR SUBLEASE. Upon prior written notice, Lessee may relocate
Equipment to any location within the continental United States provided (i) the
Equipment will not be used by an entity exempt from federal income tax, and (ii)
all additional costs (include any administrative fees, additional taxes and
insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the Lessor and
the Secured Party. Such consent to sublease will be granted if: (i) Lessee meets
the relocation requirements set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest are filed, and (vi) Lessee executed
sublease documents acceptable to Lessor.
No relocation or sublease will relieve Lessee from any of its obligations under
this Master Lease and the relevant Schedule.
5.3 ASSIGNMENT BY LESSOR. The terms and conditions of each Schedule have been
fixed by Lessor in order to permit Lessor to sell and/or assign or transfer its
interest or grant a security interest in each Schedule and/or the Equipment to a
Secured Party or Assignee. In that event, the term Lessor will mean the Assignee
and any Secured Party. However, any assignment, sale, or other transfer by
Lessor will not relieve Lessor of its obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed on Lessee. The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights, but
will not be obligated to perform any of the obligations of Lessor. The Secured
Party will not disturb Lessee's quiet and peaceful possession and unrestricted
use of the Equipment so long as Lessee is not in default and the Secured Party
continues to receive all Rent payable under the Schedule; and
(b) Lessee will pay all Rent and other amounts payable to the Secured Party,
despite any defense or claim which it has against Lessor. Lessee reserves its
right to have recourse directly against Lessor for any defense or claim;
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the extent of the
Secured Party's rights in that Equipment.
6. NET LEASE; TAXES AND FEES.
6.1 NET LEASE. Each Summary Equipment Schedule constitutes a net lease. Lessee's
obligation to pay Rent and all other amounts due hereunder is absolute and
unconditional and is not subject to any abatement, reduction, set-off, defense,
counterclaim, interruption, deferment or recoupment for any reason whatsoever.
6.2 TAXES AND FEES. Lessee will pay when due or reimburse Lessor for all taxes,
fees or any other charges (together with any related interest or penalties not
arising from the negligence of Lessor) accrued for or arising during the term o
each Summary Equipment Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state, local and franchise taxes on
the capital or the net income of Lessor). Lessor will file all personal property
tax returns for the Equipment and pay all such property taxes due. Lessee will
reimburse Lessor for property taxes within thirty (30) days of receipt of an
invoice.
7. CARE, USE AND MAINTENANCE; INSPECTION BY LESSOR.
7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal wear and tear, and will not use the Equipment for any purpose other
than that for which it was designed. If commercially available and considered
common business practice for each item of Equipment, Lessee will maintain in
force a standard maintenance contract with the manufacturer of the Equipment, or
another party acceptable to Lessor, and will provide Lessor with a complete copy
of that contract. If Lessee has the Equipment maintained by a party other than
the manufacturer or self maintains, Lessee agrees to pay an costs necessary for
the manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term, provided
re-
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certification is available and is required by Lessor. The lease term will
continue upon the same terms and conditions until recertification has been
obtained.
7.2 INSPECTION BY LESSOR. Upon reasonable advance notice, Lessee, during
reasonable business hours and subject to Lessee's security requirements, will
make the Equipment and its related log and maintenance records available to
Lessor for inspection.
8. REPRESENTATION AND WARRANTIES OF LESSEE. Lessee hereby represents, warrants
and covenants that with resect to the Master Lease and each Schedule executed
hereunder:
(a) The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business in each jurisdiction (including the jurisdiction where
the Equipment is, or is to be, located) where its ownership or lease of property
or the conduct of its business requires such qualification, except for where
such lack of qualification would not have a material adverse effect on the
Company's business; and has full corporate power and authority to hold property
under the Master Lease and each Schedule and to enter into and perform its
obligations under the Master Lease and each Schedule.
(b) The execution and delivery by the Lessee of the Master Lease and each
Schedule and its performance thereunder have been duly authorized by all
necessary corporate action on the part of the Lessee, and the Master Lease and
each Schedule are not inconsistent with the Lessee's Articles of Incorporation
or Bylaws, do not contravene any law or governmental rule, regulation or order
applicable to it, do not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
it is a party or by which it is bound, and the Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee, enforceable in
accordance with their terms, subject to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally and rules of law
concerning equitable remedies.
(c) There are not actions, suits, proceedings or patent claims pending or, to
the knowledge of the Lessee, threatened against or affecting the Lessee if any
court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Lessee to perform its obligations under the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the Lessee
will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities and
obligations of the Lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate, materially
adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has
access to, or can become licensed on reasonable terms under all patents, patent
applications, trademarks, trade names, inventions, franchise, licenses, permits,
computer software and copyrights necessary for the operations of its business as
now conducted, with no known infringement of, or conflict with, the rights of
others.
(g) All material contracts, agreements and instruments to which the Lessee is a
party are in full force and effect in all material respects, and are valid,
binding and enforceable by the Lessee in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally, and rules of law concerning equitable
remedies.
9. DELIVERY AND RETURN OF EQUIPMENT.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Summary Equipment Schedule,
Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense
(including, without limitation, expenses of transportation and in-transit
insurance), return the Equipment to Lessor in the same operating order, repair,
condition and appearance as when received, less normal depreciation and wear and
tear. Lessee shall return the Equipment to Lessor at 6111 North River Road,
Rosemont, Illinois 60018 or at such other address within the continental United
States as directed by Lessor, provided, however, that Lessee's expense shall be
limited to the cost of returning the equipment to Lessor's address as set forth
herein. During the period subsequent to receipt of a notice under Section 2,
Lessor may demonstrate the Equipment's operation in place and Lessee will supply
any of its personnel as may reasonably be required to assist in the
demonstrations.
10. LABELING.
Upon request, Lessee will mark the Equipment indicating Lessor's interest with
labels provided by Lessor. Lessee will keep all Equipment free from any other
marking or labeling which might be interpreted as a claim of ownership.
11. INDEMNITY.
With regard to bodily injury and property damage liability only, Lessee will
indemnify and hold Lessor, any Assignee and any Secured Party harmless from and
against any and all claims, costs, expenses, damages and liabilities, including
reasonable attorneys' fees, arising out of the ownership (for strict liability
in tort only), selection, possession, leasing, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment during the
term of this Master Lease or until Lessee's obligations under the Master Lease
terminate. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insured against by the Lessee on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12. RISK OF LOSS.
Effective upon delivery and until Equipment is returned, Lessee relieves Lessor
of responsibility for all risks of physical damage to or loss or destruction of
the Equipment. Lessee will carry casualty insurance for each item of Equipment
in an amount not less than the Casualty Value. All polices for such insurance
will name the Lessor and any Secured Party as additional insured and as loss
payee, and will provide for at least thirty (30) days prior written notice to
the Lessor of cancellation or expiration, and will insure Lessor's interests
regardless of any breach or violation by Lessee of any representation, warranty
or condition contained in such policies and will be primary without right of
contribution from any insurance effected by Lessor. Upon the execution of any
Schedule, the Lessee will furnish appropriate evidence of such insurance
acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such Equipment
has suffered a Casualty Loss. Within fifteen (15) days of a Casualty Loss,
Lessee will provide written notice of that loss to Lessor and Lessee will, at
Lessee's option, either (a) replace the item of Equipment with Like Equipment
and marketable title to the Like Equipment with automatically vest in Lessor or
(b) pay the Casualty Value and after that payment and the payment of all other
amounts due and owing with respect to that item of Equipment, Lessee's
obligation t pay further Rent for the item of Equipment will cease.
13. DEFAULT, REMEDIES AND MITIGATION.
13.1 DEFAULT. The occurrence of any one or more of the following Events of
Default constitutes a default under a Summary Equipment Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee when due if
that failure continues for five (5) business days after written notice; or
(b) Lessee's failure to perform any other term or condition of the Schedule or
the material inaccuracy of any representation or warranty made by the Lessee in
the Schedule or in any document or certificate furnished to the Lessor hereunder
if that failure or inaccuracy continues for ten (10) business days after written
notice; or
(c) An assignment by Lessee for the benefit of its creditors, the failure by
Lessee to pay its debts when due, the insolvency of Lessee, the filing by Lessee
or the filing against Lessee of any petition under any bankruptcy or insolvency
law or for the appointment of a trustee or other officer with similar powers,
the adjudication of Lessee as insolvent, the liquidation of Lessee, or the
taking of any action for the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule, Summary Equipment
Schedule or other agreement between Lessee and Lessor or its Assignee or Secured
Party.
13.2 REMEDIES. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable Schedule by
appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default Costs;
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<PAGE> 3
(c) with notice and demand, recover all sums due and accelerate and recover the
present value of the remaining payment stream of all Rent due under the
defaulted Schedule (discounted at the same rate of interest at which such
defaulted Schedule was discounted with a Secured Party plus any prepayment fees
charged to Lessor by the Secured Party or, if there is no Secured Party, then
discounted at 6%) together with all Rent and other amounts currently due as
liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's security
requirements, Lessor may enter on Lessee's premises to remove and repossess the
Equipment without being liable to Lessee for damages due to the repossession,
except those resulting from Lessor's, its assignees', agents' or
representatives' negligence; and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted by law,
are cumulative and may be exercised successively or concurrently.
13.3 MITIGATION. Upon return of the Equipment pursuant to the terms of Section
13.2, Lessor will use its best efforts in accordance with its normal business
procedures (and without obligation to give any priority to such Equipment) to
mitigate Lessor's damages as described below. EXCEPT AS SET FORTH IN THIS
SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE
OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY ANY OF
LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or otherwise
dispose of all or any part of the Equipment at a public or private sale for cash
or credit with the privilege of purchasing the Equipment. The proceeds from any
sale, lease or other disposition of the Equipment are defined as either:
(a) if sold or otherwise disposed of, the cash proceeds less the Fair Market
Value of the Equipment at the expiration of the Initial Term less the Default
Costs; or
(b) if leased, the present value (discounted at 3 percent (3%) over the U.S.
Treasury Notes of comparable maturity to the term of the re-lease) of the
rentals for a term not to exceed the Initial Term, less the Default Costs.
Any proceeds will be applied against liquidated damages and any other sums due
to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor may
recover, the amount by which the proceeds are less than the liquidated damages
and other sums due to Lessor from Lessee.
14. ADDITIONAL PROVISIONS.
14.1 BOARD ATTENDANCE. One representative of Lessor will have the right to
attend Lessee's corporate Board of Directors meetings and Lessee will give
Lessor reasonable notice in advance of any special Board of Directors meeting,
which notice will provide an agenda of the subject matter to be discussed at
such board meeting. Lessee will provide Lessor with a certified copy of the
minutes of each Board of Directors meeting within thirty (30) days following the
date of such meeting held during the term of this Master Lease.
14.2 FINANCIAL STATEMENTS. As soon as practicable at the end of each month (and
in any event within thirty (30) days), Lessee will provide to Lessor the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows prepared in accordance with generally accepted accounting principles,
consistently applied (the "Financial Statements"). As soon a practicable at the
end of each fiscal year, Lessee will provide to Lessor audited Financial
Statements setting forth in comparative form the corresponding figures for the
fiscal year (and in any event within ninety (90) days), and accompanied by an
audit report and opinion of the independent certified public accountants
selected by Lessee. Lessee will promptly furnish to Lessor any additional
information (including, but not limited to, tax returns, income statements,
balance sheets and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing ability to meet financial obligations.
After the effective date of the initial registration statement covering a public
offering of Lessee's securities, the term "Financial Statements" will be deemed
to refer to only those statements required by the Securities and Exchange
Commission.
14.3 OBLIGATION TO LEASE ADDITIONAL EQUIPMENT. Upon notice to Lessee, Lessor
will not be obligated to lease any Equipment which would have a Commencement
Date after said notice if: (i) Lessee is in default under this Master Lease or
any Schedule; (ii) Lessee is in default under any loan agreement, the result of
which would allow the lender or any secured party to demand immediate payment of
any material indebtedness; (iii) there is a material adverse change in Lessee's
credit standing; or (iv) Lessor determines (in reasonable good faith) that
Lessee will be unable to perform its obligations under this Master Lease or any
Schedule.
14.4 MERGER AND SALE PROVISIONS. Lessee will notify Lessor of any proposed
Merger at least sixty (60) days prior to the closing date. Lessor may, in its
discretion, either (i) consent to the assignment of the Master Lease and all
relevant Schedules to the successor entity, or (ii) terminate the Lease and all
relevant Schedules. If Lessor elects to consent to the assignment, Lessee and
its successor will sign the assignment documentation provided by Lessor. If
Lessor elects to terminate the Master Lease and all relevant Schedules, then
Lessee will pay Lessor all amounts then due and owing and a termination fee
equal to the present value (discounted at 6%) of the remaining Rent for the
balance of the Initial Term(s) of all Schedules, and will return the Equipment
in accordance with Section 9. Lessor hereby consents to any Merger in which the
acquiring entity has a Moody's Bond Rating of BA3 or better or a commercially
acceptable equivalent measure of creditworthiness as reasonably determined by
Lessor.
14.5 ENTIRE AGREEMENT. This Master Lease and associated Schedules and Summary
Equipment Schedules supersede all other oral or written agreements or
understandings between the parties concerning the Equipment including, for
example, purchase orders. ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY
ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT
IS SOUGHT TO BE ENFORCED.
14.6 NO WAIVER. No action taken by Lessor or Lessee will be deemed to constitute
a waiver of compliance with any representation, warranty or covenant contained
in this Master Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not operate or be
construed as a waiver of any subsequent breach.
14.7 BINDING NATURE. Each Schedule is binding upon, and inures to the benefit of
Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS.
14.8 SURVIVAL OF OBLIGATIONS. All agreements, obligations including, but not
limited to those arising under Section 6.2, representations and warranties
contained in this Master Lease, any Schedule, Summary Equipment Schedule or in
any document delivered in connection with those agreements are for the benefit
of Lessor and any Assignee or Secured Party and survive the execution, delivery,
expiration or termination of this Master Lease.
14.9 NOTICES. Any notice, request or other communication to either party by the
other will be given in writing and deemed received upon the earlier of (1)
actual receipt or (2) three days after mailing if mailed postage prepaid by
regular or airmail to Lessor (to the attention of "the Comdisco Venture Group")
or Lessee, at the address set out in the Schedule, (3) one day after it is sent
by courier or (4) on the same day as sent via facsimile transmission, provided
that the original is sent by personal delivery or mail by the sending party.
14.10 APPLICABLE LAW. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL HAVE
BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE GOVERNED
AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
14.11 SEVERABILITY. If any one or more of the provisions of this Master Lease or
any Schedule is for any reason held invalid, illegal or unenforceable, the
remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 COUNTERPARTS. This Master Lease and any Schedule may be executed in any
number of counterparts, each of which will be deemed an original, but all such
counterparts together constitute one and the same instrument. If Lessor grants a
security interest in all or any part of a Schedule, the Equipment or sums
payable thereunder, only that counterpart Schedule marked "Secured Party's
Original" can transfer Lessor's rights and all other counterparts will be marked
"Duplicate."
14.13 LICENSED PRODUCTS. Lessee will obtain no title to Licensed Products which
will at all items remain the property of the owner of the Licensed Products. A
license from the owner may be required and it is Lessee's responsibility to
obtain any required license before the use of the Licensed Products. Lessee
agrees to treat the Licensed Products as confidential information of the owner,
to observe all copyright restrictions, and not to reproduce or sell the Licensed
Products.
14.14 SECRETARY'S CERTIFICATE. Lessee will, upon execution of this Master Lease,
provide Lessor with a secretary's certificate of incumbency and authority. Upon
the execution of each Schedule with a purchase price in excess of $1,000,000,
Lessee
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<PAGE> 4
will provide Lessor with an opinion from Lessee's counsel in a form acceptable
to Lessor regarding the representations and warranties in Section 8.
14.15 ELECTRONIC COMMUNICATIONS. Each of the parties may communicate with the
other by electronic means under mutually agreeable terms.
14.16 LANDLORD/MORTGAGEE WAIVER. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.
14.17 EQUIPMENT PROCUREMENT CHARGES/PROGRESS PAYMENTS. Lessee hereby agrees that
Lessor shall not, by virtue of its entering into this Master Lease, be required
to remit any payments to any manufacturer or other third party until Lessee
accepts the Equipment subject to this Master Lease.
14.18 Definitions.
ADVANCE - means the amount due to Lessor by Lessee upon Lessee's execution of
each Schedule.
ASSIGNEE - means an entity to whom Lessor has sold or assigned its rights as
owner and Lessor of Equipment.
CASUALTY LOSS - means the irreparable loss or destruction of Equipment.
CASUALTY VALUE - means the greater of the aggregate Rent remaining to be paid
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
COMMENCEMENT DATE - is defined in each Schedule.
DEFAULT COSTS - means reasonable attorney's fees and remarketing costs resulting
from a Lessee default or Lessor's enforcement of its remedies.
DELIVERY DATE - means date of delivery of Inventory Equipment to Lessee's
address.
EQUIPMENT - means the property described on a Summary Equipment Schedule and any
replacement for that property required or permitted by this Master Lease or a
Schedule.
EVENT OF DEFAULT - means the events described in Subsection 13.1.
FAIR MARKET VALUE - means the aggregate amount which would be obtainable in an
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
INITIAL TERM - means the period of time beginning on the first day of the first
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
INTERIM RENT - means the pro-rata portion of Rent due for the period from the
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.
LATE CHARGE - means the lesser of five percent (5%) of the payment due or the
maximum amount permitted by the law of the state where the Equipment is located.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
MERGER - means any consolidation of the Lessee with or into any other
corporation or entity, any sale or conveyance of all or substantially all of the
assets or stock of the Lessee by or to any other person or entity in which
Lessee is not the surviving entity.
NOTICE PERIOD - means not less than ninety (90) days nor more than twelve (12)
months prior to the expiration of the lease term.
OWNER - means the owner of the Equipment.
RENT - means the rent Lessee will pay for each item of Equipment expressed in a
Summary Equipment Schedule either as a specific amount or an amount equal to the
amount which lessor pays for an item of Equipment multiplied by a lease rate
factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
RENT INTERVAL - means a full calendar month or quarter as indicated on a
Schedule.
SCHEDULE - means either an Equipment Schedule or a Licensed Products Schedule
which incorporate all of the terms and conditions of this Master Lease.
SECURED PARTY - means an entity to whom Lessor has granted a security interest
for the purpose of securing a loan.
SECURED EQUIPMENT SCHEDULE - means a certificate provided by Lessor summarizing
all of the Equipment for which Lessor has received Lessee approved vendor
invoices, purchase documents and/or evidence of delivery during a calendar
quarter which will incorporate all of the terms and conditions of the related
Schedule and this Master Lease and will constitute a separate lease for the
equipment leased thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as
of the day and year first above written.
SALESLOGIX CORPORATION COMDISCO, INC.,
as Lessee as Lessor
By: /s/Patrick M. Sullivan By: /s/ James P.Labe
------------------------------- ------------------------------------
Title: President Title: President, Venture Lease Division
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<PAGE> 5
ADDENDUM TO THE
MASTER LEASE AGREEMENT DATED AS OF JUNE 7, 1996
BETWEEN SALESLOGIX CORPORATION AS LESSEE
AND COMDISCO, INC. AS LESSOR
The undersigned hereby agree that the terms and conditions of the
above-referenced Master Lease are hereby modified and amended as follows:
1) Section 4.2, WARRANTY AND DISCLAIMER OF WARRANTIES
In the first line of the phrase "warrants to Lessee" insert the
following: "(i)".
In the third line after the phrase "use of the Equipment" insert the
following: ", and (ii) that Lessor has the full right, power and authority (from
Owner and otherwise) to execute, deliver and perform this Master Lease Agreement
and to grant the lease rights set forth herein".
2) Section 5.1, TITLE
In the eighth line after the phrase "caused by Lessor" insert the
following: ", Owner, Assignee or Secured Party".
In the last line after the word "Lessor" insert the following: ",Owner,
Assignee or Secured Party".
3) Section 5.2, RELOCATION OR SUBLEASE
In the last line of the second paragraph insert the word "reasonably"
between the words "documents" and "acceptable".
4) Section 13.1, DEFAULT
In paragraph (b) change "ten (10)" to "twenty (20)".
In paragraph (c) after the words "filing against Lessee" insert the
following: "(and the failure to have such filing dismissed within 90 days)".
In the last line of paragraph (d) after the words "Secured Party" insert
the words: ", and the failure to cure the same within applicable cure periods
(if none is specified, then within the period specified in 13.1(b) above)".
5) Section 13.2, REMEDIES
In paragraph (c) in the sixth line replace "liquidated damages" with
"Liquidated Damages".
<PAGE> 6
6) Section 13.3, MITIGATION
In the last paragraph, in the first and third lines replace "liquidated
damages" with "Liquidated Damages".
7) Section 14.1, BOARD ATTENDANCE
In the first line after the word "attend" insert "up to two (2) of" and in
the second line after the words "Board of Directors meetings" insert "per year".
In the last sentence after the words "Board of Directors meeting" replace
the words "within thirty (30) days following the date of such meeting held" with
the words "when so distributed to the Board".
8) Section 14.2, FINANCIAL STATEMENTS
Delete this section and replace it with the following: Lessee agrees to
provide Lessor on a monthly/quarterly basis (the same timing as for other
venture investors), the executive summary and minutes of the board of directors
meetings which are sent to all investors, including all attachments so
distributed.
9) Section 14.4, MERGER AND SALE PROVISIONS
In the second line replace "sixty (60)" with "thirty (30)".
10) Section 14.6, NO WAIVER
In line three after the words "or a Schedule" insert the following:
"except as expressly agreed to by Lessor".
11) Section 14.13, LICENSED PRODUCTS
In the last line after the words "Licensed Products" insert the following:
"without permission of the owner or licenser thereof".
12) Section 14.16, LANDLORD/MORTGAGEE WAIVER
In the last line after the word "form" insert the word "reasonably".
13) Section 14.18, DEFINITIONS
In the sixteenth paragraph ("Merger") after the words "corporation or
entity" insert the following: "where Lessee is not the surviving entity, or".
<PAGE> 7
SALESLOGIX CORPORATION COMDISCO, INC.
AS LESSEE AS LESSOR
By: /s/ Patrick M. Sullivan By /s/ James P. Labe
------------------------------ ------------------------------------
James P. Labe, President
Title: President Title: Venture Lease Division
--------------------------- --------------------------------
Date: Date:
----------------------------- ----------------------------------
<PAGE> 8
EQUIPMENT SCHEDULE VL-1
DATED AS OF JUNE 7, 1996
TO MASTER LEASE AGREEMENT
DATED AS OF June 7, 1996 (THE "MASTER LEASE")
LESSEE: SALESLOGIX CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
Mr. Jim Valenzuela 6111 North River Road
(602) 508-9131 Rosemont, Illinois 60018
(602) 508-9133 FAX Attn: Venture Group
Address for Notices:
3200 E. Camelback Road
Suite 253
Phoenix, AZ 85018
Attn.:
Central Billing Location Rent Interval: Monthly
Same as above
Attn.:
Lessee Reference No.: _____________________
(24 digits maximum)
Location of Equipment: Initial Term: 36 months
Same as above (Number of Rent Intervals)
Attn.: Lease Rate Factor: 3.222%
EQUIPMENT (as defined below): Advance: $ 24,165.00
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period June 7, 1996 through April 15, 1997
("Equipment Delivery Period"), for which Lessor receives vendor invoices
approved for payment, up to an aggregate purchase price of $750,000
("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock,
special tooling, "stand-alone" software, application software bundled into
computer hardware, hand held items, molds and fungible items. In no event
shall any software exceed 10 percent (10%) of Lessor's aggregate cost
hereunder.
<PAGE> 9
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this Schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
Lessor will finance only the acquisition of individual items of Equipment
with a cost to Lessor of more than $500.00.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than July 7, 1996*.
Lessor will not perform a Sale-Leaseback Transaction for any request
or accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
<TABLE>
<CAPTION>
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
----------------------------- -----------------------------------
<S> <C>
Between 04/08/96 and 07/07/96 100%
Between 02/07/95 and 04/07/96 80%
Between 11/08/95 and 02/06/96 70%
Between 08/09/95 and 11/07/95 65%
</TABLE>
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or
used Equipment from its inventory at rates provided by Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar quarter into
a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar quarter
thereafter. Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
<PAGE> 10
3. OPTION TO EXTEND
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
shall be effective as of the date of receipt.
4. PURCHASE OPTION
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at time of
purchase. Said purchase price shall be paid to Lessor at least thirty (30) days
before the expiration date of the Initial Term or extended term. Title to the
Equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier than the expiration of the fixed
Initial Term or extended term, if applicable. If the parties are unable to agree
on the purchase price or the terms and conditions with respect to said purchase,
then the Summary Equipment Schedule with respect to this Equipment shall remain
in full force and effect. Notwithstanding the exercise by Lessee of this option
and payment of the purchase price, until all obligations under the applicable
Summary Equipment Schedule have been fulfilled, it is agreed and understood that
Lessor shall retain a purchase money security interest in the Equipment listed
therein and the Summary Equipment Schedule shall constitute a Security Agreement
under the Uniform Commercial Code of the state in which the Equipment is
located.
5. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
SALESLOGIX CORPORATION COMDISCO, INC.
AS LESSEE AS LESSOR
By: /s/ Patrick M. Sullivan By /s/ James P. Labe, President
----------------------------- ----------------------------------
Title: President Title: Venture Lease Division
--------------------------- -----------------------------
Date: Date:
---------------------------- ------------------------------
<PAGE> 11
18 SLXXXXX-XX
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment
Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco,
Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
Rent:
6. Acceptance Doc Type:
<PAGE> 12
EQUIPMENT SCHEDULE VL-2
DATED AS OF JUNE 24, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF JUNE 7, 1996 (THE "MASTER LEASE")
LESSEE: SALESLOGIX CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
Mr. Jim Valenzuela
(602) 368-3700 6111 North River Road
(602) 368-3799 FAX Rosemont, Illinois 60018
Attn: Venture Group
Address for Notices:
8800 N. Gainey Center Drive
Suite 200
Scottsdale, AZ 85258
Attn.:
Central Billing Location Rent Interval: Monthly
Same as above
Attn.:
Lessee Reference No.: _____________________
(24 digits maximum)
Location of Equipment: Initial Term: 36 months
Same as above (Number of Rent Intervals)
Attn.: Lease Rate Factor: 3.226%
EQUIPMENT (as defined below): Advance: None
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period May 15, 1997 through December 15,
1998 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$750,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock,
special tooling, "stand-alone" software, application software bundled into
computer hardware, hand held items, molds and fungible items. In no event
shall any software exceed 10 percent (10%) of Lessor's aggregate cost
hereunder.
<PAGE> 13
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this Schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
Lessor will finance only the acquisition of individual items of Equipment
with a cost to Lessor of more than $500.00.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than July 30, 1997*.
Lessor will not perform a Sale-Leaseback Transaction for any request
or accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
<TABLE>
<CAPTION>
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
<S> <C>
Between 04/01/97 and 07/30/97 100%
Between 03/01/97 and 04/30/97 80%
Between 11/30/96 and 02/28/97 70%
Between 08/31/96 and 11/29/96 65%
</TABLE>
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or
used Equipment from its inventory at rates provided by Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar month into a
Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar month thereafter.
Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. OPTION TO EXTEND
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
shall be effective as of the date of receipt.
<PAGE> 14
4. PURCHASE OPTION
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at time of
purchase. Said purchase price shall be paid to Lessor at least thirty (30) days
before the expiration date of the Initial Term or extended term. Title to the
Equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier than the expiration of the fixed
Initial Term or extended term, if applicable. If the parties are unable to agree
on the purchase price or the terms and conditions with respect to said purchase,
then the Summary Equipment Schedule with respect to this Equipment shall remain
in full force and effect. Notwithstanding the exercise by Lessee of this option
and payment of the purchase price, until all obligations under the applicable
Summary Equipment Schedule have been fulfilled, it is agreed and understood that
Lessor shall retain a purchase money security interest in the Equipment listed
therein and the Summary Equipment Schedule shall constitute a Security Agreement
under the Uniform Commercial Code of the state in which the Equipment is
located.
5. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
a. Credit Adjustment
Provided Lessee is not then in Default and Lessor has received
Lessee's twelfth (12) payment for all items of Equipment under this
Equipment Schedule VL-2, Lessor hereby agrees to provide Lessee with a
one-time credit adjustment. The one-time credit adjustment shall be
determined by calculating the dollar difference between the rental that
Lessee was charged under Equipment Schedule VL-1 utilizing a Lease Rate
Factor of 3.22% (effective interest rate of 10.5%), and what the rental
would have been had the rental on Equipment Schedule VL-1 been calculated
utilizing a Lease Rate Factor of 3.178% (effective interest rate of 9.5%)
(the "Credit Adjustment"). This Credit Adjustment shall occur and be
effective as of the date on which Lessor receives Lessee's twelfth (12)
payment for all items of Equipment leased under this Equipment Schedule
VL-2.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
SALESLOGIX CORPORATION COMDISCO, INC.
as LESSEE as LESSOR
By: /s/ Patrick M. Sullivan By /s/ James P. Labe
--------------------------- -----------------------------
JAMES P. LABE, PRESIDENT
Title: President Title: COMDISCO VENTURES DIVISION
------------------------ ---------------------------
Date: Date: 7-24-97
-------------------------- ---------------------------
<PAGE> 15
20 SLXXXXX-XX
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
5. Rent:
6. Acceptance Doc Type:
<PAGE> 16
EQUIPMENT SCHEDULE VL-3
DATED AS OF AUGUST 14, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF JUNE 7, 1996 (THE "MASTER LEASE")
LESSEE: SALESLOGIX CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
Mr. Jim Valenzuela
(602) 368-3700 6111 North River Road
(602) 368-3799 FAX Rosemont, Illinois 60018
Attn.: Venture Group
Address for Notices:
8800 N. Gainey Center Drive
Suite 200
Scottsdale, AZ 85258
Attn.:
Central Billing Location Rent Interval: Monthly
Same as above
Attn.:
Lessee Reference No.: _____________________
(24 digits maximum)
Location of Equipment: Initial Term: 36 months
Same as above (Number of Rent Intervals)
Attn.: Lease Rate Factor: 3.226%
EQUIPMENT (as defined below): Advance: None
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period August 14, 1998 through March 14,
1999 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$500,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock,
special tooling, "stand-alone" software, application software bundled into
computer hardware, hand held items, molds and fungible items. In no event
shall any software exceed 10 percent (10%) of Lessor's aggregate cost
hereunder.
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this Schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
<PAGE> 17
Lessor will finance only the acquisition of individual items of Equipment
with a cost to Lessor of more than $500.00.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than September 12,
1998*. Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents which arrive
after the date marked above by an asterisk (*). Further, any
sale-leaseback Equipment will be placed on lease subject to: (1)
Lessor prior approval of the Equipment; and (2) if approved, at
Lessor's actual net appraised Equipment value pursuant to the
schedule below:
<TABLE>
<CAPTION>
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
<S> <C>
Between 04/16/98 and 08/14/98 100%
Between 02/15/98 and 04/16/98 80%
Between 11/17/97 and 02/15/98 70%
Between 08/19/97 and 11/17/97 65%
</TABLE>
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or
used Equipment from its inventory at rates provided by Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar quarter into
a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar month thereafter.
Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. OPTION TO EXTEND
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
shall be effective as of the date of receipt.
4. PURCHASE OPTION
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at time of
purchase. Said purchase price shall be paid to Lessor at least thirty (30) days
before the expiration date of the Initial Term or extended term. Title to the
Equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier
<PAGE> 18
than the expiration of the fixed Initial Term or extended term, if
applicable. If the parties are unable to agree on the purchase price or
the terms and conditions with respect to said purchase, then the Summary
Equipment Schedule with respect to this Equipment shall remain in full
force and effect. Notwithstanding the exercise by Lessee of this option
and payment of the purchase price, until all obligations under the
applicable Summary Equipment Schedule have been fulfilled, it is agreed
and understood that Lessor shall retain a purchase money security interest
in the Equipment listed therein and the Summary Equipment Schedule shall
constitute a Security Agreement under the Uniform Commercial Code of the
state in which the Equipment is located.
5. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
SALESLOGIX CORPORATION COMDISCO, INC.
as LESSEE as LESSOR
By: /s/ J. Valenzuela By /s/ James P. Labe, President
---------------------------- -------------------------------
JAMES P. LABE
Title: V.P. Finance Title: PRESIDENT
-------------------------- ----------------------------
COMDISCO VENTURES DIVISION
Date: 8/17/98 Date: AUG 27 1998
-------------------------- ------------------------------
<PAGE> 19
18 SLXXXXX-XX
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
5. Rent:
6. Acceptance Doc Type:
<PAGE> 1
EXHIBIT 10.4 - 1996 EQUITY INCENTIVE PLAN
SALESLOGIX CORPORATION
1996 EQUITY INCENTIVE PLAN
As amended and restated effective upon consummation
of the Company's initial public offering
ARTICLE 1: PURPOSE
1.1 General. The purpose of the SalesLogix Corporation 1996 EQUITY
INCENTIVE PLAN (the "Plan") is to promote the interests of SalesLogix
Corporation (the "Company"), by enabling the Company to motivate, attract, and
retain the services of persons upon whose judgment, efforts, and contributions
the success of the Company's business depends. The plan is further intended to
align the personal interests of such persons with the interests of stockholders
of the Company through equity participation in the Company's growth and success.
Capitalized terms not otherwise defined in the text are defined in Article 16.
ARTICLE 2: EFFECTIVE DATE; TERM
2.1 Effective Date. The effective date of the Plan is January 15, 1996
(the "Effective Date"), which is the date as of which the Plan was approved by
the Board of Directors and stockholders of the Company. This amendment and
restatement of the Plan was approved by the Board on March 19, 1999 and the
Company's stockholders as of April __, 1999 and shall be effective upon the
consummation of the Company's initial underwritten public offering of its Stock.
2.2 Term. This Plan shall continue in effect until terminated in
accordance with Article 14, except that Incentive Stock Option Awards shall not
be granted after the tenth (10th) anniversary of the Effective Date.
ARTICLE 3: SHARES SUBJECT TO THE PLAN
3.1 Number of Shares. The aggregate number of shares of Stock reserved and
available for Awards or which may be used to provide a basis of measurement or
valuation of an Award (such as an SAR or Performance Unit Award) shall be Four
Million Five Hundred Thousand (4,500,000) shares (the "Shares") of Stock, plus
an annual increase to be added on the first day of the Company's fiscal year
beginning in 2000 equal to the lesser of (i) 1,500,000 shares, (ii) 5% of the
adjusted average shares of outstanding Stock used to calculate fully diluted
earnings per share as reported in the Annual Report to stockholders for the
preceding year, or (iii) a lesser amount determined by the Board; provided,
however, that any shares from any increases in previous years that are not
actually issued shall be added to the aggregate number of Shares available for
issuance under the Plan; and provided further that the maximum number of
<PAGE> 2
Shares available for Incentive Stock Option Awards shall be Four Million Five
Hundred Thousand (4,500,000) shares.
3.2 Lapsed Awards. To the extent that an Award terminates, expires or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan (other than shares of Stock
subject to an Incentive Stock Option Award), and shares subject to SARs or other
Awards settled in cash will be available for the grant of an Award under the
Plan, in each case to the full extent available pursuant to the applicable rules
and interpretations of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
3.3 Payments in Stock. Any shares of Stock tendered to or withheld by the
Company in connection with payment for Stock purchased pursuant to the Plan or
withholding taxes thereon shall be added back to the aggregate number of shares
reserved and available for Awards under the Plan (other than shares of Stock
subject to an Incentive Stock Option Award), in each case to the fullest extent
permitted under the applicable rules and interpretations of the Exchange Act.
3.4 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock,
or Stock purchased on the open market.
ARTICLE 4: ELIGIBILITY
4.1 General. Awards may be granted only to an individual who is an
employee (including an employee who also is a director or officer), officer,
director, consultant, independent contractor, or adviser of the Company or a
Subsidiary, as determined by the Board.
ARTICLE 5: ADMINISTRATION
5.1 Board. The Plan shall be administered by the Board or a Committee
appointed by the Board to administer the Plan at any time or from time to time.
If the Company has a class of equity securities registered under Section 12 of
the Exchange Act, the Plan shall be administered by the Board or a Committee of
the Board in accordance with Rule 16b-3, or successor legislation, under the
Exchange Act. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause), appoint new members in substitution therefor, and fill
vacancies however caused.
5.2 Authority of Board. The Board has the exclusive power, authority, and
discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock subject to an Award;
As amended and restated effective upon consummation of the Company's IPO
2
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(d) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(e) Determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award and accelerations or waivers thereof, and any modification or amendment of
any Award previously granted, based in each case on such considerations as the
Board in its sole discretion determines;
(f) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(g) Determine whether, to what extent, and under what circumstances
cash, Stock, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Board;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(j) Interpret the Plan, any Award, and any Award Agreement in its
discretion; and
(k) Make all other decisions and determinations that may be required
under the Plan or as the Board deems necessary or advisable to administer the
Plan.
5.3 Decisions Binding. All decisions, interpretations, and determinations
by the Board with respect to the Plan, any Award, and any Award Agreement are
final, binding, and conclusive on all parties.
ARTICLE 6: STOCK OPTIONS
6.1 General. The Board is authorized to grant Options to Participants on
the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Board.
(b) Payment. Payment for Stock issued upon exercise of an Option
shall be made in accordance with Article 11 of the Plan.
(c) Time and Conditions of Exercise. The Board shall determine the
time or times at which an Option may be exercised in whole or in part, provided
that no Option may be exercisable prior to six months following the date of the
grant of such Option if and to the extent
As amended and restated effective upon consummation of the Company's IPO
3
<PAGE> 4
such limitation is necessary or required under Rule 16b-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
(d) Evidence of Option. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such provisions as may be specified by the Board.
6.2 Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Employees Only. Incentive Stock Options may only be granted to
employees (including officers and directors who are also employees) of the
Company or a Subsidiary.
(b) Exercise Price. The exercise price per share of Stock shall be
set by the Board, provided that the exercise price for any Incentive Stock
Option may not be less than the Fair Market Value as of the date of the grant.
(c) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00.
(e) Ten Percent Owners. An Incentive Stock Option may be granted to
a Ten Percent Owner, provided that at the time such option is granted the
exercise price per share of Stock shall not be less than 110% of the Fair Market
Value and such option by its terms is not exercisable after the expiration of
five (5) years from the date of its grant.
(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the expiration of ten (10)
years from the Effective Date.
(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
(h) Tax-Qualified ISOP Options. All provisions of the Plan relating
to Incentive Stock Options shall be administered and interpreted in accordance,
and so as to comply, with the provisions of Section 422 of the Code.
6.3 Termination of Participant. Notwithstanding the exercise periods set
forth in any Award Agreement, Options shall be subject to the following:
(a) An Option shall lapse ten years after it is granted, unless an
earlier time is set in the Award Agreement.
As amended and restated effective upon consummation of the Company's IPO
4
<PAGE> 5
(b) If a Participant's employment is terminated due to (i)
Disability, (ii) Retirement, or (iii) for any other reason other than for Cause,
such Participant may exercise his or her Incentive Stock Options only to the
extent that such Incentive Stock Options would have been exercisable on the
Termination Date; provided, that such exercise is made prior to the earlier of
(i) the expiration of three (3) months (six (6) months in the case of
Disability) after the Termination Date or (ii) the expiration date of the Option
set forth in the Award Agreement. If a Participant's employment is terminated
due to Cause, the Participant's Incentive Stock Options shall automatically
lapse and not be exercisable by the Participant, whether or not such Options
were vested.
(c) If a Participant's employment, contractual or other relationship
with the Company is terminated due to (i) Disability, (ii) Retirement, or (iii)
for any other reason other than for Cause, such Participant may exercise his or
her Non-Qualified Stock Options, only to the extent that such Options would have
been exercisable on the Termination Date; provided, that such exercise is made
within six months after the Termination Date, or such other time period as set
forth in the Award Agreement. If a Participant's employment, contractual or
other relationship is terminated due to Cause, the Participant's Non-Qualified
Stock Options shall automatically lapse and not be exercisable by the
Participant, whether or not such Options were vested.
(d) If a Participant dies before his or her Options lapse pursuant
to this Section, then the Participant's Options may be exercised, only to the
extent that such Options would have been exercisable on the date of the
Participant's death; provided that such exercise is made prior to the earlier of
(i) the first anniversary of such Participant's death or (ii) the expiration
date of the Option set forth in the Award Agreement. Upon the Participant's
death, any exercisable Options may be exercised by the Participant's legal
representative or representatives.
ARTICLE 7: STOCK APPRECIATION RIGHTS
7.1 Grant of SARs. The Board is authorized to grant SARs to Participants
on the following terms and conditions:
(a) Right to Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the SAR as determined by the Board,
which shall not be less than the Fair Market Value of one share of
Stock on the date of grant in the case of any SAR.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other terms and
conditions of any Stock Appreciation Right shall be determined by the Board at
the time of the grant of the Award and shall be reflected in the Award
Agreement.
As amended and restated effective upon consummation of the Company's IPO
5
<PAGE> 6
ARTICLE 8: PERFORMANCE UNITS
8.1 Grant of Performance Units. The Board is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Board. The Board shall have the complete discretion to determine
the number of Performance Units granted to each Participant. All Awards of
Performance Units shall be evidenced by an Award Agreement.
8.2 Right Under Performance Units. A grant of Performance Units gives the
Participant rights, valued as determined by the Board, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Board shall establish at grant or thereafter. The Board
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the amount and value of cash, Stock, Awards, and/or
other property that will be paid to the Participant.
8.3 Other Terms. Performance Units may be payable in cash, Stock, or other
Awards or property, or any combination thereof, and have such other terms and
conditions as determined by the Board and reflected in the Award Agreement.
ARTICLE 9: RESTRICTED STOCK AWARDS
9.1 Restricted Stock Awards. The Board is authorized to make Awards of
Restricted Stock to Participants either in the form of a grant of Stock or an
offer to sell Stock to a Participant, in such amounts and subject to such terms,
conditions and restrictions as may be selected by the Board. All Awards of
Restricted Stock shall be evidenced by an Award Agreement.
9.2 Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, including without
limitation "vesting" or forfeiture restrictions, as the Board may impose. These
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.
9.3 Forfeiture. Except as otherwise determined by the Board at the time of
the grant of the Award or thereafter, upon termination of employment during the
applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided,
however, that the Board may provide in any Award Agreement that restrictions or
forfeiture conditions relating to Restricted Stock will be waived in whole or in
part in specified circumstances, and the Board may in other cases waive in whole
or in part restrictions or forfeiture conditions relating to Restricted Stock.
9.4 Payment and Certificates for Restricted Stock. If a Restricted Stock
Award provides for the purchase of Stock by a Participant, payment shall be made
pursuant to Article 11 of the Plan. Restricted Stock granted under the Plan may
be evidenced in such manner as the Board shall determine. To the extent that an
Award is granted in the form of newly issued Restricted Stock, the Award
recipient, as a condition to the grant of such an Award, shall be required to
pay to the Company in cash, cash equivalents or other legal consideration an
amount equal to the par value of such Restricted Stock. To the extent that an
Award is granted in the
As amended and restated effective upon consummation of the Company's IPO
6
<PAGE> 7
form of Restricted Stock from the Company's treasury, no such cash consideration
shall be required of the Award recipients. If certificates representing shares
of Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company shall retain
physical possession of the certificate until such time as all applicable
restrictions lapse.
ARTICLE 10: STOCK-REFERENCE AWARDS
10.1 Grant of Stock-Reference Awards. The Board is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that are payable in, valued in whole or in part by reference to, or otherwise
based on or related to shares of Stock, as deemed by the Board to be consistent
with the purposes of the Plan, including without limitation shares of Stock
awarded purely as a "bonus" and not subject to any restrictions or conditions,
other rights convertible or exchangeable into shares of Stock, and awards valued
by reference to book value of shares of Stock or the value of securities of or
the performance of specified divisions or Subsidiaries of the Company. The Board
shall determine the terms and conditions of such Awards.
ARTICLE 11: PAYMENT FOR STOCK PURCHASES;
WITHHOLDING TAXES; RELOAD OPTIONS
11.1 Payment. Payment for Stock purchased pursuant to the Plan may be made
in cash (by check) or, where expressly approved for the Participant by the Board
in an Award Agreement or otherwise in writing and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of (or attestation to the ownership of) Stock
valued at Fair Market Value on the date new Stock is purchased under the Plan;
provided, however, that such surrender or attestation shall not be permitted if
such action would cause the Company to recognize compensation expense (or
additional compensation expense) with respect to the Award for financial
reporting purposes;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) by tender of property acceptable to the Board;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock then exists:
(1) through a "same day sale" commitment from Participant and
a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby Participant irrevocably
elects to exercise the Option and to sell a portion of the Stock so
purchased to pay for the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Stock to forward the
exercise price directly to the Company;
As amended and restated effective upon consummation of the Company's IPO
7
<PAGE> 8
(2) through a "margin" commitment from Participant and a NASD
Dealer whereby Participant irrevocably elects to exercise the Option
and to pledge the Stock so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Stock to forward the exercise price directly to
the Company; or
(3) through any other "cashless exercise" procedure approved
by the Board; or
(f) by any combination of the foregoing, or any other method of
payment acceptable to the Board in its sole discretion.
11.2 Loan Guarantees. The Board may, in its discretion, help the
Participant pay for Shares purchased under the Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
11.3 Tax Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan. Whenever,
under the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements. With respect to withholding required upon
any taxable event relating to the issuance of Stock under the Plan, Participants
may elect (the "Election"), on or prior to the date of such taxable event, to
satisfy the withholding requirement, in whole or in part, by having the Company
or any Subsidiary withhold shares of Stock having a Fair Market Value on the
date of withholding equal to the amount to be withheld for tax purposes. The
Board may disapprove any Election or may suspend or terminate the right to make
Elections. An Election is irrevocable. The Board may, at the time any Award is
granted, require that any and all applicable tax withholding requirements be
satisfied by the withholding of shares of Stock as set forth above.
11.4 Reload Options. Award Agreements may contain a provision pursuant to
which a Participant who pays all or a portion of the exercise price of an Option
or the tax required to be withheld pursuant to an exercise of an Option by
surrendering shares of Stock pursuant to Sections 11.1 or 11.3, respectively,
shall be automatically granted an Option for the purchase of Stock equal to the
number of shares surrendered (a "Reload Option"). The grant of the Reload Option
shall be effective on the date the Participant surrenders the shares of Stock in
respect of which the Reload Option is granted (the "Reload Date"). The Reload
Option shall have an exercise price equal to the Fair Market Value of the Stock
on the Reload Date, and shall have a term which is no longer, and which shall
lapse no later, than the original term of the underlying option. If stock
otherwise available under an Incentive Stock Option is withheld pursuant to
Section 11.3, any Reload Option granted in connection with the withholding shall
be treated as a new Incentive Stock Option, subject to the rules set forth in
Section 6.2.
As amended and restated effective upon consummation of the Company's IPO
8
<PAGE> 9
ARTICLE 12: PROVISIONS APPLICABLE TO AWARDS
12.1 Stand-Alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Board, be granted either alone or in addition
to, in tandem with, or in substitution for, any other Award granted under the
Plan. Awards granted in addition to or in tandem with other Awards may be
granted either at the same time as or at a different time from the grant of such
other Awards.
12.2 Modification or Assumption of Awards. Within the limitations of the
Plan, the Board may modify, extend or assume outstanding Awards or may accept
the cancellation of outstanding Awards (whether granted by the Company or by
another issuer) in return for the grant of new Awards for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Award shall, without the
consent of the Participant, alter or impair his or her rights or obligations
under such Award.
12.3 Exchange Provisions. The Board may at any time offer to exchange or
buy out any previously granted Award for a payment in cash, Stock, or another
Award, based on the terms and conditions the Board determines and communicates
to the Participant at the time the offer is made.
12.4 Term of Award. The term of each Award shall be for the period as
determined by the Board, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right exceed a period of ten
years from the date of its grant.
12.5 Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Board determines at or after the time of grant, including without
limitation, cash, Stock, other Awards, or other property, or any combination,
and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case determined in accordance with rules adopted by, and
at the discretion of, the Board.
12.6 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided below, no Award shall be
assignable or transferable by a Participant other than by will or the laws of
descent and distribution or, except in the case of an Incentive Stock Option,
pursuant to a "domestic relations order" as defined in the Code or Title I of
the Employee Retirement Income Security Act, or the rules thereunder. In the
Award Agreement for any Award other than an Award that includes an Incentive
Stock Option, the Board may allow a Participant to assign or otherwise transfer
all or a portion of the rights represented by the Award to specified individuals
or classes of individuals, or to a trust or other entity benefiting such
individuals or classes of individuals, subject to such restrictions,
limitations, or conditions as the Board deems appropriate. At the discretion of
the Board, the Company may reserve to itself or its assignees in any Award (a) a
right of first refusal to purchase any Stock which a Participant may propose to
transfer to a third party and/or (b) a right to repurchase any and all Stock
held by a Participant upon the Participant's termination of
As amended and restated effective upon consummation of the Company's IPO
9
<PAGE> 10
employment or other relationship with the Company or its Parent or Subsidiary
for any reason, including Death or Disability, at a price for such Stock as
determined by the Board.
12.7 Market Standoff. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, a Participant shall not sell, make any
short sale of, loan, hypothecate, pledge, grant any option for the purchase of,
or otherwise dispose or transfer for value or otherwise agree to engage in any
of the foregoing transactions with respect to, any Stock issued pursuant to an
Award granted under the Plan without the prior written consent of the Company or
its underwriters. Such limitations shall be in effect for such period of time as
may be requested by the Company or such underwriters and agreed to by the
Company's officers and directors with respect to their shares; provided,
however, that in no event shall such period exceed 180 days. The limitations of
this subsection shall in all events terminate two years after the effective date
of the Company's initial public offering. Holders of Stock issued pursuant to an
Award granted under the Plan shall be subject to the market standoff provisions
of this subsection only if the officers and directors of the Company are also
subject to similar arrangements.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Stock effected as a class without the Company's receipt of
consideration, then any new, substituted or additional securities distributed
with respect to the purchased Stock shall be immediately subject to the
provisions of this subsection, to the same extent the purchased Stock is at such
time covered by such provisions.
In order to enforce the limitations of this subsection, the Company
may impose stop-transfer instructions with respect to the purchased Stock until
the end of the applicable standoff period.
12.8 Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Board
deems necessary or advisable to comply with federal or state securities laws,
rules, and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Board may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
ARTICLE 13: CHANGES IN CAPITAL STRUCTURE
13.1 General; Adjustments. In the event of a subdivision of the
outstanding Stock, a declaration of a dividend payable in Stock, a declaration
of a dividend payable in a form other than Stock in an amount that has a
material effect on the price of the Stock, a combination or consolidation of the
outstanding Stock (by classification or otherwise) into a lesser number of
shares of Stock, a recapitalization, a spin-off or a similar occurrence, or the
assumption and conversion of outstanding grants of a company acquired by the
Company or its Subsidiary, the Board shall make such adjustments as it, in its
sole discretion, deems appropriate in one or more of (a) the number of shares of
Stock available for future Awards under Article 3, (b) the limitations set forth
in Article 3, (c) the number and kind of shares of Stock covered by each
outstanding Award or (d) the exercise price under each outstanding Option and
other Award in
As amended and restated effective upon consummation of the Company's IPO
10
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the nature of rights that may be exercised. Except as provided in this Article
13, a Participant shall have no rights by reason of any issue by the Company of
stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class.
13.2 Dissolution or Liquidation. To the extent not previously exercised,
Awards shall terminate immediately prior to the dissolution or liquidation of
the Company.
13.3 Reorganizations. In the event that the Company is a party to a
merger, consolidation or other reorganization, outstanding Awards shall be
subject to the agreement of merger, consolidation or reorganization. The Board
may cause such agreement to provide, without limitation, (a) for the
continuation of outstanding Awards by the Company (if the Company is a surviving
corporation), (b) for their assumption by the surviving corporation or its
parent or subsidiary, (c) for the substitution by the surviving corporation or
its parent or subsidiary of its own awards for such Awards, (d) for accelerated
vesting, accelerated expiration and/or lapse of restrictions, or (e) for
settlement in cash or cash equivalents. If the Board does not cause such
agreement to provide for one of the alternatives in (a), (b), (c), (d) or (e)
above, then all outstanding Options and other Awards in the nature of rights
that may be exercised shall become fully exercisable and all restrictions on
other Awards shall lapse, upon the effectiveness of the transactions
contemplated by such agreement.
ARTICLE 14: AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Board may terminate, amend, or
modify the Plan. An amendment or modification of the Plan shall be subject to
the approval of the stockholders of the Company only to the extent required by
applicable laws, regulations and rules.
14.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant.
ARTICLE 15: GENERAL PROVISIONS
15.1 No Rights to Awards. No Participant or employee shall have any claim
to be granted any Award under the Plan, and neither the Company nor the Board is
obligated to treat Participants and employees uniformly.
15.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
15.3 No Right to Employment. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment or other relationship with
the Company at any time, nor confer upon any Participant any right to continue
in the employment or any other relationship of the Company or any Subsidiary.
As amended and restated effective upon consummation of the Company's IPO
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<PAGE> 12
15.4 Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
15.5 Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
15.6 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
15.7 Titles and Headings. The titles and headings of the Articles and
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.
15.8 Fractional Shares. No fractional shares of stock shall be issued and
the Board shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
15.9 Securities Law Compliance. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Section 16 or its successors under the Exchange Act. To the extent
any provision of the Plan or any Award Agreement or any action by the Board
fails to so comply, it shall be void to the extent permitted by law and voidable
as deemed advisable by the Board.
15.10 Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act, any of the shares of Stock paid under the Plan. If the shares of
Stock paid under the Plan may in certain circumstances be exempt from
registration under the Securities Act, the Company may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption. As a condition to the exercise of an Option or any other
receipt of Stock pursuant to an Award under the Plan, the Company may require
the Participant to represent and warrant at the time of any such exercise or
receipt that such Stock is being purchased or received only for the
Participant's own account and without any present intention to sell or
distribute such Stock if, in the opinion of counsel for the Company, such a
representation is required by any relevant provision of the aforementioned laws.
At the option of the company, a stop-transfer order against any such Stock may
be placed on the official stock books and records of the Company, and a legend
indicating that such Stock may not be pledged, sold or otherwise transferred,
unless an opinion of counsel is provided (concurred in by counsel for the
Company) standing that such transfer is not in violation of any applicable law
or regulation, may be stamped on stock certificates to ensure exemption from
registration. The Board may also require such other action or agreement by the
As amended and restated effective upon consummation of the Company's IPO
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Participant as may from time to time be necessary to comply with federal and
state securities laws.
15.11 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Arizona.
15.12 Nonexclusivity of the Plan. Neither the adoption of the Plan nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which arrangements may
be applicable either generally to a class or classes of individuals or
specifically to a particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting of
stock options or other rights otherwise than under the Plan.
ARTICLE 16: DEFINITIONS
16.1 Definitions. The following words and phrases shall have the following
meanings for purposes of this Plan:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Unit, Stock-Reference Award or any other right or
interest relating to Stock, cash or property, granted to a Participant under the
Plan.
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company or, if the
context so requires, a Committee thereof appointed pursuant to Article 5.
(d) "Cause" means (i) conviction of any crime involving fraud or
gross misconduct, (ii) noncompliance with reasonable directives of the Board or
its designees, (iii) violation of Company rules, policies or procedures or of
the Plan or any applicable Award Agreement.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in
Article 5.
(g) "Disability" means the following: A Participant shall be
disabled if he or she is unable to perform the duties of his customary position
of employment by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which can be expected to
last for a continuous period of not less than 12 months. The Board may require
such medical or other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(h) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property determined by
the Board in good faith using
As amended and restated effective upon consummation of the Company's IPO
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such methods or procedures as may be established from time to time by the Board.
Unless otherwise determined by the Board, the Fair Market Value of Stock as of
any date shall be the mean between the bid and asked quotations for the Stock on
that date as reported by the National Association of Securities Dealers
Automated Quotation System (NASDAQ) or, if there are no bid or asked quotations
on such date, the mean between the bid and asked quotations on the next
preceding date for which quotations are available. If the Stock is subsequently
listed and traded upon a recognized securities exchange or shall be quoted on a
recognized national market system, the Fair Market Value shall be the closing
price on such date or, if no closing price is so reported for that date, the
closing price on the next preceding date for which a closing price was reported.
(i) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.
(j) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.
(k) "Option" means a right granted to a Participant under Article 6
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Non-Qualified
Stock Option.
(l) "Participant" means a person who, as an officer, employee,
consultant, independent contractor, or adviser of the Company or any Subsidiary,
has been granted an Award under the Plan.
(m) "Performance Unit" means a right granted to a Participant under
Article 8 to receive cash, Stock, or other Awards.
(n) "Plan" means the SalesLogix Corporation 1996 Equity Incentive
Plan, as amended from time to time.
(o) "Restricted Stock Award" means Stock granted to a Participant or
offered for sale to a Participant under Article 9.
(p) "Retirement" means a Participant's termination of employment
with the Company after attaining any normal or early retirement age specified in
any pension, profit sharing, or other retirement program sponsored by the
Company, if any.
(q) "Securities Act" means the Securities Act of 1933, as amended.
(r) "Stock" means Common Stock ($.001 par value) of the Company and
such other securities of the Company that may be substituted for Stock pursuant
to Article 13.
(s) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 7 to receive a payment equal to the difference between
the Fair Market Value of a share of Stock as of the date of exercise of the SAR
over the grant price of the SAR, all as determined pursuant to Article 7.
As amended and restated effective upon consummation of the Company's IPO
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(t) "Stock-Reference Award" means a right, granted to a Participant
under Article 10.
(u) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
(v) "Ten Percent Owner" means any individual who, at the date of
grant of an Incentive Stock Option, owns stock possessing more than ten percent
of the total combined voting power of all classes of Stock of the Company or a
Subsidiary. For purposes of determining such percentage, the following rules
shall apply:
(1) The individual with respect to whom such percentage is
being determined shall be considered as owning the Stock owned,
directly or indirectly, by or for his brothers and sisters (whether
by the whole or half blood), spouse, ancestors, and lineal
descendants; and
(2) Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its stockholders, partners, or
beneficiaries.
(w) "Termination Date" means the date on which the employment (or
other service or relationship in the case of a Participant who is not an
employee of the Company) of a Participant terminates for any reason or no
reason.
As amended and restated effective upon consummation of the Company's IPO
15
<PAGE> 1
EXHIBIT 10.5 - 1998 BUSINESS PARTNER STOCK OPTION PLAN
SALESLOGIX CORPORATION
1998 BUSINESS PARTNER STOCK OPTION PLAN
(AS AMENDED MARCH 19, 1999)
ARTICLE 1: PURPOSE
1.1 General. The purpose of the SALESLOGIX CORPORATION 1998 BUSINESS
PARTNER STOCK OPTION PLAN (the "Plan") is to promote the interests of SalesLogix
Corporation (the "Company"), by enabling the Company to motivate, attract, and
retain the services of persons acting as consultants and advisers to the
Company, including its independent marketers and resellers of the Company's
products, upon whose judgment, efforts, and contributions the success of the
Company's business depends. The plan is further intended to align the personal
interests of such persons with the interests of shareholders of the Company
through equity participation in the Company's growth and success. Capitalized
terms not otherwise defined in the text are defined in Article 12.
ARTICLE 2: EFFECTIVE DATE; TERM
2.1 Effective Date. The effective date of the Plan is March 19, 1998 (the
"Effective Date"), which is the date as of which the Plan was approved by the
Board of Directors and stockholders of the Company.
2.2 Term. This Plan shall terminate on the tenth (10th) anniversary of the
Effective Date, subject to Article 10.
ARTICLE 3: SHARES SUBJECT TO THE PLAN
3.1 Number of Shares. The aggregate number of shares of Stock reserved and
available for Options shall initially be 225,000 shares (the "Shares") of Stock.
3.2 Lapsed Options. To the extent that an Option terminates, expires or
lapses for any reason, any shares of Stock subject to the Option will again be
available for the grant of an Option under the Plan, in each case to the full
extent available pursuant to the applicable rules and interpretations of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
3.3 Payments in Stock. Any shares of Stock tendered to or withheld by the
Company in connection with payment for Stock purchased pursuant to the Plan or
withholding taxes thereon shall be added back to the aggregate number of shares
reserved and available for Options under the Plan, in each case to the fullest
extent permitted under the applicable rules and interpretations of the Exchange
Act.
<PAGE> 2
3.4 Stock Distributed. Any Stock distributed pursuant to an Option may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock,
or Stock purchased on the open market.
ARTICLE 4: ELIGIBILITY
4.1 General. Options may be granted only to persons, including natural
persons, sole proprietorships, corporations, general partnerships, limited
partnerships and all other entities, acting as consultants and advisers to the
Company, including independent marketers or resellers of products of the Company
or a Subsidiary and persons engaged by such independent marketers or resellers
to provide consulting or advisory services to the Company or a Subsidiary, as
determined by the Board.
ARTICLE 5: ADMINISTRATION
5.1 Board. The Plan shall be administered by the Board or a Committee
appointed by the Board to administer the Plan at any time or from time to time.
If the Company has a class of equity securities registered under Section 12 of
the Exchange Act, the Plan shall be administered by the Board or a Committee of
the Board that consists of two or more individuals, each of whom is a member of
the Board and neither of whom is an officer or employee of the Company. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause),
appoint new members in substitution therefor, and fill vacancies however caused.
5.2 Authority of Board. The Board has the exclusive power, authority, and
discretion to:
(a) Designate Participants;
(b) Determine the number of Options to be granted and the number of
shares of Stock subject to an Option;
(c) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(d) Determine the terms and conditions of any Option granted under
the Plan, including but not limited to, the exercise price, any
restrictions or limitations on the Option, any schedule for lapse of
forfeiture restrictions or restrictions on the exercisability of an Option
and accelerations or waivers thereof, and any modification or amendment of
any Option previously granted, based in each case on such considerations
as the Board in its sole discretion determines;
(e) Determine whether, to what extent, and under what circumstances
an Option may be settled in, or the exercise price of an Option may be
paid in, cash, Stock, other Options, or other property, or an Option may
be canceled, forfeited, or surrendered;
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(f) Determine whether, to what extent, and under what circumstances
cash, Stock, and other amounts payable with respect to an Option shall be
deferred either automatically or at the election of the holder thereof or
of the Board;
(g) Decide all other matters that must be determined in connection
with an Option;
(h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(i) Interpret the Plan, any Option, and any Award Agreement in its
discretion; and
(j) Make all other decisions and determinations that may be required
under the Plan or as the Board deems necessary or advisable to administer
the Plan.
5.3 Decisions Binding. All decisions, interpretations, and determinations
by the Board with respect to the Plan, any Option, and any Award Agreement are
final, binding, and conclusive on all parties.
ARTICLE 6: STOCK OPTIONS
6.1 General. The Board is authorized to grant Options to Participants on
the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Board, provided that the exercise price
may not be less than 85% of the Fair Market Value as of the date of the
grant, and provided further that with respect to Options granted to a Ten
Percent Owner, the exercise price may not be less than 110% of the Fair
Market Value as of the date of grant.
(b) Payment. Payment for Stock issued upon exercise of an Option
shall be made in accordance with Article 7 of the Plan.
(c) Time and Conditions of Exercise. The Board shall determine the
time or times at which an Option may be exercised in whole or in part,
provided that no Option may be exercisable prior to six months following
the date of the grant of such Option if and to the extent such limitation
is necessary or required under Rule 16b-3, or successor legislation, under
the Exchange Act.
(d) Evidence of Option. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions as may be specified by the Board.
6.2 Termination of Participant. Notwithstanding the exercise periods set
forth in any Award Agreement, Options shall be subject to the following:
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(a) An Option shall lapse ten years after it is granted, unless an
earlier time is set in the Award Agreement.
(b) Except as otherwise provided in the Award Agreement or
thereafter determined by the Board in writing, (i) if the contractual
relationship between the Company and the Participant, or the entity
engaging the Participant to provide consulting or advisory services to the
Company, as the case may be, expires or is terminated due to any reason
other than for Cause, the Participant's Options may only be exercised to
the extent that such Options would have been exercisable on the
Termination Date; provided, that such exercise is made within thirty days
after the Termination Date; and (ii) if such contractual relationship is
terminated for Cause, the Participant's Options shall automatically lapse
and not be exercisable by the Participant, whether or not such Options
were vested.
ARTICLE 7: PAYMENT FOR STOCK PURCHASES;
WITHHOLDING TAXES; RELOAD OPTIONS
7.1 Payment. Payment for Stock purchased pursuant to the Plan may be made
in cash (by check) or, where expressly approved for the Participant by the Board
in an Award Agreement or otherwise in writing and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of (or attestation to the ownership of) Stock
valued at Fair Market Value on the date new Stock is purchased under the
Plan; provided, however, that such surrender or attestation shall not be
permitted if such action would cause the Company to recognize compensation
expense (or additional compensation expense) for financial reporting
purposes;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) by tender of property acceptable to the Board;
(e) with respect to purchases upon exercise of an Option, and
provided that a public market for the Stock then exists:
(1) through a "same day sale" commitment from Participant and
a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby Participant irrevocably
elects to exercise the Option and to sell a portion of the Stock so
purchased to pay for the exercise price (and any applicable
withholding taxes), and whereby the NASD Dealer irrevocably commits
upon receipt of such Stock to forward the exercise price and any
such withholding taxes directly to the Company;
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<PAGE> 5
(2) through a "margin" commitment from Participant and a NASD
Dealer whereby Participant irrevocably elects to exercise the Option
and to pledge the Stock so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the exercise price (and any applicable withholding taxes), and
whereby the NASD Dealer irrevocably commits upon receipt of such
Stock to forward the exercise price and any such withholding taxes
directly to the Company; or
(3) through any other "cashless exercise" procedure approved
by the Board; or
(f) by any combination of the foregoing, or any other method of
payment acceptable to the Board in its sole discretion.
7.2 Loan Guarantees. The Board may, in its discretion, help the
Participant pay for Shares purchased under the Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
7.3 Tax Withholding. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, and local taxes
required by law to be withheld with respect to any taxable event arising as a
result of this Plan. Whenever, under the Plan, payments in satisfaction of
Options are to be made in cash, such payment shall be net of an amount
sufficient to satisfy federal, state, and local withholding tax requirements.
With respect to withholding required upon any taxable event relating to the
issuance of Stock under the Plan, Participants may elect (the "Election"), on or
prior to the date of such taxable event, to satisfy the withholding requirement,
in whole or in part, by having the Company or any Subsidiary withhold shares of
Stock having a Fair Market Value on the date of withholding equal to the amount
to be withheld for tax purposes. The Board may disapprove any Election or may
suspend or terminate the right to make Elections. An Election is irrevocable.
The Board may, at the time any Option is granted, require that any and all
applicable tax withholding requirements be satisfied by the withholding of
shares of Stock as set forth above.
7.4 Reload Options. Award Agreements may contain a provision pursuant to
which a Participant who pays all or a portion of the exercise price of an Option
or the tax required to be withheld pursuant to an exercise of an Option by
surrendering shares of Stock pursuant to Sections 7.1 or 7.3, respectively,
shall be automatically granted an Option for the purchase of Stock equal to the
number of shares surrendered (a "Reload Option"). The grant of the Reload Option
shall be effective on the date the Participant surrenders the shares of Stock in
respect of which the Reload Option is granted (the "Reload Date"). The Reload
Option shall have an exercise price equal to the Fair Market Value of the Stock
on the Reload Date, and shall have a term which is no longer, and which shall
lapse no later, than the original term of the underlying option.
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ARTICLE 8: PROVISIONS APPLICABLE TO OPTIONS
8.1 Stand-Alone, Tandem, and Substitute Options. Options granted under the
Plan may, in the discretion of the Board, be granted either alone or in addition
to, in tandem with, or in substitution for, any other Option granted under the
Plan. Options granted in addition to or in tandem with other Options may be
granted either at the same time as or at a different time from the grant of such
other Options.
8.2 Modification or Assumption of Options. Within the limitations of the
Plan, the Board may modify, extend or assume outstanding Options or may accept
the cancellation of outstanding Options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Participant, alter or impair his or her rights or obligations
under such Option.
8.3 Exchange Provisions. The Board may at any time offer to exchange or
buy out any previously granted Option for a payment in cash, Stock, or another
Option, based on the terms and conditions the Board determines and communicates
to the Participant at the time the offer is made.
8.4 Term of Option. The term of each Option shall be for the period as
determined by the Board, provided that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
8.5 Form of Payment for Options. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Option may be made in
such forms as the Board determines at or after the time of grant, including
without limitation, cash, Stock, other Options, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Board.
8.6 Limits on Transfer. No right or interest of a Participant in any
Option may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. No Option shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
pursuant to a "domestic relations order" as defined in the Code or Title I of
the Employee Retirement Income Security Act, or the rules thereunder.
8.7 Repurchase Rights. At the discretion of the Board, the Company may
reserve to itself or its assignees in any Award Agreement (a) a right of first
refusal to purchase any Stock which a Participant may propose to transfer to a
third party and/or (b) a right to repurchase any and all Stock held by a
Participant upon termination for any reason of the contractual relationship
between Company or its Subsidiary and the Participant, or the entity engaging
the Participant to
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provide consulting or advisory services to the Company or its Subsidiary, as the
case may be, at a reasonable price for such Stock as determined by the Board.
8.8 Lock-up Agreement. In addition to any other restrictions on transfer,
a Participant shall not, without the prior written consent of the Board in its
discretion, offer or sell any Stock acquired pursuant to the Plan for at least
one hundred eighty (180) days after (a) the closing of the initial public
offering of securities of the Company registered under the Securities Act or (b)
in the event that subsequent to such initial public offering the Stock is not
listed and traded upon a recognized securities exchange or quoted on a
recognized national market system, the closing of each offering of securities of
the Company registered under the Securities Act subsequent to such initial
public offering through and including one hundred eighty (180) days after the
offering immediately after which the Stock is listed and traded upon such
exchange or system.
8.9 Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Board
deems necessary or advisable to comply with federal or state securities laws,
rules, and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Board may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
ARTICLE 9: CHANGES IN CAPITAL STRUCTURE
9.1 General; Adjustments. In the event of a subdivision of the outstanding
Stock, a declaration of a dividend payable in Stock, a declaration of a dividend
payable in a form other than Stock in an amount that has a material effect on
the price of the Stock, a combination or consolidation of the outstanding Stock
(by classification or otherwise) into a lesser number of shares of Stock, a
recapitalization, a spin-off or a similar occurrence, the Board shall make such
adjustments as it, in its sole discretion, deems appropriate in one or more of
(a) the number of shares of Stock available for future Options under Article 3,
(b) the limitations set forth in Article 3, (c) the number and kind of shares of
Stock covered by each outstanding Option or (d) the exercise price under each
outstanding Option in the nature of rights that may be exercised. Except as
provided in this Article 9, a Participant shall have no rights by reason of any
issue by the Company of stock of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class.
9.2 Dissolution or Liquidation. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution or liquidation of
the Company.
9.3 Reorganizations. In the event that the Company is a party to a merger,
consolidation or other reorganization, outstanding Options shall be subject to
the agreement of merger, consolidation or reorganization. The Board may cause
such agreement to provide, without limitation, (a) for the continuation of
outstanding Options by the Company (if the Company is a surviving corporation),
(b) for their assumption by the surviving corporation or its parent or
subsidiary, (c) for the substitution by the surviving corporation or its parent
or
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subsidiary of its own awards for such Options, (d) for accelerated vesting,
accelerated expiration and/or lapse of restrictions, or (e) for settlement in
cash or cash equivalents. If the Board does not cause such agreement to provide
for one of the alternatives in (a), (b), (c), (d) or (e) above, then all
outstanding Options shall become fully exercisable upon the effectiveness of the
transactions contemplated by such agreement.
ARTICLE 10: AMENDMENT, MODIFICATION, AND TERMINATION
10.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Board may terminate, amend, or
modify the Plan. An amendment or modification of the Plan shall be subject to
the approval of the shareholders of the Company only to the extent required by
applicable laws, regulations and rules.
10.2 Options Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Option
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 11: GENERAL PROVISIONS
11.1 No Rights to Options. No Participant shall have any claim to be
granted any Option under the Plan, and neither the Company nor the Board is
obligated to treat Participants uniformly.
11.2 No Stockholder Rights. No Option gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Option.
11.3 Relationship Between the Company and Participants. Nothing in the
Plan or any Award Agreement shall make any Participant an employee or agent of
the Company or any Subsidiary for any purpose whatsoever, nor confer upon any
Participant any authority to assume or create any obligation or responsibility,
expressed or implied, on behalf of or in the name of the Company or any
Subsidiary, nor extend or constitute a commitment to extend the terms and
conditions of any agreement between the Participant and the Company.
11.4 Unfunded Status of Options. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Option, nothing contained in the Plan
or any Award Agreement shall give the Participant any rights that are greater
than those of a general creditor of the Company or any Subsidiary.
11.5 Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any other benefit plan of
the Company or any Subsidiary.
11.6 Expenses. The expense of administering the Plan shall be borne by the
Company and its Subsidiaries.
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11.7 Titles and Headings. The titles and headings of the Articles and
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.
11.8 Fractional Shares. No fractional shares of stock shall be issued and
the Board shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
11.9 Securities Law Compliance. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Section 16 or its successors under the Exchange Act. To the extent
any provision of the Plan or any Award Agreement or any action by the Board
fails to so comply, it shall be void to the extent required by law and voidable
as deemed advisable by the Board.
11.10 Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act, any of the shares of Stock paid under the Plan. If the shares of
Stock paid under the Plan may in certain circumstances be exempt from
registration under the Securities Act, the Company may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
11.11 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Arizona.
11.12 Nonexclusivity of the Plan. Neither the adoption of the Plan nor the
submission of the Plan to the shareholders of the Company for approval shall be
construed as creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which arrangements may
be applicable either generally to a class or classes of individuals or
specifically to a particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting of
stock options or other rights otherwise than under the Plan.
11.13 Financial Statements. Within a reasonable time after such financial
statements are available, at the end of each fiscal year the Company will
provide a copy of its balance sheet and income statement to any Participant who
was a shareholder as of such fiscal year end.
ARTICLE 12: DEFINITIONS
12.1 Definitions. The following words and phrases shall have the following
meanings for purposes of this Plan:
(a) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Option.
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<PAGE> 10
(b) "Board" means the Board of Directors of the Company or, if the
context so requires, a Committee thereof appointed pursuant to Article 5.
(c) "Cause" means material breach by the Participant, or the entity
engaging the Participant to provide consulting or advisory services to the
Company or its Subsidiary, as the case may be, of its obligations under
any contractual relationship with the Company, and such breach, if capable
of remedy, has not been remedied at the expiration of thirty (30) days
following delivery of written notice to the Participant from the Company
indicating the steps required to be taken to remedy the failure.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" means the committee of the Board described in
Article 5.
(f) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property determined
by the Board in good faith using such methods or procedures as may be
established from time to time by the Board. Unless otherwise determined by
the Board, the Fair Market Value of Stock as of any date shall be the mean
between the bid and asked quotations for the Stock on that date as
reported by the National Association of Securities Dealers Automated
Quotation System (NASDAQ) or, if there are no bid or asked quotations on
such date, the mean between the bid and asked quotations on the next
preceding date for which quotations are available. If the Stock is
subsequently listed and traded upon a recognized securities exchange or
shall be quoted on a recognized national market system, the Fair Market
Value shall be the closing price on such date or, if no closing price is
so reported for that date, the closing price on the next preceding date
for which a closing price was reported.
(g) "Option" means a right granted to a Participant under Article 6
of the Plan to purchase Stock at a specified price during specified time
periods. An Option is not intended to be an incentive stock option meeting
the requirements of Section 422 of the Code.
(h) "Participant" means a person described in Section 4.1 who has
been granted an Option under the Plan.
(i) "Plan" means the SalesLogix Corporation 1998 Business Partner
Stock Option Plan, as amended from time to time.
(j) "Securities Act" means the Securities Act of 1933, as amended.
(k) "Stock" means Class A Common Stock ($.001 par value) of the
Company.
(l) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
10
<PAGE> 11
(m) "Ten Percent Owner" means any individual who, at the date of
grant of an Incentive Stock Option, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company or a Subsidiary. For purposes of determining such percentage, the
following rules shall apply:
(1) The individual with respect to whom such percentage is
being determined shall be considered as owning the Stock owned,
directly or indirectly, by or for his brothers and sisters (whether
by the whole or half blood), spouse, ancestors, and lineal
descendants; and
(2) Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its shareholders, partners, or
beneficiaries.
(n) "Termination Date" means the date on which the contractual
relationship between the Company or its Subsidiary and a Participant, or
the entity engaging the Participant to provide consulting or advisory
services to the Company or its Subsidiary, as the case may be, expires or
terminates for any reason or no reason.
11
<PAGE> 1
EXHIBIT 10.6 - FORM OF NONQUALIFIED OPTION AWARD AGREEMENT;
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NONQUALIFIED OPTION AWARD AGREEMENT
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This Non-Employee Director Option Award Agreement is by and between
SalesLogix Corporation (the "Company") and the grantee whose name and signature
is set forth on the final page of this Agreement (the "Director").
WHEREAS, pursuant to the Company's 1999 Non-Employee Director Stock Option
Plan (the "Plan") on (the "Grant Date"), the Director was
automatically granted an option (the "Option") to purchase the number of shares
of the Company's Common Stock, $0.001 par value set forth on the final page of
this Agreement (the "Stock"), at the price per share set forth on the final page
of this Agreement, subject to execution and delivery by the Director of this
Agreement; and
WHEREAS, the Director desires to accept the Option on the terms and
conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Governing Terms. The Option is subject to the terms and conditions of
the Plan and the terms and conditions as set forth in this Award Agreement
(collectively the "Agreement"). The terms of the Plan are incorporated by
reference in this Award Agreement and govern the granting, holding and exercise
of the Option as though set forth herein in full. The Director acknowledges that
he or she has received and reviewed a copy of the Plan. All capitalized terms
used in this Award Agreement and not otherwise defined herein shall have the
meanings expressly assigned thereto in the Plan.
2. Exercise Procedure. The Director may exercise the Option only by
delivery to the Company (in care of its Secretary) at the principal offices of
the Company, presently located at 8800 North Gainey Center Drive, Suite 200,
Scottsdale, Arizona 85258, written, irrevocable notice of exercise in the form
attached to this Agreement as Exhibit B, specifying the number of shares with
respect to which the Option is being exercised, together with payment of the
exercise price for those shares in cash or by check. Any other form of exercise
or tender may be refused by the Company, acting through the Board or otherwise,
in its discretion.
3. Governing Law. The Plan and this Option granted to the Director
thereunder are governed by, and shall be interpreted according to, the laws of
the State of Arizona without giving effect to the principles of conflicts of
law.
<PAGE> 2
4. Further Assurances. Each party hereto agrees to do all such things and
take all such actions, and to make, execute and deliver such other documents and
instruments, as shall be reasonably requested to carry out the provisions,
intent and purpose of this Agreement.
5. Representations and Warranties. The Director hereby represents and
warrants to the Company that receipt of this Option is not contrary to any
policy or agreement of my employer(s).
BECAUSE THE TAX EFFECT MAY VARY DEPENDING ON THE DIRECTOR'S INDIVIDUAL
CIRCUMSTANCES, AND THE TAX LAWS MAY CHANGE FROM TIME TO TIME, IT IS STRONGLY
RECOMMENDED THAT THE DIRECTOR CONSULT WITH TAX COUNSEL OR A TAX ADVISOR IN ORDER
TO REALIZE ANY AVAILABLE TAX BENEFITS, OR ADDRESS ANY POTENTIAL ADVERSE TAX
CONSEQUENCES, ASSOCIATED WITH THIS OPTION.
THIS AWARD AGREEMENT ONLY GRANTS THE OPTIONS DESCRIBED ABOVE AND NOTHING
IN THE PLAN OR THIS AWARD AGREEMENT SHALL MAKE THE DIRECTOR AN EMPLOYEE OR AGENT
OF THE COMPANY FOR ANY PURPOSE WHATSOEVER, NOR CONFER UPON DIRECTOR ANY RIGHT TO
CONTINUE AS A MEMBER OF THE BOARD OF DIRECTORS OF THE COMPANY OR SHALL AFFECT
ANY RIGHT OF THE COMPANY, ITS BOARD, OR STOCKHOLDERS TO TERMINATE THE SERVICE OF
DIRECTOR WITH OR WITHOUT CAUSE.
Number of Option Shares granted: <<Shares>>
Exercise price per share: <<Shares>>
SALESLOGIX CORPORATION
By: _______________________________
Name: Patrick M. Sullivan
Its: President
Date: _______________________________
_____________________________________
<<NAME>>
Date: _______________________________
<PAGE> 3
EXHIBIT "A"
SALESLOGIX CORPORATION
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE
(a) The purpose of the SalesLogix Corporation Non-Employee Director Stock
Option Plan (the "Plan") is to provide a means by which each director of
SalesLogix Corporation, a Delaware corporation (the "Company"), who is not
otherwise an employee of the Company or of any subsidiary of the Company (each
such person being hereafter referred to as a "Non-Employee Director") will be
given an opportunity to purchase Common Stock of the Company ("Common Stock"),
to assist in attracting and retaining the services of such persons as members of
the Board of Directors, to further align their interests with the stockholders
and to provide compensation for such persons for serving on the Board.
(b) Options issued under the Plan shall not be incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. ADMINISTRATION AND EFFECTIVE DATE
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in Section 2(b).
(b) The Board may from time to time delegate administration of the Plan to
a committee composed of not fewer than two (2) members of the Board (the
"Committee"). If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board.
(c) The Plan shall be effective on the consummation of the offering
described in the Company's initial Registration Statement on Form S-1 under the
Securities Act of 1933 covering shares of Common Stock in an underwritten public
offering, or the date on which the Plan is approved by the stockholders of the
Company, whichever is later (the "Effective Date"), and shall continue until
terminated in accordance with Section 11.
3. SHARES SUBJECT TO THE PLAN
(a) Options to purchase Common Stock shall be automatically granted to
Non-Employee Directors in accordance with this Plan. Options granted hereunder
to purchase Common Stock shall be hereinafter referred to as an "Option" or
"Options." Subject to the provisions of Section 10, the maximum aggregate number
of shares of Common Stock reserved and available for granting of Options
hereunder shall be 200,000 shares of Common Stock, plus an annual increase to be
added automatically at the conclusion of each annual meeting of the Company's
stockholders equal to (i) the aggregate number of shares determined by
multiplying
Ex. A - 1
<PAGE> 4
the total number of Non-Employee Directors then in office by 12,500,
or (ii) a lesser amount determined by the Board; provided, however, that any
shares from any increases in previous years that are not actually issued shall
be added to the aggregate number of Shares available for issuance under the
Plan.
(b) If any Option shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such Option
shall again become available for issuance under the Plan. Any shares of stock
tendered to or withheld by the Company as payment of the exercise price of an
Option or for withholding taxes in connection with such exercise shall again
become available for issuance under the Plan.
(c) Common Stock subject to the Plan may be authorized and unissued shares
or treasury shares.
4. ELIGIBILITY
Options shall be granted only pursuant to the express terms of this Plan
to Non-Employee Directors of the Company who have advised the Company in writing
that the receipt of such Option is not contrary to any policy or agreement of
such Non-Employee Director's employer.
5. NON-DISCRETIONARY GRANTS
(a) Each person who is a Non-Employee Director on the Effective Date, and
each person who is after the Effective Date elected for the first time to be a
Non-Employee Director of the Company shall, upon the Effective Date or the date
of his or her initial designation to be a Non-Employee Director, as the case may
be, be automatically granted an Option to purchase [12,500] shares of Common
Stock on the terms and conditions set forth herein.
(b) Beginning on the date of the Company's first annual meeting of
stockholders in the year following the Effective Date and on each annual meeting
of stockholders thereafter so long as the Plan remains in effect, each
Non-Employee Director shall be automatically granted an Option to purchase
[12,500] shares of Common Stock on the terms and conditions set forth herein,
provided such Non-Employee Director remains a director immediately after such
annual meeting, unless such Non-Employee Director has elected not to receive
such Option by written notice delivered to the Board prior to the date of such
annual meeting.
6. OPTION PROVISIONS
Each Option shall be subject to the following terms and conditions:
(a) No Option shall be exercisable after the expiration of ten (10) years
from the date it was granted.
(b) An Option shall vest (i.e., become exercisable) with respect to each
optionee in sixteen (16) equal quarterly installments on the three, six, nine
and twelve month anniversaries of the date of grant of the Option, provided that
the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director of the Company, whereupon
Ex. A - 2
<PAGE> 5
such Option shall become fully exercisable in accordance with its terms with
respect to that installment of shares.
(c) The exercise price of each Option shall be one hundred percent (100%)
of the Fair Market Value of the Common Stock on the date such Option is granted.
The "Fair Market Value" shall mean, as of any date, the value of Common Stock
determined by the Board in good faith using such methods or procedures as may be
established from time to time by the Board. Unless otherwise determined by the
Board, the Fair Market Value of Common Stock as of any date shall be the mean
between the bid and asked quotations for the Common Stock on that date as
reported by the National Association of Securities Dealers Automated Quotation
System (NASDAQ) or, if there are no bid or asked quotations on such date, the
mean between the bid and asked quotations on the next preceding date for which
quotations are available. If the Common Stock is subsequently listed and traded
upon a recognized securities exchange or shall be quoted on a recognized
national market system, the Fair Market Value shall be the closing price on such
date or, if no closing price is so reported for that date, the closing price on
the next preceding date for which a closing price was reported.
(d) (i) In the event the optionee ceases to be a member of the Board for
any reason other than death or disability, any then unexercised Options
granted to such optionee shall, to the extent not then exercisable
pursuant to Section 6(b) above, be immediately terminated and become void,
and any Options which are then so exercisable but have not been exercised
at the time the optionee so ceases to be a member of the Board may be
exercised, only to the extent they are then exercisable, by the optionee
during the period ending on the earlier of (A) three (3) months from the
date the optionee so ceases to be a member of the Board or (B) the
expiration of the Option.
(ii) In the event that the optionee ceases to be a member of the
Board by reason of disability or death, any then unexercised Options
granted to such optionee shall, to the extent not then exercisable
pursuant to Section 6(b) above, be immediately terminated and become void,
and any Options which are then so exercisable but have not been exercised
at the time the optionee so ceases to be a member of the Board may be
exercised, only to the extent they are then exercisable, by the optionee
(or by the optionee's personal representative, heir or legatee, in the
event of death) during the period ending on the earlier of (A) six (6)
months from the date the optionee so ceases to be a member of the Board or
(B) the expiration date of the Option.
(e) Notwithstanding anything herein to the contrary, the right to exercise
Options granted hereunder shall be subject to the following limitations:
(i) Options may not be exercised unless the optionee, at the time he
exercises the Option, is a member of the Board, except as provided in
Sections 6(d)(i) and (ii) above.
(ii) No fractional shares may be purchased under Options granted
hereunder.
(f) Options may be exercised by giving written notice to the Company by
registered/certified mail, return receipt requested, postage prepaid or in
person addressed to the
Ex. A - 3
<PAGE> 6
Secretary, specifying the number of shares being purchased, accompanied by
payment of the full option price of the shares being purchased. Payment of the
option exercise price may be:
(i) in cash or by bank-certified, cashier's, or personal check;
(ii) by surrender of (or attestation to the ownership of) Common
Stock valued at Fair Market Value on the date new Common Stock is
purchased under the Plan; provided, however, that such surrender or
attestation shall not be permitted if such action would cause the Company
to recognize compensation expense (or additional compensation expense)
with respect to the Award for financial reporting purposes;
(iii) provided that a public market for the Common Stock then
exists: (A) through a "same day sale" commitment from the optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers (a "NASD Dealer") whereby the optionee irrevocably elects to
exercise the Option and to sell a portion of the Common Stock so purchased
to pay for the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Common Stock to forward the exercise price
directly to the Company; (B) through a "margin" commitment from the
optionee and a NASD Dealer whereby the optionee irrevocably elects to
exercise the Option and to pledge the Common Stock so purchased to the
NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Common Stock to forward the
exercise price directly to the Company; or (C) through any other "cashless
exercise" procedure approved by the Board; or
(iv) by any combination of the above, or any other method of payment
acceptable to the Board.
(g) Notwithstanding anything herein to the contrary, shares shall not be
issued with respect to an Option unless the exercise of such Option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and
regulations promulgated thereunder and the requirements of any stock exchange or
quotation service upon which the shares may then be listed or quoted and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.
As a condition to the exercise of an Option, the Company may require the
optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned applicable
provisions of law.
(h) No right or interest of an optionee in any Option may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company,
or shall be subject to any lien, obligation, or liability of such optionee to
any other party other than the Company. Except as otherwise provided below, no
Option shall be assignable or transferable by an optionee other
Ex. A - 4
<PAGE> 7
than by will or the laws of descent and distribution or, pursuant to a qualified
domestic relations order as defined in Section 414(p)(1)(A) of the Code or Title
I of the Employee Retirement Income Security Act, or the rules thereunder. The
Board may allow an optionee to assign or otherwise transfer all or a portion of
the rights represented by the Option to specified individuals or classes of
individuals, or to a trust benefiting such individuals or classes of
individuals, subject to such restrictions, limitations, or conditions as the
Board deems appropriate.
(i) The Company shall have the authority and the right to deduct or
withhold, or require an optionee to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes required by law to be withheld with
respect to any taxable event arising as a result of this Plan. With respect to
withholding required upon any taxable event relating to the issuance of Common
Stock under the Plan, optionees may elect (the "Election"), on or prior to the
date of such taxable event, to satisfy the withholding requirement, in whole or
in part, by having the Company withhold shares of Common Stock having a Fair
Market Value on the date of withholding equal to the amount to be withheld for
tax purposes. The Board may disapprove any Election or may suspend or terminate
the right to make Elections. An Election is irrevocable. The Board may, at the
time any Award is granted, require that any and all applicable tax withholding
requirements be satisfied by the withholding of shares of Common Stock as set
forth above.
7. COVENANTS OF THE COMPANY
During the terms of the Options granted under the Plan, the Company shall
keep available at all times the number of shares of Common Stock required to
satisfy such Options.
8. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of Common Stock pursuant to Options granted under
the Plan shall constitute general funds of the Company.
9. NO RIGHTS TO SHARES OR DIRECTORSHIP
(a) Neither an optionee nor any person to whom an Option is transferred
under Section 6(h) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue as a member of
the Board of Directors of the Company or shall affect any right of the Company,
its Board, or stockholders to terminate the service of any Non-Employee Director
with or without cause.
10. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE
(a) General; Adjustments. In the event of a subdivision of the outstanding
Common Stock, a declaration of a dividend payable in Common Stock, a declaration
of a dividend payable in a form other than Common Stock in an amount that has a
material effect on the price of the Common Stock, a combination or consolidation
of the outstanding Common Stock (by
Ex. A - 5
<PAGE> 8
classification or otherwise) into a lesser number of shares of Common Stock, a
recapitalization, a spin-off or a similar occurrence, the Board shall make such
adjustments as it, in its sole discretion, deems appropriate in one or more of
(i) the number of shares of Common Stock available for future Options under
Section 3, (ii) the number and kind of shares of stock covered by each
outstanding Option or (iii) the exercise price under each outstanding Option.
Except as provided in this Section, an optionee shall have no rights by reason
of any issue by the Company of stock of any class or securities convertible into
stock of any class, any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class.
(b) Dissolution or Liquidation. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution or liquidation of
the Company.
(c) Acceleration; Change in Control. In its sole discretion, the Board may
waive or accelerate vesting of Options, or waive or extend expiration dates
(other than the final expiration date set forth in Section 6(a) above). In
addition, vesting shall automatically be deemed waived on the date which is
thirty (30) days prior to a "Change in Control". For purposes of this Agreement,
"Change of Control" means each of the following:
(i) Any transaction, or series of transactions, whereby any person
(as that term is used in Section 13 and 14(d)(2) of the Exchange Act,
excluding affiliates of the Company as of the effective date of such
transaction, is or becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act) 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;
(ii) Any merger, consolidation, or liquidation of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which Common Stock would be converted into cash, securities,
or other property, other than a merger or consolidation with a wholly
owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change
in the stockholders of the Company and all then outstanding Options are
assumed by the successor corporation, which assumption shall be binding on
all optionees; or
(iii) The sale, transfer, or other disposition of all or
substantially all of the assets of the Company.
11. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN
(a) Amendments. With the approval of the Board, at any time and from time
to time, the Board may terminate, amend, or modify the Plan. However, without
approval of the stockholders of the Company (if required in accordance with the
Code, the Exchange Act, the rules and regulations thereunder or other applicable
law and rules), no such termination, amendment, or modification may:
(i) Materially increase the total number of shares of Common Stock
that may be issued under the Plan, except as provided in Section 10(a);
Ex. A - 6
<PAGE> 9
(ii) Materially modify the eligibility requirements for
participation in the Plan;
or
(iii) Materially increase the benefits accruing to optionees under
the Plan.
Any such termination, amendment, or modification shall comply with such other
requirements as may be required by the Code, by the rules under Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Stock is listed or reported, or by a regulatory body having jurisdiction.
(b) Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Option previously
granted under the Plan, without the written consent of the optionee.
12. MISCELLANEOUS
(a) Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to an
optionee pursuant to an Option, nothing contained in the Plan or any instrument
issued thereunder shall give the optionee any rights that are greater than those
of a general creditor of the Company.
(b) Securities Law Compliance. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Section 16 or its successors under the Exchange Act. To the extent
any provision of the Plan or any instrument issued thereunder or any action by
the Board fails to so comply, it shall be void to the extent required by law and
voidable as deemed advisable by the Board.
(c) Governing Law. The Plan and all instruments issued thereunder shall be
construed in accordance with and governed by the laws of the State of Arizona
without giving effect to the principles of conflicts of law.
(d) Nonexclusivity of the Plan. Neither the adoption of the Plan nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which arrangements may
be applicable either generally to a class or classes of individuals or
specifically to a particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the granting to
directors of stock options or other rights otherwise than under the Plan.
Ex. A - 7
<PAGE> 10
EXHIBIT "B"
NOTICE OF EXERCISE OF OPTION
TO PURCHASE SHARES OF
SALESLOGIX CORPORATION
AND RECORD OF STOCK TRANSFER
The undersigned hereby exercises the Option granted to it by SalesLogix
Corporation (the "Company") under the 1999 Non-Employee Director Stock Option
Plan (the "Plan"), subject to all the terms and provisions referred to in the
Plan, and notifies the Company of the undersigned's desire to purchase _______
shares of Common Stock of the Company which were offered to the undersigned
pursuant to said Option. Enclosed is (a) the undersigned's check in the sum of
$_______ in full payment for such shares.
The undersigned represents that he, she or it has read and fully
understand the Plan. The undersigned agrees to indemnify the Company and its
subsidiaries, together with their respective officers and directors, against any
and all liabilities, losses, damages and expenses (including reasonable attorney
fees) arising from or in connection with any disposition of the shares hereby
being acquired, or any interest therein, in violation of applicable securities
laws or regulations.
Dated:_______________
________________________________
Print Name:_____________________
Ex. B - 1
<PAGE> 11
Receipt is hereby acknowledged of the delivery to the undersigned by
SalesLogix Corporation on _______ of stock certificates for _______ shares of
Common Stock purchased by the undersigned pursuant to the terms and conditions
of the Plan referred to above, which shares were transferred to the undersigned
on SalesLogix Corporation's stock record books on
_____________________________.
________________________________
Print Name:_____________________
Ex. B - 2
<PAGE> 1
EXHIBIT 10.7 - 1999 EMPLOYEE STOCK PURCHASE PLAN
SALESLOGIX CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean SalesLogix Corporation, a Delaware
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross earnings
and commission exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation, all as
reported by the Company on W-2 forms.
(f) "Designated Subsidiary" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
Offering Period.
(i) "Exercise Date" shall mean the last Trading Day of each Purchase
Period.
<PAGE> 2
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined by the Board in good faith using such methods or
procedures as may be established from time to time by the Board. Unless
otherwise determined by the Board, the Fair Market Value of Common Stock as of
any date shall be the mean between the bid and asked quotations for the Common
Stock on that date as reported by the National Association of Securities Dealers
Automated Quotation System (NASDAQ) or, if there are no bid or asked quotations
on such date, the mean between the bid and asked quotations on the next
preceding date for which quotations are available. If the Stock is subsequently
listed and traded upon a recognized securities exchange or shall be quoted on a
recognized national market system, the Fair Market Value shall be the closing
price on such date or, if no closing price is so reported for that date, the
closing price on the next preceding date for which a closing price was reported.
For purposes of the Enrollment Date of the first Offering Period under the Plan,
the Fair Market Value shall be the initial price to the public as set forth in
the final prospectus included within the registration statement in Form S-1
filed with the Securities and Exchange Commission for the initial public
offering of the Company's Common Stock (the "Registration Statement").
(k) "Offering Periods" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after July 1 and January
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective and terminating on the last Trading Day on or before June
30, 2001. The duration of Offering Periods may be changed pursuant to Section 4
of this Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Period" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
(n) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value per share of Common Stock on the Enrollment Date or on the Exercise
Date, whichever is lower; provided, however, that the Purchase Price may be
adjusted by the Board pursuant to Section 20.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
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<PAGE> 3
(q) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the Fair Market Value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after July 1 and January 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
June 30, 2001. The Board shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect future offerings
without stockholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected
thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount equal to at least two percent (2%), but
shall not exceed fifteen percent (15%) of the Compensation which he or she
receives on each pay day during the Offering Period.
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<PAGE> 4
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than 2,500
shares (subject to any adjustment pursuant to Section 19), and provided further
that such purchase shall be subject to the limitations set forth Sections 3(b)
and 13 hereof. The Board may, for future Offering Periods, increase or decrease,
in its absolute discretion, the maximum number of shares of the Company's Common
Stock an Employee may purchase during each Purchase Period of such Offering
Period. Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof. The Option
shall expire on the last day of the Offering Period.
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<PAGE> 5
8. Exercise of-Option.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
stockholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, the shares purchased upon exercise of his or
her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering
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<PAGE> 6
Period, payroll deductions shall not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company after new
subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 300,000 shares, plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2000 equal to the lesser of (i) 300,000
shares, (ii) 1% of the adjusted average shares of outstanding Common Stock used
to calculate fully diluted earnings per share as reported in the Annual Report
to stockholders for the preceding year, or (iii) a lesser amount determined by
the Board; provided, however, that any shares from any increases in previous
years that are not actually issued shall be added to the aggregate number of
shares available for issuance under the Plan. Shares issued under the Plan shall
be drawn from authorized and unissued shares or shares now held or subsequently
acquired by the Company.
(b) The participant shall have no interest or voting right in shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the extent permitted
by law, be final and binding upon all parties.
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<PAGE> 7
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the participant's spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
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<PAGE> 8
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
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 of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as provided
in Section 19 and Section 20 hereof, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any other applicable law, regulation or stock exchange rule), the Company shall
obtain stockholder approval in such a manner and to such a degree as required.
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<PAGE> 9
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation and establish such other limitations or procedures as
the Board (or its committee) determines in its sole discretion advisable which
are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
ii) shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time
of the Board action; and
iii) allocating shares.
Such modifications or amendments shall not require stockholder approval or
the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder and the requirements
of any stock exchange or quotation service upon which the shares may then be
listed or quoted and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law. The Company is under no obligation
to register or qualify under state or federal securities laws any shares of
Common Stock issued
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<PAGE> 10
pursuant to the Plan. The Company may issue stock certificates for shares with
such legends and subject to such restrictions on transfer and stop transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal and state securities laws.
23. ESPP Broker. If the Board designates or approves a stock brokerage or
other financial services firm (the "ESPP Broker") to hold shares purchased under
the Plan for the accounts of Employees, the following procedures shall apply.
Promptly following each Exercise Date, the number of shares of Common Stock
purchased by each Employee shall be deposited into an account established in the
Employee's name with the ESPP Broker. An Employee shall be free to undertake a
disposition of the shares of Common Stock in his or her account at any time but,
in the absence of such a disposition, the shares of Common Stock must remain in
the Employee's account at the ESPP Broker until the holding period set forth in
Code Section 423 has been satisfied. With respect to shares of Common Stock for
which the holding periods set forth above have been satisfied, the Employee may
move those shares of Common Stock to another brokerage account of the Employee's
choosing or request that a stock certificate be issued and delivered to him or
her. Any dividends paid in the form of shares of Common Stock with respect to
Common Stock in an Employee's account shall be credited to such account. An
Employee who is not subject to payment of U.S. income taxes may move his or her
shares of Common Stock to another brokerage account of his or her choosing or
request that a stock certificate be delivered to him or her at any time, without
regard to the Code Section 423 holding period.
24. Effect Upon Other Plans. The adoption of the Plan shall not affect any
other compensation or incentive plans in effect for the Company or any
Designated Subsidiary. Nothing in the Plan shall be construed to limit the right
of the Company or Designated Subsidiary to (a) establish any other forms of
incentives or compensation for employees of the Company or Designated Subsidiary
or (b) grant or assume options otherwise than under the Plan in connection with
any proper corporate purpose, including, but not by way of limitation, the grant
or assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
25. Term of Plan. The Plan shall become effective upon the consummation of
the offering described in the Registration Statement, or its approval by the
stockholders of the Company, whichever is later. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 20 hereof.
26. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
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EXHIBIT A
SALESLOGIX CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ____________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ___________________ hereby elects to participate in the SalesLogix
Corporation 1999 Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to ____%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note that no
fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price determined
in accordance with the Employee Stock Purchase Plan. I understand that if I do
not withdraw from an Offering Period, any accumulated payroll deductions will be
used to automatically exercise my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in all
respects subject to the terms of the Plan. I understand that my ability to
exercise the option under this Subscription Agreement is subject to stockholder
approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only).
6. I UNDERSTAND THAT IF I DISPOSE OF ANY SHARES RECEIVED BY ME PURSUANT TO
THE PLAN WITHIN 2 YEARS AFTER THE ENROLLMENT DATE (THE FIRST DAY OF THE OFFERING
PERIOD DURING WHICH I PURCHASED SUCH SHARES) OR ONE YEAR AFTER THE EXERCISE
DATE, I WILL BE TREATED FOR FEDERAL INCOME TAX PURPOSES AS HAVING RECEIVED
ORDINARY INCOME AT THE TIME OF SUCH DISPOSITION IN AN AMOUNT EQUAL TO THE EXCESS
OF THE FAIR MARKET VALUE OF THE SHARES AT THE TIME SUCH SHARES WERE PURCHASED BY
ME OVER THE PRICE WHICH I PAID FOR THE SHARES. I HEREBY AGREE TO NOTIFY THE
COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF SHARES
AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING
OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF SHARES. THE COMPANY
MAY, BUT WILL NOT BE OBLIGATED TO, WITHHOLD FROM MY COMPENSATION THE AMOUNT
NECESSARY TO
<PAGE> 12
MEET ANY APPLICABLE WITHHOLDING OBLIGATION INCLUDING ANY WITHHOLDING NECESSARY
TO MAKE AVAILABLE TO THE COMPANY ANY TAX DEDUCTIONS OR BENEFITS ATTRIBUTABLE TO
SALE OR EARLY DISPOSITION OF COMMON STOCK BY ME. IF I DISPOSE OF SUCH SHARES AT
ANY TIME AFTER THE EXPIRATION OF THE 2-YEAR AND 1-YEAR HOLDING PERIODS, I
UNDERSTAND THAT I WILL BE TREATED FOR FEDERAL INCOME TAX PURPOSES AS HAVING
RECEIVED INCOME ONLY AT THE TIME OF SUCH DISPOSITION, AND THAT SUCH INCOME WILL
BE TAXED AS ORDINARY INCOME ONLY TO THE EXTENT OF AN AMOUNT EQUAL TO THE LESSER
OF (A) THE EXCESS OF THE FAIR MARKET VALUE OF THE SHARES AT THE TIME OF SUCH
DISPOSITION OVER THE PURCHASE PRICE WHICH I PAID FOR THE SHARES, OR (B) 15% OF
THE FAIR MARKET VALUE OF THE SHARES ON THE FIRST DAY OF THE OFFERING PERIOD. THE
REMAINDER OF THE GAIN, IF ANY, RECOGNIZED ON SUCH DISPOSITION WILL BE TAXED AS
CAPITAL GAIN.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Employee
Stock Purchase Plan:
NAME: (Please print)___________________________________________________________
(First) (Middle) (Last)_________________________________________________________
Relationship____________________________________________________________________
(Address)_______________________________________________________________________
Employee's Social Security Number:______________________________________________
Employee's Address:_____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:__________________________________________________________________________
Signature of Employee___________________________________________________________
Spouse's Signature (If beneficiary other than spouse)___________________________
<PAGE> 13
EXHIBIT B
SALESLOGIX CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the SalesLogix Corporation
1999 Employee Stock Purchase Plan which began on _____________, ____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
__________________________________________
__________________________________________
__________________________________________
Signature:
__________________________________________
Date:_____________________________________
<PAGE> 1
Exhibit 10.8 - Employment Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 17th day of January, 1996, by and between QUEST SALES SOFTWARE, INC., a
Delaware corporation (the "Company"), and PATRICK M. SULLIVAN, an individual
("Executive").
WITNESSETH:
WHEREAS, the Company desires to retain the services of Executive, and
Executive desires to be employed by the Company, on the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and Executive, intending
to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Executive and Executive
accepts such employment, upon the terms and conditions of this Agreement.
2. Term. The term of Executive's employment hereunder shall commence on
the date hereof, and shall continue until the third (3rd) anniversary date of
the Agreement, unless this Agreement is earlier terminated by either party, or
extended in writing by mutual agreement of the parties.
3. Position and Duties.
3.1 Position. Executive's initial title shall be President and
Chief Executive Officer.
3.2 Duties. Executive shall perform such duties, which shall
be commensurate with his abilities, experience, and performance, as are
determined, from time to time, by Executive and the Board of Directors of the
Company exercising their reasonable, good faith judgment. Initially, Executive's
duties shall be those customarily performed by the President and Chief Executive
Officer of a software development company, and he shall report directly to the
Board of Directors of the Company.
3.3 No Conflicting Duties. During the term hereof, Executive
shall not serve as an officer, director, employee, consultant or advisor to any
other business without the prior written consent of the Company's Board of
Directors. Executive hereby confirms that he is under no contractual commitments
inconsistent with his obligations set forth in this Agreement, and
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that during the term of this Agreement, he will not render or perform services,
or enter into any contract to do so, for any other corporation, firm, entity or
person which are inconsistent with the provisions of this Agreement.
4. Compensation.
4.1 Base Salary. As compensation for all services to be
rendered by Executive under this Agreement, the Company shall pay to Executive a
base salary at an annual rate of at least One Hundred Twenty Five Thousand
Dollars ($125,000) (the "Base Salary"), less required withholdings, which shall
be paid on a regular basis in accordance with the Company's normal payroll
procedures and policies. The amount of the Base Salary shall be reviewed
annually by the Board of Directors.
4.2 Company Bonus Plan. The Company may from time to time
establish a bonus plan for Company management. If such a plan is adopted,
Executive will be in the class of employees eligible to participate in such
plan. Such a plan is subject to approval of the Board of Directors.
4.3 Stock Options. The Board of Directors of the Company is
planning to adopt an incentive plan pursuant to which it may grant incentive
stock options to employees of the Company. Executive will be in the class of
employees eligible to participate in such plan.
4.4 Participation in Benefit Plans. Executive shall be
included to the extent eligible thereunder in any and all plans of the Company
providing general benefits for the Company's employees, including but not
limited to health and disability insurance, 401(k) plan, vacation, sick days,
and holidays. Executive's participation in any such plan or program shall be
subject to the provisions, rules and regulations applicable thereto.
4.5 Business Expenses. In accordance with the Company's
policies established from time to time, the Company will pay or reimburse
Executive for all reasonable and necessary (as determined by the Board)
out-of-pocket expenses incurred by him in the performance of his duties under
this Agreement, subject to the presentment of appropriate vouchers.
5. Compensation Upon the Termination of Executive's Employment
by the Company.
5.1 Termination upon Disability, for Cause, or Voluntary. In
the event that Executive's employment is terminated pursuant to Section 10.1
(Disability), 10.3 (for Cause), or 10.4 (Voluntary Resignation), then Executive
shall be entitled to receive Executive's then current Base Salary, pro rated
through the date his employment is terminated, but no other compensation of any
kind or amount.
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5.2 Termination upon Death. In the event Executive's
employment is terminated pursuant to Section 10.2 (Death), Executive's
beneficiary or a beneficiary designated by Executive in writing to the Company,
or in the absence of such beneficiary, Executive's estate, shall be entitled to
receive Executive's then current Base Salary pro rated through the end of the
pay period in which his death occurs, but no other compensation of any kind or
amount.
5.3 Termination Without Cause or Resignation for Good Reason.
In the event Executive is terminated by the Company pursuant to Section 10.5
(without Cause) or resigns pursuant to 10.6 (for Good Reason), the Company shall
pay to Executive, as a severance allowance, his then current Base Salary, pro
rated on a monthly basis, for the six month period following the date of
termination, plus the pro rata portion of his Base Salary for accrued but unused
vacation days.
All payments required to be made by the Company to Executive pursuant
to this Section 5 shall be paid in the manner and at the times specified in
Section 4.1 hereof.
6. Confidential Information. Except as permitted or directed by the
Company's Board, Executive shall not during the term of his employment under
this Agreement or at any time thereafter divulge, furnish, disclose or make
accessible (other than in the ordinary course of the business of the Company) to
anyone for use in any way any confidential or secret knowledge or information of
the Company which Executive has acquired or become acquainted with or will
acquire or become acquainted with prior to the termination of the period of his
employment by the Company (including employment by the Company prior to the date
of this Agreement), whether developed by himself or by others, concerning any
trade secrets, confidential or secret designs, processes, formulae, software or
computer programs, plans, devices or material (whether or not patented or
patentable, copyrighted or copyrightable) directly or indirectly useful in any
aspect of the business of the Company, any confidential customer or supplier
lists of the Company, any strategic or financial plans, any confidential or
secret development or research work of the Company, or any other confidential,
secret or nonpublic aspects of the business of the Company. Executive
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of the Company acquired at great time and expense by
the Company, and that any disclosure or other use of such knowledge or
information other than for the sole benefit of the Company would be wrongful and
would cause irreparable harm to the Company both during and after the term of
this Agreement, Executive will refrain from any acts or omissions that would
reduce the value of the use of such knowledge or information to the Company. The
foregoing obligations of confidentiality, however, shall not apply to any
knowledge or information which is now published or which subsequently becomes
generally publicly known, other than as a direct or indirect result of the
breach of this Agreement by Executive.
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7. Patent and Related Matters.
7.1 Disclosure and Assignment. Executive will promptly
disclose in writing to the Company complete information concerning each and
every invention, discovery, improvement, device, design, apparatus, practice,
process, software or computer program, method or product, whether or not
patentable or copyrightable, made, developed, perfected, devised, conceived or
first reduced to practice by Executive, either solely or in collaboration with
others, during Executive's employment under this Agreement, or for the period in
which a covenant not to compete is in effect hereunder as to Executive, whether
or not during regular working hours, relating to the business, products or
practices of the Company (hereinafter referred to as the "Inventions").
Executive, to the extent that he has the legal right to do so, hereby
acknowledges that any and all of the Inventions are the property of the Company
and hereby assigns and agrees to assign to the property of the Company any and
all of Executive's right, title and interest in and to any and all of the
Inventions without further payment.
7.2 Future Inventions. As to any future Inventions made by
Executive which relate to the business, products or practices of the Company and
which are first conceived or reduced to practice during the term of this
Agreement, or for the period in which a covenant not to compete is in effect
hereunder as to Executive, but which are claimed for any reason to belong to an
entity or person other than the Company, Executive will promptly disclose the
same in writing to the Company and shall not disclose the same to others if the
Company, within twenty (20) days thereafter, shall claim ownership of such
Inventions under the terms of this Agreement.
7.3 Limitations of Sections 7.1 and 7.2. The provisions of
Sections 7.1 and 7.2 shall not apply to any Invention meeting the following
conditions (an "Excluded Invention"):
(a) such Invention was developed entirely on Executive's own
time; and
(b) such Invention was made without the use of any Company
equipment, supplies, facilities or trade secret information; and
(c) such Invention does not relate (i) to the business of the
Company which initially is the manufacture and sale of sales automation contact
management software, or (ii) to the Company's actual or demonstrably anticipated
research or development; and
(d) such Invention does not result from any work performed by
Executive for the Company; and
(e) Executive informs the Company in writing within one month
after commencing work on any Invention that is to be an Excluded Invention and
again informs the Company in writing that such Invention has been developed
within one (1) month of the date when development of such Invention is complete,
provided, however, that Executive shall have
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no disclosure obligation under this subparagraph (e) from and after the time he
is no longer employed by the Company.
7.4 Assistance of Executive. Upon the request of the Company
and without further compensation therefor, but at no expense to Executive, and
whether during the term of this Agreement or thereafter, Executive will do all
lawful acts, including, but not limited to, the execution of papers and lawful
oaths and the giving of testimony, that in the opinion of the Company, its
successors and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign Letters Patents,
including, but not limited to, design patents, on any and all of the Inventions,
and for perfecting, affirming and recording the Company's complete ownership and
title thereto, and to cooperate otherwise in all proceedings and matters
relating thereto.
7.5 Records. Executive will keep complete, accurate and
authentic accounts, notes, data and records of all of the Inventions in such
manner and form as is reasonably requested by the Company. Such accounts, notes,
data and records shall be the property of the Company, and, upon its request,
Executive will promptly surrender the same to it or, if not previously
surrendered upon its request or otherwise, Executive will surrender the same,
and all copies thereof, to the Company upon the conclusion of his employment.
7.6 Obligations, Restrictions and Limitations. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government, and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any said invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action which may be required to discharge such obligations
and to comply with such restrictions and limitations.
8. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in the project, program or venture shall belong to the Company and shall
constitute a corporate opportunity belonging exclusively to the Company. Except
as approved by the Company's Board of Directors, Executive shall not be entitled
to any interest in such project, program or venture or to any commission,
finder's fee or other compensation in connection therewith other than the salary
to be paid to Executive as provided ln this Agreement.
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9. Non-Competition; Solicitation of Customers and Solicitation of
Employees.
9.1 Non-Competition.
(a) Executive agrees that, during the period of his employment
hereunder and for a period of twenty four (24) months following the termination
of his employment with the Company for any reason, he shall not, directly or
indirectly, engage in competition with the Company within any state in the
United States, or any country, in which the Company is then conducting its
business (the "Territory") in any manner or capacity (e.g., as a management
consultant, principal, partner, officer, director, stockholder or management
employee) in any phase of the Company's business as then being conducted.
(b) Ownership by Executive, as a passive investment, of less
than 2 1/2% of the outstanding shares of capital stock of any corporation listed
on a national securities exchange or publicly traded in the over-the-counter
market shall not constitute a breach of this Section 9.
(c) Executive further agrees that, during the term of this
Agreement and for twenty-four (24) months after its termination, he will not,
directly or indirectly, assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the above
provisions of this Section 9 if such activity were carried out by Executive,
either directly or indirectly, and in particular Executive agrees that he will
not, directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity.
9.2 Agreement Not to Solicit Customers. Executive agrees that
during his employment by the Company hereunder and for the period in which a
covenant not to compete is in effect hereunder as to Executive, he will not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, to any competing business (i) any person or entity whose account
with the Company was sold or serviced by or under the supervision of Executive
during the year preceding the termination of such employment, or (ii) any person
or entity whose account with the Company has been directly solicited at least
twice by the Company within the eighteen (18) month period prior to the date of
termination of employment.
9.3 Agreement Not to Solicit Employees. Executive agrees that
during his employment by the Company hereunder and for the three (3) year period
following the termination of such employment for any reason, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others solicit, divert or hire away, or attempt to solicit, divert or hire away
any person then employed by the Company or then serving as a sales
representative of the Company.
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10. Termination.
10.1 Disability. Executive's employment shall terminate upon
Executive's becoming totally or permanently disabled for a period of six (6)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled" or "total or permanent disability" means Executive's inability on
account of sickness or accident, whether or not job-related, to engage in
regularly or to perform adequately his assigned duties under this Agreement. A
reasonable determination by the Board of Directors of the existence of a
disability shall be conclusive for all purposes hereunder. In making such
determination of disability, the Board of Directors may utilize such advice and
consultation as the Board of Directors deems appropriate, but there is no
requirement of procedure or formality associated with the making of a
determination of disability.
10.2 Death of Executive. Executive's employment shall
terminate immediately upon the death of Executive.
10.3 Termination for Cause. The Company may, upon the
affirmative vote of a majority of the members of the Board of Directors of the
Company (with Executive abstaining), taken at a meeting at which Executive is
given an opportunity to be heard, terminate Executive's employment at any time
for "Cause" (as hereinafter defined) immediately upon written notice to
Executive. Such written notice shall set forth with reasonable specificity the
Company's basis for such termination. As used herein, the term "Cause" shall
mean: (i) the Executive has committed a wrongful act of a material nature
against the Company (e.g., embezzlement or sexual harassment), or (ii) the
Executive has been negligent in carrying out any of his material duties as an
employee, so as to cause material harm to the Company or that is likely to cause
material harm to the Company or (iii) after receiving written notice, the
Executive continues to willfully or habitually refuse to follow the directions
given by the Board of Directors, or (iv) Executive has committed an act of fraud
or dishonesty or other acts of moral turpitude or has used illegal drugs or any
other illegal substance, or (v) the Executive has breached any material covenant
or obligation of any written agreement between the Executive and the Company.
10.4 Resignation. Executive's employment shall be terminated
on the earlier of the date that is three (3) months following the written
submission of Executive's resignation to the Board or the earlier date such
resignation is accepted by the Board.
10.5 Termination Without Cause. Upon the affirmative vote of a
majority of the members of the Board of Directors of the Company (with Executive
abstaining), taken at a meeting at which Executive is given an opportunity to be
heard, the Company may terminate Executive's employment without cause, effective
upon written notice to Executive. Termination "without cause" shall mean
termination of employment on any basis other than termination of Executive's
employment hereunder pursuant to Sections 10.1, 10.2, 10.3 or 10.4.
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10.6 Resignation for Good Reason. Executive's employment shall
be terminated on the date he submits written notice to the Board of his
resignation for Good Reason. For purposes of this Agreement, Good Reason means a
breach by the Company of any material covenant or obligation of this Agreement
which has not been cured within thirty (30) days after written notice of such
noncompliance has been given by Executive to the Company.
10.7 Surrender of Records and Property. Upon termination of
his employment with the Company, Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company and which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.
11. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or
of which 50% or more of the equity investment and of the voting control is
owned, directly or indirectly, by, or is under common ownership with, the
Company. Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Executive to assume and perform,
from and after the date of such assignment, the terms, conditions, and
provisions imposed by this Agreement upon the Company. After any such assignment
by the Company and such written agreement by the Assignee, the Company shall be
discharged from all further liability hereunder and such assignee shall
thereafter be deemed to be the Company for the purposes of all provisions of
this Agreement including this Section 11.
12. Injunctive Relief. Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 6, 7, 9
and 10.6. Accordingly, Executive specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
13. Miscellaneous.
13.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Arizona.
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13.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
13.3 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
13.4 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
13.5 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
13.6 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted here
from and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by any provision of this Agreement be in excess
of that which is valid and enforceable under applicable law, then such provision
shall be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement shall be
given the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
13.7 Survival. Sections 6, 7, 8, 9, 10.7, 11, 12 and 13 shall
survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
as of the day and year set forth above.
QUEST SALES SOFTWARE, INC.
By: /s/ Patrick M. Sullivan
---------------------------------
Its President
"COMPANY"
/s/ Patrick M. Sullivan
---------------------------------
PATRICK M. SULLIVAN
"EXECUTIVE"
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the "Effective Date" defined below, by and between SALESLOGIX CORPORATION, a
Delaware corporation (the "Company"), and DOUGLAS J. NICHOLAS, an individual
("Executive").
RECITALS
A. The Company has entered into an agreement to merge (the "Merger")
with Opis Corporation, an Iowa corporation ("Opis").
B. Executive currently is employed by Opis. Executive and the Company
desire to enter into this Agreement, which describes the terms and conditions
under which the Company will employ Executive as of the Effective Date going
forward.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and Executive, intending
to be legally bound, hereby agree as follows:
AGREEMENT
1. Employment. Effective upon and subject to the closing of the Merger in a
manner acceptable to the Company (the "Effective Date"), the Company agrees to
employ Executive, and Executive accepts such employment and agrees to perform
services for the Company, for the period and upon the other terms and conditions
set forth in this Agreement.
2. Term of Employment. The term of Executive's employment hereunder shall
commence on the Effective Date and shall continue for a term of four (4) years
or until this Agreement is earlier terminated as provided herein, this being an
"at will" employment agreement (the "Term"); provided, that Sections 5 and 6 of
this Agreement shall govern the amount of any compensation to be paid to
Executive upon termination of this Agreement.
3. Position and Duties.
3.1 Service with the Company. Commencing on the Effective Date and thereafter
during the Term of this Agreement, Executive agrees to serve as the Vice
President of Customer Support Products of the Company, and to perform such
executive employment duties consistent with Executive's education, training and
experience as shall be assigned to Executive from time to time by the Company's
Chief Executive Officer initially, and any executive to whom the Chief Executive
Officer shall later assign Executive to report.
3.2 No Conflicting Duties. During the Term hereof, Executive shall not serve as
an officer, director, employee, consultant, or advisor to any other business
without the prior
<PAGE> 2
written consent of the Board. Executive hereby confirms that Executive is under
no contractual commitments inconsistent with Executive's obligations set forth
in this Agreement, and that during the Term of this Agreement, Executive will
not render or perform services, or enter into any contract to do so for
compensation, for any other corporation, firm, entity or person. Excluding any
period of vacation or other approved leaves, Executive shall devote Executive's
entire working time, knowledge, attention, energy, and skill to the duties and
responsibilities set forth in this Section 3 and otherwise assigned by the
Company in conformity with normal exclusive full-time employment standards, and
shall exert Executive's best efforts on behalf of the Company
4. Compensation.
4.1 Base Salary. As compensation for all services to be rendered by
Executive under this Agreement, the Company shall pay to Executive a monthly
salary of $9,583.33 (the "Base Salary"), which shall be paid on a regular basis
in accordance with the Company's normal payroll procedures and policies. The
amount of the Base Salary shall be subject to periodic review and adjustment (at
least annually) in the Company's sole discretion. The Company shall not decrease
the Base Salary below the initial amount set forth above during the term of this
Agreement. Executive shall also receive a car allowance for 6 months not to
exceed an aggregate allowance of $3,000. Executive shall cause that certain GMAC
Lease Agreement between Flaherty Buick - Pontiac - Cadillac, Inc. and Opis dated
February 5, 1996 (the "GMAC Lease") to be assigned to Executive and Opis, and
the Company and all subsidiaries of Company shall be released from all
obligations under the GMAC Lease within 90 days of the date of this Agreement.
4.2 Bonuses. Executive is eligible from time to time for bonuses under
written bonus plans adopted by the Company from time to time in its sole
discretion. Executive's eligibility for any such bonuses shall be subject to the
terms and conditions of the adopted written bonus plans. Nothing in this
Agreement or otherwise, however, shall be construed as guaranteeing Executive
the right to receive any bonus. For calendar year 1998, Executive will be
eligible to participate in any executive compensation plan that other executives
of the Company are eligible to participate in, which plan will be determined by
the Compensation Committee of the Board of Directors of Company, it its sole
discretion.
4.3 Stock Options. The Board will grant to Executive options to
purchase up to 100,000 shares of the Company's common stock. Such options shall
be granted pursuant to the Company's 1996 Equity Incentive Plan (the "Plan") and
an award agreement in the form attached hereto as Exhibit A setting forth such
terms and conditions as the Board deems appropriate, including without
limitation vesting conditions and restrictions on transfer of such stock.
4.4 Participation in Benefit Plans. Executive shall be included to the
extent eligible thereunder in any and all plans or programs of the Company
providing general benefits for the Company's employees, including but not
limited to insurance, 401(k) plan, sick days, and holidays. Executive shall be
entitled to three (3) weeks vacation per year. Executive's
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participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto, as amended from time to time. The
provisions of this Section 4.4 shall not affect in any way the rights of the
Company to amend or terminate any such benefits in accordance with the terms of
such plans or programs and the provisions of applicable law.
4.5 Business Expenses. In accordance with the Company's policies
established from time to time, the Company will pay or reimburse Executive for
all reasonable and necessary out-of-pocket expenses incurred by Executive in the
performance of Executive's duties under this Agreement, subject to the
presentment of appropriate documentation in accordance with Company policies. To
the extent that the Company generally offers perquisites to other similarly
situated executives at the Company, the Company shall provide substantially
similar perquisites to Executive.
4.6 Moving Expenses. Upon presentment of appropriate vouchers, the
Company agrees to reimburse Executive for reasonable moving costs relate to
Executive's relocation from Des Moines, Iowa, to Scottsdale, Arizona, as more
fully described on the relocation policy attached hereto as Exhibit B. The
Company will reimburse Executive for any incremental income tax associated with
relocating Executive to Scottsdale, Arizona.
4.7 Written Agreements. Executive shall be entitled to receive bonuses,
stock options, restricted stock, other compensation based on the Company's stock
or other compensation not expressly set forth in this Agreement only if such
compensation is expressly provided for in written plans or agreements entered
into by the Company after the date hereof.
5. Termination.
5.1 Disability. The Company shall have the right to terminate
Executive's employment and this Agreement upon Executive's becoming totally or
permanently disabled for a period of three (3) months or more, to the fullest
extent allowed by applicable law. For purposes of this Agreement, the term
"totally or permanently disabled" or "total or permanent disability" means
Executive's inability on account of sickness or accident, whether or not
job-related, to engage in regularly or to perform adequately Executive's
assigned duties under this Agreement. A good faith determination by the Board of
the existence of a disability shall be conclusive for all purposes hereunder. In
making such determination of disability, the Board may utilize such advice and
consultation as the Board deems appropriate, but there is no requirement of
procedure or formality associated with the making of a determination of
disability.
5.2 Death of Executive. Executive's employment and this Agreement shall
terminate immediately upon the death of Executive.
5.3 Termination for Cause. The Company may terminate Executive's
employment and this Agreement at any time for "Cause" (as hereinafter defined)
immediately upon written notice to Executive. As used herein, the term "Cause"
shall mean that Executive shall have in the reasonable judgment of the Company
(i) been convicted of any felony; (ii)
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committed any criminal act in connection with the embezzlement of Opis funds by
Steven Criger; (iii) knowingly participated in any improper revenue recognition
by Opis; (iv) knowingly submitted any fraudulent loan application; (v) committed
an act of fraud, embezzlement, dishonesty, moral turpitude or breach of trust;
(vi) committed an act of gross misconduct that materially and adversely affects
the Company or any employee of the Company; (vii) used or possessed any illegal
drug or any other illegal substance; (viii) knowingly breached any material
covenant or obligation under this Agreement or other agreement with the Company;
and (ix) any certificate or other document executed by Executive on behalf of
Opis in connection with the Merger was not, to the knowledge of Executive at the
time of such execution, true and accurate in all material respects. For purposes
of this Section 5.3 "materiality" and "adversely affects" shall be determined by
the Chief Executive Officer or the Board of Directors of the Company acting in
good faith, and such determination shall be conclusive for all purposes.
5.4 Termination for Performance Reasons. The Company may terminate
Executive's employment and this Agreement at any time for "Performance Reasons"
(as hereinafter defined) provided the Company first provides Executive with
written notice that he may be terminated for "Performance Reasons," and gives
Executive forty-five (45) days to cure such deficiencies. As used herein, the
term "Performance Reasons" shall mean that Executive shall have in the
reasonable judgment of the Company (i) violated written corporate policy or
rules of the Company; (ii) refused to follow the written directions or
directives of the Board, the Company's Chief Executive Officer, or Executive's
supervisors; or (iii) failed to satisfactorily discharge Executive's duties and
obligations.
5.5 Resignation. Executive's employment and this Agreement shall be
terminated on the earlier of the date that is thirty (30) days following the
written submission of Executive's resignation to the Company or the earlier date
such resignation is accepted by the Company.
5.6 Termination Without Cause. The Company may terminate Executive's
employment and this Agreement without cause or reason upon written notice to
Executive. Termination "without cause" shall mean termination of employment on
any basis other than termination of Executive's employment hereunder pursuant to
Sections 5.1, 5.2, 5.3, 5.4, or 5.5. Executive and the Company expressly agree
and acknowledge that Executive is an at-will employee under Arizona law, which
means that the Company may terminate Executive's employment at any time, with or
without cause or reason.
6. Compensation Upon the Termination of Executive's Employment.
6.1 In the event Executive's employment is terminated pursuant to
Section 5.1 (Disability), 5.3 (Cause), or 5.5 (Resignation), then Executive
shall be entitled to receive Executive's then current monthly Base Salary
through the date Executive's employment is terminated, but no other compensation
of any kind or amount, except for any vested rights under the plans or
agreements referred to in Section 4.3.
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6.2 In the event Executive's employment is terminated pursuant to
Section 5.2 (Death), Executive's beneficiary designated by Executive in writing
to the Company, or in the absence of such beneficiary, Executive's estate, shall
be entitled to receive Executive's then current monthly Base Salary through the
end of the month in which Executive's death occurs, but no other compensation of
any kind or amount, except for any vested rights under the plans or agreements
referred to in Section 4.3.
6.3 In the event Executive's employment is terminated pursuant to
Section 5.4 (Performance Reasons), the Company shall: (i) pay to Executive, as a
severance allowance, Executive's then current monthly Base Salary for the three
(3) month period following the date of termination; (ii) maintain in full force
and effect, by paying Executive's COBRA payments, health insurance for the
Executive until the first to occur of Executive's attainment of alternative
employment or three (3) months following the termination date of Executive's
employment hereunder; and (iii) pay no other compensation of any kind or amount,
except for any vested rights under the plans or agreements referred to in
Section 4.3 (collectively, the "Termination Payments"). As a condition precedent
to the Company's obligation to provide Executive with the Termination Payments,
Executive must first execute and deliver to the Company a legal release in
substantially the form that is attached hereto as Exhibit C.
6.4 In the event Executive's employment is terminated pursuant to
Section 5.5 (Without Cause), the Company shall: (i) pay to Executive, as a
severance allowance, Executive's then current monthly Base Salary for the six
(6) month period following the date of termination; (ii) maintain in full force
and effect, by paying Executive's COBRA payments, health insurance for the
Executive until the first to occur of Executive's attainment of alternative
employment or six (6) months following the termination date of Executive's
employment hereunder; and (iii) pay no other compensation of any kind or amount,
except for any vested rights under the plans or agreements referred to in
Section 4.3 (collectively, the "Termination Payments"). As a condition precedent
to the Company's obligation to provide Executive with the Termination Payments,
Executive must first execute and deliver to the Company a legal release in
substantially the form attached as Exhibit C.
6.5 All payments required to be made by the Company to Executive
pursuant to this Section 6 shall be paid in the manner and at the times
specified in Section 4.1 hereof.
6.6 The failure or delay by either party hereto to exercise its rights
to terminate this Agreement with respect to any one or more of the matters
referred to in Section 5 shall not be taken or held to be a waiver by such party
of its right of termination of this Agreement in respect to such matter or any
subsequent matter.
6.7 Except as expressly provided in this Section 6, upon the
termination of this Agreement, the Company shall not have any liability or
obligation of any kind or character to the Executive under the terms of this
Agreement or in connection with the termination of the Executive's employment
hereunder.
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<PAGE> 6
7. Confidentiality and Proprietary Information. Simultaneous with the
execution of this Agreement, Executive shall execute and return to the Company
the Employee Proprietary Rights Agreement attached hereto as Exhibit D.
8. Ventures. If, during the Term, Executive is engaged in or associated
with the planning or implementing of any project, program or venture involving
the Company and a third party or parties, or Executive receives from any third
party or parties any opportunity to participate in any project, program or
venture relating directly to the business of the Company, all rights in the
project, program or venture shall belong to the Company and shall constitute a
corporate opportunity belonging exclusively to the Company. Except as approved
by the Company's Board, Executive shall not be entitled to any interest in such
project, program or venture or to any commission, finder's fee or other
compensation in connection therewith other than the Base Salary to be paid to
Executive as provided in this Agreement.
9. Non-Competition; Solicitation of Customers and Solicitation of Employees.
9.1 Non-Competition.
(a) Executive agrees that, during the Term and for a period of
twelve (12) months thereafter, Executive shall not, directly or indirectly,
engage in competition with the Company within any state in the United States, or
any country outside the United States, in which the Company is then conducting
its business (the "Territory"), in any manner or capacity (e.g., as a
consultant, principal, partner, owner, officer, director, stockholder, agent, or
employee) in any phase of the Company's business as then being conducted.
(b) Ownership by Executive, as a passive investment, of less
than 1% of the outstanding shares of capital stock of any corporation listed on
a national securities exchange or publicly traded in the over-the-counter market
shall not constitute a breach of this Section 9.1.
(c) Executive further agrees that, during the Term and for a
period of twelve (12) months thereafter, Executive will not, directly or
indirectly, assist or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the above provisions of
this Section 9 if such activity were carried out by Executive, either directly
or indirectly, and in particular Executive agrees that Executive will not,
directly or indirectly, induce any employee or consultant of the Company to
carry out, directly or indirectly, any such activity.
9.2 Agreement Not to Solicit Customers. Executive agrees that,
during the Term and for a period of twelve (12) months thereafter, Executive
will not, either directly or indirectly, on Executive's own behalf or in the
service or on behalf of others, solicit, divert or appropriate, or attempt to
solicit, divert or appropriate, to any competing business (i) any person or
entity whose account the Company sold or serviced (including maintenance) during
the twelve (12) months preceding the termination of such employment, or (ii) any
person or entity whose
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<PAGE> 7
account the Company has directly solicited at least twice within the twelve (12)
month period prior to the date of termination of employment.
9.3 Agreement Not to Solicit Employees and Contractors. Executive
agrees that during the Term and for the three (3) year period thereafter,
Executive will not, either directly or indirectly, on Executive's own behalf or
in the service or on behalf of others solicit, divert, encourage to leave or
cease doing business with the Company, or hire away, or attempt to solicit,
divert, encourage to leave or cease doing business with the Company, or hire
away any person then employed by the Company or then serving as a sales
representative or distributor of the Company.
9.4 Reformation. In the event that any provision in this Section 9 is
held to be overbroad as written, such provision shall be deemed amended to
narrow its application to the extent necessary to make the provision enforceable
to the fullest extent allowable. Executive and the Company hereby agree that
such amendment shall be accomplished as follows:
(a) In the case of duration, the length of the covenant or
provision shall be reduced in increments of one (1) month each until it is of
the greatest duration as may be enforceable under applicable law.
(b) In the case of geographic scope, the geographic scope of
the covenant or provision shall be reduced until it is of the greatest
geographic scope as may be enforceable under applicable law, which reduction
shall be effected by eliminating in the following order, one by one, countries
outside the United States, beginning with the country in which the Company
received the least volume of gross revenue over the prior six (6) months, and
continuing in the inverse order ranked by the Company's gross billings over the
prior six (6) months within each country until such scope is enforceable, and
then, if necessary, by eliminating in the following order, one by one,
individual States within the United States, beginning with the State in which
the Company received the least volume of gross revenue over the prior six (6)
months, and continuing in the inverse order ranked by the Company's gross
billings over the prior six (6) months within each State until such scope is
enforceable, and then, if necessary and applicable, by eliminating in the
following order the counties in the State of Arizona, beginning with the county
in which the Company received the least volume of gross revenue over the prior
six (6) months, and continuing in the inverse order ranked by the Company's
gross billings over the prior six (6) months within each county in Arizona until
such scope is enforceable.
9.5 Reasonableness. Executive and the Company agree that the covenants
set forth in this Section 9 are appropriate and reasonable when considered in
light of the nature and extent of the Company's business. Executive acknowledges
that (i) the Company has a legitimate interest in protecting the Company's
business activities, (ii) the covenants set forth herein are not oppressive to
Executive and contain reasonable limitations as to time, scope, geographical
area and activity, (iii) the covenants do not harm in any manner whatsoever the
public interest, (iv) Executive can earn a livelihood without violating any of
the covenants set forth herein, and (v) Executive has received and will receive
substantial consideration for
7
<PAGE> 8
agreeing to such covenants, including without limitation the consideration to be
received by Executive under this Agreement, including the Termination Payments.
9.6 Notice to Future Employers. For the period of twelve (12)
months following the termination of Employee's employment, Employee shall
provide a copy of this Agreement to any future or prospective employer of
Employee and agrees that the Company also may do so.
10. Surrender of Records and Property. Upon termination of Executive's
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company and which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in Executive's
possession or under Executive's control.
11. Release of Opis. As of the Effective Date, Executive waives and
releases all of Executive's existing rights to any relief of any kind from Opis
and its affiliates, subsidiaries, divisions, directors, officers, shareholders,
employees, agents, attorneys, successors, and assigns (collectively, the
"Released Parties"), including, without limitation, all claims, demands,
liabilities, obligations, causes, and causes of action of whatever kind or
nature, whether known or unknown, past or present, suspected or unsuspected,
including, without limitation, those that arise out of or that relate to:
Executive's employment with Opis; the termination of Executive's employment with
Opis; all statements or actions of the Released Parties; all claims that arise
under the Civil Rights Act of 1964 and the Americans with Disabilities Act; all
claims for wrongful discharge; all claims for relief or other benefits under any
federal, state, or local statute, ordinance, regulation, or rule of decision;
all claims that the Released Parties engaged in conduct prohibited on any basis
under any federal, state, or local statute, ordinance, regulation, or rule of
decision; and all claims for wages, stock, stock options, or other rights with
respect to equity securities of Opis, severance pay, compensation, attorneys'
fees, liquidated damages, punitive damages, costs, expense reimbursements, and
disbursements.
12. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, (ii) to
which the Company may sell or transfer all or substantially all of its assets or
(iii) which controls, is controlled by or is under common control with, the
Company, where control means the ownership of 50% or more of the equity
investment and of the voting power of an entity. Upon such assignment by the
Company, the Company shall obtain the assignees' written agreement enforceable
by Executive to assume and perform, from and after the date of such assignment,
the terms, conditions, and provisions imposed by this Agreement upon the
Company. After any such assignment by the Company and such written agreement by
the assignee, the Company shall be discharged from all further liability
hereunder and such assignee
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<PAGE> 9
shall thereafter be deemed to be the Company for the purposes of all provisions
of this Agreement including this Section 12.
13. Injunctive Relief. Executive agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 7, 9 and
10. Accordingly, Executive specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
14. Dispute Resolution. If there shall be any dispute between the
Company and Executive whatsoever, the dispute shall be resolved in accordance
with the dispute resolution procedures set forth in Exhibit E hereto, the
provisions of which are incorporated as a part hereof, and the parties hereto
hereby agree that such dispute resolution procedures shall be the exclusive
method for resolution of disputes under this Agreement. Notwithstanding anything
herein to the contrary, nothing in this Section 14 or Exhibit E shall preclude
any party from seeking interim or provisional relief, in the form of a temporary
restraining order, preliminary injunction or other interim equitable relief
concerning a dispute, either prior to or during any of the negotiations or
proceedings provided for herein, if deemed necessary by a party, in its
discretion, to protect the interests of such party. Further, this Section 14
shall be specifically enforceable. IT IS EXPRESSLY UNDERSTOOD THAT BY SIGNING
THIS AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE COMPANY AND
EXECUTIVE AGREE TO WAIVE COURT OR JURY TRIAL AND TO WAIVE PUNITIVE, STATUTORY,
CONSEQUENTIAL AND ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES, TO THE FULLEST
EXTENT ALLOWED BY LAW.
15. Miscellaneous.
15.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Arizona.
15.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter,
except for other written agreements between the parties that are specifically
referenced in this Agreement, and the parties hereto have made no agreements,
inducements, representations or warranties relating to the subject matter of
this Agreement which are not set forth herein.
15.3 Withholding Taxes. The Company may withhold from any
payments and benefits payable under this Agreement all federal, state, city or
other taxes as shall be required pursuant to any law or governmental regulation
or ruling.
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15.4 Notices. All notices and other communications hereunder
shall be in writing and shall be given by delivery in person, by registered or
certified mail (return receipt requested and with postage prepaid thereon) or by
cable, telex or facsimile transmission to the Company at the Company's primary
business address and to Executive at the address on file with the Company, which
may be changed upon written notice by Executive.
All notices and other communications hereunder that are addressed as
provided in or pursuant to this Section 15.4 shall be deemed duly and validly
given (a) if delivered in person, upon delivery, (b) if delivered by registered
or certified mail (return receipt requested and with postage paid thereon), 72
hours after being placed in a depository of the United States mails and (c) if
delivered by cable, telex or facsimile transmission, upon transmission thereof
and receipt of the appropriate answer back, if any.
15.5 Amendments. No amendment, modification or rescission of
this Agreement shall be deemed effective unless made in writing signed by the
parties hereto.
15.6 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
15.7 Severability. If, after application of any provision of
this Agreement specifying how reformation shall be accomplished, including
Section 9.4, to the extent any provision of this Agreement shall still be
invalid or unenforceable, it shall be considered deleted from this Agreement and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
15.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.9 Survival. Sections 7, 8, 9, 10, 11, 12, 13, 14, and 15
shall survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first set forth above.
SALESLOGIX CORPORATION
By /s/ Patrick M. Sullivan
--------------------------
Its President
--------------------------
"THE COMPANY"
/s/ Douglas J. Nicholas
--------------------------
DOUGLAS J. NICHOLAS
"EXECUTIVE"
The undersigned, as spouse of the Executive identified above, hereby confirms
that the community property of Executive and the undersigned is subject to and
bound by the agreement set forth above.
- -----------------------------
Spouse of Employee
11
<PAGE> 12
EXHIBIT A
Form of ISO Award Agreement
<PAGE> 13
EXHIBIT B
To Employment Agreement of Douglas Nicholas
Employee Relocation Program
Purpose of Program
The program has been designed with the primary objective of minimizing the
financial impact of the relocation of an employee and his/her immediate family
to the Phoenix metropolitan area. It is the aim of SalesLogix to make the
relocation as efficient and pleasant as possible. It should be recognized,
however, that while we have high aspirations for the future, currently we are a
small start-up company with limited personnel and financial resources. That
aside, we will do everything we can to make your relocation as painless as we
can. The program covers up to two trips to the Phoenix metropolitan area (get to
know the "Valley of the Sun" and house/apartment hunting), temporary living and
other expenses, the move itself, normal seller's closing costs incurred in
selling your home (or, if you currently live in an apartment, early lease
termination penalties) and normal buyer's closing costs in buying a home.
Trips to the Phoenix metropolitan area
Reimbursement of expenses incurred for up to two trips to the Phoenix
metropolitan area, a get to know the "Valley of the Sun" trip of up to three
days and a house/apartment finding trip of up to seven days. Expenses to be
reimbursed include: airfare for employee and spouse, hotel, rental car and up to
$30.00 per person per day for meals and incidentals. Airfare, hotel and rental
car are to be arranged by SalesLogix. In order to minimize the costs of airfare,
we request that you notify us at least two weeks in advance of your travel to
obtain the lowest possible fares.
Temporary living and other expenses
Reimbursement for up to $2,500 of temporary housing and other agreed upon (in
advance) expenses.
Moving expenses
Moving expenses will be reimbursed in full. We will require that bids be
solicited from three reputable moving companies, one of which will be arranged
by SalesLogix from United Moving and Storage. In the event that the employee
decides to make his/her own arrangements, SalesLogix will pay the employee an
amount equal to the lowest of the three bids.
Reimbursement of expenses in connection with sale of home
Reimbursement/payment of normal seller's closing costs, including real estate
commissions of up to 6% incurred in connection with the sale of existing home.
Lease termination costs
<PAGE> 14
Reimbursement/payment of costs incurred in connection with early termination of
lease for rented housing.
Reimbursement of expenses in connection with purchase of new home
Reimbursement of normal buyer's closing and new mortgage loan costs, including
up to a 1% origination fee for new loan.
<PAGE> 15
EXHIBIT C
Form of Release
In exchange for consideration from SalesLogix Corporation, a Delaware
corporation (the "Company"), the receipt and sufficiency of which are hereby
acknowledged, I, the undersigned individual, hereby waive and release all of my
existing rights to any relief of any kind from the Company and Opis Corporation,
its wholly owned subsidiary formerly known as SLX Acquisition Corporation
("SAC"), and Opis Corporation, an Iowa corporation that was merged into SAC
("OPIS"), and their affiliates, subsidiaries, divisions, directors, officers,
shareholders, employees, agents, attorneys, successors, and assigns
(collectively, the "Released Parties"), including, without limitation, all
claims, demands, liabilities, obligations, causes, and causes of action of
whatever kind or nature, whether known or unknown, past or present, suspected or
unsuspected, including, without limitation, those that arise out of or that
relate to: my employment with the Company or OPIS; the termination of my
employment with the Company or OPIS; all statements or actions of the Released
Parties; all claims that arise under the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, and the Americans with Disabilities Act; all
claims for wrongful discharge; all claims for relief or other benefits under any
federal, state, or local statute, ordinance, regulation, or rule of decision;
all claims that the Released Parties engaged in conduct prohibited on any basis
under any federal, state, or local statute, ordinance, regulation, or rule of
decision; and all claims for wages, stock, stock options, or other rights with
respect to equity securities of the Company or OPIS, severance pay,
compensation, attorneys' fees, liquidated damages, punitive damages, costs,
expense reimbursements, and disbursements (other than the consideration I
received as set forth on Schedule 2.1(b) of that Certain Agreement and Plan of
Merger between the Company, SAC and OPIS, dated December 23, 1997).
I acknowledge that I have been given at least 21 calendar days to
decide whether to sign this release, and that I have been advised to consult
with my own attorney prior to signing the release. I further acknowledge, that
after I sign this release and return it to the Company, I will then have 7 days
to revoke my acceptance of this release, or, in other words, change my mind. I
understand that if I decide to revoke my acceptance of this release, I must send
the Company a letter declaring my decision to revoke my acceptance, which the
Company must receive before the expiration of the 7-day revocation period to be
effective.
I also agree that I will not disparage or defame the reputation,
character, image, or services of the Company or the Released Parties. I also
agree that I will not recommend or suggest to any potential claimants or
plaintiffs or any entity or their attorneys or agents that they initiate claims
or lawsuits against the Company or the Released Parties, nor will I voluntarily
aid, assist, or cooperate with any such claims or lawsuits.
- ------------------------------- -------------------------
Douglas Nicholas Date
<PAGE> 16
EXHIBIT D
Employee Proprietary Rights Agreement
<PAGE> 17
EXHIBIT E
Dispute Resolution Procedures
A. If a controversy should arise which is covered by Section 14, then
not later than three (3) months from the date of the event which is the subject
of dispute either party may serve on the other a written notice specifying the
existence of such controversy and setting forth in reasonably specific detail
the grounds thereof ("Notice of Controversy"); provided that, in any event, the
other party shall have at least thirty (30) days from and after the date of the
Notice of Controversy to serve a written notice of any counterclaim ("Notice of
Counterclaim"). The Notice of Counterclaim shall specify the claim or claims in
reasonably specific detail. If the Notice of Controversy or the Notice of
Counterclaim, as the case may be, is not served within the applicable period,
the claim set forth therein will be deemed to have been waived, abandoned and
rendered unenforceable.
B. Following receipt of the Notice of Controversy (or the Notice of
Counterclaim, as the case may be), there shall be a three (3) week period during
which the parties will make a good faith effort to resolve the dispute through
negotiation ("Period of Negotiation"). Neither party shall take any action
during the Period of Negotiation to initiate arbitration proceedings.
C. If the parties should agree during the Period of Negotiation to
mediate the dispute, then the Period of Negotiation shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation. In no
event, however, may the Period of Negotiation be extended by more than five (5)
weeks or, stated differently, in no event may the Period of Negotiation be
extended to encompass more than a total of eight (8) weeks.
D. If the parties agree to mediate the dispute but are thereafter
unable to agree within one (1) week on the format and procedures for the
mediation, then the effort to mediate shall cease, and the Period of Negotiation
shall terminate four (4) weeks from the Notice of Controversy (or the Notice of
Counterclaim, as the case may be).
E. Following the termination of the Period of Negotiation, the dispute
(including the main claim and counterclaim, if any) shall be settled by
arbitration, governed by the Federal Arbitration Act, 9 U.S.C. 1 et seq.
("FAA"), and judgment upon the award may be entered in any court of competent
jurisdiction. The format and procedures of the arbitration are set forth below.
F. A notice of intention to arbitrate ("Notice of Arbitration") shall
be served on the opposing party within forty-five (45) days of the termination
of the Period of Negotiation. If the Notice of Arbitration is not served within
this period, the claim set forth in the Notice of Controversy (or the Notice of
Counterclaim, as the case may be) will be deemed to have been waived, abandoned
and rendered unenforceable.
G. The Company shall designate a neutral third party to administer the
arbitration, such as the American Arbitration Association, Jams Endispute, or
another neutral individual or entity, who may be one of the arbitrators (the
"Administrator").
<PAGE> 18
H. The arbitrators shall reach a decision on the merits on the basis of
applicable legal principals as embodied in the law of the State of Arizona. The
arbitration hearing shall take place in Phoenix, Arizona.
I. There shall be three arbitrators, regardless of the amount in
controversy. Each party shall select one arbitrator within fifteen (15) days
after the Notice of Arbitration is served by notifying the opposing party and
the Administrator of such selection, and the two party-appointed arbitrators
shall select the third arbitrator (the "Neutral Arbitrator") within fifteen (15)
days after they are selected and shall promptly notify the parties of such
selection. The Neutral Arbitrator, in order to be eligible to serve, shall be a
lawyer in Phoenix, Arizona (i) who has at least fifteen (15) years experience
specializing in general commercial litigation, general corporate and commercial
matters, or employment law matters and (ii) who has had both training and
experience as an arbitrator. In the event the party-appointed arbitrators cannot
agree on the Neutral Arbitrator, the Administrator shall appoint a Neutral
Arbitrator who shall meet the foregoing criteria. If either party fails to
appoint a party-appointed arbitrator, the single party-appointed arbitrator
shall select the Neutral Arbitrator and the Neutral Arbitrator shall be the sole
arbitrator and shall decide all matters in the arbitration. Until the conclusion
of the arbitration, each party shall pay the fees and costs of its
party-appointed arbitrator, and the parties shall each pay one-half (1/2) the
fees and costs of the Neutral Arbitrator. Upon the conclusion of the
arbitration, the prevailing party shall be entitled to reimbursement of the
arbitrators' fees it has paid, as set forth below.
J. At the time of appointment and as a condition thereto, each
arbitrator will be apprised of the time limitations and other provisions of this
Exhibit C and shall indicate such arbitrator's agreement to comply with such
provisions and time limitations.
K. During the thirty (30) day period following appointment of the
Neutral Arbitrator, either party may serve on the other a request for limited
numbers of documents (no more than twenty (20) categories of documents may be
requested) directly related to the dispute. Such documents will be produced
within seven (7) days of the request to the extent practicable.
L. Following the thirty (30) day period of document production, there
will be a forty-five (45) day period during which limited depositions will be
permissible. Neither party will take more than five (5) depositions, and no
party can question a witness for more than three (3) hours in any deposition.
M. Disputes as to discovery or prehearing matters of a procedural
nature shall be promptly submitted to the arbitrators pursuant to telephone
conference call or otherwise. The arbitrators shall make every effort to render
a ruling on such interim matters at the time of the hearing (or conference call)
or within five (5) business days thereafter.
N. Following the period of depositions, the arbitration hearing shall
promptly commence. The arbitrators will make every effort to commence the
hearing within thirty (30) days of the conclusion of the deposition period and,
in addition, will make every effort to
<PAGE> 19
conduct the hearing on consecutive business days to conclusion. The Federal
Rules of Evidence will apply during the arbitration hearing.
O. An award will be rendered, at the latest, within six (6) months of
the date of the Notice of Arbitration and within thirty (30) days of the close
of the arbitration hearing. The award shall set forth the grounds for the
decision (findings of fact and conclusions of law) in reasonably specific
detail. The award shall be final and nonappealable except as provided in the
FAA.
The award may only be made for compensatory damages, and if any other
damages (whether exemplary, punitive, consequential, statutory or other) are
included, the award shall be vacated and remanded, or modified or corrected, as
appropriate to promote this damage limitation.
The prevailing party in the arbitration shall be entitled to
reimbursement from the other party of costs incurred in connection with the
arbitration, including, without limitation, filing fees, attorneys' fees,
disbursements of counsel, costs, and arbitrator's fees.
P. All decisions and awards of the arbitrators must be by a majority of
the arbitrators.
Q. All negotiations and proceedings pursuant to this Exhibit C and
information and documents disclosed therein ("Confidential Information") shall
be used only for negotiation, mediation, and arbitration as provided in this
Exhibit C, and for no other purpose. Specifically, Confidential Information
shall not be disclosed to anyone other than (i) the parties and their attorneys
and staffs; (ii) outside experts or consultants retained by the parties for
purposes of mediation or arbitration, including their secretarial or clerical
personnel, provided that the outside experts and consultants have first read
this paragraph and have agreed to abide by its terms; and (iii) other persons
upon whom the parties mutually agree in writing. All arbitrators and mediators
shall agree in writing, prior to the start of any mediation or arbitration, to
agree to comply with the foregoing restrictions regarding Confidential
Information. All documents will be returned to the party that produced such
documents when the documents are no longer needed or upon the final
determination of the mediation or arbitration.
R. The parties may agree upon different procedures or deadlines only in
a writing signed by both parties.
<PAGE> 1
Exhibit 10.10 - Form of Employee Proprietary Rights Agreement
EMPLOYEE PROPRIETARY RIGHTS, NONCOMPETITION
AND NONSOLICITATION AGREEMENT
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE BINDING. PLEASE
READ IT IN FULL BEFORE YOU SIGN.
I recognize the importance of protecting the Company's rights to inventions,
discoveries, ideas, confidential information and other intellectual property,
and for good and valuable consideration which I have received, I agree to the
following:
1. DEFINITIONS. For the purposes of this Agreement:
(a) "Company" means SalesLogix Corporation.
(b) "Creation" means any invention, discovery, idea, concept,
design, process, work of authorship, development or improvement
(whether or not subject to copyright or patent protection and whether
or not reduced to practice by me): (i) relating to any present or
reasonably anticipated business of the Company and which was created or
otherwise developed during the course of my employment with the
Company, (ii) which was created or otherwise developed during Company
time, or (iii) which was created or otherwise developed at any time
using equipment, supplies, facilities, information or proprietary
rights or other property of the Company.
(c) "Confidential Information" means information (including
information created by me) which is not generally known about the
Company or its business, including without limitation about its
products, projects, designs, developmental or experimental work,
computer programs, data bases, know-how, processes, formulas,
customers, suppliers, business plans, marketing plans and strategies,
finances, or personnel, and information obtained from third parties
under confidentiality agreements.
2. OWNERSHIP OF CREATIONS
(a) Inventions Retained by Employee. I represent that all
matters which I have created or otherwise developed prior to my
employment, which I wish to exclude from my obligations to the Company
under this agreement, are listed below. If no items are listed below, I
represent that there are no such matters to be excluded.
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(b) Assignment of Creations. I hereby agree to hold in trust
for the sole right and benefit of the Company and assign to the Company
all my right, title and interest in and to any and all Creations
created or otherwise developed, alone or in conjunction with others. I
further agree to assign to any third party, including the United States
government, all my right, title and interest in and to any and all
Creations whenever such assignment is required by a contract between
the Company and such third party.
(c) Maintenance of Records. I agree to keep and maintain
adequate and current written records of all Creations made by me, in
the form of notes, sketches, drawings and other notations which may be
specified by the Company, which records shall be available to and
remain the sole property of the Company at all times.
(d) Disclosure of Creations and Filings. I agree to promptly
disclose to the Company in writing all Creations created or otherwise
developed by me alone or in conjunction with others, as well as any and
all patent applications or copyright registrations filed by me during
and within a year after termination of my employment with the Company.
(e) Assistance. During and after the period of my employment
by the Company, I agree that I will give the Company all assistance it
reasonably requires (at the Company's expense) to file for, maintain,
protect and enforce the Company's patents, copyrights, trademarks,
trade secrets and other rights in Creations, in any and all countries.
To that end I will sign documents and do other acts which the Company
may determine necessary or desirable including, without limitation,
giving evidence and testimony in support of the Company.
(f) Intellectual Property Rights in Works of Authorship. I
acknowledge and agree that any intellectual property rights Creations
which are works of authorship belong to the Company and are "works made
for hire" within the definition of section 101 of the United States
Copyright Acts of 1976, Title 17, United States Code. The Company or
any of its direct or indirect licensees shall not be obligated to
designate me as author of any design, software, firmware, related
documentation, or any other work of authorship when distributed
publicly or otherwise, nor to make any distribution.
3. CONFIDENTIAL INFORMATION
(a) Ownership of Confidential Information. All Confidential
Information which I create or otherwise develop or which comes into my
possession shall be and remain the exclusive property of the Company.
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(b) No Disclosure of Confidential Information. Unless
authorized in writing by the Company, I will maintain all Confidential
Information in confidence and, except as necessary in conjunction with
my work for the Company, will not copy or make notes of, divulge to
anyone outside the Company or use any of the Confidential Information
for my own or another's benefit, either during or after the term of my
employment with the Company. I agree that I will promptly disclose to
the Company all Confidential Information developed by me.
(c) Returning the Company Documents and Tangible Property.
Upon request of the Company and, in any event, upon termination of my
employment, I will promptly surrender and deliver to the Company (and
will not keep in my possession or deliver to anyone else) and agree not
to use any Confidential Information, records, data, notes, reports,
proposals, lists, correspondence, computer code, specifications,
drawings, blueprints, sketches, flow diagrams, materials, equipment,
devices or any other documents or property (including photocopies or
other reproductions of any of the aforesaid items) of the Company.
(d) Confidential Information of Third Parties. During my
employment with the Company I may receive, under non-disclosure
agreements agreed to by authorized representatives of the Company,
information claimed by third parties to be their confidential
information. I agree that I will respect such agreements and will not
disclose such information to any person or organization, except as is
necessary in carrying out my work for the Company consistent with the
Company's agreement with such third parties. At the request of the
Company and, in any event, upon the termination of my employment, I
will promptly surrender to the Company any such information.
4. NON-USE OF PROPERTY OF THIRD PARTIES. During my employment with the Company,
I will not improperly use or disclose any confidential or proprietary
information or property of any third party (including any former employer).
5. NO PRIOR RESTRICTIONS. I hereby represent and warrant that I am free to enter
into your employ and that there are no contracts or restrictive covenants
preventing full performance of my duties.
6. LIMITATIONS ON COMPETITIVE ACTIVITIES DURING EMPLOYMENT. During my employment
with the Company, I will not, alone or with others, directly or indirectly, work
on, plan, organize or engage in any consulting, employment or other business
activity (whether or not for compensation) that is competitive with the business
in which the Company is involved or may hereafter become involved, nor will I
engage in any other activity that conflicts with my obligations to the Company.
Prior to working on, planning, organizing or engaging in any consulting,
employment or other business activity outside my employment with the Company, I
will consult my manager or supervisor to ensure that no conflict of interest
with the Company exists.
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7. PUBLISHING. Unless approved by the Company in writing, I will not publish
anything in the Company's business areas of interest during my employment with
the Company.
8. EXPORT LAW ASSURANCES. I agree and certify that neither the software nor any
other technical data received from the Company or the direct product thereof,
will be downloaded, shipped, transferred or re-exported, directly or indirectly
any countries designated from time to time by the U.S. Government for non-export
of regulated technology.
9. NO GUARANTEE OF EMPLOYMENT. I expressly acknowledge and agree that this is
not an agreement by the Company to employ me for any period, and unless
otherwise expressly agreed in writing between me and the Company, and my
employment with the Company may be terminated at any time, with or without cause
by either myself or the Company. All of the terms of this Agreement shall
survive any termination of my employment.
10. RESTRICTIVE COVENANTS.
(a) Non-Solicitation of Employees. I acknowledge the
international character of the Company's business and the substantial
amount of time, money, and effort that the Company has spent and will
spend in recruitment of competent employees, and I agree that I will
not, for a period of one (1) year after termination of my employment
with the Company, solicit for employment, attempt to employ or actively
assist any other entity in employing or soliciting for employment any
salesman, manager, executive, scientist, programmer, engineer or a
person involved in technical activities, who is or who is hereafter
employed by the Company or any successor of the Company, for an
employer within the United States and Canada which competes with the
Company.
(b) Non-Solicitation of Customers. I acknowledge the
international character of the Company's business and the substantial
amount of time, money, and effort that the Company has spent and will
spend in building relationships with customers in the United States and
Canada, and agree that I, for a period of one (1) year following
termination of my employment with the Company will not solicit or cause
to be solicited for the purpose of selling products or services
substantially similar to the Company's products and services at the
time of such termination, in the United States and Canada, any customer
with whom I have had contact on behalf of the Company or as a result of
being employed by the Company. The time period shall be tolled while I
am in breach hereof.
(c) Non-Competition. I acknowledge the international character
of the Company's business and the substantial amount of time, money,
and effort that the Company has spent and will spend in building its
products, employee and customer relationships and development of
strategically important information, and agree that I, for a period of
one (1) year following termination of my employment with the Company,
will not, alone or with others, directly or indirectly, work on, plan,
organize or engage in any
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consulting, employment or other business activity (whether or not for
compensation) that is competitive with the business in which the
Company is involved (or which I am aware it intends to become involved
in) in the United States or Canada.
(d) Reasonableness. The restrictions contained in this
Agreement are considered by me to be fair and reasonable and necessary
for the protection of the legitimate business interests of the Company.
I acknowledge that I can earn a livelihood without violating any of the
undertakings contained in this Agreement.
11. MISCELLANEOUS
(a) Severability. If any provision of this Agreement or
portion thereof is determined by a court of competent jurisdiction to
be wholly or partially unenforceable for any reason, such provision or
portion thereof shall be considered separate from the remainder of this
Agreement, which shall remain in full force and effect. In the event
that any provision of this Agreement is held to be overbroad as
written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable
to the fullest extent allowable.
(b) Waiver. The Company's waiver or failure to enforce any
violation or provision of this Agreement shall not constitute a waiver
of its rights hereunder with respect to any other violation or
provision of this Agreement, and shall be effective only in the
specific instance and for the specific purpose given.
(c) Foreign Laws. I agree to comply with the applicable laws
of any foreign countries with which the Company does business.
(d) Governing Law. This agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Arizona.
(e) Successors. This Agreement shall be for the benefit of and
be binding upon: i) my executors, heirs, legatees and personal
representatives, and ii) the successors and assigns of the Company.
(f) Entirety of Agreement. This Agreement supersedes all prior
agreements concerning Creations and Confidential Information between
myself and the Company.
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(g) Acknowledgment I acknowledge that I have received a copy
of this Employee Proprietary Rights, Noncompetition and Nonsolicitation
Agreement.
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Employee Name--Printed
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Employee Signature
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Employee Soc. Sec. No.
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Date
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EXHIBIT 10.11 - SOFTWARE LICENSE AGREEMENT
SOFTWARE LICENSE AGREEMENT
This SOFTWARE LICENSE AGREEMENT is made and entered into as of the last
day written below by and between SalesLogix Corporation, a Delaware corporation
with its principal offices located at 8800 N Gainey Center Drive, Suite 200,
Phoenix, Arizona 85258 ("Licensor") and The McCosker Corporation, whose
principal place of business is located at 1777 Oakland Blvd., Suite 201, Walnut
Creek, California 94596 ("Licensee").
RECITALS
A. Licensor owns certain proprietary software products (consisting of
programs and related documentation) that Licensor distributes and licenses.
B. Licensee is in the business of developing, marketing and distributing
proprietary software products consisting of programs and related documentation.
C. Licensor and Licensee wish to enter into an agreement authorizing
Licensee to utilize and modify certain portions of source code versions of a
proprietary software product of Licensor and to promote, market, distribute,
license and sublicense Licensee's software products that incorporate object code
versions of the modified proprietary software product of Licensor, within a
specified market.
THE PARTIES AGREE AS FOLLOWS:
1. GLOSSARY
1.1 The "Act" means the Copyright Act of 1976, as amended.
1.2 A "business day" means a day, other than Saturday or Sunday, on which
banks located in Phoenix, Arizona and San Francisco, California are generally,
open for business in each of such cities. If the day on which an act or event is
scheduled to occur under this Agreement shall not be a business day, then the
same shall be timely if it occurs on the next following business day.
1.3 "Confidential Information" of a party hereto means all confidential
and proprietary information of such party marked as such (if such information is
capable of being so marked) not generally known to the public regarding such
party's products and business that are disclosed by such party (the "Disclosing
Party") to the other party (the "Non-Disclosing Party") under this Agreement
including, but not limited to, the Licensed Programs and designated portions of
the Licensed Materials (including by way of example, but not limitation, Source
Code design materials). Confidential Information does not include information
(i) in the public domain at the time of delivery, (ii) subsequently published or
otherwise made part of the public domain through no fault of the Non-Disclosing
Party or of its representatives, (iii) in the Non-Disclosing Party's possession
at the time of disclosure and not acquired by the Non-Disclosing
<PAGE> 2
party directly or indirectly from such Disclosing Party or its representatives
on a confidential basis, or (iv) which becomes available to the Non-Disclosing
Party on a non-confidential basis from a source that, to the best of its
knowledge, is not under an obligation to the Disclosing Party.
1.4 "Derivative Source Code" shall mean any work in Source Code form that
is based upon the Licensed Products or which contains or incorporates any
portion of the Licensed Products, such as a revision, modification, translation
(including compilation or recapitulation by computer), abridgment, condensation,
expansion, or any other form in which the Licensed Material may be recast,
transformed, or adapted, and that if prepared without authorization by the owner
of the pre-existing work, would constitute a copyright infringement.
1.5 "Derivative Work" shall mean any work that is based upon the Source
Code for the Licensed Products or which contains or incorporated any portion of
such Source Code, such as a revision, modification, translation (including
compilation or recapitulation by computer), abridgment, condensation, expansion,
or any other form in which the Licensed Programs may be recast, transformed, or
adapted, and that if prepared without authorization by the owner of the
pre-existing work, would constitute a copyright infringement.
1.6 "Documentation" shall mean all technical specifications and supporting
documentation in Licensor's possession, custody or control for the Source Code
for the Licensed Products, as set forth in Exhibit 1, including all updates and
modifications thereto.
1.7 "Effective Date" means the last day written below; provided that to be
effective this Agreement must be executed by an authorized representative of
each of the Licensee and Licensor.
1.8 "End Materials" means any user manuals, handbooks and other written
materials developed by Licensee or their licensees or sublicensees and provided
by Licensee or its licensees or sublicensees to End Users for use in conjunction
with End Programs, which may include a portion of Licensed Materials.
1.9 "End Products" means the End Programs and the End Materials.
1.10 "End Product Royally" means the fee payable by Licensor to Licensee
pursuant to Section 3.2.
1.11 "End Programs" means any computer software programs developed by or
for Licensee for sublicensing by Licensee or its licensees or sublicensees to
End Users which include a portion of a Licensed Program (including the code or
program logic or concepts). End Programs are intended to be Derivative Works and
compilations, as such terms are defined in Section 10 1 of the Act.
1.12 "End User" means any person or entity that is granted a license by or
through Licensee, its licensees, sublicensees or their respective agents,
pursuant to the authority granted under this Agreement, to use an End Product
solely for such End User's internal business purposes and that cannot re-sell,
lease, market, license, sublicense or otherwise distribute that End Product to
any other party.
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1.13 "Licenses" means the licenses granted to Licensee pursuant to Sections
2.1 through 2.3 of this Agreement.
1.14 "Licensed Materials" means all of the user manuals, diagrams,
listings, handbooks and other written materials developed by or for Licensor for
use in conjunction with any Licensed Program, which consist of the written
materials specified in Exhibit 1.
1.15 "Licensed Products" means the Licensed Materials and the Licensed
Programs.
1.16 "Licensed Programs" means the proprietary computer software programs
of Licensor licensed under this Agreement as are specified in Exhibit 1, each
consisting of a series of instructions in Source Code form (as defined below)
and the underlying program logic and concepts.
1.17 "Permitted Market" means the market consisting of construction,
engineering, property management, real estate brokerage, and home building.
1.18 "Royalty Rate" means twenty-five (25%) percent.
1.19 "Source Code" means a computer software program in a form in which the
program logic can be deduced by a human being, such as a printed listing of the
program, or in an encoded machine-readable form, such as might be recorded on
magnetic tape or disk, from which a printed listing can be made by processing it
with a computer. The Source Code for the Licensed Products shall be the most
current version developed by or for Licensor, including all updates,
enhancements, corrections and modifications.
1.20 "Trade Secret" shall mean any information, including any formula,
pattern, compilation, program, device, method, technique or process that derives
independent economic value from not being generally known to the public or to
other persons who can obtain economic value from its disclosure or use, and that
has been the subject of reasonable efforts by Licensor to maintain its secrecy.
2. LICENSES GRANTED
2.1 Licensed Materials. Licensor hereby grants to Licensee a
non-exclusive, worldwide license, and upon payment of the Fee as hereinafter
defined and all End Product Royalties, such license will be fully paid and
irrevocable:
2.1.1 to use, copy, adapt, modify, reproduce for internal purposes the
Licensed Materials, in whole or in part;
2.1.2 to use, copy, adapt, modify, reproduce, market, promote,
distribute, and license and sublicense the Licensed Materials, in whole or in
part, which rights shall include, but not be limited to, the right to
incorporate and distribute such Licensed Materials in End Materials to be
distributed by Licensee (subject to protecting portions of Licensed Materials
designated as Confidential Information in accordance with this Agreement) to End
Users within the Permitted Market; and
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2.1.3 to license and sublicense others to use, adapt, modify,
reproduce, market, promote, license, distribute, and sublicense the Licensed
Materials, in whole or in part, which rights shall include, but not be limited
to, the right to license and sublicense to third parties the right to
incorporate and distribute such Licensed Materials in End Materials to be
distributed by such third parties (subject to protecting portions of Licensed
Materials designated as Confidential Information in accordance with this
Agreement) to End Users within the Permitted Market.
2.2 Licensed Programs. Licensor hereby grants to Licensee, and Licensee
hereby accepts, a non-exclusive, perpetual worldwide license, and upon payment
of the Fee as hereinafter defined and all End Product Royalties, such license
will be fully paid and irrevocable:
2.2.1 to use, copy, reproduce, run, modify, enhance, execute and
compile the Source Code for the Licensed Programs, or have its contractors do so
on its behalf, solely for or in support of the exercise of Licensee's rights
under Sections 2.2.2 and 2.2.3;
2.2.2 to use, adapt, modify, reproduce, market, promote, license,
distribute, and sublicense the Licensed Programs to End Users within the
Permitted Market in Object Code form, in whole or in part, which rights shall
include, but not be limited to, the right to incorporate and distribute the
Licensed Programs to End Users in the Permitted Market in Object Code form in
End Programs to be distributed by Licensee;
2.2.3 to license and sublicense others to use, reproduce, market,
promote, distribute, license and sublicense the Licensed Programs to End Users
in the Permitted Market in Object Code form, in whole or in part, which rights
shall include, but not be limited to, the right to license and sublicense to
third parties the right to incorporate and distribute the Licensed Programs in
Object Code form in End Programs to be distributed by such third parties to End
Users in the Permitted Market; and
2.2.4 solely for or in support of the exercise of Licensee's rights
under Sections 2.2.2, 2.2.3, 2.3.2 and 2.3.3, to use, practice or otherwise
exploit any and all Trade Secrets, patent or patentable rights (except as
hereafter provided), or other proprietary rights that are embodied or reflected
in the Source Code for the Licensed Products or the Documentation, provided that
Licensee shall have no right to use, practice or otherwise exploit any letters
patent or patentable right covered by or issued pursuant to that certain
Application for Letters Patent of the United States, filed on February 24, 1995,
under Serial No. 08/394,030 (an invention entitled Apparatus and Method for
Creating and Executing Graphically Depicted Communication Processes) (the
"Patent Application") except to the extent that the "process builder and form
builder" functionality covered by the Patent Application is included in the
Licensed Programs and marketed as a part thereof and not as one or more
stand-alone products; and
2.2.5 to sublicense the Source Code for the Licensed Programs and
Derivative Source Code as incorporated into Licensee's Source Code, provided
that (i) Licensee provides Licensor with prior written notice of such
sublicense, including the name and address of the sublicensee and a reasonably
accurate description of the sublicensee's business, and (ii) Licensee provides
Licensor a written undertaking by the sublicensee, in form and substance
reasonably satisfactory to Licensor, pursuant to which the sublicensee
acknowledges and agrees that the scope of its sublicense is no broader than the
licenses set forth in this Agreement and that the
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sublicensee agrees to be bound by Licensee's obligations under this Agreement
(other than Licensee's obligations to pay the Fee and the End Product Royalties
under Section 3).
2.3 Derivative Works. Licensor hereby grants to Licensee a non-exclusive,
worldwide license, and upon payment of the Fee as hereinafter defined and all
End Product Royalties, such license will be fully paid:
2.3.1 to prepare Derivative Source Code based upon the Source Code for
the Licensed Programs and Documentation solely for or in support of the exercise
of Licensees rights under Sections 2.3.2 and 2.3.3, and to develop Derivative
Works based on the Licensed Products and any Derivative Works or compilations;
2.3.2 to use, adapt, modify, reproduce, market, promote, distribute,
license and sublicense such Derivative Works and compilations, in whole or in
part, provided that portions of such Derivative Works and compilations
containing Licensed Programs may be marketed, promoted, licensed and sublicensed
in Object Code form only and only to End Users in the Permitted Market; and
2.3.3 to license and sublicense others to use, reproduce, market,
promote, distribute, license and sublicense such Derivative Works and
compilations, in whole or in part, provided that such portions of such
Derivative Works and compilations containing Licensed Programs may be marketed,
promoted, licensed and sublicensed in Object Code form only and only to End
Users in the Permitted Market.
2.4 Implementation of Licenses. To implement this Agreement, Licensee may,
in such manner as it deems fit and at its sole cost and expense, edit, rewrite,
revise, adapt, translate, change the order of and add to or delete from any
material which comprises a Licensed Program and use the same for any purpose
permitted herein for a Licensed Program, by itself or in combination with any
other work, provided, however, that if Licensee shall register pursuant to the
Act its copyright in the End Programs and Derivative Works and compilations
based upon or containing Licensed Programs, Licensee shall identify in such
registration the pre-existing Licensed Program by Licensor which is included in
or upon which is based the End Program, derivative work or compilation. Licensee
shall affix to all copies of the Licensed Programs distributed by it such
copyright and confidentiality notices as required from time to time to implement
this Agreement. Licensee will include a proper Licensor copyright notice in the
"about box" of the End Programs in the same typeface and size as used by such
Licensee for other third party software copyright legends. Licensee and its
sublicensees shall grant sublicenses to End Users for use of End Programs,
Licensed Programs, End Materials, or Licensed Materials on terms and conditions
consistent with this Agreement and which protect the intellectual property
rights of Licensor to the same degree as the most valuable intellectual property
rights of Licensee is protected by them in similar circumstances.
2.5 Identification of Products. Notwithstanding anything stated herein to
the contrary, Licensor and Licensee agree that the Licensed Programs and End
Programs distributed pursuant to this Agreement will be identified to
sublicensee, End Users and any other third party under the Licensee's respective
trademarks and brands, subject to proper use or retention, as applicable, of
copyright legends identifying Licensor's copyright interests in therein.
Licensee
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and its sublicensees are not acquiring hereunder any license or right to use in
any manner any Licensor trademark or brand.
2.6 Exclusive Rights to Permitted Market. Licensor agrees, during the Term
of this Agreement, not to directly, or indirectly through its distributors or
other licensees, enter into new licenses of the Licensed Products. Licensee
acknowledges and agrees that neither this provision nor anything else in this
Agreement shall be construed to restrict (i) Licensor's right to license
directly, or indirectly through its distributors or other licensees, any other
software products of Licensor, including but not limited to the SalesLogix suite
of software products and any subsequent releases of software products other than
the Licensed Products, to End Users within the Permitted Market, or (ii)
Licensor's customers (VARs, OEMs, distributors, End Users, etc.) from
customizing copies of the SalesLogix products for the Permitted Market. For the
two year period commencing on the date hereof, Licensor will not develop a
product that is specifically designed for and targeted at the Permitted Market
in competition with the Licensed Products.
2.7 No Rights Outside Permitted Market. Licensee acknowledges and agrees
that this Agreement does not grant Licensee any rights to use, adapt, modify,
reproduce, market, promote, distribute, license or sublicense, directly or
indirectly, any Licensed Materials for sale, license or distribution to any End
Users outside of the Permitted Market. Licensee agrees not to engage, directly
or indirectly, in any licensing or marketing of the End Products outside of the
Permitted Market and will utilize its best efforts to ensure that its
distributors and licensees do not engage, directly or indirectly, in any
licensing or marketing of the End Products outside of the Permitted Market.
2.8 Term. The term of the Licenses shall be as provided in Section 7.0.
3. PAYMENTS TO LICENSOR; ACCEPTANCE
3.1 Technology License Fee. In consideration of the Licenses, Licensee
agrees to pay to Licensor a one-time Technology License Fee of one hundred
thousand dollars ($ 100,000) (the "Fee"). Licensee shall pay the Fee to
Licensor, by wire transfer or in other immediately available funds, as follows:
$62,500 will be paid no later than five (5) business days after the completion
of Licensee's first of two sessions as defined in Section 4.2.1, at Licensor's,
and the balance ($37,500) no later than thirty (30) days after first payment
($62,500) is received and acceptance is deemed.
3.2 End Product Royalty. In further consideration of the Licenses,
Licensee agrees to pay to Licensor an End Product Royalty for each copy,
distributed during the Term of this Agreement by Licensee, its licensees,
sublicensees or agents, of an End Product as follows:
3.2.1 Individual Products. The End Product Royalty for each copy of an
End Product distributed to an End User as an individual product shall be an
amount equal to the greater of: (i) two hundred dollars ($200.00); or (ii) the
Royalty Rate, multiplied by the actual invoice price to the End User for such
End Product.
3.2.2 Bundled Products. The End Product Royalty for each transaction
in which the End Product is bundled with other products for distribution to an
End User shall be an amount equal to the greater of (i) two hundred dollars
($200.00); or (ii) the Royalty Rate,
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multiplied by the then-current Licensee standard list price for the End Product,
the product of which shall be multiplied by a fraction, the numerator of which
is (x) the actual aggregate invoice price to the End User for the bundled suite
of products, and the denominator of which is (y) the aggregate then-current
unbundled Licensee list prices for the individual component products bundled for
sale to the End User in such transaction.
3.3 Payment of Royalties. The first End Product Royalty due in cash under
this Agreement shall be paid within fifteen (15) days after the sixth month
anniversary of the Effective Date of this Agreement and shall cover all
royalties collected during the first six months during which this Agreement is
in effect. Thereafter, the End Product Royalty shall be paid on a monthly basis,
within fifteen (15) days after the close of each month in which Licensee
collects revenue. All End Product Royalties due under this Section 3.3 shall be
net of the applicable End Product Royalties related to returns of Licensed
Product within the applicable warranty period, not to exceed thirty (30) days.
3.4 Royalty Cap. No further royalties shall be due under this Section 3.2
after Licensee has paid Licensor aggregate royalties under this Section 3.2
totaling three hundred thousand dollars ($300,000).
4. RESPONSIBILITIES AND OBLIGATIONS OF LICENSOR
4.1 Deliverables. Licensor shall timely deliver the most recent copies (as
demonstrated at Licensor's site as part of sessions defined in Section 4.2.1) of
the following (the "Deliverables") to the Licensee within five (5) days after
Licensor's receipt of the first installment of the Technology Fee as defined in
Section 3.1:
4.1.1 One copy of the Source Code and Object Code in electronic format
described in Exhibit 1.
4.1.2 One copy of the Licensed Materials in electronic format.
4.1.3 One copy of all licenses referred to in Exhibit 4, and any
documentation related to such licenses. Additionally code for such licenses in
electronic format.
4.1.4 One copy of each current maintenance agreement between Licensor
and an End User relating to the Licensed Products, for the purposes described in
Sections 4.3 and 5.1 hereof
4.1.5 One copy of all sales collateral and training materials of
Licensor as of the Effective Date, in hard copy and electronic format.
4.2 Acceptance Procedure.
4.2.1 Acceptance Criteria. Licensor shall demonstrate, at Licensor's
site in Scottsdale, Arizona, over a period not to exceed two noncontiguous
sessions, and over sessions not to exceed an aggregate of three (3) business
days in length, that the Licensed Programs meet the acceptance criteria as
defined on Exhibit 2 attached hereto (the "Acceptance Criteria") on
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equipment meeting the specifications described on Exhibit 2. Upon successfully
meeting the Acceptance Criteria, "Acceptance" will have occurred, and the Fee
shall be due and payable within the period specified in Section 3.1. To the
extent that Licensee, prior to the completion of the three business days
allotted for this purpose, becomes satisfied that the Licensed Programs meet the
acceptance criteria, Licensee may use the remainder of the allotted three
business days to obtain, free of any additional charge, an on-site technical
review of the Licensed Materials with Licensor' software programmers.
4.2.2 Cooperation. The Licensee agrees to provide the personnel and
equipment described on Exhibit 2 and to perform their responsibilities as
described in Exhibit 2 while Licensor is on-site, and the parties agree to
cooperate with each other fully in order to complete the acceptance procedures
in a timely and effective manner.
4.2.3 Bug List and Support. Attached hereto as Exhibit 3 is the "known
bug list" for the Licensed Programs. Licensee acknowledges that Licensor has no
obligation to make any such fixes, or to provide to Licensee any enhancements or
modifications made by or for Licensor to the Licensed Programs after the
Effective Date. For a period of ninety (90) days following Acceptance, Licensor
agrees to provide Licensee with telephone support for one technically qualified
project manager specified by Licensee. The telephone support provided by
Licensor shall respond to each Licensee inquiry within twenty-four (24) hours of
the inquiry, but shall be limited to technical, design and product-related
issues.
4.3 No Existing Maintenance Agreements, Assignment of Payment. Licensor
does not currently have any maintenance contracts with or warranty obligations
to end users of the Licensed Products. Licensor agrees that Licensee may provide
maintenance services with respect to the Licensed Products and further agrees to
refer any maintenance inquiries of end users of the Licensed Products to
Licensee for consideration. Licensor further agrees that any revenues which
Licensee receives for providing maintenance services to end users of the
Licensed Products 'shall not give rise to any royalty or payment obligation to
Licensor under this Agreement. Licensor further assigns to Licensee, upon
Acceptance, Licensor's remaining rights to receive payment under that agreement
dated August 23,1996 between Licensor and Lundgren Brothers.
4.4 Standard of Performance. Licensor shall perform its obligations under
this Agreement using a standard of performance that is equal to or greater than
the standard of performance used by Licensor to perform its general business
obligations and in any event shall use its best efforts and devote sufficient
resources to timely deliver the Licensed Programs, Licensed Materials, and
perform its other obligations under this Agreement.
5. RESPONSIBILITIES AND OBLIGATIONS OF LICENSEE
5.1 Intentionally deleted.
5.2 Standard of Performance. Licensee shall perform its obligations under
this Agreement using a standard of performance that is equal to or greater than
the standard of performance used by Licensee to perform its general business
obligations.
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5.3 Taxes. Except for taxes based upon Licensor's net income, Licensee and
its sublicensees and End Customers shall pay any federal, state or municipal
taxes, levied upon Licensee, including foreign export or import taxes, tariffs,
duties, or related charges based upon fees for the Licensed Programs, End
Programs, Licensed Materials or End Materials, or any services provided
hereunder, and shall indemnify and hold Licensor harmless therefrom and any
related interest or penalties arising from nonpayment by Licensee (except to the
extent that Licensor does not provide Licensee with timely notice of any tax
assessment received by it to which this Section 5.3 applies).
6. TRADEMARKS AND TRADE NAMES
The trademarks and trade names under which Licensee shall, in its sole
discretion, elect to market the End Products are and shall be the exclusive
property of Licensee and the use thereof shall inure to the sole benefit of
Licensee; provided that the trademarks and trade names under which Licensor
markets the Licensed Products are and remain the exclusive property of Licensor
and Licensee shall not have any right to use, nor shall it use the name
"Prospector", or any other trade name or trademark of Licensor, or any name or
mark confusingly similar thereto, except in connection with copyright notices.
Nothing in this Agreement or elsewhere gives either party any rights to the
trademarks or trade names of the other.
7. TERM AND TERMINATION
7.1 Term. The term of this Agreement shall be perpetual commencing on the
Effective Date, unless sooner terminated as set forth herein or by the written
consent of the parties.
7.2 Termination by Licensor. If Licensee defaults in performing any
material obligations required under this Agreement, Licensor may give written
notice of its intention to terminate this Agreement, describing in reasonable
detail the default. If Licensee fails to remedy such material default within
thirty (30) days (ten (10) days for a payment default) following receipt of such
written notice, or if such default is not capable of cure within such thirty
(30)-day period, and Licensee fails to commence cure procedures within such
thirty (30)-day period and diligently prosecute such procedures until the
default is cured, then Licensor may, in addition to all other remedies available
at law or in equity, terminate this Agreement and the Licenses after the
expiration of the notice period to remedy the default upon written notice.
7.3 Termination by Licensee. If Licensor defaults in performing any
material obligations required under this Agreement, Licensee may give written
notice of its intention to terminate this Agreement, describing in reasonable
detail the default. If Licensor fails to remedy such material default within
thirty (30) days (ten (10) days for a payment default) following receipt of such
written notice, or if such default is not capable of cure within such thirty
(30)-day period, and Licensor fails to commence cure procedures within such
thirty (30)-day period and diligently prosecute such procedures until the
default is cured, then Licensee may, in addition to all other remedies available
at law or in equity, terminate this Agreement upon written notice and retain
fully paid-up Licenses as set forth in Section 2, notwithstanding such
termination.
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8. EFFECT OF TERMINATION OR EXPIRATION
8.1 Effect; Survival; Irrevocability. Except as provided in Section 7.3
and Section 8.2, upon any termination or expiration of this Agreement, Licensee
shall immediately pay all amounts then due to Licensor and shall immediately
discontinue use of and shall destroy all Licensed Products, including all copies
thereof and all portions thereof in Licensee's inventory of End Products, and
shall deliver a certificate of its chief executive officer of compliance with
this provision. Sections 5, 6, 7.2, 8.2, 10, 11, 12, 13, and 19 shall survive
any termination or expiration of this Agreement. Nothing contained in this
Section 8.1 shall permit any Licensee or sublicensee to disclose Source Code for
Licensed Programs to any third party, and such Source Code shall remain
Confidential Information of Licensor notwithstanding any license for Licensed
Programs becoming irrevocable.
8.2 Installed End Users. Notwithstanding any provision of this Agreement to
the contrary, no termination or expiration of this Agreement shall affect the
rights of End Users to continue to use then-installed End Products pursuant to
then existing Licenses (without extensions of the then existing terms thereof).
9. ADMINISTRATION
Until such time as Licensee certifies to Licensor that all Confidential
Information of Licensor in such Licensee's possession, custody or control has
been destroyed by it, Licensor shall have the right once per calendar year to
have third party representatives reasonably approved by the Licensee inspect the
books and records of the Licensee reasonably related to compliance by the
Licensee with Section 11 of this Agreement. Any such inspection shall be
permitted by Licensee within thirty (30) days of receipt of Licensor's written
request to inspect, during normal business hours, at a time mutually agreed upon
by Licensor and Licensee. Licensor shall bear its own expenses in connection
with such inspection, which shall not exceed three (3) days per year at
Licensee's site. Licensor's representatives shall also comply with Licensee's
on-site confidentiality requirements.
10. COPYRIGHTS IN AND OWNERSHIP OF LICENSED PRODUCTS
10.1 Title. Licensor represents and warrants that, except as expressly
disclosed in Section 10.2, Licensor is the sole owner of the Licensed Products,
free and clear of any lien, encumbrance or other restriction, and that Licensor
conceived and developed the Licensed Products and did not acquire such Licensed
Products from any third party.
10.2 Right to License. Licensor represents and warrants that the only
Licensed Products conceived or developed by others are described in Exhibit 4,
that true and complete copies of the agreements and instruments granting to
Licensor its rights in such Licensed Products are attached as part of such
Exhibit 4 and that Licensor has all necessary power and authority to license all
Licensed Products in accordance with this Agreement without the consent or
approval of any third party except those described in Exhibit 4. Licensee
acknowledges that it is responsible for obtaining the consents or licenses
described in Exhibit 4 and that all rights with respect to Licensed Products
(including the right to produce Derivative Works therefrom) not
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explicitly granted in this Agreement remain the sole property of Licensor or of
Licensor's licensors.
10.3 Derivative Works. Subject to the rights of Licensor in the Licensed
Programs from which a derivative End Program is created or from which a
compilation results, (i) Licensee shall be the exclusive owner and the copyright
holder of such derivative and compilation End Programs, (ii) the exclusive use
thereof shall inure to the benefit of Licensee and (iii) no rights in the
Derivative Works and compilations created by or for Licensee are granted to
Licensor or any third party pursuant to this Agreement.
11. CONFIDENTIAL INFORMATION
11.1 Licensor's Obligations. Licensor shall safeguard and keep
confidential all Confidential Information of Licensee and shall return all
Confidential Information to Licensee promptly upon request and in any event
within fifteen (15) days of the termination or expiration of this Agreement.
Licensor agrees to safeguard any such Confidential Information received from
Licensee using measures that are equal to the standard of performance used by
Licensor to safeguard its own Confidential Information. Licensor shall use its
best efforts to safeguard and keep confidential the Licensed Products and
Licensed Materials and to maintain at its expense in full force and effect any
and all existing intellectual property rights in the Licensed Products and
Licensed Materials subject to the Licenses. Licensee shall have the right to
require Licensor, at Licensee's expense, to take such additional actions as
Licensee reasonably believes appropriate to obtain, maintain and enforce other
forms of proprietary protection (including without limitation patent and
copyright registration) that are not inconsistent with the confidential
treatment required by this Agreement.
11.2 Licensee's Obligations. Licensee shall safeguard and keep confidential
all Confidential Information of Licensor and shall return all Confidential
Information of Licensor to Licensor promptly upon breach of this Section and in
any event within fifteen (15) days of termination or expiration of this
Agreement. Licensee hereby agrees that, except as otherwise expressly provided
in this Agreement, all ownership rights in the Licensed Programs and Licensed
Materials remain in Licensor. Licensee further agrees to safeguard Confidential
Information using measures that are comparable to the standard of performance
used by Licensee to safeguard its own most valuable Confidential Information in
similar circumstances.
11.3 Joint Obligations. Subject to the provisions set forth in Section 2,
neither party shall, without the prior written consent of the other party:
11.3.1 disclose any Confidential Information of the other party to any
person other than an employee or an independent contractor who agrees to be
bound by this Section 11 or as expressly contemplated by this Agreement;
11.3.2 make any unauthorized copies of Confidential Information; or
11.3.3 use any Confidential Information of the other party for any
purpose except to implement its rights and obligations under this Agreement and
as other wise expressly contemplated by this Agreement;
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provided, however, that if any party or its representatives is requested or
required by law, court order, or subpoena to disclose any Confidential
Information, that party will promptly notify the other party of such request or
requirement so that the other party may seek an appropriate protective order or
other appropriate relief and/or waive compliance with provisions of this
Agreement, and if, in the absence of such relief or waiver hereunder, any party
or its representatives are, in the opinion of its counsel, legally compelled to
disclose Confidential Information, then that party may disclose such of the
Confidential Information to the person compelling disclosure as is, according to
such opinion, required, without liability hereunder.
11.4 Third-Party Infringement. If either party learns of any use or
disclosure of Confidential Information of the other party which is not permitted
under this Agreement, it shall promptly notify the party whose Confidential
Information was used or disclosed, stating in reasonable detail all facts known
to it with respect to such unauthorized use or disclosure and shall cooperate in
all respects reasonably requested by the party whose Confidential Information
was used or disclosed or its counsel, at such requesting party's expense, in
such requesting party's pursuit of available remedies against the person or
persons responsible for such unauthorized use or disclosure.
11.5 Injunctive Relief. Each party acknowledges that breach of the
foregoing obligations may cause irreparable injury to the party whose
Confidential Information is disclosed and that (notwithstanding any contrary
provision relating to the arbitration of disputes) such party may seek and
obtain injunctive relief against such breach or threatened breach without
prejudice to any other remedies which may be available to it.
11.6 Terms and Conditions of Agreement Confidential. In addition to
safeguarding the other's Confidential Information, each party further agrees to
keep the terms and conditions of this Agreement confidential.
12. REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY
12.1 Of Licensor. Licensor hereby represents, warrants and covenants to
Licensee as follows:
12.1.1 License Rights. Licensor has the right to license the Licensed
Products to Licensee in accordance with the terms and conditions of this
Agreement, subject to Exhibit 4. Each delivery by Licensor to Licensee under
this Agreement shall contain only material that Licensor is legally entitled to
deliver to Licensee as Licensed Products.
12.1.2 Performance. Licensee acknowledges and agrees that it has
performed a complete due diligence review of the Licensed Programs and will,
upon completion of the Acceptance procedures described in Section 4.2, have had
the opportunity to review and inspect the Source Code for the Licensed Programs.
Licensee is willing to accept the Licensed Programs in their current form on an
AS IS basis provided that the Licensed Materials meet the Acceptance Criteria
specified in Exhibit 2. Licensor does not warrant that the Licensed Programs
will meet Licensee's requirements or will operate in combinations which Licensee
may, at its sole discretion, select to use with the Licensed Programs. Licensor
does not warrant that the Licensed Programs shall operate uninterrupted or free
of non-material efforts.
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12.1.3 Ability to Perform. Licensor warrants that it has the ability
to perform its obligations under this Agreement.
12.1.4 Title. There are no outstanding options, licenses, or
agreements of any kind relating to the Licensed Products in accordance with the
terms of this Agreement, subject to Exhibit 4.
12.1.5 Litigation. There is no claim, litigation, action, suit or
proceeding, administrative or judicial, pending or, to the best of Licensor's
knowledge, threatened against Licensor involving the Licensed Products, at law
or in equity, before any federal, state, local or foreign court or regulatory
agency, or other governmental or arbitral authority which could have a material
adverse effect on (i) the use of the Licensed Products by Licensee as
contemplated under this Agreement, or (ii) the consummation of the transactions
contemplated by this Agreement. To the best of Licensor's knowledge, there is no
basis or alleged basis upon which such claim, litigation, action, suit or
proceeding could be brought or initiated subject to Exhibit 4 letters.
12.1.6 Protection. Licensor has taken security measures believed by
Licensor to be sufficient to protect the secrecy and confidentiality of the
Licensed Products.
12.1.7 No Conflict or Default. To the best of Licensor's knowledge
neither the execution and delivery of this Agreement by Licensor, nor compliance
with the terms and provisions hereof, including without limitation, the
consummation of the transactions by Licensor contemplated hereby, will conflict
with or result in the breach of any term, condition, or provision of the
Certificate of Incorporation or Bylaws of Licensor or of any agreement, deed,
contract, mortgage, indenture, writ, order decree, legal obligation or
instrument to which Licensor is a party or by which it or the Licensed Products
are or may be bound, or constitute a material default (or an event which, with
the lapse of time or the giving of notice, or both, would constitute a material
default) thereunder, or result in the creation or imposition of any lien, charge
or encumbrance, or restriction of any nature whatsoever with respect to the
Licensed Products, or give to others any interest or rights, including rights of
termination, acceleration or cancellation In or with respect to the Licensed
Products.
12.2 Of Licensee. Licensee hereby represents, warrants and covenants to
Licensor as follows:
12.2.1 Ability to Perform. Licensee warrants that it has the ability
to perform its obligations under this Agreement.
THE FOREGOING WARRANTIES OF LICENSOR AND LICENSEE ARE EXCLUSIVE AND IN LIEU OF
ANY AND ALL OTHER WARRANTIES OF ANY KIND OR NATURE, INCLUDING WITHOUT LIMITATION
EXPRESSED OR IMPLIED WARRANTIES, AND WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
12.3 Limitation of Liability. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF
PROFITS, REVENUE, DATA, OR USE, WHETHER INCURRED BY
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ANY OTHER PARTY HERETO OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR
IN TORT OR BASED ON A WARRANTY, EVEN IF THE OTHER PARTIES HERETO OR ANY OTHER
THIRD PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING
THE FOREGOING, THIS SECTION 12.4 SHALL NOT APPLY TO BREACHES OF SECTION 11 OF
THIS AGREEMENT.
13. INDEMNIFICATION
13.1 Indemnification for Infringement. Licensor shall indemnify and hold
harmless Licensee and its licensees and sublicensees from and against any and
all losses, liabilities, damages, claims and expenses (including reasonable
attorneys' fees) arising from allegations that the use, copying, modification,
distribution and/or sale of Licensed Products infringes any U.S. patent, U.S.
copyright, any trade secret or any other proprietary or intellectual property
right arising under U.S. law; provided, however, that the foregoing indemnity
shall not apply to the extent that the alleged infringement is attributable to
alterations, modifications or re-engineering of the Licensed Products from the
form delivered to Licensee hereunder, or to use of the Licensed Products with or
in combination with other products by Licensee or sublicensees in circumstances
where use of the Licensed Products, in the form delivered to Licensee hereunder,
would not be infringing if not used with or in such combination.
13.2 Procedures. The indemnity set forth in Section 13.1 shall not apply
unless the Licensee claiming the right to indemnification notifies Licensor in
writing of any and all claims of infringement within a reasonable time, not to
exceed 60 days, after being informed or having received notice of them and
reasonably cooperates with Licensor (at no out-of-pocket expense to Licensee).
Licensor shall notify Licensee within 30 days after being informed or becoming
aware of any claims of infringement relating to the Licensed Products.
13.2.1 Licensor shall, in its reasonable discretion, control the
defense against claim(s) of infringement, for which it is required to provide
indemnification hereunder, and shall be responsible for related cost and
attorneys' fees. Licensor shall, in its reasonable discretion, have the right to
settle such claim(s) of infringement, provided that the final settlement permits
the continued, uninterrupted use of the Licensed Products by Licensee and its
sublicensees as contemplated by this Agreement, and no additional costs will be
incurred by Licensee as a result of such settlement.
13.2.2 Licensor shall pay all resulting costs or damages incurred by
Licensee or sublicensees awarded by a court of competent jurisdiction in favor
of third parties and attributable to claim(s) of infringement for which Licensor
is required to provide indemnification hereunder.
13.2.3 Licensor shall, upon a decision by a court of competent
jurisdiction that the Licensed Products are infringing, which decision impairs
or prevents Licensee's or sublicensees' use of the Licensed Products under the
terms and conditions of this Agreement, at Licensor's sole cost, (i) make
modification(s) to the Licensed Product(s) so that they are non-infringing, (ii)
secure a non-infringing license for the use of the Licensed Products by Licensee
and sublicensees, or (iii) provide an alternative solution(s), at no additional
cost to Licensee,
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enabling the standard use or application(s) development per the terms and
conditions of this Agreement by Licensee and sublicensees.
13.2.4 Licensor shall refund a pro rata portion of the Fee and End
Product Royalties paid by Licensee under this Agreement, based upon a five (5)
year useful life on a straight line basis, if it is unable to provide a remedy
and fails to perform as stated in 13.2.3 above and such refund shall constitute
complete and full satisfaction of Licensor's obligation's under this Section 13.
13.2.5 THE FOREGOING STATES THE ENTIRE OBLIGATION OF LICENSOR TO
LICENSEE AND SUBLICENSEES WITH RESPECT TO CLAIM(S) OF INFRINGEMENT.
14. ASSIGNMENT AND SUBLICENSE
14.1 Successors and Assigns. This Agreement is binding on the successors
and assigns of the parties; provided, that this Agreement may not be assigned by
either party without the prior written consent of the other party, except as
provided in this Section 14.
14.2 Assignment by Licensor. Notwithstanding Section 14.1, the rights and
obligations of Licensor may be assigned, without the consent of Licensee, by
Licensor to any corporation which is a wholly owned subsidiary or parent of
Licensor, which survives a merger in which Licensor participates and does not
independently survive or to any corporation or other person or business entity
which acquires all or substantially all of the Licensed Products from Licensor.
14.3 Assignment by License. Notwithstanding Section 14.1, all the rights
and obligations of Licensee under this Agreement may be assigned, without the
consent of Licensor, by Licensee to (i) any corporation or other business entity
which is a wholly owned subsidiary or parent of Licensee or which survives a
merger in which Licensee participates and does not independently survive, or
(ii) to any corporation or other person or business entity which acquires all or
substantially all of the assets of Licensee, or (iii) to any partner or
shareholder of Licensee, provided the assignee under (i), (ii) or (iii) agrees
to be bound by and any assume all of the obligations of Licensee hereunder.
14.4 Sublicenses. Notwithstanding Section 14.1, Section 2.6, or Section
8.1, Licensee may license or sublicense (each, a "Sublicense"), exclusively or
nonexclusively, in whole or in part, the rights of Licensee under this Agreement
to distribute Licensed Programs (or derivatives thereof) in Object Code form to
End Users in the Permitted Market, without the consent of Licensor, to any
corporation, person or business entity ("Sublicensee") to which Licensee sells,
licenses or sublicenses the rights to use, adapt, modify, reproduce, market,
promote, distribute, license and/or sublicense one or more End Products and/or
Derivative Works based on such End Product(s); provided, that such Sublicensee
shall have agreed in writing to perform, with respect to the Sublicense, the
same obligations Licensee has agreed to perform under Sections 5, 6, 11, 13 and
14 of this Agreement. Except as expressly provided in Section 2.2.5, the rights
that Licensee is authorized to so license or sublicense pursuant to a Sublicense
do not include any right to use, adapt, modify, or reproduce the Licensed
Programs in Source Code form, in whole or in part.
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15. NOTICES
Service of all notices under this Agreement to Licensor shall be effective
only upon the third (3rd) day after mailing, if mailed by registered mail,
return receipt requested, or upon delivery, if personally delivered, or
delivered by a national overnight courier service, and receipted for as follows:
SalesLogix Corporation, 8800 N. Gainey Center Dr., Suite 200. Scottsdale, AZ
85258, Attention: President, with a copy to Osborn Maledon, P.A. 2929 North
Central, Suite 2100, Phoenix, Arizona 85012, Attention: Thomas H. Curzon.
Service of all notices under this Agreement to Licensee shall be effective only
upon the third (3rd) day after mailing, if mailed by registered mail, return
receipt requested, or upon delivery, if personally delivered, or delivered by a
national overnight courier service, and receipted for as follows: The McCosker
Corporation, 1777 Oakland Blvd., Suite 201, Walnut Creek, California, 94596
Attention: President. Any party may change its address for service of notice by
written notice to the other.
16. UNFORESEEN EVENTS
Notwithstanding anything else in this Agreement, no default, delay or
failure to perform on the part of either party shall be considered a breach of
this Agreement (other than nonpayment of money or breach of confidentiality
provisions) if such default, delay or failure to perform is shown to be due
entirely to causes beyond the reasonable control of the party charged with a
default, including, but not limited to, causes such as strikes, lock-outs or
other labor disputes, riots, civil disturbances, actions or inactions of
governmental authorities or suppliers, epidemics, war, embargoes, severe
weather, fire, earthquakes, acts of God or the public enemy or nuclear
disasters.
17. SEVERABILITY
To the fullest extent possible each provision of this Agreement shall be
interpreted in such fashion as to be effective and valid under applicable law.
If any provision of this Agreement is declared void or unenforceable for
particular facts or circumstances, such provision shall remain in full force and
effect for all other facts or circumstances. If any provision of this Agreement
is declared entirely void or unenforceable, such provision shall be deemed
severed from this Agreement, which shall otherwise remain in full force and
effect.
18. ENTIRE AGREEMENT; MODIFICATION
This Agreement, together with the Exhibits hereto, constitutes the entire
agreement between the parties with respect to the transactions contemplated
herein, and supersedes all proposals, oral or written, all negotiations,
conversations or discussions between the parties relating to this Agreement and
all past course of dealing or industry custom, and no representations,
warranties, inducements or oral agreements have been made by any party except as
expressly set forth herein or in other contemporaneous written agreements. This
Agreement may not be changed, modified or rescinded, except in writing, signed
by all parties hereto, and any attempt at oral modification of this Agreement
shall be void and of no effect.
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19. GENERAL TERMS AND CONDITIONS
19.1 Governing Law. The validity and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State of Arizona,
excluding that body of law applicable to choice of law.
19.2 Headings. Headings included in this Agreement are for convenience only
and are not to be used to interpret this Agreement.
19.3 Waiver. The failure of either party to enforce at any time any of the
provisions hereof or exercise any right or option hereunder shall not be
construed to be a waiver of the right of such party thereafter to enforce any
such provisions or exercise such right or option.
19.4 No Joint Venture. This is a license agreement. No agency, partnership,
joint venture or other Joint relationship is created hereby. Licensee does not
extend to Licensor or Licensor's agents or distributors any authority of any
kind to bind Licensee in any respect whatsoever. Licensor does not extend to
Licensee, its agents or distributors, or sublicensees any authority of any kind
to bind Licensor in any respect whatsoever.
19.5 Attorneys' Fees. In any litigation or arbitration between parties, the
prevailing party shall be entitled to reasonable attorneys' fees and all costs
of proceedings, experts, investigations and related expenses, incurred in
enforcing, or pursuing other remedies with respect to, this Agreement, provided
that notice and an opportunity to cure pursuant to Section 7 was provided, to
the extent applicable.
19.6 Export. Licensee shall not export any Licensed Product to any country
for which the United States Government or any agency thereof requires an export
license or other governmental approval without first obtaining such license or
approval.
EXECUTED BY THE PARTIES AS PROVIDED BELOW:
EFFECTIVE DATE: FEBRUARY 19, 1997
Licensee: The McCosker Corp Licensor:
SALESLOGIX CORPORATION
By: /s/ Robert (illegible) By: /s/ James E. Valenzuela
----------------------- ------------------------
Title: President Title: V.P. Finance
-------------------- ---------------------
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EXHIBIT 1
DESCRIPTIONS OF LICENSED PROGRAMS AND LICENSED MATERIALS
1. Source code and Object code for all program pieces and parts of latest
version of Prospector (License Program) as of the effective date of this
agreement and third party products compatible with Visual Basic 3.0
programming language on media that is compatible with personal computers
(IBM compatible) operating with the DOS/Win31 operating systems.
2. Source code and Object code for all program pieces and parts of latest
version of Prospector (License Program) as of the effective date of this
agreement and third party products compatible with Visual Basic 4.0
programming language on media that is compatible with personal computers
(IBM compatible) operating with the Windows95 operating systems.
3. Any other Source and Object Code developed for or within the License
Programs that are not apparent to the end user operating the product that
is available and might have been used in prior releases or versions of the
license product.
4. On-line and printable user and administration documentation on media
compatible with personal computers (IBM compatible) operating with the
DOS/Win31 operating system.
5. Programs, database files, and data for the bug tracking system on media
compatible with personal computers (IBM compatible) operating with the
DOS/Win31 operating system.
6. Any other technical notes and documentation related to the design,
development, support, and maintenance of the license programs or license
materials on media compatible with personal computers (IBM compatible)
operating with the DOS/Win31 operating system.
7. Any source and object code developed as utilities for support and
maintenance of the license programs on media compatible with personal
computers (IBM compatible) operating with the DOS/Win31 operating system.
This would include functions for the creation of installation and security
disks for the license programs.
<PAGE> 19
EXHIBIT 2
ACCEPTANCE CRITERIA
1. Licensor will perform a complete review of the license programs functions
to demonstrate the use and the navigation of the system.
2. Licensor will operate license programs on personal computer (IBM
compatible) operating in the DOS/Win31 and Windows95 operating systems.
3. License program will compile and link into a run file on personal computer
(IBM compatible) operating in the DOS/Win31 operating system.
4. Licensor will explain and review source code of license programs and
related third party licensed products to demonstrate that included with the
licensed product are all the parts necessary to allow a reasonably
competent programmer to understand and use the source code for the license
product.
5. Licensor will explain and review source code of license materials (such as
user documentation and internal technical notes) to demonstrate that
included with the licensed materials are all the parts necessary to allow
someone proficient with the tools (Pagemaker 5.0) used to create license
materials, to use and maintain the license materials
6. Licensor will explain and review the sales and training materials to
demonstrate that included with the License Product are all the parts
necessary to allow someone proficient with the tools used to create the
sales and training materials, to use and maintain the sales and training
materials.
<PAGE> 1
EXHIBIT 10.12
SOFTWARE DISTRIBUTION LICENSE AGREEMENT
SOFTWARE DISTRIBUTION LICENSE AGREEMENT
BETWEEN
IQ SOFTWARE CORPORATION
AND
SALESLOGIX CORPORATION
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I. DEFINITIONS.....................................................................................1
ARTICLE II. LICENSES........................................................................................1
ARTICLE III. CONSIDERATION...................................................................................2
ARTICLE IV. KNOWLEDGEBASE OF LICENSOR PROGRAM...............................................................2
ARTICLE V. MAINTENANCE.....................................................................................2
ARTICLE VI. MISCELLANEOUS...................................................................................3
</TABLE>
Schedules
Schedule A: Licensor Software
Schedule B: Licensee Software
Schedule C: License and Documentation Fees
Schedule D: Maintenance Fees
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<PAGE> 3
SOFTWARE DISTRIBUTION LICENSE AGREEMENT
THIS SOFTWARE DISTRIBUTION LICENSE AGREEMENT ("Agreement") made as of this 30th
day of October 1997, by and between IQ Software Corporation, a Georgia
corporation ("Licensor") and SalesLogix Corporation a Delaware corporation
(hereinafter referred to as "Licensee").
WHEREAS, Licensor has developed certain software programs; and
WHEREAS, Licensee desires to acquire a nonexclusive license and right to
sublicense such software programs of Licensor for use by customers of Licensee
for use with certain software programs of Licensee.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I.
DEFINITIONS
1.01 LICENSOR SOFTWARE. "Licensor Software" shall mean the software program(s)
of Licensor described in Schedule A attached hereto and all modifications,
improvements and enhancements of such software program(s) hereafter released as
such by Licensor in its sole discretion, but shall not include software programs
of Licensor which are marketed by it as new or different software programs from
the software programs listed on Schedule A- The parties, by written agreement
may hereafter add or remove software program(s) from Schedule A and Schedule A,
effective with such change, shall be so amended.
1.02 LICENSEE SOFTWARE. "Licensee Software" shall mean the software program(s)
of Licensee described in Schedule B attached hereto and all enhancements,
modifications and improvements thereof hereafter released by Licensee, but shall
not include software programs of Licensee which are marketed by it as new or
different software programs from the software programs listed on Schedule B. The
parties, by written agreement, may hereafter add or remove software programs
from Schedule B and Schedule B, effective with such change, shall be so amended.
1.03 DOCUMENTS. "Documents" shall mean operating instructions and instructional
and other documentation, including all guides and manuals released by Licensor
with respect to the Licensor Software.
ARTICLE II.
LICENSES
2.01 GRANT - LICENSE. Licensor hereby grants to Licensee, and Licensee hereby
accepts, a non-exclusive, worldwide license to market, distribute and license
the Licensor Software directly to enduser customers or indirectly to enduser
customers through Licensee's existing and future authorized distribution
channels, including Licensee's "Business Partners' and any future OEM partners,
resellers or similar distributors with whom Licensee may contract for the
distribution of the Licensee Software (collectively, "OEM Partners"). In
addition, Licensor hereby grants to Licensee and its OEM Partners a
non-exclusive, worldwide, non-transferable license to reproduce Licensor
Software in conjunction with the licenses granted Licensee and its OEM Partners
under this agreement These licenses are limited to the license or sale of
Licensor Software as bundled with and integrated into the Licensee Software, or
as an add-on offered to enduser customers who are existing licensees of the
Licensee Software for use with the Licensee Software. These licenses are granted
in exchange for the consideration in Article III. In addition, Licensor grants
to Licensee and its OEM Partners the royalty-free right to use the Licensor
Software in conjunction with Licensee Software for internal purposes,
compatibility testing, support of Licensee Software that contains the Licensor
Software, and customer demonstrations, and/or evaluation licenses.
2.02 GRANT - DOCUMENTS. Licensor hereby grants to Licensee, and Licensee hereby
accepts, a nonexclusive worldwide right and license to use the Documents with
the right to grant nonexclusive, nontransferable sublicenses to OEM Partners and
endusers to use the Documents in conjunction with the Licensor Software. The
Documents may be incorporated into enduser documents distributed by Licensee
provided Licensors copyright notice is retained.
<PAGE> 4
ARTICLE III.
CONSIDERATION
3.01 (a) LICENSE FEE. Licensee shall pay Licensor for the licenses and rights to
use and to grant sublicenses of the Licensor Software the amounts set forth in
Schedule C for each sublicense granted to an enduser (by Licensee or an OEM
Partner) to use the Licensor Software. Each such sublicense of a copy of the
Licensor Software constitutes a single sublicense or sale for determining the
number of copies licensed and/or sold.
3.02 DOCUMENT CHARGES. Licensee shall, in addition, pay Licensor for each copy
of a Document furnished by Licensor, in accordance with the amounts set forth in
Schedule C. Licensee shall have the right to reproduce the then current version
of the Documents in full without charge only for use and licensing as
hereinabove provided. Such copies shall contain all copyright and proprietary
notices of Licensor contained therein. Licensor shall provide Licensee with an
electronic version of its Documents.
3.03 MEDIA. The Licensor Software will be furnished by Licensor to Licensee only
in machine readable (object code) form on diskettes or other appropriate
electronic media.
3.04 PAYMENTS. (a) A sublicense of Licensor Software is granted, for purposes of
determining the license fees payable, at the earlier of the time the copy of
Licensor Software is shipped by Licensee or the OEM Partner to the sublicensee.
Except as provided in Schedule C, payment of all license fees due Licensor
hereunder for a calendar quarter shall be payable within thirty (30) days after
the last day of the preceding calendar quarter. Each payment shall be
accompanied by a list of names and addresses of the sublicensees of the Licensor
Software and the number of sublicenses granted to each sublicensee including by
the OEM Partner during the preceding calendar quarter. (b) Charges for copies of
Documents, if any, shall be invoiced by Licensor and shall be payable by
Licensee within thirty (30) days after receipt of invoice by Licensee. (c) In
the event of a default in any payment Licensor may request payment of such fees
and charges in advance of shipment by Licensee to its agents or to the
sublicensees.
ARTICLE IV.
KNOWLEDGEBASE OF LICENSOR PROGRAM
4.01 INCLUSION OF IQ KNOWLEDGEBASE. Licensee shall add the KnowledgeBase to all
copies of the Licensor Program prior to the furnishing of such copy of the
Licensor Software to a sublicensee as herein permitted. It shall be the sole
responsibility of Licensee promptly to finalize and update the KnowledgeBase in
any software program previously sublicensed by Licensee, without charge to
Licensor.
4.02 DISTRIBUTION OF KNOWLEDGEBASE ADMINISTRATOR PROGRAM. Licensee shall grant
sublicenses to use the KnowledgeBase Administrator Program, which is a component
of the IQ/Objects Administrator Edition, in accordance with paragraph 2.01.
Sublicensee's use of KnowledgeBase Administrator program shall only be for
altering the data dictionary for use with the Licensee Software listed on
Schedule B.
ARTICLE V.
MAINTENANCE
5.01 MAINTENANCE. Licensor will provide to Licensee maintenance and support
services as hereinafter set forth for the most current version of each Licensor
Software program. The period for the rendering of such services shall be annual
and shall be automatically renewed for an additional year unless Licensee gives
at least thirty (30) days prior written notice to Licensor that such maintenance
and support services are not to be renewed. Licensor shall offer for purchase
maintenance and support services for the most current version of Licensor
Software for at least three years from the effective date; Licensor may
thereafter discontinue offering maintenance and support for the Licensor
Software upon six (6) months prior written notice.
5.02 MAINTENANCE FEES. The maintenance and support fees for each Licensor
Software program shall be determined and paid as provided in Schedule D. Fees
for maintenance and support shall be invoiced by Licensor monthly and shall be
payable by Licensee within thirty (30) days after receipt of invoice by
Licensee.
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<PAGE> 5
5.03 MAINTENANCE SERVICES. As long as the Licensor Software program is
to be maintained and supported by Licensor hereunder
(i) Licensor shall correct any variance between the specifications set
forth in the Documents and the Licensor Software program which the
Licensee so advises Licensor during the period for which maintenance
and support is to be provided hereunder for such Licensor Software
program which can be corrected with reasonable effort including the
correction of the software code. Licensor shall distribute to Licensee
one copy of such corrected program or patches as soon as it is
available. Licensee shall be responsible for effecting such changes and
corrections in each copy of the applicable Licensor Program sublicensed
by Licensee. Licensor will respond to Licensee's request for
maintenance and support services within a reasonable time considering
all circumstances at the time of the request including the nature of
the service or support required. Such maintenance and support service
does not include on-site maintenance or support which, subject to
availability of personnel, will be offered to Licensee at a separate
charge.
(ii) Licensor shall provide support and maintenance services via
telephone to Licensee. Telephone support is defined as "answering
questions requiring a reasonable amount of time, usually during the
same telephone call". This telephone support will be available Monday
through Friday, holidays excluded, from 8:00 a.m. to 8:00 p.m. Eastern
time.
(iii) Licensor shall promptly make available to Licensee all
modifications and improvements to the Licensor Software generally
released by Licensor to other Licensor OEMs that are similar to
Licensee. Modifications and improvements may include but are not
limited to:
(x) System Updates: Versions of the appropriate Licensor
Software which operate under new releases of the computer
manufacturer's operating system.
(y) Computer Program Modifications: Versions of the
appropriate Licensor Software which encompass improvements of
the Licensor Software.
(z) Documentation. Updates and modifications of user
documentation of the appropriate Licensor Program.
Licensee's fight to receive modifications and improvements to the Licensor
Software shall not enable Licensee to receive new and different software
products developed by Licensor during the term of the Agreement For the purposes
of this restriction and by way of example, a new release of IQ/Objects would not
be considered a "new and different" software product however, an entirely new
product marketed by Licensor under a new name and not generally made available
to other OEM licensees of the Licensor Software would be considered a "new and
different product."
ARTICLE VI.
MISCELLANEOUS
6.01 AGREEMENTS WITH SUBLICENSEES. (a) Licensee will secure, and will require
the OEM Partners to secure, written license agreements from all sublicensees,
which may take the form of shrink wrap licenses. The license agreements shall
include provisions that (i) acknowledge the Licensors copyright and proprietary
rights in and to the Licensor's Software and documents, which may take the form
of acknowledgment of Licensee's and/or its licensors' proprietary rights; (ii)
cause the Customer to acknowledge that the Licensor Software is proprietary to
Licensee and its licensors, constitutes valuable trade secrets and is protected
by United States Copyright Law and international treaties; (iii) prohibit the
licensee from taking any action which impairs or infringes the intellectual
property rights of Licensee and its licensors; (iv) prohibit the sublicensee or
licensee from using, copying, modifying, transferring, downloading, merging,
making any translation or derivative work, or otherwise dealing with the
Licensor Software, except as expressly permitted in this Agreement; (v) require
the licensee or sublicensee not to cause or permit the disassembly, reverse
compilation or other decoding of the Licensor Software; and (vi) require the
licensee or sublicensee not to remove or destroy any copyright notices, or other
proprietary markings or confidential legends placed upon or contained within the
Licensor Software.
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<PAGE> 6
(b) Licensee shall take the same care to enforce intellectual property
provisions in the sublicenses as they effect the Licensor Software as Licensee
takes to enforce intellectual property provisions in the sublicenses as they
effect the Licensee Software which shall not be less than reasonable care.
(c) Licensee acknowledges that Licensor may in its own name bring an
action against a defaulting sublicensee to enforce such provisions to protect
its right, title and interest in the Licensor Software.
(d) In the event that a sublicensee violates or may have violated any
material terms of such license and Licensee becomes aware of such events or
facts, Licensee shall immediately advise Licensor of such violation and shall
cooperate with Licensor in any action taken by Licensor against the sublicensee
for violations of Licensors rights in the Licensor Software and the
sublicensee's undertaking regarding the security, confidentiality and ownership
of the Licensor Software.
6.02 ASSISTANCE OF LICENSOR Licensor agrees to use its best efforts to answer
technical questions regarding the Licensor Software necessary in order to assist
Licensee in the marketing of the Licensor Software.
6.03 TITLE, PATENT, AND COPYRIGHT INDEMNIFICATION. (a) Licensor represents that
it has sufficient right, title and interest in the Licensor Software to grant
the licenses contained in this Agreement. Licensor agrees to defend at its
expense any threatened or actual suit against Licensee based upon a claim that
Licensor does not have sufficient right, title, and interest in the Licensor
Software to grant the license contained in this Agreement, or that the Licensor
Software infringe(s) any United States patent or United States copyright or
other proprietary property, and to pay the amount of any settlement or the costs
and damages finally awarded after appeal, if any, in such suit, provided that
(1) Licensor is notified promptly in writing of any notice of claim or of
threatened or actual suit and is given complete authority for the defense of
such claim, and (2) at Licensors request, Licensor is given assistance and
information for the defense of the same for which Licensor shall reimburse
Licensee for out of pocket expenses.
(b) Following written notice of a claim or of a threatened or actual
suit, Licensor may at its expense, without obligation to do so, procure for
Licensee the right to continue to market, use and have others use the alleged
infringing Licensor Software or, without obligation to do so, may replace or
modify the Licensor Software to make it non-fringing. If Licensor elects to
replace or modify the Licensor Software, such replacement shall meet
substantially the same specifications of the Licensor Software as provided in
the documents.
6.04 TERMINATION. (a) Licensor may terminate this agreement in the event of the
default by Licensee of the performance of any material provision of this
Agreement or in any amount payable hereunder provided such default is not
remedied within thirty (30) days of receipt of written notice of default.
(b) Licensee may terminate this Agreement in the event of the default
by Licensor in the performance of any material provision of this Agreement
provided such default is not remedied within thirty (30) days of receipt of
written notice of default.
(c) In the event of the termination or cancellation of this Agreement
for any reason by either party, the obligations of Licensor and of Licensee
which have accrued as of the date of termination shall survive such termination
as well as the obligation of the Licensee regarding the confidentiality and
security of the Licensor Software and Documents shall continue. All licenses to
OEM Partners shall terminate at such time. Licensors obligations under Section
6.03 shall survive the termination.
(d) Termination or cancellation of this Agreement or exercise of any
other rights described in this Section .04 shall be in addition to and not in
lieu of any legal or other equitable remedies available to the parties.
6.05 LICENSES AND SUPPORT AFTER TERMINATION. (a) Upon termination of this
Agreement for any reason, the right of the Licensee to grant sublicenses shall
immediately terminate; provided, however, that all sublicenses granted prior to
the date of termination shall continue in full force and effect.
(b) Upon termination of this Agreement for any reason, the right of the
Licensee to support and maintenance services to be provided pursuant to Article
V shall continue thereafter provided Licensee is not in default in the payment
of any monies due under the terms of this Agreement for a period of more than
thirty (30) days.
6.06 AUDIT OF RECORDS. For the purpose of verifying the fees and other charges
due the Licensor under this Agreement, the Licensor or its designated agent
shall have the right to audit and inspect the financial and operational records
of Licensee for all activities pertaining to the Licensor Software and the
sublicensing thereof. The cost of each such audit will be borne by Licensor,
provided, however, that if
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<PAGE> 7
such an audit conducted at the expense of Licensor shows that Licensee failed to
pay when due to Licensor an amount greater than then percent (10%) of all
payments determined to have been due to Licensor during the twelve months
proceeding the audit, Licensee shall reimburse Licensor for the reasonable,
documented costs of such audit. The audit shall be conducted during regular
business hours at Licensee's offices and in such a manner as not to interfere
with Licensee's normal business activities.
6.07 INDEPENDENT CONTRACTOR. It is agreed that the relationship established by
this Agreement is solely that of an independent contractor and does not
designate Licensee as the agent, legal representative, partner or joint venturer
of the Licensor for any purpose whatsoever. Licensee is not granted any right to
create any obligation or responsibility or make representations, expressed or
implied, on behalf of or in the name of the Licensor or regarding the Licensor
Software or to bind the Licensor in any manner or thing whatsoever including,
without limitation, to the Licensee's sublicensees, except as Licensor may
specifically authorize in writing.
6.08 CONFIDENTIALITY/SECURITY (a) Upon termination of any license or sublicense
granted hereunder or pursuant to the authority contained herein for any reason,
the Licensor Software and Documents and all copies thereof, in whole or in part,
in the possession of Licensee or its sublicensee, shall be promptly delivered to
the Licensor or disposed of as otherwise directed by Licensor in writing.
(b) Licensee acknowledges that the Licensor Software (including the
KnowledgeBase), the Documents, the IQ KnowledgeBase Administrator Program and
all copies thereof are the sole property of the Licensor, contain valuable trade
secrets and other proprietary property of Licensor, including without limitation
ideas and know-how. Licensee agrees to safeguard the confidential information
and proprietary property contained within the Licensors Software using measures
that are equal to the standard of performance used by Licensee to safeguard its
own confidential information of comparable value, but in no event less than
reasonable care. Licensee agrees to include the copyright notice and/or
proprietary notice of the Licensor, where applicable, on all copies of the
Licensor Software and the Documents distributed by Licensee in accordance with
this Agreement or as may be authorized hereafter in writing by the Licensor.
(c) Licensee agrees to take reasonable steps necessary to insure that
the Licensor Software and all Documents and other information related to the
Licensor Software are not disclosed, published, released, transferred or
otherwise made available by Licensee or by any of its agents or employees to any
person, firm or entity except to employees and agents of Licensee and of
sublicensees for purposes specifically related to the use of the Licensor
Software pursuant to the license and the grant of sublicenses as permitted
hereunder.
6.09 TERM. This Agreement shall be effective as of the date first above written
and shall continue in full force and effect for a period commencing on the
effective date and expiring on December 31, 1999. Thereafter, the Agreement
shall automatically renew for successive one year periods (running from January
1 through December 31) unless either party provides the other with written
notice, at least ninety (90) days prior to December 31, 1999 or the relevant
anniversary date, of its election not to renew.
6.10 WARRANTY (a) The Licensor Software (including the KnowledgeBase if properly
modified and maintained by Licensee) is warranted (i) to conform to the design
specifications as designated in Documents, (ii) to be compatible with the
equipment referenced in Schedule B, and (iii) capable of performing in
accordance with the specifications and descriptions set forth in the Documents.
This warranty is applicable only to the use of an unaltered release of the
Licensor Software under normal use and only for a period of ninety (90) days
commencing on the date of delivery of the first copy (regardless of the release
thereafter of subsequent versions) of the applicable Licensor Software to
Licensee hereunder. The Licensor does not warrant that the functions contained
in the Licensor Software will meet Licensee's or sublicensee's requirements or
that the operation of the Licensor Software will be uninterrupted or free of all
errors.
(b) In the event the Licensor Software (including the KnowledgeBase if
properly modified and maintained by Licensee) fails to perform as hereinabove
warranted under normal use and the Licensee promptly advises the Licensor in
writing of such failure within the ninety (90) day period of the above warranty,
Licensee agrees that its sole and exclusive remedy is for Licensor to provide
programming services to attempt to correct any error, malfunction or defect in
the Licensor Software. Such services will consist of a review by a software
programmer designated by Licensor who will make a reasonable effort in good
faith to identify the cause of the alleged error, malfunction or defect and to
make appropriate corrections thereof. The method of correcting errors,
malfunctions and defects and implementing corrections will be at the sole
discretion of Licensor. Licensee will promptly furnish to Licensor all
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printouts and other information reasonably requested to assist the Licensor in
the rendering of such programming services.
(c) No warranty is made with respect to the modifications to the
KnowledgeBase which are to be made by Licensee.
(d) EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, THERE ARE NO
OTHER WARRANTIES, EXPRESSED OR IMPLIED. BY LICENSOR REGARDING THE LICENSOR
SOFTWARE, INCLUDING, BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(e) Licensor will make available programming services after said
warranty period pursuant to a maintenance agreement.
(f) Licensor's warranties and representations hereunder are to Licensee
only and Licensor assumes no liability or obligation for any representation or
warranty made to sublicensees by Licensee.
6.11 TAXES. Licensee will pay or be responsible for payment of all sales and use
taxes based solely on the charges paid or payable under this Agreement.
6.12 AMENDMENTS. This Agreement may not be amended, modified, or otherwise
affected except by written document signed by both parties hereto.
6.13 NOTICES. Any notices provided for in this Agreement must be in writing and
shall be delivered or sent (including by cable or telex) in wrong to the party
at the address written below. The notice is effective upon delivery to the
designated address.
6.14 ASSIGNMENT. This Agreement is binding on the successors and assigns of the
parties; provided, that this Agreement may not be assigned by either party
without the prior written consent of the other party (which consent shall not be
withheld unreasonably), except as provided in this paragraph. The rights and
obligations of a party (the "assigning party") may be assigned, without the
consent of the other, to any corporation which is a wholly owned subsidiary or
parent of the assigning party, which survives a merger in which assigning party
participates or to any corporation or other person or business entity which
acquires all or substantially all of the assets of the assigning party.
6.15 ENTIRE AGREEMENT. This Agreement including the Schedules hereto (as amended
from time to time as herein provided), constitutes the entire understanding and
agreement of the parties hereto and supersedes all other prior agreements and
understandings, oral and written.
6.16 WAIVERS. No waiver of any provision of this Agreement shall be effective
unless in writing and executed by the party waiving the right. Failure to
properly demand compliance or performance shall not constitute a waiver of a
party's rights hereunder.
6.17 GOVERNING LAW. This Agreement shall be construed and interpreted according
to the laws of the State of Georgia.
6.18 GENERAL MATTERS. (a) EXCEPT AS SET FORTH IN SECTION 6.03 LICENSEE AGREES
THE LICENSOR'S LIABILITY UNDER THIS AGREEMENT FOR MONETARY DAMAGES WITH RESPECT
TO ANY LICENSOR SOFTWARE PROGRAM WILL NOT EXCEED THE TOTAL OF THE LICENSE FEES
PAID BY LICENSEE TO THE LICENSOR FOR SAID LICENSOR SOFTWARE DURING THE PRECEDING
TWELVE MONTH PERIOD.
(b) EXCEPT AS SET FORTH IN SECTION 6.03 IN NO EVENT SHALL LICENSOR BE
LIABLE TO LICENSEE OR ITS SUBLICENSEES FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT OR SPECIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOST PROFITS) EVEN IF
LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(c) No action, regardless of form, arising out of or alleging any
breach of this Agreement or in any way related to the execution of this
Agreement or performance hereunder may be commenced by either party more than
two (2) years after the cause of action has arisen.
6.19 EXPORT LAWS AND REGULATIONS. Licensee shall not use, export or otherwise
dispose of the Licensor Software or Documents (or any part thereto outside the
United States or license others to use, export or otherwise dispose of the
Licensor Software or Documents (or any part thereof]l to any person, firm,
corporation or governmental agency which Licensee knows or has reason to believe
will use, license, export or otherwise dispose of the Licensor Software or
Documents outside the United States where the use, license, export or other
disposition is prohibited or is regulated by any law or regulation of the United
States of America without the prior approval required by such law or
regulations.
6.20 SOFTWARE ESCROW AGREEMENT. Within thirty (30) days of the effective date of
this Agreement Licensor will execute the necessary documentation to make
Licensee a beneficiary under that Master Escrow Trust Agreement dated November
1, 1994.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LICENSOR: LICENSEE:
IQ SOFTWARE CORPORATION SALESLOGIX CORPORATION
BY: /s/ Charles R. Chilty BY: /s/ James E. Valenzuela
-------------------------------- ----------------------------------
NAME: Charles R. Chilty NAME: James E. Valenzuela
------------------------------ --------------------------------
TITLE: Pres/CEO TITLE: V.P. Finance & Admin.
----------------------------- -------------------------------
ADDRESS: 3295 River Exchange Drive ADDRESS: 8800 N. Gainey Center Dr.
Suite 550 Suite 200
Norcross, Georgia 30092 Scottsdale, AZ 85258
DATE: 10/31/97 DATE: 10/30/97
------------------------------ --------------------------------
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SCHEDULE A
LICENSOR SOFTWARE
(PARAGRAPH 1.01)
Name
IQ/Objects
Personal Edition
Query Edition
Reporting Edition
Administrator Edition
IQ/SmartServer (includes IQ/LiveWeb)
IQ/Vision
IQ/VisionServer
Java submitter for IQ/Objects
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SCHEDULE B
LICENSEE SOFTWARE
(PARAGRAPH 1.02)
<TABLE>
<CAPTION>
COMPUTER HARDWARE/ OPERATING
NAME VERSION ENVIRONMENT
---- ------- -----------
<S> <C> <C>
SalesLogix Version 2.0+ and higher All IQ Supported Environments
</TABLE>
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SCHEDULE C
CONSIDERATION
(PARAGRAPH 3.01)
The following schedules apply to the Per Copy Royalty Option and Annual Royalty
Option
At the beginning of each Option Period defined below, Licensee shall have the
option of selecting either the Per Copy Royalty Option Schedule or the Annual
Royalty Option Schedule for the Option Period. If the Per Copy Royalty Option
Schedule is chosen, the Licensee will remit payments according to Paragraph 3.04
for each copy of Licensor Software sublicensed during the Option Period. If the
Annual Royalty Option Schedule is selected, the Licensee will pay the Option
Price in full by the end of the first month of the Option Period. With the
exception of IQ/Vision and IQ/VisionServer, the Annual Royalty Option covers all
copies of Licensor Software sublicensed in conjunction with or subsequent to
Licensee Software during the Option Period. For Year One, Licensee has selected
the Annual Royalty Option.
PER COPY ROYALTY OPTION SCHEDULE
<TABLE>
<CAPTION>
PROGRAM NAME ROYALTY
------------ -------
<S> <C>
IQ/Objects Query Edition $*
IQ/Objects Report Edition $*
IQ/Objects Administrator Edition $*
IQ/SmartServer - NT Version $*
IQ/SmartServer - UNIX Version $*
</TABLE>
ANNUAL ROYALTY OPTION SCHEDULE
<TABLE>
<CAPTION>
OPTION PERIOD OPTION PRICE PAYMENT DUE
------------- ------------ -----------
<S> <C> <C> <C>
Year One (10/31/1997 through 12/31/1998) $* See schedule below
Year Two (01/01/1999 through 12/31/1999) $* 01/31/1999
Year Three (01/01/2000 through 12/31/2000) $* 01/31/2000
Year Four (01/01/2001 through 12/31/2001) $* 01/31/2001
Year Five (01/01/2002 through 12/31/2002) $* 01/31/2002
</TABLE>
PAYMENT SCHEDULE FOR YEAR ONE
<TABLE>
<CAPTION>
<S> <C> <C>
Amount due $*
Payment One * due 10/31/97
Payment Two * due 02/28/98
Payment Three * due 06/30/98
</TABLE>
10
*Confidential information has been ommitted and filed separately with the
Commission.
<PAGE> 13
IQ/VISION AND IQ/VISIONSERVER
Royalty Fees for IQ/Vision and lQ/VisionServer are not included in the Annual
Royalty Option. The Royalty fees for l/Vision and IQ/VisionServer are equal to
twenty-five (25) percent of Licensee's net revenue.
DEVELOPMENT LICENSES
Licensor agrees to provide Licensee development copies of Licensor Software for
at no charge to be used as described in paragraph 2.01.
ROYALTY FREE LICENSES
In the event that Licensee elects to provide Licensee Software at no charge for
marketing purposes, then Licensee may provide royalty free licenses of the
IQ/Objects Query Edition. Licensee may provide other versions of Licensor
Software under evaluation pursuant to Paragraph 2.01.
TRAINING
Licensor will create an abbreviated training course designed to introduce
Licensee Business Partners to the functionality of Licensor Software. The
training course will be taught by Licensor personnel in three regional locations
and will be provided at a reasonable cost to the Business Partners. The material
for this training course will be provided to Licensee for use in Licensee
training classes.
11
<PAGE> 14
CURRENT CHARGES FOR DOCUMENTS
(PARAGRAPH 3.02)
<TABLE>
<CAPTION>
IQ OBJECTS
<S> <C>
Query Edition $10
Reporting Edition 40
Administrator Edition 50
IQ/SmartServer 10
IQ/Vision 100
IQ/VisionServer 20
</TABLE>
Charges for documents are subject to change upon sixty (60) day prior written
notice and/or for new releases of Licensor Software.
Except for IQ/VisionServer documentation, Licensor will provide documentation to
Licensee in magnetic form at no additional charge for use as set forth in
Paragraph 2.02.
12
<PAGE> 15
SCHEDULE D
ANNUAL MAINTENANCE AND SUPPORT FEES
(PARAGRAPH 5.02)
The Annual Maintenance fee is payable monthly (on the first business day of the
month) as follows.
<TABLE>
<CAPTION>
PERIOD COVERED COST PER MONTH
- -------------- --------------
<S> <C>
02/01/1998 through 12/31/1998 $2,917
01/01/1999 through 12/31/1999 $2,917
01/01/2000 through 12/31/2000 $3,667
01/01/2001 through 12/31/2001 $3,667
01/01/2002 through 12/31/2002 $3,667
</TABLE>
Reinstatement of support and maintenance shall consist of the payment all fees
since the cessation of maintenance payments.
13
<PAGE> 1
Exhibit 10.13 Software License Agreement
PUMA TECHNOLOGY, INC.
2550 North First Street, Suite 500
San Jose, CA 95131 u.s.a.
Tel: (408) 321-7650
Fax: (408) 321-3886
INTELLISYNC RUNTIME ENGINE SOFTWARE LICENSE
AGREEMENT
Licensee Name: SalesLogix
Licensee Address: 8800 N. Gainey Center Drive, Suite 200
Scottsdale, AZ 85258
Telephone: (602) 368-3700
Fax: (602) 368-3799
Licensee Contract Representative: Doug Nicholas
This Intellisync Runtime Engine Software License Agreement ("Agreement") is
entered into by and between Puma Technology, Inc. ("Puma") and the Licensee
identified above ("Licensee") as of the date executed by Puma ("Effective
Date"). The parties previously entered into an Intellisync Software Developer's
Kit License Agreement with an Effective Date of April 14, 1998 providing for
license of Puma's SDK to Licensee for the sole purpose of developing translator
software ("Translator") that enables Puma's proprietary Intellisync
synchronization engine to operate with Licensee's "Sales Logix" sales automation
software product ("Sales Logix"). Licensee now requires a license to the
Run-Time Engine to the Intellisync engine ("Licensed Software") identified in
Exhibit A hereto, giving Licensee rights to distribute the Software to end
users, provided that the Translator is included with the Licensed Software. For
the mutual promises and consideration set forth herein, Puma agrees to grant
Licensee certain licenses to the Licensed Software, subject to the attached
Terms and Conditions and Exhibits.
Exhibit A - Licensed Software
Exhibit B - Fees
LICENSEE ACKNOWLEDGES HAVING READ THE TERMS AND CONDITIONS SET FORTH ON THE THIS
FACING PAGE AND ATTACHED HERETO, UNDERSTANDS ALL SUCH TERMS AND CONDITIONS, AND
AGREES TO BE BOUND THEREBY.
PUMA TECHNOLOGY, INC. SALESLOGIX
By: /s/ Bradley A. (Illegible) By: /s/ Douglas J. Nicholas
-------------------------- ----------------------------------
Name: Bradley A. (Illegible) Name: Douglas J. Nicholas
Title: President & CFO Title: Vice President Bus. Development
Date: 12/28/98 Date: 12/18/98
<PAGE> 2
TERM AND CONDITIONS
1. DEFINITIONS
1.1. Bundle or Bundling. "Bundle or Bundling" shall mean the act of
reproducing and including a copy of the Licensed Software with SalesLogix and
the Translator.
1.2. Licensed Software. "Licensed Software" shall mean the Puma
software in executable code form, specified on Exhibit A, and all modifications
to such Licensed Software, if any, supplied by Puma to Licensee under this
Agreement.
1.3. Per Unit Royalty. "Per Unit Royalty" shall mean the royalty price
paid by Licensee to Puma for each Unit with is copied, produced, reproduced or
distributed by Licensee subject to the terms of this Agreement.
2. LICENSE AND FEES
2.1. Object License. As of the Effective Date, Puma grants to Licensee
a nonexclusive, non transferable worldwide license to Bundle the Licensed
Software with SalesLogix and the Translator and to distribute the Licensed
Software to end user customers through its distribution network.
2.2. No Sublicense. Licensee shall not have a right to grant any
license or sublicense to any third party except a sublicense granted to end
users of SalesLogix to use the copy produced and distributed by Licensee as set
forth in Section 2.1
2.3. Modifications. Licensee shall have no right to modify all or any
part of the Licensed Software. Licensee agrees not to take any actions, such as
reverse assembly or reverse compilation, to derive a source code equivalent to
the Licensed Software.
2.4. Licensee Fees. Licensee agrees to pay Puma the license fees shown
in Exhibit B for the rights granted by this Agreement. Within thirty (30) days
following the end of each calendar quarter during the term of this Agreement in
which Licensee produces a copy of SalesLogix which incorporates the Licensed
Software, Licensee shall account to Puma for the Per Unit Royalties due as set
forth in Exhibit B, based upon production totals for that quarter. Licensee
shall provide Puma with a written report that reflects the facts or basis upon
which the total Per Unit Royalties due was calculated and will clearly indicate
applicable Per Unit Royalty Rates that apply to different versions of the
Licensed Software, if any, as noted in Exhibit B. For purposes of this
Agreement, production occurs when the Licensed Software is shipped out of the
final manufacturing facility. During the term of this Agreement and for a period
of three (3) years after each such transaction, Licensee shall retain such books
and records as are required to show Licensee's compliance with the terms of this
Agreement.
2.5. Payments. All payments made are non-refundable unless provided for
specifically in this Agreement. All payments shall be in U.S. Dollars and be
made by telephone transfer directly to Puma's bank account as follows:
Silicon Valley Bank
3003 Tasman Drive
2
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 3
Santa Clara, CA 95054
ABA # 121140399 for benefit of Puma Technology, Inc.
Account # 035175-3570
The amounts indicated on Exhibit B for payments do not include any federal,
state, local or other governmental taxes, excise taxes, tariffs or other
governmental charges that may be imposed on sale, transportation, production,
storage or export of the Licensed Software. Licensee shall pay any and all such
taxes and charges (other than taxes imposed upon or measured by Puma's net
income) and Puma, its agents and distributors shall have no liability therefor.
If taxes are required to be withheld for any foreign government on payments
required under this Agreement, then Licensee may deduct such withholding taxes
from the amount owed Puma as will enable Puma to receive a U.S. Foreign Tax
Credit; provided, Licensee pays such amounts to the appropriate tax authority.
Licensee shall obtain and deliver to Puma a receipt and all other documents
necessary for Puma to claim a Foreign Tax Credit.
3. DELIVERY
3.1. Delivery of Licensed Software. Within five (5) business days after
execution of this Agreement, Puma shall deliver a master copy of the Licensed
Software to Licensee.
3.2. Acceptance. The Licensed Software will be deemed accepted by
Licensee if Puma is not notified of any errors in writing within thirty (30)
days after delivery of the Licensed Software to Licensee. In the event Licensee
notifies Puma of such errors, Licensee shall return the Licensed Software to
Puma in the manner specified by Puma. Puma shall, at its option, repair or
replace the Licensed Software, as soon as commercially practicable, but no later
than sixty (60) days after the return of the Licensed Software to Puma.
Acceptance of the repaired or replaced Licensed Software will be subject to the
same procedures.
4. SUPPORT AND TRAINING. Licensee will be responsible for all customer and end
user support for the licensed Software. Puma agrees to provide Licensee's
personnel responsible for support for the Licensed Software with up to two full
days of training on the Licensed Software at Puma's facilities, free of charge
to Licensee.
5. AUDIT; TAXES.
5.1. Audit. Licensee shall maintain Licensee's usual records relating
to the Licensed Software in accordance with Section 2.6. Licensee shall permit a
mutually agreed upon certified public accountant to audit such books and records
as may reasonably be required to verify compliance with this Agreement, at such
times as Puma may reasonably request, upon reasonable written notice. Puma shall
pay the cost of audits unless the number of Units distributed by Licensee
exceeds the number of Units reported by Licensee by more than two percent (2%),
in which event Licensee shall reimburse Puma for the cost of such audits in
addition to all other amounts to which Puma may be legally entitled as a result
of such unauthorized copies. Audits shall not unreasonably interfere with
Licensee's business activities and shall not be conducted more than once in any
twelve month period.
5.2. Taxes. Licensee shall be responsible for the payment of all
export, excise, sales, use, property and other taxes based upon the transactions
under this Agreement or the fees paid
3
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 4
hereunder, other than taxes imposed upon or measured by Puma's net income or any
withholding for taxes on royalties to Puma required by any foreign governmental
laws, which shall be withheld by licensee as required by such law.
6. PROPRIETARY OWNERSHIP RIGHTS
6.1. Ownership. Puma shall retain all ownership, right, title and
interest in and to the Licensed Software and all current and hereafter existing
revisions of or modifications to the Licensed Software (including all copies
made hereunder).
6.2. Copyright Notices. All copies of the Licensed Software made by
Licensee shall contain Puma's copyright notice and Licensee shall not remove any
copyright notices contained in the Licensed Software. No other copyright notice
shall appear in, or be associated with, the Licensed Software. Upon Puma's
request, Licensee shall affix to each diskette or other item containing the
Licensed Software such copyright or other proprietary notices with the content,
in the form, and in the clearly visible place mutually agreed upon.
6.3. Trademarks. Except as specified or required by this Agreement and
its Exhibits, neither party may use the other's name, logo or trademarks without
the other party's prior written consent.
6.4. No Assertion. Licensee hereby expressly acknowledges and affirms
Puma's ownership in the Licensed Software as set forth in Section 6.1 above.
Accordingly, Licensee shall not at any time, directly or indirectly, oppose the
grant of, dispute the validity of or cooperate in any suit or proceeding which
challenges or disputes any proprietary rights of Puma in the Licensed Software.
7. WARRANTY
7.1. Limited Warranty. Puma warrants that the media upon which the
Licensed Software is placed by Puma will be free from defects in workmanship and
materials, and that the Licensed Software will meet all written specifications
provided by Puma to Licensee. Puma does not warrant or claim that the Licensed
Software will run error free. If Licensee finds any errors or failure of the
Licensed Software to meet such specifications and provides Puma with a written
report thereof, as Licensee's sole remedy, Puma will use reasonable commercial
efforts to correct such errors. Puma's warranty and obligation with respect to
the Licensed Software shall extend for a period of ninety (90) days from the
date the Licensed Software is delivered to Licensee and is solely for the
benefit of Licensee. Licensee has no authority to extend this warranty to any
other person. This warranty shall not apply to any Licensed Software which has
been (i) repaired, altered or installed, other than by Puma, (ii) subject to
misuse, mishandling, neglect or accident, or (iii) not maintained in accordance
with handling or operating instructions supplied by Puma.
7.2. Warranty Exclusion. EXCEPT AS PROVIDED IN SECTION 7.1, PUMA MAKES
NO WARRANTY OF ANY KIND WITH REGARD TO THE LICENSED SOFTWARE. PUMA EXPRESSLY
DISCLAIMS ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY
4
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 5
AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER ARISING IN LAW, CUSTOM, CONDUCT
OR OTHERWISE.
8. LIMITATION OF LIABILITY
8.1. Limitation. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS
OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES ARISING
UNDER THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY DAMAGES ATTRIBUTABLE TO PUMA
EXCEED THE AMOUNT OF PAYMENTS MADE TO PUMA UNDER THIS AGREEMENT.
8.2. Force Majeure. Except for payment of moneys due under this
Agreement, nonperformance of either party shall be executed to the extent that
performance is rendered impossible by fire, flood, governmental acts or orders
or restrictions, failure of suppliers, or any other reason where failure to
perform is beyond the control and not caused by the negligence of the
non-performing party.
9. PROPRIETARY RIGHTS INDEMNIFICATION
9.1. Representations. Puma represents that it has the right to grant
the license hereunder and that it has no knowledge of any facts which might lead
to a claim of infringement of any patent, copyright or trade secret of any third
party from the United States, Japan, or any member country of the European Union
("Claim") as a result of the license to the Licensed Software granted by this
Agreement.
9.2. Indemnity. Puma agrees to indemnify and hold Licensee harmless
from any and all damages, liability, costs and expenses (including but not
limited to reasonable attorneys' fees) resulting from any Claim; provided
however, that Puma shall be relieved of the foregoing obligations unless
Licensee gives Puma immediate notice of any such Claim against Licensee and Puma
has the option to defend, settle, or dispose of such claim as it deems
appropriate. Licensee shall cooperate with Puma, at Puma's expense, in the
defense of any such Claim. IN NO EVENT SHALL PUMA'S LIABILITY UNDER THIS SECTION
9.2 EXCEED THE TOTAL AMOUNTS PAID BY LICENSEE TO PUMA UNDER THIS AGREEMENT IN
THE TWELVE (12) MONTHS PRIOR TO INITIATION OF THE CLAIM OR SUIT IN QUESTION.
Puma assumes no liability for (i) infringement of any proprietary right covering
any assembly, circuit, combination, method or process in which any of the
Licensed Software may be used but not covering the Licensed Software standing
alone; (ii) any combination of the Licensed software with other software not
supplied by Puma; or (iii) the modification of the Licensed Software, unless
such modification was made by Puma pursuant to specifications and designs
drafted by Puma. Licensee agrees to indemnify and hold Puma harmless from any
and all damages, liability, costs and expenses (including but not limited to
reasonable attorney's fees) resulting from the foregoing; provided however, that
Licensee shall be relieved of the foregoing obligations unless Puma gives
Licensee immediate notice of any such claim or suit against Puma, and Licensee
has the option to defend, settle, or dispose of such claim or suit as it deems
5
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 6
appropriate. Puma shall cooperate with Licensee, at Licensee's expense, in the
defense of any such claim or suit.
9.3. Exclusive Remedy. THE FOREGOING PROVISIONS OF THIS SECTION 9 STATE
THE ENTIRE LIABILITY AND OBLIGATIONS OF EACH PARTY AND THE EXCLUSIVE REMEDY OF
EACH PARTY WITH RESPECT TO ANY ALLEGED INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT
BY THE LICENSED SOFTWARE.
10. TERM; TERMINATION
10.1. Term. This Agreement shall commence on the Effective Date and
continue for one (1) year after such date, unless earlier terminated under this
Section 11. This Agreement will automatically renew for additional and
sequential one (1) year terms unless either party provides written notice to the
other party of its intention not to renew at least thirty (30) days prior to the
end of the then current term.
10.2. Termination for Cause. If either party defaults in the
performance of any material provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party that if the default is not
cured within thirty (30) days, then the Agreement shall automatically terminate
at the end of such period. Any breach of the provisions in Sections 2.1, 2.2,
2.3, 6.2 or 6.4 by Licensee will be considered breaches which cannot be cured
and may be the basis for the automatic termination of this Agreement.
10.3. Bankruptcy. If either party files a petition in bankruptcy or is
adjudicated a bankrupt, or if a petition in bankruptcy is filed against either
party and such petition is not discharged within sixty (60) days of such filing,
or if either party becomes insolvent, or makes an assignment for the benefit of
creditors or an arrangement pursuant to any bankruptcy law, or if either party
discontinues its business or if a receiver is appointed for it or its business,
this Agreement shall automatically terminate without any notice whatsoever being
necessary.
10.4. Survival. The obligations under Sections 2.3, 5, 6, 7, 8, 9, and
the relevant portions of Sections 10 and 12, shall survive any termination of
this Agreement.
10.5. Termination Effect. Within thirty (30) days after the termination
of this Agreement, Licensee shall return to Puma or destroy the master copy of
the Licensed Software, and any other materials delivered to Licensee by Puma in
connection with this Agreement. Unless this Agreement was terminated by Puma for
cause under section 10.2, any Licensed Software in Licensee's inventory on the
effective date of termination may be disposed of by Licensee within a period of
ninety (90) days after such date. Termination of this Agreement for any reason
shall not affect the rights of any end user to use the Licensed Software under
any sublicense granted in accordance with this Agreement.
10.6. Additional Remedies. Except as expressly limited by this
Agreement, termination of this Agreement shall be without prejudice to any other
remedy which may be available to a party due to default of this Agreement.
Violation of obligations under this Agreement may cause irreparable harm and
damage which may not be recovered at law, and remedies for breach of this
Agreement may be awarded in equity through injunctive relief.
6
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 7
11. MISCELLANEOUS
11.1. Relationship. The relationship between parties shall be that of
independent contractors. Nothing contained herein shall be construed to imply a
joint venture, principal or agent relationship, or other joint relationship, and
neither party shall have the rights, power or authority to create any
obligation, express or implied, on behalf of the other.
11.2. Governing Law. This Agreement shall be governed in all respects
by the substantive laws of the State of California, United States of America,
exclusive of its conflicts of laws rules, as applied to agreements entered into
in California between California residents. The United Nations Convention on
Contracts for the International Sale of Goods shall not apply to this Agreement
in any manner whatsoever.
11.3. Jurisdiction; Venue. The parties expressly stipulate that any
litigation under this Agreement shall be brought in the state courts of the
County of Santa Clara, California, or in the United States District Court for
the Northern District of California.
11.4. Attorneys' Fees. In the event of any litigation or arbitration by
the parties under this Agreement, the prevailing party shall be entitled to
costs and reasonable attorneys' fees.
11.5. Assignment. Neither party shall assign or otherwise transfer any
of its rights, obligations or licenses hereunder without the prior written
consent of the other party. Subject to the foregoing, the provisions of this
Agreement shall apply to and bind the successors and permitted assigns of the
parties.
11.6. Waiver. Failure by any party to enforce any of its rights under
this Agreement shall not be deemed a waiver of any right which that party has
under this Agreement.
11.7. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and delivered personally, by express mail or by
facsimile (with facsimiles to be promptly confirmed in writing). All such
written communications delivered by express mail shall be sent postage prepaid,
by an internationally recognized express mail courier such as Federal Express or
DHL to the parties at their respective addresses as set forth on the facing page
of this Agreement, subject to the right of either party to change its address by
delivering written notice to the other. Such notices shall be deemed to be
effective upon receipt.
11.8. Severability. Should any provisions of this Agreement contravene
any law or valid regulation of any government having jurisdiction over the
parties, then such provision shall be automatically terminated and performance
thereof by the parties waived, and all other provisions of this Agreement shall
continue in full force and effect.
11.9. Export Compliance. Licensee shall not export, directly or
indirectly, any Licensed Software to any country for which United States' laws
or regulations require an export license or other governmental approval, without
first obtaining such license or approval. Licensee hereby agrees to indemnify
and hold Puma harmless from and against any losses, damages, penalties or causes
of action resulting from a violation of this Section.
7
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 8
11.10. Entire Agreement; Amendment. This Agreement (including facing page and
all Exhibits) reflects the entire agreement of the parties regarding the subject
matter hereof, and supersedes all prior or contemporaneous agreements between
the parties, whether written or oral. This Agreement shall not be amended,
altered or changed, except by written agreement signed by both parties.
EXHIBIT A
LICENSED SOFTWARE: Intellisync for Sales Logix database synchronization
software, in executable code form, as defined by the feature set listed below,
and including all maintenance modifications thereof, designated by Puma as a
positive increase in either the tenths digit or hundredths digit after the
decimal point.
Feature Set
1. Direct Synchronization
2. Accurate Conflict Resolution
3. Complete Customization via field mapping
4. Supported PIM Applications
- MS Outlook 87/98
- Such Other PIMs as Licensee, in its sole discretion, desires to
include, provided that such applications are already supported by
Intellisync
8
/s/ BR /s/ DN
- --------- ---------
Initials Initials
<PAGE> 9
EXHIBIT B
FEES
Software Per Unit Royalty: $* per Unit
Puma agrees to waiver the Per Unit royalty for the first six months of the
initial term of this Agreement beginning January 1, 1999.
Terms for all payments are net thirty (30) days. If any amount is not paid to
Puma when due hereunder, Licensee shall pay to Puma on demand a late fee in an
amount not to exceed two percent (2%) of such delinquent payment for each month
or part thereof from the due date until the date paid; but Licensee shall have
such grace period as may be required by law and the late fee shall not exceed
the maximum allowed by law.
297281
9
/s/ BR /s/ DN
- --------- ---------
Initials Initials
*Confidential information has been omitted and filed separately with the
Commission.
<PAGE> 1
EXHIBIT 10.14 -
VAR AGREEMENT
BORLAND No-Nonsense VAR Agreement
- --------------------------------------------------------------------------------
This Agreement is between Borland International, Inc., 100 Borland Way, Scotts
Valley, CA 95066 ("us"), and
SalesLogix Corporation
8800 North Gainey Center Drive Ste. 200
Scottsdale, AZ 85258 ("you")
1. We appoint you an authorized Value Added Reseller (VAR) of the Software in
the Territory.
"We," "our," and "us" mean Borland International, Inc. "Software" means
only our computer program(s) listed in the Schedule and any related
documentation ("Documentation"); we may change or discontinue any or all
Software products or versions at any time without notice or liability.
"Schedule" means any schedule that you and we sign that specifically refer
to this Agreement. The "Territory" means the territory set forth in
Schedule; you agree not to advertise, solicit orders, or establish or
maintain a branch, sales office, or distribution depot for the Software,
outside the Territory. Your appointment is non-exclusive; you understand
that we may appoint or license other distributors. Master VARs, VARs,
OEMs, dealers or end-users in the Territory directly without notice or
liability to you.
2. You will vigorously market the Software at your expense.
You will maintain at all times adequate sales, marketing, technical and
service staff (in-house or under contract) to demonstrate the Software,
provide training and support, attend sales event, and otherwise promote
the Software to end users.
3. You may demonstrate the Software at your premises or on a customer's
computer.
You may install and run the Software for demonstration use on your own
computer(s) or those of prospective customers. You must remove
demonstration copies of the Software from a customer's computer not more
than 120 days after installation, unless we otherwise agree in writing. We
will charge you the applicable License Fees for demonstration copies of
the Software or Documentation that you do not remove from a customer's
site or your own when required. We reserve the right to require that
demonstration Software have an access key, and/or that you enter into a
sublicense agreement with customers evaluating particular Software.
4. You may develop your own applications that work with the Software.
For each platform on which you will be distributing your application, you
must purchase at least one license for the Software at a 50% discount from
the then current list price. You may use the Software on that particular
Platform in order to develop, test, verify and support your own
application software to work with that Software. You may combine Software
with your own application software for your own development use, but you
may not modify any Software and you must maintain all Software in
complete, unedited form.
5. You may sublicense end-users to use the Software only with your own
software application.
You may market and sublicense the Software only to end-users in the
Territory who would use it for internal data processing. You may only
sublicense the Software on the platform specified in the Schedule. You may
not, however, sublicense Software for use on any Platform unless you have
already purchased a license to use that Software on that particular
Platform. You may only sublicense the Software if it is embedded in or
bundled with your own software application product, or otherwise for use
with your application product, but not as a standalone product. You will
sublicense the Software under terms substantially similar to those set
forth in the No Nonsense License Statement and Limited Warranty, attached.
Certain software products may require that you secure an access code from
us for each customer's computer for which the Software is sublicensed.
6. You will make records and reports of your Software Installations and
sublicenses.
You will keep, and give us not less than 30 days after the end of each
calendar quarter, a complete and accurate report. For software products on
Intel platform(s), such report will list (i) the number of "license seats"
(defined in Schedule 1) deployed during such quarter, (ii) the number of
license seats for which customer support was purchased during such
quarter; (iii) the number of license seats for which customer support was
renewed during
<PAGE> 2
BORLAND No-Nonsense VAR Agreement
- --------------------------------------------------------------------------------
such quarter, and (iv) a statement detailing the License Fees and Support
Fees payable to Borland. Such License Fees and Support Fees are payable in
conjunction with each report 30 days after the end of each calendar
quarter.
7. You will pay us the License Fees listed in the Schedule.
You will pay us the applicable License Fee for each license we give you to
use the Software on your own computers, and for each sublicense you grant
for the Software to be used on another's computer. The "License Fee" is
the applicable amount set forth in the Schedule. All deliveries are FOB
our warehouse. You are responsible for paying all taxes, duties, shipping
and other such fees on the Software, except taxes on our net income. You
will pay on time: All sums are due within thirty (30) days after the date
of our invoice. Late payments will be subject to interest at 1.5% per
month, or the maximum rate allowable by law, if less. We have the right to
cancel orders and change credit or payment terms if you do not pay in full
and on time and/or if your financial position changes. We can also cancel
this Agreement and/or repossess the Software from your premises for
nonpayment and/or late payment. We or our representative have the right
(at our cost and on a confidential basis to inspect your records relating
to our Software during regular business hours to verify the accuracy of
your reports and License Fee payments. Such inspection will be conducted
no more frequently than annually and with a prior 10-day written notice.
8. Our warranty and liability for the Software are limited.
The Software is provided "AS IS." We do not warrant that the Software is
error-free, or that any errors will be corrected. We warrant the physical
media and physical Documentation for each Software product we provide to
you (but not any media or Documentation distributed by you) to be free of
physical defects in materials and workmanship for a period of 30 days
after it is first delivered to you. If we receive notification within the
warranty period of such physical defects in materials or workmanship, and
we determine that such notification is correct, we will replace the
defective media or Documentation. THE FOREGOING WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES TO YOU OR ANY THIRD PARTY, EXPRESS OR IMPLIED, RELATED TO
THE SOFTWARE OR ANY SERVICES WE MAY PROVIDE, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR ARISING BY STATUTE, LAW OR TRADE DEALING OR USAGE. We are not
liable to you or any third party for incidental, special or consequential
damages for any reason (including loss of data or other business or
property damage), even if foreseeable, and our liability in all events
will not exceed the applicable License Fee that you have paid. You will
require each sublicensee to accept similar warranty and liability limits.
You may not make any warranty or other representation to sublicensees or
others on our behalf. We are not liable for defects in your own
application software, or for your own activities in marketing and
sublicensing the Software. You agree to implement backup and recovery
procedures adequate to prevent loss due to malfunctions.
9. You will purchase training and support services from us.
You will purchase training, technical, Hotline and update support from us,
under the terms of our standard support programs, for yourself and for
your customers that order support from you. You are solely responsible for
installing, maintaining and supporting the Software for sublicensees and
other customers unless otherwise agreed in the Schedule. We have no
obligation to provide support services except under the terms of standard
support programs purchased directly from us, or to deal with any third
party directly. Our support programs are subject to change from time to
time without notice from us.
10. You will respect our copyright in the Software.
You will not copy the Software except as required to demonstrate and
sublicense the Software and develop your applications under the specific
terms of this Agreement, and to make adequate archival copies. You will
put our proprietary and copyright notices on all copies. You may not copy
the Documentation except as specified in the schedule.
11. You will respect our trade secrets and other proprietary rights in the
Software.
You agree that we have and will keep title, copyright, trademarks and all
other proprietary rights in the Software, the Documentation, and all
portions and copies in any form. All distribution of the Software is by
license only, not sale. You will keep the Software in a safe place. You
will use best efforts to ensure that your employees and others with access
to the Software comply with this Agreement. You have no right to use,
examine, re-create, sublicense, or transfer the Software source code,
which is our trade secret. You agree not to alter the Software, or make
any attempt to unlock or by-pass any access-prevention device in the
Software. You may use our trademarks only as necessary to market the
Software.
12. You may not transfer or sublicense the Software except as specifically
allowed under this Agreement.
You may not in any event export to any country under U.S. Commerce
Department restriction, or rent or electronically transmit the Software.
Any attempted assignment, delegation, sublicense or transfer by you of the
Software, this Agreement, or your rights to anyone is
<PAGE> 3
BORLAND No-Nonsense VAR Agreement
- --------------------------------------------------------------------------------
void and terminates this Agreement automatically, unless we have
explicitly given permission in this Agreement or otherwise in writing.
13. This Agreement remains in effect for two years from the Effective Date
below, unless terminated earlier.
After the initial term, this Agreement will renew for successive one-year
periods, unless terminated. We may terminate this Agreement immediately if
you breach it and fail to cure such breach within 30 days after written
notice of breach, or if you enter bankruptcy, insolvency, liquidation or
similar proceedings. Either you or we may terminate this agreement,
without liability and with or without cause, with six (6) months' written
notice, provided that no such termination shall become effective until
after the expiration of the initial two-year term. On termination, you
will return the Software and all copies in your possession, custody and
control to us, give us a final accounting, and pay all outstanding License
Fees and other amounts due. You will also make no further use of the
Software or our trademarks, grant no more sublicenses, and return all
copies of the Software in your possession to us on termination. All
proprietary rights automatically revert to us. Sections 7-8 and 10-14 of
this Agreement will remain in effect. Software sublicenses properly
granted and paid for prior to termination will also remain in effect
according to their terms.
14. The following terms also apply.
This is the full and final agreement between you and us on this subject,
and supersedes any earlier promises, representations or agreements. This
Agreement may only be changed if you and our authorized representative do
so in writing. No inconsistent, additional, or preprinted terms on your
purchase order or other business form will apply. You are an independent
contractor, not our agent, partner, franchisee, joint venturer or
employee. Waivers not given in writing may be revoked at any time without
liability. Invalid provisions do not affect the enforceability of the
others. We are entitled to injunctive relief for violations of our
copyrights, trade secrets or other proprietary rights. Use, duplication,
or disclosure by the U.S. Government of the Software and Documentation
shall be subject to the restricted rights applicable to commercial
computer software (under DFARS 252.227-7013 or FAR 52.227-19, as
applicable). We reserve all rights not granted specifically in this
Agreement. All notices shall be in writing and in English and may be sent
by cable, telecopy, or air mail, return receipt requested, sent to the
attention of the Legal Department at the addresses first set forth above,
and shall be deemed received as follows: cable and telecopy, 24 hours
after transmission; and registered airmail, 10 days after delivery to the
postal authorities by the party serving notice. This Agreement will be
construed, interpreted and governed by the substantive laws of the State
of California. Any legal action arising out of or related to this
Agreement shall be brought only in a state or federal court of competent
jurisdiction located in the Counties of Santa Cruz or Santa Clara,
California.
Borland International, Inc.
Signed: /s/ L.W. Brand
--------------------------------------------
Name: L. W. Brand
--------------------------------------------
Title: V. P. Sales
--------------------------------------------
Effective Date: 9/10/96
SalesLogix Corporation
Signed: /s/ Patrick M. Sullivan
--------------------------------------------
Name: Patrick M. Sullivan
--------------------------------------------
Title: President/CEO
--------------------------------------------
<PAGE> 4
BORLAND No-Nonsense VAR Agreement
Schedule No. 1
- --------------------------------------------------------------------------------
This Schedule is part of the InterBase VAR Agreement ("Agreement") entered into
on ________________ between Borland International, Inc., 100 Borland Way, Scotts
Valley, CA 95066 ("us"), and SalesLogix Corporation 8800 North Gainey Center
Drive Ste. 200 Scottsdale, AZ 85258
______________________________________________________________________ ("you").
1. "Software," and "License Fees"
a. The Software products that you are permitted to use, duplicate and
deploy under Section 4 of the Agreement are the products listed in the
Attachment for which you have paid the applicable License Fee. You must
pay the applicable License Fee for any Software you use.
b. We will furnish to you a master copy of the Software identified in the
paragraph above, in machine-executable form, and one set of end user
documentation, from which copies may be made.
c. Other products and/or versions may be added to this Agreement only if
you and our authorized representative agree to do so in a written
schedule.
d. The License Fees you must pay us for each license you purchase from us
and for each copy of the Software you sublicense to others are set forth
in an Attachment to this Schedule.
e. A "license seat" is defined as the single user version of the product
or the number of clients in the server version of the product. In the
event a single user license seat is subsequently upgraded to a
client/server license seat and the customer of such license seat has paid
the current Customer Annual Support Fee, then no additional License Fees
or Support Fees are payable. If such customer has not paid the current
Customer Annual Support Fee, then you will pay us a Customer Annual
Support Fee for such license seat.
2. Territory.
The "Territory" is worldwide, except the country of Japan, subject to U.S.
Export Control laws.
3. Support Services.
a. You must purchase Update and Hotline Support from us for each Software
license you purchase for your own use. The annual fee for Update Support
will be 12% of the License Fee paid by you for each Software product so
licensed. The annual fee for Hotline Support is our then-current published
price for such Hotline Support.
b. You will offer first-line, Update, Hotline and related technical
support to your customers. You will complete our technical Training
classes and maintain continuing qualification and performance consistent
with our requirements for technical support. You will provide all customer
support to your customers.
c. You will pay us the Customer Annual Support Fee for each license seat
for which a customer purchases the above Support services.
d. You may distribute and install Updates and Maintenance releases to the
Software for each such license seat. Support begins on the first day of
the calendar quarter in which such Support is purchased.
4. Marketing Materials.
You will include the InterBase trademark on the outside of your packages
which contain the Software. In your marketing, advertising and packaging
materials for your application, you will identify the Software as created
by us and in a manner which reflects positively upon the Software and upon
us. You may order marketing materials from us; there may be a standard
charge for certain materials or quantities.
5. Other Terms and Conditions.
a. InterBase Software may not be sold on a standalone basis, and must be
embedded in your application.
b. In the event of change of ownership of either party, this Agreement
shall remain in full force and effect.
c. We will provide an electronic copy of InterBase documentation. You may
copy this documentation or portions of this documentation at no additional
charge to be used solely in conjunction with your application. You must
acknowledge Borland's copyright in any Borland documentation that you
reproduce.
d. You agree to participate in our "InterBase at Work" marketing program,
assisting our marketing department. In documenting your InterBase
application and solution. You agree to allow us to distribute such
articles at no charge to us.
e. All terms of the Agreement are incorporated herein and remain in force
except as specifically changed in this Schedule and Attachment.
f. This offer is valid until September 9, 1996.
<PAGE> 5
BORLAND No-Nonsense VAR Agreement
Schedule No. 1
- --------------------------------------------------------------------------------
Borland International, Inc.
Signed: /s/ L.W. Brand
----------------------------------------
Name: L. W. Brand
----------------------------------------
Title: V. P. Sales
----------------------------------------
Effective Date: 9/10/96
SalesLogix Corporation
Signed: /s/ Patrick M. Sullivan
----------------------------------------
Name: Patrick M. Sullivan
----------------------------------------
Title: President/CEO
----------------------------------------
<PAGE> 6
BORLAND No-Nonsense VAR Agreement
Schedule No. 1
- --------------------------------------------------------------------------------
ATTACHMENT A
SOFTWARE:
Single-user Local InterBase, and
InterBase Client/Server for Windows95 (maximum 10 users), Windows NT, and
NetWare
LICENSE FEES:
Upon execution of this Agreement you will pay us a non-refundable,
non-cancelable Minimum License Payment of $100,000 for the right to copy, use
and deploy the Software with your application.
For the first two years of the term your annual fee for internal Update and
Hotline Support will be deducted from the Minimum License Payment. The internal
Update and Hotline Support is for licenses that you purchased from Borland
directly and the fees for such is defined in Section 4(a) of Schedule 1 of this
Agreement.
As Software license seats are deployed, the License Fees and Customer Annual
Support Fees (optional) set forth below will be deducted from the Minimum
License Payment.
- License Fee per license seat: $*
- Customer Annual Support Fee per seat: $2.00 (at customer's option)
Fees will be deducted from the Minimum License Payment until no balance remains.
Thereafter, you will make additional payments based upon the reports due
quarterly as specified in Section 6 of this Agreement. Payments are due within
30 days from the end of each calendar quarter.
DEVELOPMENT SOFTWARE:
During the initial term of this Agreement, you may order products on Borland's
current U.S. price list directly from Borland for your internal use for
development purposes only at a 50% discount off of the current U.S. list price
of the products, provided that each such order shall be in minimum increments of
$1,000. We will invoice you upon receipt of your purchase order.
CUSTOMER SUPPORT:
Update Support consists of Maintenance releases and Updates, as available, and
Second-line technical support.
Maintenance releases are in-line releases (signified by a change to the number
to right of the decimal in the version number, such as from version 1.0 to
version 1.1).
Updates are new product releases (signified by a change to the number to left of
the decimal in the version number, such as from version 1.0 to version 2.0).
Maintenance releases and Updates where applicable, are intended as replacements
for the prior version of the product and may not be used to increase the total
number of products licensed. You may elect not to install the Maintenance
releases or Updates of a product, but our obligation to provide technical
support for a product will apply only to the current version of the product and
the immediately preceding version.
Second-line support consists of back-up telephone support given to your two
named contacts, after your contacts have expended reasonable efforts to provide
technical assistance to your customers. We will undertake reasonable efforts to
provide technical assistance under this Agreement, but we do not guarantee that
all problems will be solved or that any item will be error free.
We will provide a two day initial InterBase training course at no additional
charge to be performed within 90 days of the effective date of the contract.
Execution Version
Eric D. Duran
/s/ Eric D. Duran
----------------------------------
9-30-96
*Confidential information has been omitted and filed separately with the
Commission.
<PAGE> 7
BORLAND INTERBASE SUPPORT AGREEMENT
- --------------------------------------------------------------------------------
1. Borland ("we") will offer you the Support Services described below for those
InterBase Products you have licensed from Borland.
(i)UPDATE SUPPORT, consisting of Maintenance Releases, in which we will provide
bug fixes, support for new operating system versions, and new Product features,
all as available; Upgrades, in which we will provide new product releases
(signified by a change to the number to the left of the decimal in the version
number) as available; and Technical materials, such as mailings of our Technical
Bulletins and other useful information; and
(ii)TECHNICAL SUPPORT, in which we will answer technical questions from
designated persons about the installation and use of covered Products.
Note that the Maintenance Releases and Upgrades, where applicable, are intended
as replacements for the prior version of the Product and may not be used to
increase the total number of Products licensed. You may elect not to install the
Maintenance Release or Upgrade of a Product, but Borland's obligation to provide
Technical Support for a Product will apply only to the current version of the
Product and the immediately preceding version. After you have installed an
Upgrade or Maintenance Release of a Product, you may archive (but not transfer)
the prior version.
2. You will pay us the applicable Support Fees as set forth on the current
InterBase Price List.
Support Fees must be prepaid.
3. We may change our available Support Services from time to time.
We will undertake reasonable efforts to provide technical assistance under this
agreement, but we do not guarantee that all problems will be solved or that any
item will be error-free. We will provide you with substantially the same level
of service throughout the term of this Agreement. We may from time to time,
however, discontinue Products or versions, stop supporting Products or versions
within a reasonable time after discontinuance, or otherwise discontinue any
support services. We also provide a 30-day limited warranty that the original
Product physical media and physical documentation you purchased are free from
defects in materials and workmanship. THE FOREGOING WARRANTIES ARE IN LIEU OF
ALL OTHER WARRANTIES OR PROMISES TO YOU OR ANY THIRD PARTY, EXPRESS OR IMPLIED,
RELATED TO THE SOFTWARE OR ANY SERVICES WE MAY PROVIDE, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR ARISING BY STATUTE, LAW OR TRADE DEALING OR USAGE. EXCEPT AS
PROVIDED ABOVE, ALL MATERIALS AND SERVICES ARE PROVIDED "AS IS." We are not
liable for incidental, special or consequential damages for any reason
(including loss of data or other business or property damage), even if
foreseeable, and our liability in all events will not exceed the applicable fees
that you have paid us.
4. Adding Products.
You may add newly licensed units of Products to this agreement simply by paying
the applicable support fees for each such unit.
5. This Support Plan will be effective for 1 year.
You and we may extend or terminate this agreement as provided below. At the end
of any one-year term, you may renew this agreement with our consent under the
terms of the Support Plan then in effect by paying the Support Fees in effect at
that time. Either you or we may terminate this agreement for material breach,
including nonpayment, at any time; in the absence of material breach by Borland.
Support Fees are not refundable.
6. The following terms also apply.
This is the full and final agreement between you and us, and supersedes any
promises, representations or agreements relating to the subject of this
agreement. This agreement may only be changed if you and our authorized
representative do so in writing. No inconsistent, additional, or preprinted
terms on your purchase order or other business form will apply. You may not
assign this agreement without our written consent. Any unauthorized assignment
terminates this agreement automatically. The Products, Upgrades, Maintenance
Releases, and Technical Materials are our copyrighted property, and may not be
copied, distributed, or transferred, or otherwise used except as we have
expressly permitted in the relevant license agreement (the terms of which are
incorporated into this agreement by reference) or otherwise in writing.
<PAGE> 8
AMENDMENT 1
TO THE NO-NONSENSE VAR AGREEMENT BETWEEN
INPRISE CORPORATION AND SALESLOGIX CORPORATION
Inprise Corporation, formerly known as Borland International, Inc. ("Inprise")
and SalesLogix Corporation ("SalesLogix") are parties to a No-Nonsense VAR
Agreement dated September 10, 1996, as amended (the "Agreement").
The parties agree to further amend the Agreement as follows:
1. TERM: The term of the Agreement shall be extended for a period of one
year, expiring on September 10, 1999.
2. MINIMUM LICENSE PAYMENT: Upon execution of this Amendment, SalesLogix
agrees to pay Inprise a non-refundable, non-cancelable Minimum License
Payment in the amount of $100,000, for the right to copy, use and deploy
the Software described in Schedule 1, Attachment A with your application.
3. FEES:
As Software license seats are deployed, the License Fees and Customer
Annual Support Fees set forth below will be deducted from the Minimum
License payment.
a. License Fee per license seat: $ *
b. Customer Annual Support Fee per seat: $2.00 (at customer's option)
Fees will be deducted from the Minimum License Payment until no balance
remains. Thereafter, SalesLogix will make additional payments based upon
the reports due quarterly as specified in Section 6 of the Agreement. Such
payments are due within 30 days from the end of each calendar quarter.
5. LIMITED TIME OFFER: This Amendment is only valid if executed by both
parties, and if SalesLogix submits its purchase order in the amount of
$100,000 to Inprise on or before September 30, 1998.
INPRISE CORPORATION SALESLOGIX CORPORATION
By: By: /s/ James E. Valenzuela
------------------------------ -----------------------------------
Print Name: Print Name: James E. Valenzuela
---------------------- ---------------------------
Title: Title: V.P. Finance
--------------------------- --------------------------------
Date: Date: 9/30/98
---------------------------- ---------------------------------
* Confidential information has been omitted and filed separately with the
Commission.
<PAGE> 9
AMENDMENT 2
TO THE NO-NONSENSE VAR AGREEMENT BETWEEN
INPRISE CORPORATION AND SALESLOGIX CORPORATION
Inprise Corporation, formerly known as Borland International, Inc. ("Inprise")
and SalesLogix Corporation ("SalesLogix") are parties to a No-Nonsense VAR
Agreement dated September 10, 1996, as amended (the "Agreement").
The parties agree to further amend the Agreement as follows:
1. MINIMUM LICENSE PAYMENT: Upon execution of this Amendment, SalesLogix
agrees to pay Inprise a non-refundable, non-cancelable License Fee and
Update Support Fee prepayment in the amount of $25,000, for the right to
copy, use and deploy the Software described in Schedule 1, Attachment A of
your application.
2. LICENSE FEES:
As Software license seats are deployed, the License Fees and Customer
Annual Support Fees set forth below will be deducted from the prepayment.
a. License Fee per license seat: $ *
b. Customer Annual Support Fee per seat: $2.00 (at customer's option)
Fees will be deducted from the prepayment until no balance remains.
Thereafter, SalesLogix will make additional payments based upon the
reports due quarterly as specified in Section 6 of the Agreement. Such
payments are due within 30 days from the end of each calendar quarter.
3. LIMITED TIME OFFER: This Amendment is only valid if executed by both
parties, and if SalesLogix submits its purchase order in the amount of
$25,000 to Inprise on or before December 31, 1998.
INPRISE CORPORATION SALESLOGIX CORPORATION
By: By: /s/ James E. Valenzuela
------------------------------ -----------------------------------
Print Name: Print Name: James E. Valenzuela
---------------------- ---------------------------
Title: Title: V.P. Finance
--------------------------- --------------------------------
Date: Date: 12/31/98
---------------------------- ---------------------------------
* Confidential information has been omitted and filed separately with the
Commission.
<PAGE> 10
INPRISE CORPORATION - SINGLE ORDER / LIMITED RIGHT TO COPY SOFTWARE AGREEMENT
1. CUSTOMER AND DATE This Single Order / Limited Right to Copy Software
Agreement ("AGREEMENT") is between Inprise Corporation, a Delaware corporation
with an address of 100 Enterprise Way, Scotts Valley, California 95066,
("INPRISE") and Saleslogix Corporation, its parent, subsidiaries and affiliates,
a non-profit organization, with an address of 8800 N. Gainey Ranch Drive, Suite
200, Scottsdale, AZ 85258 ("CUSTOMER"). The "EFFECTIVE DATE" of this Agreement
is DECEMBER 31, 1998.
2. INPRISE SOFTWARE
The Inprise software set forth at the end of this Agreement will be delivered to
Customer at the following address: 8800 N. Gainey Ranch Drive, Suite 200,
Scottsdale, AZ 85258 ("SITE"). Such software and any copies of the software
which Customer is authorized to make pursuant to SUBSECTION 2.3 below
("SOFTWARE") shall be used by Customer solely to fulfill its own systems
operations needs under the terms of the standard end-user license and limited
warranty statement ("LICENSE TERMS") included in the normal packages of the
Software and included as part of this agreement attached hereto as Exhibit A.
Except for the license provided for in this Agreement and the License Terms,
Inprise and/or its suppliers retain any and all right, title and interest in and
to the Software.
2.2. Inprise will ship one (1) copy of the Software F.O.B. Inprise's facility on
a carrier selected by Inprise. All shipping costs will be the responsibility of
Customer.
2.3. Upon payment of the applicable license fees, Inprise grants Customer the
right to copy the Software up to the number of copies set forth at the end of
this Agreement ("LICENSED COPY(IES)"). Customer may order additional Licensed
Copies of the Software by paying to Inprise the applicable Licensed Copy fee as
specified in Subsection 4.1 below. Any obligations under the applicable License
Terms with respect to the physical diskettes and documentation shall not apply
to the Licensed Copies. Each Licensed Copy made by Customer shall include the
Software's copyright notice.
2.4. Customer's use of the Software shall be subject to all of the disclaimers
and exclusions of liability set forth in the License Terms. SPECIFICALLY, THE
SOFTWARE AND THE ACCOMPANYING WRITTEN MATERIALS ARE PROVIDED "AS IS" WITHOUT
EXPRESS OR IMPLIED WARRANTY OF ANY KIND. INPRISE FURTHER DISCLAIMS ALL IMPLIED
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF TITLE,
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. INPRISE
DOES NOT WARRANT THAT THE INPRISE SOFTWARE WILL BE ERROR FREE OR WILL OPERATE
WITHOUT INTERRUPTION. THE ENTIRE RISK ARISING OUT OF THE USE OR PERFORMANCE OF
THE SOFTWARE AND ACCOMPANYING WRITTEN MATERIALS REMAINS WITH CUSTOMER. IN NO
EVENT WILL INPRISE OR ITS SUPPLIERS BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF THE USE,
INABILITY TO USE, OR PERFORMANCE OF THE SOFTWARE.
3. MAINTENANCE AND SUPPORT
3.1. Throughout the Term, Inprise will provide maintenance to Customer for the
Software. Maintenance entitles Customer to (a) receive one master copy of
Upgrades which may become commercially available from Inprise during the
Maintenance Term, (b) duplicate and install Upgrades for use at the Sites up to
the number of Licensed Copies/Software for which the applicable maintenance fees
have been paid. "UPGRADE" is a revised version of the Software with the
identical name, on the identical platform and shall include both major and minor
version number releases. "Maintenance term" shall mean for a one year period of
time and may be extended from time to time by the parties.
3.2. Provided Customer has paid the applicable annual support fee, throughout
the Term, Inprise will provide Customer with Developer Assist Technical Support
for the Software. "DEVELOPER ASSIST TECHNICAL SUPPORT" entitles Customer to
contact Inprise's technical support organization regarding TWELVE (12) INCIDENTS
PER YEAR. An "INCIDENT" means a single support question which results from a
reproducible failure or deviation in the Software to perform as specified in the
manuals accompanying the Software and the reasonable effort of Inprise to
resolve it. A
<PAGE> 11
single support question is an issue that cannot be broken down into subordinate
issues. Before an Incident is opened for Customer, Customer and an Inprise
technical support representative must agree on what the issue is and the
parameters for a mutually acceptable solution. An Incident may require multiple
phone calls and off-line research
3.3. Inprise reserves the right to discontinue such maintenance and support if
the Software is no longer made generally commercially available by Inprise or
Inprise has stopped supporting or maintaining the Software.
3.4. Election of Maintenance and Support shall be at the discretion of Customer.
In the event Customer elects to decline the annual maintenance and support, such
election shall not impair customer's other rights with respect to continue use
of the Software licensed hereunder.
4. FEES
4.1. In consideration of the license granted in SECTION 2 above, Customer
will pay to Inprise a one-time, nonrefundable "LICENSE FEE" in the amount of
THIRTY THOUSAND DOLLARS ($30,000). For each additional Licensed Copy specified
in SUBSECTION 2.3 above, Customer shall pay to Inprise a one-time, nonrefundable
License Fee equal to 50% of the license fee shown on the then current Inprise
Customer Service Dual Price List.
4.2. In consideration of the maintenance services described in SUBSECTION
3.1 above, Customer will pay to Inprise a one-time, nonrefundable annual
"MAINTENANCE FEE" in the amount of FIVE THOUSAND DOLLARS ($5,000). Election of
maintenance and support services shall not be a requirement of customer's
obtaining or continuing any use of the licenses granted hereunder.
4.3. All up front fees payable within thirty (30) days of the date of
receipt of invoice by Customer. For additional Licensed Copies, the License Fees
and Maintenance Fees shall be paid prior to Customer making such Licensed Copy.
Customer will pay all sales, use, and other taxes or duties (except our income
tax) that may be required as a result of this Agreement.
5. YEAR 2000
Inprise represents and warrants that the then-current version of the
Software shall be Year 2000 Compliant. "YEAR 2000 COMPLIANT" shall mean all
calendar year representations used within the Software which, when operated on
(including, but not limited to, arithmetic, comparison and sorting operations)
before, during and after the actual calendar year 2000 A.D. shall not produce
subsequent operations and/or generated output which yield results in variance
with the normal course of operations of the Software or error conditions which
are the direct result of the use of a calendar year representation. The
foregoing warranty shall not apply (i) to a prior version of the Software if a
more recent version of the Software is Year 2000 Compliant; and (ii) to the
extent the Software is non-Year 2000 Compliant as a result of the combination,
operation or use of the Software with data, hardware or software not provided by
Inprise, if the Software would have been Year 2000 Compliant but for such
combination, operation or use.
IN THE EVENT THE SOFTWARE IS NOT YEAR 2000 COMPLIANT, INPRISE SHALL HAVE THE
OPTION, AT ITS EXPENSE TO: (A) MODIFY THE SOFTWARE TO MAKE IT YEAR 2000
COMPLIANT, OR (B) REFUND TO CUSTOMER THE PRO-RATED FEES, BASED ON A THREE YEAR
LIFE, PAID FOR SUCH SOFTWARE. THE FOREGOING STATES INPRISE'S ENTIRE LIABILITY
AND CUSTOMER'S EXCLUSIVE REMEDIES FOR ANY BREACH OF THE LIMITED WARRANTY FOR THE
OR SOFTWARE SET FORTH IN SUBSECTION 5.1.
5.3. OTHER THAN THE LIMITED WARRANTIES SET FORTH IN SUBSECTION 5.1 AND THE
LICENSE TERMS THE SOFTWARE AND THE ACCOMPANYING WRITTEN MATERIALS ARE PROVIDED
"AS IS" WITHOUT EXPRESS OR IMPLIED WARRANTY OF ANY KIND. INPRISE FURTHER
DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF TITLE, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. INPRISE DOES NOT WARRANT THAT THE SOFTWARE WILL BE ERROR
FREE OR WILL OPERATE WITHOUT INTERRUPTION. THE ENTIRE RISK ARISING OUT OF THE
USE
<PAGE> 12
OR PERFORMANCE OF THE SOFTWARE AND ACCOMPANYING WRITTEN MATERIALS REMAINS WITH
CUSTOMER.
6. INFRINGEMENT INDEMNITY
Inprise will defend you against any claims by third parties of infringement of
United States copyrights arising from your use, as permitted herein, of any
Product as furnished by Inprise and pay any damages awarded. Inprise obligations
are contingent upon you notifying Inprise promptly of any notice of any actual
or threatened claim or suit; giving Inprise the exclusive right to control the
defense and settlement of such claim or suit; and giving your full cooperation
for the defense of same. Following notice of a claim or a threatened claim,
Inprise may, in its discretion and at its option, procure for you the right to
continue using any Product or may replace or modify any Product to make it
non-infringing. If Inprise determines that none of these alternatives is
practical, Inprise may refund the license fees paid by you hereunder for the
affected Products (less a charge for depreciation on a three year, straight-line
basis) and accept the return of the affected Products.
Inprise will have no liability for any claim of infringement of any third party
right that is caused by (i) your use of any Product with non-Inprise software,
products or data if such claim would have been avoided by exclusive use of the
Product; (ii) modification of the Product by anyone other than Inprise if such
claim would have been avoided by use of the unmodified Product; or (iii) by use
of other than the most current release of the Product.
6.3. This Section 6 states Inprise's entire liability to you for actual or
claimed infringement of intellectual or proprietary rights.
7. GENERAL
7.1. Either party shall have the right to terminate this Agreement if the
other party materially defaults on any of its obligations hereunder, unless
within thirty (30) days after written notice of such default, either party cures
the default. The software is subject to U.S. Commerce Department export
restrictions.
7.2. Use, duplication, or disclosure of the Licensed Copies by the U.S.
Government is subject to the restricted rights applicable to commercial computer
software (under FAR 52.227-19 and DFARS 252.227-7013).
7.3. Customer may not sublicense, assign or transfer this Agreement except
to an entity that succeeds to all or substantially all of Customer's business or
assets.
7.4. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
7.5. This Agreement and the applicable License Terms represents the entire
agreement between the parties and supersedes any other communications or
advertising with respect to the Software hereunder. This Agreement may not be
modified except in writing and signed by both parties.
IN WITNESS WHEREOF, Inprise and Customer have caused this Agreement to be
entered into by their duly authorized representatives as of the Effective Date.
CUSTOMER: SalesLogix Corp. INPRISE CORPORATION
By: /s/ James E. Valenzuela By:
--------------------------------- -----------------------------------
Print Name: James E. Valenzuela Print Name:
-------------------- ----------------------------
Title: V.P. Finance Title:
------------------------------- ---------------------------------
Date: 12-31-98 Date:
-------------------------------- ----------------------------------
<PAGE> 13
INPRISE CORPORATION - SINGLE ORDER / LIMITED RIGHT TO COPY SOFTWARE
AGREEMENT (DESCRIPTION)
I. SOFTWARE DESCRIPTION INFORMATION
<TABLE>
<CAPTION>
QUANTITY SKU SOFTWARE DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
1 HDA1340WWFS180 Delphi 4.0 Client Server Suite for Windows NT
HDB1340WW1018P
29 Licensed Copies Delphi 4.0 Client Server Suite for Windows NT
</TABLE>
II. MAINTENANCE DESCRIPTION INFORMATION
<TABLE>
<CAPTION>
QUANTITY SKU SOFTWARE DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
30 Maintenance for Delphi 4.0 Client Server Suite
for Windows NT
</TABLE>
IV. TOTAL FEES DUE ON THE EFFECTIVE DATE
<TABLE>
<S> <C>
License Fee $ *
Maintenance Fee $ 5,000
-------
TOTAL $ *
</TABLE>
* Confidential information has been omitted and filed separately with the
Commission.
<PAGE> 1
Exhibit 10.15 - OEM License Agreement
- --------------------------------------------------------------------------------
IMP COMPUTER SERVICES, INC.
OEM LICENSE AGREEMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Agreement is made as of June 28, 1996 (the "Effective Date") between
Seagate Software Information Management Group, Inc. ("IMG"), a British Columbia,
Canada, corporation, and Opis Corporation ("OEM"), an Iowa corporation, with
reference to the following facts.
- --------------------------------------------------------------------------------
A. IMG has developed and is the owner of certain report writing and related
software products. OEM is a manufacturer and/or reseller of certain
computer hardware and/or software products.
B. OEM wishes to obtain from IMG the right to market and distribute IMG's
software products with OEM's products, on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
1.1. "Bundled Products" shall mean combinations of copies of IMG Products
and OEM Products sold to customers as single packages.
1.2. "IMG Products" shall mean, collectively, the software programs
identified in Exhibit A attached hereto, along with the
Documentation, if applicable, as well as an y modifications,
enhancements, and derivative works thereof as may be provided by IMG
or produced by OEM under the terms of this Agreement.
1.3. "Documentation" shall mean the user manuals, instructions, and other
written materials made available by IMG in printed or electronic
format to assist in the use of the IMG Products.
1.4. "End User License" shall mean a license agreement between OEM and
any end user to whom OEM sublicenses any IMG Products.
1.5. "Master Copy" shall mean an original copy of a IMG Product on
appropriate media for use by OEM for internal purposes only in
accordance with the terms hereof.
1.6. "OEM Products" shall mean the computer hardware and/or software
products which are identified on Exhibit B attached hereto.
1.7. "Prepackaged Copy" shall mean a copy of a IMG Product which is
packaged by IMG before delivery to OEM, for resale by OEM in
accordance with the terms hereof.
1.8. "Trademarks" includes IMG's trademarks, service marks, tradenames,
and service names.
2. GRANT OF RIGHTS
2.1. Grant of License. Subject to the terms and conditions of this
Agreement, IMG hereby grants OEM during the term of this Agreement a
nonexclusive, nontransferable, worldwide limited license to
reproduce, market, distribute and sublicense IMG Products to OEM's
customers, but only in accordance with the terms herein.
2.2. OEM Election.
(a) OEM shall elect, by purchase order or other written notice to
IMG, whether to exercise its rights hereunder by using a
Master Copy, or by distributing Prepackaged Copies, or by some
specified combination of both such means.
(b) If OEM elects to use a Master Copy, IMG shall deliver a Master
Copy to OEM for each IMG Product as to which a Master Copy is
ordered. OEM shall safeguard all Master Copies and may use
them only to reproduce IMG Products at locations approved by
IMG in writing, for resale in accordance herewith. OEM shall
package all such copies made from Master Copies, with such
Documentation, IMG's form of end user license agreement per
Exhibit C, and/or other IMG materials and Trademarks,
according to such requirements as IMG may prescribe.
(c) If OEM elects to distribute Prepackaged Copies, IMG shall sell
and deliver such Copies to OEM for resale herein. OEM may not
open, modify, or reproduce any Prepackaged Copy or its
contents, including without limitation IMG's end user license
and registration card included in each package.
2.3. Bundled Products. OEM may market, distribute and sublicense IMG
Products ONLY (1) as part of Bundled Products, or (2) directly to
existing registered end users of OEM Products. The Sublicenses
granted under this agreement limit the sublicensee to use of the IMG
Products only with OEM products and the data related specifically to
the Bundled Products. OEM shall cause all distributors, resellers,
and others to whom it sells Bundled Products (other than end users)
to distribute and resell them only as Bundled Products.
2.4. Ownership of Software. OEM acknowledges that the software programs
embodied in the IMG Products are
116
<PAGE> 2
and shall remain the sole and exclusive property of IMG.
3. GENERAL OBLIGATIONS OF OEM
3.1. End User Licenses. As to each IMG Product which OEM markets,
distributes or sublicenses, OEM shall secure the end user's consent
to an End User License which provides that the end user
("Sublicensee") may use the IMG Products only under license terms
and conditions which include, at a minimum those set forth in
Exhibit C attached hereto.
3.2. IMG's Trademarks. Except to any extent which may be expressly
authorized under terms set forth in Exhibit D hereto, OEM shall not
delete or in any manner alter the Trademarks or other intellectual
property rights notices of IMG and IMG's suppliers, if any appearing
on the IMG Products as delivered to OEM. As a condition of the
license rights granted to OEM in this Agreement, OEM shall reproduce
and display such Trademarks and notices on each copy of IMG
Products. If OEM adopts and uses its own trademarks to identify the
Bundled Products, it shall state in all marketing, advertising, and
packaging materials that the IMG Products are the technology of IMG.
OEM shall cooperate fully with IMG in the defense and protection of
the Trademarks, and shall promptly advise IMG of the use of any mark
infringing any of the Trademarks.
3.3. Marketing. OEM shall make no representations or warranties
concerning the IMG Products, except as IMG may itself provide or
approve in writing.
3.4. OEM's Business Practices. OEM shall (a) comply with all applicable
laws and regulations, (b) avoid deceptive, misleading or unethical
practices.
4. PAYMENTS, DELIVERY, TAXES
4.1. Orders, Payments and Payment Terms. OEM shall order IMG Products
according to IMG's standard procedures, and shall pay IMG the
payments and fees, on the terms and conditions, set forth in Exhibit
E.
4.2. Taxes and Costs. All amounts payable hereunder are exclusive of all
sales, use value-added, withholding and other taxes and duties. OEM
shall pay all shipping and transportation charges, taxes, duties and
other fees imposed on product purchases and sales hereunder. In the
event IMG pays any such amounts, OEM shall reimburse IMG and they
shall be added to the invoiced amounts as separate charges.
5. REPORTS AND AUDITS
5.1. Payment Reports. Within 20 days after the close of each calendar
quarter, OEM will deliver to IMG a report (the "Quarter Report")
which will provide all information reasonably required by IMG for
computation and/or confirmation of the payments, if any, due or
credited to IMG for such quarter.
5.2. Audits. During the term of this Agreement and for one (1) year after
termination or expiration, OEM will maintain complete records
regarding its distribution and sublicensing of the IMG Products to
each of its customers. Upon reasonable notice to OEM IMG may audit,
at IMG's expense, OEM's books and records to determine its
compliance hereunder. In the event any such audit reveals that OEM
has underpaid IMG by an amount greater than 5% of the amounts due
IMG in the period being audited, or that OEM has knowingly breached
any material obligation hereunder, then, in addition to such other
remedies as IMG may have, OEM shall pay or reimburse to IMG the cost
of the audit.
6. MAINTENANCE SUPPORT
6.1. Customer Support By OEM. OEM will provide direct first level
technical support for IMG Products to end users acquiring them from
OEM or OEM's customers. OEM's support will include, but not
necessarily be limited to answering product use questions,
diagnosing problems, and using reasonable efforts to provide
solutions to problems.
6.2. IMG's Support. OEM will designate one of its employees as its
technical contact person, to whom IMG will provide technical support
for IMG Products by telephone free of charge, provided that OEM has
during the preceding 12-month period paid royalties and fees to IMG
in an amount equal to or greater than the minimum fee amount set
forth in Exhibit E. If OEM has not met the minimum fee amount, then
OEM shall pay IMG for any technical support at the rate of $150 per
hour.
7. REPRESENTATIONS AND WARRANTIES
7.1. OEM Warranties. OEM represents and warrants that: (a) OEM has the
unrestricted right and authority to enter into and perform this
Agreement, (b) no consent of any other person or entity is needed to
market and distribute the OEM Products, in combination with the IMG
Products, as contemplated hereunder, and (c) its combination of the
IMG Products and the OEM Products in a Bundled Product does not and
will not violate any applicable laws, including without limitation
any applicable competition or antitrust laws.
7.2. IMG Limited Warranties. IMG warrants to OEM that during the 90 days
following the delivery of any Master Copy to OEM or the delivery of
any Prepackaged Copy to an end user, as applicable: (a) the IMG
Products will perform substantially in accordance with IMG's
applicable product documentation in all material respects; and (b)
the storage media containing the IMG Products will be free from
defects in materials and workmanship. In the event the IMG Products
or storage media fail to conform to such warranty, as OEM's sole and
exclusive remedy for such failure IMG will, at IMG's option and
without charge to OEM, repair or replace such IMG Products or
storage media, provided the nonconforming item is returned to IMG
within such warranty period.
7.3. DISCLAIMER. EXCEPT AS SET FORTH IN WRITING IN THIS AGREEMENT, IMG
MAKES NO PERFORMANCE REPRESENTATIONS,
117
<PAGE> 3
WARRANTIES, OR GUARANTEES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, WITH RESPECT TO THE IMG PRODUCTS AND ANY SERVICES COVERED
BY OR FURNISHED PURSUANT TO THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY (A) OF MERCHANTABILITY, (B) OF
FITNESS FOR A PARTICULAR PURPOSE, OR (C) ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE.
8. IMG'S INTELLECTUAL PROPERTY
8.1. Limited Rights. OEM shall not acquire any right to any of IMG's
Trademarks, or its copyrights, patents, trade secrets, commercial
symbols, goodwill, or other form of its intellectual or commercial
property. OEM shall not use IMG's Trademarks in any manner, except
only to identify the IMG Products and to identify itself as an
authorized distributor of IMG, in a form prescribed or approved from
time to time by IMG in writing. IMG may from time to time
discontinue or modify its Trademarks, add new Trademarks, and revise
these instructions, to protect the standards of quality established
for IMG's goods and services marketed and/or licensed under its
Trademarks.
8.2. Protection of Trademarks. IMG shall have sole and exclusive right to
protect and defend the Trademarks, at its sole cost and expense. IMG
shall not be liable to OEM for any loss of damage suffered by OEM as
a result of the use of the expense. IMG shall not be liable to OEM
for any loss or damage suffered by OEM as a result of the use of the
Trademarks, any litigation or proceeding involving the Trademarks,
or any failure by IMG to protect or defend the Trademarks.
8.3. Modifications. Except as may be expressly provided in Exhibit D
hereto, OEM shall not copy, modify, enhance, or make derivative
works of the IMG Products. However, in no event shall OEM remove or
alter the provision for an electronic registration capture screen
which will appear when any end user first accesses the IMG Products.
Provisions will be made to have the software pre-registered with
Opis. Any copies, modifications, enhancements and derivative works
shall belong to IMG and OEM hereby assigns all rights to them
(including moral rights) to IMG.
8.4. Reverse Engineering, Source Code. OEM shall not reverse engineer or
decompile any IMG Products.
8.5. Confidential Information.
(a) As used herein, "Confidential Information" shall mean all
information concerning either party (the "disclosing party")
to which the other party (the "receiving party") is provided
access by virtue of this Agreement or its activities
hereunder, including without limitation source code, technical
data, sales information, quantity and kind of IMG Products or
OEM Products marketed or sold, prices and methods of pricing,
marketing techniques and plans, returns, unannounced products,
product and process information, and such other information
which, if disclosed to others, might be competitively
detrimental to the disclosing party. Confidential Information
shall not include any information which has been publicly
disseminated in writing by the disclosing party, which the
receiving party can show it knew prior to the disclosing
party's disclosure hereunder, or which is rightfully received
by the receiving party from a third party without restriction.
(b) During the term hereof and at all times thereafter, the
receiving party shall maintain the Confidential Information of
the disclosing party in strictest confidence, shall not
disclose it to any third party, and shall use it only as
necessary to perform hereunder. The receiving party shall
cause each of its officers, directors, employees, and agents
to restrict disclosure and use of such Confidential
Information in like fashion, and shall be responsible for any
wrongful disclosure or use by any of them.
(c) In the event any court or other authority orders the receiving
party to disclose any Confidential Information of the
disclosing party, the receiving party shall use its best
efforts to protect its confidentiality and shall forthwith
notify the disclosing party thereof to enable it to do
likewise. At the termination of this Agreement, the receiving
party shall promptly return all tangible Confidential
Information to the disclosing party.
9. INDEMNIFICATION
9.1. Infringement Claims. If an action is brought against OEM claiming
that IMG Products or any part thereof infringes any Canadian or
United States patent, copyright or trade secret rights of a third
party, IMG shall defend OEM at IMG's expense and shall pay the
damages and costs finally awarded against OEM in the action, but
only if (a) OEM notifies IMG promptly upon learning that the claim
might be asserted, (b) IMG has sole control over the defense of the
claim and any negotiation for its settlement or compromise, and (c)
OEM takes no action that, in IMG's reasonable judgment, impairs
IMG's defense of the claim.
9.2. IMG's Options. If OEM's use of any IMG Products is enjoined, or if
IMG wishes to minimize its liability hereunder, IMG may, at its
option and expense, and as a complete remedy to OEM, either (a)
substitute equivalent non-infringing software for the infringing
item, (b) modify the infringing item so that it no longer infringes
but remains functionally equivalent, (c) obtain for OEM the right to
continue marketing and sublicensing such item, or (d) if none of the
foregoing is reasonably feasible, accept a return of the IMG
Products which are subject to the injunction and refund to OEM the
amounts paid by OEM to IMG with respect to those copies which are
returned, less reasonable depreciation, plus shipping costs paid by
OEM. The
<PAGE> 4
indemnity in Section 9.1 will not apply if and to the extent that
the infringement claim results from (a) a correction or modification
of the IMG Products not provided by IMG, (b) a failure to promptly
install an update provided by IMG, or (c) the combination of the IMG
Products with other software not provided by IMG.
9.3. LIMIT. THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATION OF
IMG WITH RESPECT TO INFRINGEMENT OR CLAIMS OF INFRINGEMENT, BY THE
IMG PRODUCTS, OF ANY PATENT, COPYRIGHT, TRADE SECRET OR OTHER
INTELLECTUAL PROPERTY RIGHT.
9.4. Indemnification by OEM. OEM shall defend, indemnify and hold IMG and
its affiliated companies harmless from any and all claims by any
other party (including reasonable attorneys' fees and costs of
litigation) resulting from OEM's own breaches, acts, omissions or
misrepresentations, including but not limited to OEM's combining (or
its authorizing others to combine) the IMG Products with any
products not provided by IMG.
10. LIMITATION OF LIABILITY
EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY IN SECTION 9, THE LIABILITY
OF IMG AND ITS AFFILIATED ENTITIES UNDER THIS AGREEMENT TO OEM, REGARDLESS
OF THE BASIS OF LIABILITY OR THE FORM OF ACTION, SHALL IN NO EVENT EXCEED
THE TOTAL AMOUNTS PAID TO IMG BY OEM, NET OF ALL DISCOUNTS, REBATES, AND
REFUNDS, FOR THE IMG PRODUCTS DIRECTLY CAUSING THE LIABILITY. IN NO EVENT
SHALL IMG OR ITS AFFILIATED ENTITIES BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE GOODS BY ANYONE, OR FOR INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL, OR OTHER DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH OF
CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT IMG HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THE ESSENTIAL PURPOSE OF THIS SECTION
IS TO LIMIT THE POTENTIAL LIABILITY OF IMG AND ITS AFFILIATED ENTITIES
ARISING OUT OF THIS AGREEMENT.
11. TERM AND TERMINATION
11.1. Term. The term of this Agreement shall commence on the Effective
Date hereof and shall expire two years thereafter unless sooner
terminated in accordance herewith.
11.2. Minimum Fees. IMG may terminate this Agreement on written notice to
OEM if OEM fails for any reason, including any reason out of its
reasonable control, to pay the minimum annual fees specified in
Exhibit E.
11.3. Payment Breach. Except as otherwise provided herein, IMG may
terminate this Agreement prior to its expiration in the even OEM
fails to cure any breach of a payment obligation hereunder within 10
days after written notice from IMG describing the breach.
11.4. Termination Cause. Either party may terminate this Agreement at any
time if (a) a receiver is appointed for the other party or its
property, (b) the other party makes an assignment for the benefit of
its creditors, (c) proceedings are commenced by or for the other
party liquidates or dissolves or attempts to do so, (e) the other
party assigns or purports to assign this Agreement in breach of its
provisions, or (f) the other party commits any other breach of a
material obligation hereunder which it fails to cure within 20 days
of written notice or which is by its nature incurable.
11.5. Obligations on Termination. Termination of this Agreement will not
relieve either party from fulfilling its obligations which by their
terms or nature survive termination. Upon termination of this
Agreement for any reason: (a) OEM shall immediately cease using and
shall deliver to IMG, any unused sales literature and other written
information and materials supplied by IMG pursuant to this Agreement
or which contain IMG's Trademarks; (b) OEM shall immediately cease
to identify itself as an authorized distributor for IMG or otherwise
affiliated in any manner with IMG; and (c) IMG shall have the
option, but not the obligation, in its discretion, to reacquire from
OEM all or part of the IMG Products and Documentation, including
translated versions, which are then held on OEM in inventory and are
not committed to sales. IMG shall exercise such option by written
notice to OEM within 30 days after termination. IMG shall pay for
such IMG Products at the prices originally paid by OEM in acquiring
them from IMG.
12. MISCELLANEOUS
12.1. Assignment. This Agreement may be assigned by IMG to any entity
which assumes its obligations and acquires ownership of or the right
to use and license the IMG Products. This Agreement has been entered
into by IMG in reliance upon the reputation of OEM and its
management, and accordingly may not be assigned or encumbered by OEM
without IMG's prior written consent, not unreasonably withheld. Due
to the importance of OEM's ownership and management, the sale,
transfer or assignment of 50% or more of OEM's capital stock,
partnership interests, or voting rights shall be deemed an
assignment of this Agreement.
12.2. Independent Contractors. The relationship of IMG and OEM established
by this Agreement is that of independent contractors.
12.3. Entire Agreement. This Agreement constitutes the entire agreement
of the parties and supersedes any prior and contemporaneous oral or
written understanding as to the subject matter hereof. Each party
acknowledges that it is entering into this Agreement as a result of
its own independent investigation and not as a result of any
representation of the other party not contained herein.
12.4. Amendments; Waivers. This Agreement may be modified only by a
writing signed by the party to be charged. A waiver of any provision
or breach is no waiver of any other provision or breach.
<PAGE> 5
12.5. Force Majeure. Except as otherwise provided in Section 11.2, neither
party shall be liable to the other for its failure to perform any of
its obligations hereunder during any period in which such
performance is delayed by circumstances beyond its reasonable
control including, but not limited to earthquake, fire, flood, war,
embargo, strike, riot, or the intervention of any governmental
authority.
12.6. Import and Export Controls. OEM shall comply with all applicable
laws, including export, re-export and foreign policy controls and
restrictions which may be imposed by the Canadian or United States
government. OEM shall take all necessary actions and precautions to
ensure that its customers do not contravene such Canadian or U.S.
laws or regulations.
12.7. Publicity. The terms of this Agreement are confidential. No press
release or other like publicity regarding this Agreement may be made
without the other party's approval.
12.8. Notices. All notices and other communications hereunder shall be
given in writing and delivered (a) by personal delivery, by prepaid
overnight or courier service to the addresses set forth herein, or
(b) by facsimile to such facsimile number as may be provided in
writing by a party. Notices are deemed given on receipt or attempted
delivery (if receipt is refused).
12.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard
to its conflicts of laws rules.
12.10. Dispute Resolution.
(a) Except as otherwise provided below, any controversy or claim
arising out of or relating to this Agreement shall be
submitted to final and binding arbitration in San Francisco,
California, in accordance with the commercial rules of the
American Arbitration Association ("AAA"). The arbitration
shall be before a single arbitrator, except that in the event
the amount in controversy exceeds $100,000 the arbitration
shall be before three (3) arbitrators and the decision of any
two of them shall be binding. If not mutually agreed upon, the
arbitrator(s) shall be selected according to AAA rules from a
list, prepared by the AAA, of persons having expertise in the
subject matter. Judgment upon the award may be entered in any
court having jurisdiction thereof. This provision is
self-executing, and in the event that either party fails to
appear at any properly noticed arbitration proceeding, an
award may be entered against such party notwithstanding said
failure to appear.
(b) Notwithstanding the foregoing: (1) any claim relating to any
of the parties' confidential information, the Trademarks, or
other proprietary technology or intellectual property shall
not be determined by arbitration, but only by a court located
in San Francisco, California to whose jurisdiction the parties
hereby consent; and (2) each party acknowledges that any
breach of its obligations under this Agreement with respect to
the proprietary rights or confidential information of the
other party will cause the other party irreparable harm, and
therefore the non-breaching party will be entitled to
equitable relief in addition to all other remedies provided by
this Agreement or available at law or in equity, in any court
of competent jurisdiction.
12.11. Attorney's Fees. In the event of any litigation or arbitration hereunder,
the arbitration or court shall award costs and reasonable attorney's fees
to the prevailing party.
12.12. Severability. The terms of this Agreement are severable. If any term
hereof is held invalid, illegal, or unenforceable for any reason
whatsoever, such term shall be enforced to the fullest extent permitted by
applicable law, and the validity, legality, and enforceability of the
remaining terms shall not in any way be affected or impaired thereby.
SEAGATE SOFTWARE INFORMATION OPIS CORPORATION
MANAGEMENT GROUP, INC.
1095 West Pender Street, 4th. Floor 1101 Walnut Street
Vancouver, B.C. Des Moines, Iowa
Canada V6E2M6 USA 50309-3425
By: By:/s/ Saulene Richer
---------------------------------- -----------------------------------
Its: Its: President
---------------------------------- ----------------------------------
6/28/96
<PAGE> 6
EXHIBIT A
IMG PRODUCTS
1. Programs
English, French, German and Spanish language, when they become available,
custom-specific builds of:
Crystal Reports Version 4.5 for Windows (16-bit or 32-bit)
2. Documentation
English Language version of Crystal Reports User Manuals, in electronic
format
EXHIBIT B
OEM PRODUCTS
Opis Support Express
<PAGE> 7
EXHIBIT C
MINIMUM TERMS OF OEM END USER LICENSE
Each OEM End User License must contain the following minimum terms and
conditions applicable to IMG Products (modified as necessary for multi-copy
packages):
1. Only a personal, non-transferable and non-exclusive right to use the
executable version of the product on a single central processing unit is
granted to end user.
2. The license granted to the end user is further qualified, in that this
copy of IMG software may only be used with the third party product with
which it was provided. Accessing data that is not created by, or used by,
the third party product is in violation of this end user license.
3. End user will not copy the product except as necessary to use the OEM
system and for back-up and archival purposes.
4. Except as stated above, end user is not granted any right (whether by
license, ownership or otherwise) in or to any proprietary rights in the
product.
5. No title to the proprietary rights in the product or documentation is
transferred to end user.
6. End user will not transfer the product to a third party unless end user
transfers all copies of the product and ceases all use of the product, and
the transferee agrees to be bound by the terms and conditions imposed on
end user with respect to the product.
7. End user will not translate, reverse compile or disassemble the product.
8. End user will not remove, alter or destroy any form of copyright notice,
proprietary markings or confidential legends placed upon or contained
within the product.
9. End user will not export or re-export the product without the appropriate
United States or foreign government licenses.
10. End user is notified that IMG Computer Services, Inc., a British Columbia,
Canada, corporation ("IMG") is a third-party beneficiary to the end user
license to the extent it relates to use of the IMG product. Such
provisions are made expressly for the benefit of IMG and are enforceable
by both OEM and IMG.
11. IMG makes no warranty to end user of any kind with respect to the product,
express or implied, including without limitation, the implied warranties
of merchantability, fitness for a particular purpose and non-infringement
of third party rights.
12. If the produce is acquired under the terms of: (i) a DOD contract:
the Government's rights to use, modify, reproduce, release or disclose
the software or accompanying documentation are subject to the
restrictions set forth in this license agreement pursuant to DFARS
227.7202; (ii) a Civilian agency contract: the Government's rights to
use, modify, reproduce, release or disclose the software or
accompanying documentation are subject to the restrictions of
paragraphs (a)-(d) of the Commercial Computer Software--Restricted
Rights clause at FAR 52.227-19 and the restrictions set forth in this
license agreement.
<PAGE> 8
EXHIBIT D
PERMITTED MODIFICATIONS
OEM SHALL NOT ALTER IMG'S TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS
NOTICES APPEARING ON THE IMG PRODUCTS AS DELIVERED TO OEM, AND SHALL REPRODUCE
ALL SUCH TRADEMARKS AND NOTICES ON EACH COPY.
OEM SHALL NOT COPY, MODIFY, ENHANCE, OR MAKE DERIVATIVE WORKS OF THE IMG
PRODUCTS.
<PAGE> 9
EXHIBIT E
PAYMENT TERMS
1. APPLICABLE TO ALL AMOUNTS PAYABLE TO IMG UNDER THIS AGREEMENT: Amounts
shall be paid in U.S. dollars. Payments made under this Agreement after
their due date will incur interest at a rate equal to one percent (1%) per
month or the highest rate permitted by applicable law, whichever is lower.
2. MINIMUM ANNUAL FEES: As a condition of retaining its rights under this
Agreement, including without limitation its right to receive technical
support from IMG free of charge (as set forth in paragraph 6.2 of the
Agreement), OEM must pays fees (including royalties, but excluding One
Time Program Fee) to IMG in the minimum annual amount of US$25,000.
3. ONE TIME PROGRAM FEE: OEM agrees to pay IMG a one-time, non-refundable
license fee of US$32,600, $10,000 of which is due upon the Effective date
of this Agreement; $10,000 is due July 30, 1996 and $12,600 is due Sept.
30, 1996.
4. IN THE EVENT AND TO THE EXTENT THAT IMG PROVIDES CUSTOM MASTER COPIES FOR
REPRODUCTION OF IMG PRODUCTS, THE FOLLOWING TERMS AND CONDITIONS SHALL
APPLY:
(a) Initial Set-up Fee. For each set of Master Copy diskettes that IMG
produces and delivers for the OEM, OEM shall pay IMG $2,000 as a
set-up fee. Said payment shall be due and payable within 30 days of
IMG's shipment of the Master Copies.
(b) Further Set-up Fees.
(1) Unless otherwise specified herein, all Master Copies to be
provided shall be for English language versions. To the extent
available, OEM may request and IMG will produce additional
sets of master diskettes in other languages; for each such set
of Master Copy diskettes that IMG produces and delivers for
the OEM, OEM shall pay IMG $2000 as a set-up fee.
(2) If OEM is entitled to upgrades, for each upgrade of IMG
Products which IMG makes available to the public during the
term of this Agreement, OEM may request and IMG will produce a
set of Master Copies of the upgrade version for OEM. for each
such set of Master Copy diskettes that IMG produces and
delivers for the OEM, OEM shall pay IMG $2,000 as a set-up
fee.
(c) Royalties. For each copy of any IMG Product which OEM sells, OEM
shall pay IMG royalties in the amounts set forth below. If the
royalty amount is set forth as a percentage, the percentage shall be
applied to OEM's Net Revenues in connection with the IMG Products.
"Net Revenues", for the purpose of calculating royalties, means the
amounts invoiced to OEM's customers for Bundled Products. Royalty
payments shall be due on the 20th day after the close of the month
in which OEM delivered the copy of IMG Products to its customer.
5. IN THE EVENT AND TO THE EXTENT THAT IMG PROVIDES OEM WITH PREPACKAGED
COPIES OR OTHER FINISHED GOOD MATERIALS, THE FOLLOWING TERMS AND
CONDITIONS SHALL APPLY:
(a) Fees. OEM shall pay IMG license fees for all Prepackaged Copies
(which include royalties and prepackaged costs), in the amounts set
forth below. All such payments shall be due within 30 days from the
date of shipment by IMG.
(b) Costs. OEM shall pay all shipping and transportation charges, taxes,
and other fees imposed on Product sales hereunder. In the event IMG
pays any such amounts, OEM shall reimburse IMG and they shall be
added to the invoiced amounts as separate charges.
(c) Stock Balancing. During the term of this Agreement, IMG shall allow
stock balancing of up to 30% of OEM's total orders of IMG Products
on a calendar quarter basis, commencing with the first calendar
quarter following the effective date of this Agreement, but only if
OEM submits to IMG an order for IMG Products equal to or greater
than the value of the IMG Products being returned for credit. To
obtain such stock balancing, OEM (a) may submit only the stock
balancing request per calendar quarter, (b) shall submit such
request in writing at least 30 days in advance of OEM's proposed
stock return date, and (c) shall indicate on the stock balancing
request the identity and quantity of the inventory to be returned.
Stock returned for stock balancing credit may not have been acquired
from IMG more than 3 months before the date of the stock balancing
request, IMG, at its sole option, may amend or discontinue its stock
balancing program without notice.
FEES: ROYALTIES:
$45 per unit of Crystal Reports Professional v.4.5 sold
with Support Express.
$180 per unit of Crystal Reports Professional sold
without Support Express.
$0 per unit for the first 460 seats of Crystal
Reports Professional Upgrades.
Major version upgrades to Licensee's existing users of
the Report Writer at $100.
$150 per unit of French, German and Spanish versions of
Crystal Reports Professional (when they become
available) when sold with Support Express.
$125 per unit of French, German and Spanish upgrade
versions of Crystal Reports Professional (when they
become available).
<PAGE> 10
PREPACKAGED COPIES (AT IMG'S CURRENT COST OF MATERIALS):
Costs as of 3/95: $7 per set of manuals (User's Guide and
Developer's Reference)
$4 per book
$15 diskettes and manuals
<PAGE> 11
SEAGATE Software
ADDENDUM TO OEM LICENSE AGREEMENT
This Addendum to the OEM License Agreement is made and entered into this 25th
day of September, 1998, by and between Seagate Software Information Management
Group, Inc. (Seagate) and SalesLogix Corporation, successor-in-interest Opis
Corporation (OEM).
Whereas upon execution of this Addendum, Opis has assigned its rights under the
Agreement to SalesLogix and SalesLogix assumes and agrees to perform all of the
obligations of Opis under the Agreement;
Whereas Seagate and OEM entered into an OEM license agreement dated June 28,
1996 (the "Agreement"), the parties wish to amend the agreement as follows:
1. Section 11.1 (Term) of the Agreement shall be extended for an additional
term of two (2) years, expiring June 28, 2000.
2. OEM agrees to pay a nonrefundable program fee in the amount of $12,500
upon execution of this Addendum. All fees and royalties owing to Seagate
for the original Term of the Agreement shall be considered to be paid.
3. Section 11.2 (Minimum Fees) shall be deleted from the Agreement and OEM
shall no longer be required to pay a minimum annual fee.
3. Exhibit B (OEM Products) shall be amended to include the following:
SALESLOGIX
SUPPORT LOGIX
4. Exhibit E (FEES) shall continue at the same rates for the term of this
Addendum.
The Agreement does not exclude either party from entering into similar
agreements with competitors of the other party. Except as modified herein, the
Agreement shall be unaffected and shall remain in full force and effect.
In Witness whereof, the parties hereto have duly executed this Addendum,
September 25, 1998.
SEAGATE SOFTWARE INFORMATION SALESLOGIX CORPORATION
MANAGEMENT GROUP, INC
By: By: /s/ James E. Valenzuela
--------------------------------- ---------------------------------
Name: Name: James E. Valenzuela
------------------------------- --------------------------------
Title: Title: V. P. Finance
------------------------------ --------------------------------
<PAGE> 12
SEAGATE Software
ADDENDUM NO. 2 TO OEM LICENSE AGREEMENT
This Addendum to the OEM License Agreement is made and entered into this 30th
day of November 1998, by and between Seagate Software Information Management
Group, Inc. (Seagate) and SalesLogix Corporation, successor-in-interest Opis
Corporation (OEM).
Whereas Seagate and OEM entered into an OEM license agreement dated June 28,
1996, and an Addendum dated September 25, 1998 (the "Agreement"), the parties
wish to amend the agreement as follows:
1. Exhibit A (IMG PRODUCTS) shall be amended to include Crystal Reports
version 6.0, and future versions as they become available. This Addendum
No. 2 shall be effective for the additional term of the Agreement,
beginning June 28, 1998, and expiring June 28, 2000.
Except as modified herein, the Agreement shall be unaffected and shall remain in
full force and effect.
OEM has read, understands and agrees to the terms of this Addendum and the
undersigned represents that he or she is duly authorized to sign this Addendum.
SEAGATE SOFTWARE INFORMATION SALESLOGIX CORPORATION
MANAGEMENT GROUP, INC
By: /s/ John Fraissinet By: /s/ James E. Valenzuela
--------------------------------- ---------------------------------
Name: John Fraissinet Name: James E. Valenzuela
------------------------------- --------------------------------
Title: V. P. Title: V. P. Finance
------------------------------ --------------------------------
<PAGE> 1
Exhibit 10.16 - OEM Agreement
Topic(R) OEM Agreement
between
VERITY, INC.
1550 Plymouth Street
Mountain View, CA 94043
and
Opis Corporation
"LICENSEE"
Address:
1101 Walnut Street
Des Moines, Iowa 50309-3425
1. DEFINITIONS. Certain of the defined terms used in this Agreement are as
follows:
1.1. "SOFTWARE" shall mean the computer software, in object code form
only, which Verity owns or has the right to license to Licensee under this
Agreement, including the Development Software and the Run-Time Software, for use
in connection with the Application. The specific Verity products incorporating
the Software to be licensed to Licensee are listed in Exhibit A.
1.2. "RUN-TIME SOFTWARE" shall mean the portion of the Software which must
be incorporated in the Application to execute the search, retrieval and other
functionality of the Software.
1.3. "DEVELOPMENT SOFTWARE" shall mean the tools and other portions of the
Software (including, without limitation, LIBVDL(#).LIB and LIBVDL(#).a code)
which are used to incorporate the Run-Time Software in the Application and
enable the Run-Time Software to provide search, retrieval and other
functionality within the Application.
1.4. "DOCUMENTATION" shall mean the documentation, instructions and user's
guides, including updates thereto, relating to the Software, whether in printed
or electronic format, provided by Verity to Licensee for the purposes of this
Agreement.
1.5. "APPLICATION" shall mean one and/or all of the three software
application programs, including content or data owned or licensed by Licensee
from third parties, which is developed by Licensee with the use of the
Development Software and which executes the Run-Time Software for the purposes
described in Exhibit C. Each of such three Applications shall embed only one of
the three types of Run-Time Software licensed hereunder (TDK Basic Engine, TDK
Advanced Engine, or Topic Enterprise Server, as further described in Exhibit A).
The Application shall not provide direct or exposed access to the development
tools or capabilities of the Development Software. The Application shall access,
modify, and/or manipulate only those Collections which it creates.
1.6. "COLLECTIONS" shall mean the data structures created by Software and
required for the Run-Time Software to operate.
1.7. "PLATFORM" shall mean a binary compatible combination of hardware and
operating system software supported by Verity that will run the Software and the
associated Application. The supported Platforms upon which Licensee may operate
the Software and the Application are set forth in Exhibit C.
1.8. "TERRITORY" shall mean worldwide.
<PAGE> 2
2. LICENSE GRANT.
2.1. Appointment of Licensee. Verity hereby appoints Licensee as a
Topic(R) OEM and, subject to the terms and conditions of this Agreement, grants
to Licensee certain rights to the Software during the term of the Agreement, as
set forth below. The parties acknowledge that the Software may contain software
licensed by Verity from third parties (the "Verity Licensors"). Accordingly, as
a condition of this Agreement, Licensee will be required to execute the Third
Party Licensor Addenda, if any, noted on Exhibit A.
2.2. The Development Software.
2.2.1. Development of Application. Verity grants Licensee a
nonexclusive and nontransferable right to use the Development Software on the
Platforms at Licensee's locations solely in the Territory and solely for
internal development of the Application and related internal demonstration and
training of its personnel. In connection with such use, Licensee shall have the
right to make a reasonable number of copies of the Development Software for
normal backup and archival purposes only.
2.2.2. Verity Data Access Standards. To enable Verity to develop and
market applications that access and enhance Collections created by the
Application, Licensee will develop the Application in conformance with the
Verity Data Access Standards set forth in Exhibit D. If the development of a
software gateway is necessary to enable such access by Verity applications, then
Licensee will develop and maintain such a gateway in accordance with the time
schedule and specifications set forth in Exhibit D, and Licensee hereby grants
to Verity a perpetual and exclusive, worldwide license to use the executable
implementation of any such gateway.
2.3. Application Distribution. Verity grants to Licensee a nonexclusive
and nontransferable right to use, market, reproduce and distribute the Run-Time
Software solely as an embedded component of the Application and only in the
Territory. Licensee's right to distribute the Application is limited to those
persons who sublicense the Application for their own business or personal use
("End Users") and those persons who only have the right to redistribute to End
Users the Application in the same form as provided by Licensee without any right
of reproduction or any right to use the Application except as an End User
("Resellers"). To help assure quality, the Application may only be licensed for
use on the Platforms. Licensee acknowledges that Licensee has no right to use,
or sublicense others to use, the Software of any dial-up, remote access,
interactive or other on-line service unless specifically authorized in an
amendment to this Agreement executed by Verity. The foregoing sentence is not
intended to restrict Licensee's End Users from accessing the Collections via
remote network.
2.4. Documentation. Verity grants Licensee a nonexclusive and
nontransferable right and license to use and reproduce the Documentation solely
to distribute the End User portions of the Documentation in the Territory with
the Application and for use internally by Licensee's personnel in the Territory
in connection with the support of the Application.
2.5. Sublicense Right.
(a) Reproduction. Licensee may sublicense its right to reproduce the
Application and the Documentation only to subcontractors in the Territory who
agree in writing to be bound by the terms of this Agreement, including, but not
limited to, Section 9 ("Confidentiality"). Licensee and its subcontractors will
ensure that each copy of the media containing the Software is manufactured under
a quality assurance program designed to ensure that there is no virus or other
embedded device or code in the Software (e.g., back door, time bomb, Trojan
Horse or worm) that is intended to obstruct or prevent use of the Software.
(b) Sublicense Agreements. Any distribution of the Application shall
be accomplished under a license agreement ("Sublicense Agreement") between the
Licensee and the person to whom the distribution is made. Each Sublicense
Agreement pertaining to a distribution to a Reseller (including Resellers
through multiple tiers of distribution) shall be signed by the Reseller and
shall contain terms and conditions at least as protective of Verity's
proprietary rights as the applicable provisions of Section 2.3 (other than the
right to reproduce), 7, 8.1, 9, 10 (disclaimer only), 13, 15.4, 15.6 and 15.7.
Any Sublicense Agreement pertaining to a distribution to an End User may be
through a shrink-wrap substantially in the form attached Exhibit E, so long as
the End User is required to
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<PAGE> 3
take an affirmative act of consent to the terms of such shrink-wrap by opening
the Application package or clicking a button to initiate installation only after
an opportunity to view the applicable terms and conditions. Licensee will
promptly notify Verity of any violation of a Sublicense Agreement of which it
becomes aware, and will take commercially reasonable efforts to enforce each
Sublicense Agreement with at least the same degree of diligence used in
enforcing similar agreements governing end users of Licensee's own products.
Such Sublicense Agreements shall also state that Verity is a third party
beneficiary of such agreements with respect to provisions relating to use of the
Application, and that such provisions are also enforceable by Verity.
2.6. Sample Applications. Licensee agrees to deliver to Verity ten (10)
copies of the Application upon the first commercial shipment of the Application.
Licensee grants to Verity a worldwide, nonexclusive, nontransferable,
royalty-free and fully-paid right and license solely to use such copies
internally and to demonstrate such copies to existing and potential customers
for marketing purposes.
3. TERM. This Agreement shall remain in effect for an initial term of two (2)
years from the Effective Date, unless terminated earlier in accordance with
Section 14. The Agreement will renew automatically for successive one (1) year
terms unless written notice of termination is received by either party at least
sixty (60) days prior to the end of the then-current initial term or renewal
term.
4. LICENSE AND OTHER FEES. Fees (including sublicense fees) for the Software and
for all related support, training and other services offered by Verity are set
forth in Exhibit A. Licensee will pay all applicable shipping charges and sales,
use, excise and similar taxes (except for taxes based upon Verity's net income).
All amounts required to be paid to Verity hereunder shall be paid within thirty
(30) days from the date of Verity's applicable invoice.
5. SOFTWARE SUPPORT AND TRAINING.
5.1. Internal Software Support. During the term of this Agreement,
Licensee shall obtain Software support, as further described in Exhibit B, from
Verity for the purpose of Licensee's provision of support to its End Users and
Resellers. All items delivered by Verity in providing such support, including
Error Corrections and Software Updates, shall be deemed to become a part of the
applicable Software and shall be subject to all terms and conditions of this
Agreement.
5.2. Second-Line Software Support. Licensee is responsible for providing
front-line support to its End Users and Resellers with respect to Software
installation, on-going technical support, training and consultations relating to
the Application. Any direct request to Verity for support services by the
Licensee's End Users or Resellers will be referred to Licensee.
5.3. Training. Licensee is required to send, at a minimum, one (1)
technical employee to Verity's technical training program within ninety (90)
days of the Effective Date of this Agreement, or, if no training class is
available during such ninety (90) day period, as soon as such class becomes
available. At all times during the term of this Agreement, Licensee shall
maintain employment of at least one (1) employee who has received such training.
Licensee shall be responsible for travel and other out-of-pocket expenses of its
employees.
6. ORDERING AND DELIVERY OF SOFTWARE. All orders for Software or other products
or services issued by Licensee shall be deemed subject to this Agreement and
shall specify the quantity ordered, the discounted price, Platform, and the
shipping address thereof. Licensee understands and agrees that any additional
terms and conditions of the Licensee's order shall be void and of no effect. No
orders shall be binding until the earlier of Verity's written confirmation or
shipment. Upon receipt of Licensee's initial purchase order, Verity shall
deliver to Licensee (i) the number of copies of Verity products comprising the
Software described on Exhibit A, (ii) one (1) golden master copy of the Run-Time
Software on magnetic media and (iii) one (1) copy of the Documentation in both
printed and electronic form. Verity shall deliver to Licensee one (1)copy of any
Error Corrections or Software Updates to the Software on magnetic media and one
(1) copy of each of the applicable Documentation in both printed and electronic
form, if any, promptly upon distribution by Verity of such Error Corrections and
Updates to other Verity OEMs. All shipments shall be FOB shipping point. All
orders delivered shall be deemed accepted by Licensee upon delivery.
Page A-2
<PAGE> 4
7. RECORDS AND REPORTS. Licensee shall keep complete and accurate records
relating to its use and marketing of the Application in accordance with standard
business practices in the computer industry and generally accepted accounting
principles. Within thirty (30) days after each calendar quarter, Licensee shall
provide Verity with a written sales report in the form supplied by Verity. Such
reports shall, at a minimum, contain information detailing each Application
distributed for the applicable reporting quarter, including (i) the number of
copies sold during the reporting period and the location of distributions
(county or state), broken down by month and on a cumulative basis; (ii) an
accounting of the sublicense fees associated with such copies; and (iii)
second-line support fees due to Verity associated with such copies. In addition,
upon Verity's request not more than once per quarter, Licensee shall provide
non-binding monthly sales reports to Verity within fifteen (15) days after the
end of the applicable month. To assure compliance with the payment and reporting
requirements of this Agreement, Verity or its independent auditors may inspect,
at Verity's expense and on Licensee's premises, Licensee's applicable records
from time to time, but no more frequently than once per year. In the event any
inspection of Licensee's records indicates an underpayment of an amount equal to
or greater than five percent (5%) of any amounts due hereunder, Licensee shall
promptly reimburse Verity for all reasonable expenses associated with such
inspection along with the deficient amounts.
8. TITLE, USE OF TRADE NAMES AND TRADEMARKS.
8.1. Proprietary Rights. Title and ownership of all proprietary rights in
the Software, including any copyright, patent, trade secret, trademark or other
intellectual property rights, are and will at all times remain the property of
Verity and the Verity Licensors. Licensee agrees not to remove or obliterate any
copyright, trademark or proprietary rights notices of Verity or the Verity
Licensors from the Software or Documentation and shall reproduce all such
notices on all authorized copies of the Software or Documentation. Licensee
shall not modify, translate, disassemble, decompile, reverse engineer or cause
or allow discovery of the source code of the Software in any way. In addition,
Licensee shall include a copyright notice in the start-up or "About" screen of
the Application indicating that portions of the Application include technology
used under license from Verity, Inc.
8.2. Trademarks. Verity hereby grants to License a non-exclusive, limited
license to use the applicable Trademarks solely as permitted in this Agreement.
Licensee agrees to cooperate with Verity in facilitating Verity's monitoring and
control of the nature and quality of such products and services, and to supply
Verity with specimens of use of the Trademarks upon request. Licensee
understands and agrees that the use of any Trademark in connection with this
Agreement shall not create any right, title or interest, in or to the use of the
Trademark and that all such use and goodwill associated with the Trademark will
inure the benefit of Verity. Licensee agrees not to register or attempt to
register any Trademarks.
8.3. Branding; Cooperative Efforts. Licensee agrees to the following
additional co-marketing obligations:
(a) Licensee will make good faith efforts to provide all reasonable
marketing treatment and opportunities to Verity as it provides to other
substantially similar vendors and product partners of Licensee;
(b) Licensee will, during the term of the Agreement, set up and use
Verity search technology as the default search, if any, used from Licensee's
home page. Licensee will also feature the Verity logo on the Licensee home page.
In addition, on any page where a text search may be invoked, Licensee will
prominently denote that it uses Verity technology and search engine for all text
searching.
(c) Licensee will provide a hot link from Licensee's home page for
the Application to the Verity home page;
(d) Licensee and Verity agree to issue a joint and mutually agreed
upon press release announcing the project involving the Application ("Project")
and Verity's participation and value not more than 30 days from the execution of
this Agreement. Licensee will prominently feature Verity in all press
announcements regarding the joint Verity and Opis Project and have Verity's
brand identity and logo included in announcement materials and programs
associated with the introduction of the Application to the trade press and
potential customers of Licensee; and
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<PAGE> 5
(e) Licensee will cooperate with and support Verity in its press
release materials, and provide reasonable efforts in support of an event, if
any, sponsored by Verity to highlight its inclusion as a key technology within
the Application.
9. CONFIDENTIALITY. Each party shall hold in confidence all materials or
information disclosed to it in confidence hereunder ("Confidential Information")
which are marked as confidential or proprietary, or if disclosed verbally,
reduced to writing and marked confidential within thirty (30) days after the
date of disclosure. Confidential Information shall also include any new product
information or the results of any bench mark or similar tests on the Software,
which may adversely affect Verity, conducted by Licensee or divulged by Licensee
to Verity. Each party agrees to take precautions to prevent any authorized
disclosure or use of Confidential Information consistent with precautions used
to protect such party's own confidential information, but in no event less than
reasonable care. The obligations of the parties hereunder shall not apply to any
materials or information that is or becomes a part of the public domain through
no act or omission of the receiving party or which is independently developed by
the receiving party.
10. WARRANTY. Verity warrants to Licensee that for a period of ninety (90) days
from the date of delivery of the Software to Licensee that the Software used by
Licensee shall substantially perform in accordance with Verity's applicable
Documentation. Licensee's sole and exclusive remedy shall be for Verity to
modify or correct the Software or, if Verity is unable to provide a reasonable
work-around for the error, Verity will accept the return of the defective
Software in Licensee's possession and Verity will refund the license fees paid
by Licensee for such Software. This warranty shall not apply to any Software
which has been modified by Licensee or by any party other than Verity, or which
has been improperly installed or used in any manner other than as authorized
under this Agreement, EXCEPT AS SET FORTH IN THIS SECTION, VERITY AND VERITY
LICENSORS MAKE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. The Software
is warranted only to Licensee, and Licensee shall not extend any warranties for
or on behalf of Verity or Verity Licensors to End Users, Resellers, or any other
third parties.
11. INFRINGEMENT AND INDEMNIFICATION.
11.1. By Verity. Verity agrees to indemnify and hold Licensee harmless
from all liability (cost and expenses), settlements agreed to by Verity and all
costs and direct damages awarded to a third party to the extent they arise out
of a claim that the software as delivered to Licensee infringes a U.S.
copyright, U.S. patent, or trade secret under U.S. law of a third party. Such
obligation is subject to the following conditions (i) Licensee shall notify
Verity in writing within thirty (30) days of the date Licensee first becomes
aware of a claim; (ii) Verity has sole control of the settlement, compromise,
negotiation and defense of any such action; and (iii) Licensee gives Verity all
reasonably available information, assistance and authority, at Verity's
reasonable expense, to enable Verity to do so. Verity may, at its option, obtain
the right to continued use of the Software, substitute other equivalent
software, or modify the Software so its is no longer infringing, or, if none of
the foregoing remedies are available, terminate Licensee's right to the
allegedly infringing Software and refund to Licensee the amount which Licensee
has paid for such Software, depreciated on a straight-line basis over a
five-year period. The foregoing indemnity shall not apply to any infringement
claim arising from Software which has been modified by parties other than Verity
or use of the Software in conjunction with other software or hardware where use
with such other software or hardware gives rise to an infringement claim. THE
FOREGOING STATES LICENSEE'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS OF ANY KIND, AND VERITY EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTY OF NONINFRINGEMENT.
11.2. By Licensee. Licensee agrees to indemnify and hold Verity harmless
from all liability (costs and expenses), settlements agreed to by Licensees and
all costs and direct damages awarded to a third party to the extent they arise
out of a claim that the portions of the Application other than the Software
("Licensee Product") infringes a U.S. copyright, U.S. patent or trade secret
under U.S. law of a third party. Such obligation is subject to the following
conditions (i) Verity shall notify Licensee in writing within thirty (30) days
of the date Verity first becomes aware of a claim; (ii) Licensee has sole
control of the settlement, compromise, negotiation and defense of any such
action; and (iii) Verity gives Licensee all reasonably available information,
assistance and authority, at Licensee's reasonable expense, to enable Licensee
to do so. Notwithstanding the foregoing, Licensee shall have no liability for
nor shall Licensee indemnify Verity against any infringement claim based solely
on the Software or any
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infringement claim that could have been avoided by use of software other than
the Software. THE FOREGOING STATES THE ENTIRE AND EXCLUSIVE OBLIGATION OF
LICENSEE TO VERITY RELATING TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS.
12. LICENSEE INDEMNIFICATION. Licensee shall defend, indemnify and hold harmless
Verity and Verity Licensors from and against any claims by a Reseller, End User,
or other party arising out of (i) the operation or use of the Application, (ii)
Licensee's or a Reseller's failure to obtain a valid Sublicense Agreement or
(iii) except as permitted by this Agreement, Licensee's making representations
or warranties regarding the Software to End Users, Resellers or other third
parties.
13. LIMITATION OF LIABILITY. VERITY'S AND VERITY LICENSORS' AGGREGATE LIABILITY
UNDER ANY CLAIMS ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE FEES PAID BY
LICENSEE TO VERITY DURING THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THE
INITIAL EVENT RESULTING IN SUCH CLAIMS. VERITY AND VERITY LICENSORS WILL NOT BE
LIABLE FOR LOST PROFITS OR FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, REGARDLESS OF THE FORM OF ACTION, EVEN IF VERITY IS ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
14. TERMINATION. This Agreement may be terminated earlier by either party on
sixty (60) written days notice to the other party if the other party fails to
materially perform any obligation hereunder and such failure is not cured within
such sixty (60) day period; provided, however, that either party may terminate
this Agreement immediately upon delivery of notice in connection with any breach
by the other of Section 2 or Sections 8.1 or 82. Upon termination or expiration,
Licensee's licenses hereunder shall terminate, all open orders shall
automatically terminate, and Verity shall have no obligation to fill such
orders. In such event, Licensee shall immediately cease using, marketing,
reproducing and distributing the Software and shall return all copies thereof to
Verity (except for Applications which are finished goods already in the
distribution channel and not in Licensee's possession or direct control), along
with a certification signed by an officer of Licensee that no copies have been
retained by Licensee for any purpose whatsoever. However, if the Agreement
terminates or expires for any reason other than Verity's termination of Licensee
in accordance with this Section, Licensee shall have the right to distribute all
copies of the Software paid for hereunder which are then in its inventory on the
effective date of termination (which amount shall not exceed Licensee's average
monthly inventory of the Application for the twelve months preceding the
termination date); and Licensee shall have the right to continue to use the
Software internally at no additional charge upon execution of Verity's
then-current applicable end user agreement to support End User customers who
have valid Sublicense Agreements in effect on the effective date of termination.
The obligations of each party under Sections 4, 7, 8.1, 9, 10, 11, 12, 13, 14
and 15 shall survive termination or expiration of this Agreement.
15. MISCELLANEOUS.
15.1. No Assignment. Neither party may transfer or assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
other party.
15.2. Notices. Any notice required under this Agreement shall be given in
writing and shall be deemed effective upon delivery to the party to whom
addressed by (i) express courier upon written verification of actual receipt or
(ii) facsimile upon confirmation of receipt generated by the sending device. All
notices shall be sent to the applicable address on the cover page hereof or to
such other address as the parties may designate in writing, with a copy to the
president and to the legal department of such party.
15.3. Governing Law. This Agreement shall be governed and interpreted by
the laws of the State of California. The parties agree that the United Nations
Convention on Contracts for the International Sales of Goods in specifically
excluded from application to this Agreement. In any legal action relating to
this Agreement, Licensee agrees to the exercise of jurisdiction over Licensee by
a state or federal court in Santa Clara County, California. In the event an
action is brought to enforce any provision or declare a breach of this
Agreement, the prevailing party shall be entitled to recover, in addition to any
other amounts awarded, reasonable legal and other related costs and expenses,
including attorney's fees, incurred thereby.
Page A-5
<PAGE> 7
15.4. Injunctive Relief. It is expressly agreed that a material breach of
this Agreement will cause irreparable harm to Verity and that a remedy at law
would be inadequate. Therefore, in addition to any and all remedies available at
law, Verity and/or Verity Licensors shall be entitled to injunctive relief
against Licensee in the event of any threatened or actual violation of any or
all provisions in this Agreement.
15.5. Independent Contractor. Licensee is an independent contractor, and
nothing in this Agreement shall be deemed to create a joint venture,
partnership, or agency relationship between the parties. Neither party has the
right or authority to assume or create any obligation or reasonability on behalf
of the other.
15.6. Export. Licensee agrees that it will not export or reexport the
Software or the Application without the appropriate United States Government or
any other government licenses. Verity acknowledges that as of the execution of
this Agreement, to its knowledge, the Topic Tools Developer's Kit and Topic
Enterprise Server products licensed hereunder as Software are not under special
restrictions with respect to the foregoing in addition to those restrictions
imposed on similar software and technical information.
15.7. Government End Users. The Software (a) was developed at private
expense, is existing computer software and no part of it was developed with
government funds, (b) is a trade secrete of Verity for all purposes of the
Freedom of Information Act, (c) is commercial computer software submitted with
only those rights provided in Verity's then-current standard end-user license
agreement, (d) in all respects is proprietary data belonging solely to Verity,
(e) is unpublished and all rights are reserved under the copyright laws of the
United States. For units of the Department of Defense (DoD) this Software is
licensed only with those rights specified in Verity's then-current standard End
User license agreement, and use, duplication or disclosure of the Software is
subject to the restrictions set forth in such end-user license agreement.
15.8. Force Majeure. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder (except for
the payment of money on account of strikes, riots, insurrection, fires, floods,
storms, earthquakes, acts of God, war, governmental action, labor conditions, or
any other cause which is beyond the reasonable control of such party.
15.9. Entire Agreement. If any portion of this Agreement is determined to
be or becomes unenforceable or illegal, such portion shall be deemed eliminated
and the remainder of this Agreement shall remain in effect in accordance with
its terms as modified by such deletion. No waiver of any breach of this
Agreement shall be effective unless in writing, nor shall any breach constitute
a waiver of any subsequent breach of any provision of this Agreement. This
Agreement (including all Exhibits) contains the entire agreement and
understanding between the parties with respect to the subject matter hereof, and
supersedes all prior agreements, negotiations, proposals and communications
between the parties. Moreover, this Agreement shall replace and supersede any
Verity end user license agreement included with the package of any Software used
by Licensee.
The foregoing is agreed to effective as of the last execution date below:
VERITY, INC. LICENSEE
By: By: Opis - /s/ Sallene M. Richer
--------------------------------- --------------------------------
Name: Name: Sallene M. Richer
------------------------------- ------------------------------
Title: Title: President
------------------------------ -----------------------------
Date: Date: 5/28/96
------------------------------- ------------------------------
Page A-6
<PAGE> 8
VERITY CORPORATION
OEM Agreement (Standard OEM)
- --------------------------------------------------------------------------------
EXHIBIT A
FEES FOR STANDARD OEM
1. LICENSED SOFTWARE. Topic Tools Developer's Kit (Basic Engine (with
versions utilizing stemmers and thesaurii in French, German and Spanish
languages) and Advanced Engine as defined below), Topic Enterprise Server
2. LIMITED INTERNAL USE LICENSES. The following are licensed hereunder for
internal development:
<TABLE>
<CAPTION>
Product Quantity Platforms Discounted Price
------- -------- --------- ----------------
<S> <C> <C> <C>
Topic Tools Developer's Kit 1 Windows 3.x, NT, and 95 $ 495.00
(Basic Engine*)
Topic Tools Developer's Kit 1 Windows 3.x, NT, and 95 $ 495.00
(Advanced Engine*)
Topic Enterprise Server 1 Windows 3.x., NT, and 95 $ 495.00
- -------------------------------------------------------------------------------------------------
Total Up-front, one-time, nonrefundable, nonrecoupable license fees
("License Fee"): $1,485.00
Total first year maintenance fees for such Software ("Initial
Maintenance Fee"): $2,990.00
- -------------------------------------------------------------------------------------------------
Total Upfront, nonrefundable fees due upon execution of the Agreement: $4,475.00
</TABLE>
* The Topic TDK Basic Engine includes boolean, phrase, sentence, paragraph,
many, accrue, wild care, basic zone searching, thesaurus (English only),
stemming (English only), and ODBC gateway, and is limited to ASCII documents
only and limited to 12 Collections only. For purposes of this Agreement, Topic
TDK Basic Engine may also include versions utilizing stemmers and thesaurii in
French, German and Spanish languages (each, a "Localized TDK Basic Engine").
** The Topic TDK Advanced Engine includes in addition proximity, density,
Topics, client profiling, international stemming (for those countries supported
by Verity), and international thesaurus (for those countries supported by
Verity), and is limited to 128 Collections. If and when commercially available,
the Topic TDK Advanced Engine may in the future include advanced zone searching
incorporating HTML and SGML attributes, clustering and summarization.
3. SUBLICENSE FEE: The sublicense fee ("Sublicense Fee") will be calculated as
follows:
(i) three percent (3%) of the Net Sales for any and all Applications
incorporating any Run-Time Software of the TDK Basic Engine (non-localized),
with a minimum Sublicense Fee owed to Verity of Ten Dollars ($10) per copy of
such Application distributed or used for internal business or other productive
purposes, or four percent (4%) of the Net Sales for any and all Applications
incorporating any Run-Time Software of the Localized TDK Basic Engine, with a
minimum Sublicense Fee owed to Verity of Thirteen Dollars ($13) per copy of such
Application distributed or used for internal business or other productive
purposes;
(ii) ten percent (10%) of the Net Sales for any and all Applications
incorporating any Run-Time Software of the TDK Advanced Engine, with a minimum
Sublicense Fee owed to Verity of Twenty-Five Dollars ($25) per copy of such
Application distributed or used for internal business or other productive
purposes; and
(iii) ten percent (10%) of the Net Sales for any and all Applications
incorporating any Run-Time Software of the Topic Enterprise Server, with a
minimum Sublicense Fee owed to Verity of Five Hundred Dollars ($500) per copy of
such Application distributed or used for internal business or other productive
purposes.
Page A-1
<PAGE> 9
"Net Sales" shall mean gross sales less any applicable taxes, shipping charges
and returns. Upon execution of this Agreement, Licensee shall pay to Verity a
non-refundable Sublicensee Fee prepayment ("Prepaid Sublicense Fees") of
$55,525.00, payable as follows: $15,000 upon execution of the Agreement, $15,000
on or prior to July 15, 1996, and $30,000 on or prior to August 15, 1996.
The Prepaid Sublicense Fees shall be credited against copies of the Run-Time
Software distributed by Licensee. Upon exhaustion of the Prepaid Sublicense
Fees, Licensee shall pay all Sublicense Fees or other sublicense related fees
within fifteen (15) days of the last day of each calendar quarter during which
Licensee distributed the Run-Time Software, accompanied by the sales report
described in Section 6.2 of the Agreement.
Licensee shall have the right to use internally, free of charge, up to 25 copies
of the Run-Time Software of the TDK Basic Engine, 25 copies of the Run-Time
Software of the TDK Advanced Engine, and 1 copy of the Run-Time Software of the
Topic Enterprise Server solely as necessary to support of End Users.
2. EVALUATION COPIES: Notwithstanding Paragraph 4 above, Verity grants Licensee
the right to provide evaluation copies of the Application ("Evaluation Copies")
to End Users. Each Evaluation Copy shall be limited to an evaluation period of
sixty (60) days from receipt by the End User, after which such Evaluation Copy
shall be automatically disabled by means of a timebomb expiration mechanism. The
End User shall be authorized to use the Software solely for evaluating its
applicability to its requirements and shall not be for any commercial or private
benefit use. Licensee shall only provide Evaluation Copies only to End Users who
have executed a written evaluation agreement substantially similar to Verity's
Standard Evaluation Agreement, a copy of which will be provided to Licensee upon
written request. Licensee shall include the following information with each
order for an Evaluation Copy: (i) Software name; (ii) End User's platform; (iii)
the make/model, operating system/version of End User's computer; and (iv) the
media type of the Evaluation Copy. The license fee for each Evaluation Copy of
the Software shall be Licensee's price charged, if any, for such Evaluation Copy
less the following discount:
EVALUATION COPY DISCOUNT: 90%
3. DEVELOPMENT SOFTWARE REFERRAL COMMISSIONS. Licensee is eligible to receive a
commission in the amount specified below based on the net amount paid to Verity
for any Development Software license orders from End Users referred to Verity.
The referral qualifies for a commission payment upon completion of all of the
following: (i) Development Software is installed on the same CPU as the
Licensee's Application; (ii) Verity receives an executed end user license
agreement from the End User; (iii) payment is received by Verity from the End
User; (iv) Licensee completes a Verity Commission Request Form and such form is
approved by Verity prior to delivery of the Software; (v) the Licensee's
marketing efforts preceded the license grant; (vi) End User is a new customer to
Verity and is generating new license revenue to Verity and (vii) Licensee is
current on all amounts owed to Verity. The commissions to be paid to Licensee
shall be in the following amount:
DEVELOPMENT SOFTWARE LICENSE COMMISSION: 10%
4. INTERNAL SUPPORT: The annual fee for internal support for each copy of the
Software used by Licensee shall be based on Verity's then-current list price for
the Software used internally multiplied by the following rate:
INTERNAL SUPPORT FEE RATE: 18%
Except that the rate for each Topic Tools Developer's Kit (including basic
and advanced engines) and each Topic Enterprise Server shall be $1,495.00 per
year per platform. Therefore, the first year's maintenance fee for the Software
licensed herein shall be $2,990.00.
Such fee shall be invoiced by Verity annually, at the beginning of the initial
term and each renewal term of the Agreement.
5. SECOND-LINE SUPPORT: Licensee shall pay Verity an annual fee for second-line
support in the amount of ten percent (10%) of Sublicense Fees accrued for all
new customers and all customers renewing annual
Page A-2
<PAGE> 10
maintenance during the applicable quarter, to be submitted with the quarterly
sales report as described in Section 6.2 of the Agreement.
6. TRAINING. The fees for Verity's standard basic 4-day TDK training classes,
for one (1) Licensee employee, on indexing and retrieving, and TDK gateways and
customization, are included in the Run-time Licensee Fee. All additional
training shall be available at Verity's then-current training rates.
FAILURE OF LICENSEE TO TAKE AN INITIAL TRAINING COURSE WITHIN NINETY (90)
DAYS OF THE EFFECTIVE DATE MAY BE GROUNDS FOR TERMINATION OF THIS AGREEMENT
7. DOCUMENTATION. Verity shall provide one (1) printed and one (1) electronic
copy of the applicable user documentation with each copy of Development
Software. Additional copies are available to Licensee at $65.00 each.
8. PRICE LIST. Verity reserves the right to withdraw or change the availability
of the Software from its then-current product availability and price list at any
time.
11. ON-SITE INTEGRATION SERVICES. 4 days of basic on-site integration services
by Verity are included in the License Fee.
Page A-3
<PAGE> 11
VERITY CORPORATION
OEM Agreement
- --------------------------------------------------------------------------------
EXHIBIT B
SOFTWARE SUPPORT TERMS AND CONDITIONS
For all Licensees who purchase Maintenance Services, Verity provides support in
the form of Error Corrections, Software Updates, and Hotline Telephone Support.
For Software which is supported, Maintenance Services are provided only for the
current release and the most recent previous release of the Software.
The initial effective date of Maintenance Services is the date Software is
shipped from Verity's facility.
DESCRIPTION OF SERVICES PROVIDED DURING A MAINTENANCE PERIOD
A) Error Corrections. Verity shall exercise commercially reasonable
efforts to correct any error reported by the Licensee in the current unmodified
release of the Software in accordance with the priority level reasonably
assigned to such error by Verity. If a reported error has caused the Software to
be inoperable, or the Licensee's notice to Verity states that the reported error
is substantial and material with respect to the Licensee's use of the product,
Verity shall, as expeditiously as possible, use its reasonable commercial
efforts to correct such error or to provide a software patch or bypass around
such error. The Licensee acknowledges that all reported errors may not be
corrected.
B) Software Updates. Verity provides, at no additional cost, one (1) copy
of all published revisions to the printed documentation and one (1) copy of, or
authorization to copy, new releases of the products, which are not designated by
Verity as new products for which it charges a separate fee.
C) Telephone Hotline Support. Verity provides telephone assistance to all
Licensees who have purchased Maintenance Services. Verity Support personnel are
available to answer questions related to Verity's supported products and how
they perform with compatible hardware systems. Assistance in the development of
custom applications for Verity's products is not included in standard hotline
support. If Licensees wish to acquire such support, it is available through
Verity's Consulting group at the then-current consulting rates.
PRIORITY LEVELS OF ERRORS
In the performance of Maintenance Services, Verity applies priority ratings to
problems reported by Licensees.
A) Priority I Errors.
Description: Program errors that prevent some function or process
from substantially meeting the functional specification and which
seriously affect the overall performance of the function or process
and no work-around is known.
Verity Response: Verity shall promptly initiate the following
procedures: (1) assign senior Verity engineers to correct the error;
(2) notify senior Verity Management that such errors have been
reported and that steps are being taken to correct the error; (3)
provide Licensee with periodic reports on the status of corrections;
(4) commence work to provide Licensee with a work-around until final
solution is available; (5) provide final solution to Licensee as
soon as it is available.
B) Priority II Errors.
Description: Program errors that prevent some function or
process from meeting functional specification, but has a
reasonable work-around.
Page B-1
<PAGE> 12
Verity Response: Verity shall provide a work-around to the Licensee
and shall exercise commercially reasonable efforts to include the
fix for the error in the next software maintenance release.
C) Priority III Errors.
Description: Program errors that prevent some portion of a
function from meeting functional specification but do not
seriously affect the overall performance of the function.
Verity Response: Verity may include the fix for the error in the
next major release of the Software.
Page B-2
<PAGE> 13
VERITY CORPORATION
OEM Agreement
- --------------------------------------------------------------------------------
EXHIBIT C
OEM APPLICATION PACKAGE DESCRIPTION
Names of Application programs which Licensee will be sublicensing under the
Agreement & short description:
1A) (embedding TDK Basic Engine): SupportExpress
-- helpdesk and customer support application
1B) (embedding TDK Basic Engine): Helplink
-- end user trouble ticketing system
2) (embedding TDK Advanced Engine): Express Link Advanced Server
-- add-on to SupportExpress to enhance support functions in SupportExpress
3) (embedding Topic Enterprise Server): Express Link Enterprise Server
-- add-on to SupportExpress to add enterprise functionality to
SupportExpress
Modules: speedsearch; bridge
Platforms: Windows 3.x, 95, NT and Netware
Page C-1
<PAGE> 14
VERITY, Inc. CONFIDENTIAL
OEM Agreement
- --------------------------------------------------------------------------------
EXHIBIT D
VERITY DATA ACCESS STANDARDS
1. QUERY LANGUAGE OPERATORS AND SYNTAX
Query capability enhancements may be created by Verity which rely upon queries
containing Verity Query Language operators and syntax not normally used by the
Application or for functionality not licensed by Licensee.
The Application will not trap, require modification, or otherwise restrict
access to the full Verity Query Language, including all operators and syntax
formats. The Verity Query Language is described in the Verity Developer Kit API
Reference Guide, Appendix A: Verity Query Language.
2. TDK GATEWAYS
If Licensee implements a TDK Gateway for use in the Application, Licensee will
provide Verity with an executable form of the TDK Gateway prior to the first
Application release which uses the TDK Gateway and updates thereto for prior to
each subsequent commercial release of the TDK Gateway. Licensee grants Verity,
at no fee and free of royalties, the unrestricted, perpetual right to modify,
incorporate, reproduce and redistribute the TDK Gateway within Verity software.
TDK Gateway usage is described in the Verity Developer Kit Configuration Options
Guide, Chapters 5-8.
As used in this Agreement, TDK Gateway means code generated by the Licensee
which is used to read in documents or data which is received from sources in a
format not supported natively by the Verity engine. If such documents or data is
delivered from a DBMS, a feed, or other source that is not natively understood
by the Verity engine, a gateway must be written to index that data. In some
cases, the gateway is also required to retrieve the document for viewing.
3. CALLBACKS
A TDK Gateway includes functions which meet the specification for VGW Callbacks
required by a Table of Stream Gateway, as well as any Application functions
invoked by the VGW Callback functions.
The VGW Callbacks for a Table Gateway are:
VgwSessionNewCBFnc
VgwSessionFreeCBFnc
VgwTableNewCBFnc
VgwTableFreeCBFnc
VgwTableGetInfoCBFnc
VgwTableGetInfoFreeCBFnc
VgwTableReadCBFnc
VgwTableReadFreeCBFnc
VgwTableExistCBFnc
VgwTableUpdateCBFnc
VgwTableDeleteCBFnc
The VGW Callbacks for a Stream Gateway are:
VgwSessionNewCBFnc
VgwSessionFreeCBFnc
VgwStreamNewCBFnc
VgwStreamFreeCBFnc
VgwStreamReadCBFnc
Page D-1
<PAGE> 15
FIRST ADDENDUM TO TOPIC(R) OEM AGREEMENT
between Verity, Inc. ("Verity") and SalesLogix Corporation ("Licensee")
This First Addendum ("First Addendum") amends and supplements the OEM Agreement
dated May 29, 1996 between Verity and SalesLogix Corporation, assignee of Opis
Corporation ("OEM Agreement"). Verity and Licensee agree that this First
Addendum is attached and made a part of the OEM Agreement and unless otherwise
defined, capitalized terms in the First Addendum shall have the same meaning as
in the OEM Agreement.
A. Section 3 of the OEM Agreement labeled "Term" shall be deleted and replaced
in its entirety with the following:
This Agreement shall remain in effect until May 29, 2000, unless
terminated earlier in accordance with Section 14. The Agreement will renew
automatically for successive one (1) year terms unless written notice of
termination is received by either party at least one hundred and eighty
(180) days prior to the end of the then-current initial term or renewal
term.
B. Section 2 of Exhibit A of the OEM Agreement labeled "Limited Internal Use
Licenses" is amended to include the following:
<TABLE>
<CAPTION>
Product Development Software
------- --------------------
Fee
- ---
<S> <C>
One (1) copy of Verity Linguistic CD (Advanced Search) on NT Platform US$0.00
One (1) copy of Verity Key View Viewing SDK on NT Platform US$4,995
</TABLE>
Advanced Search. The functionality of Advanced Search includes
clustering, summarization and query by example.
Upon the execution of this Addendum, Licensee shall pay to Verity the
amount of US$4995 for the Verity products stated above.
C. Section 3 of Exhibit A of the OEM Agreement labeled "Sublicense Fee" shall be
deleted in its entirety and replaced with the following:
Prepaid Sublicense Fees. Upon the execution of this Addendum, Licensee
shall pay to Verity a nonrefundable Sublicense Fee prepayment of $65,000
("Prepaid Sublicense Fees") against which Sublicense Fees (defined below)
subsequently incurred, due and owing to Verity shall apply until such prepaid
sublicense fee amount is exhausted. Upon termination or expiration of this
Agreement for any reason, all unrecouped Prepaid Sublicense Fees paid to Verity
shall be nonrefundable and nonrecoupable.
Sublicense Fees. The Sublicense Fee for distribution of the
Applications which is used internally by Licensee or any Reseller or
distributed to End Users shall be as follows:
Application Sublicense Fee
----------- --------------
SalesLogix (Basic Search) US$6.00 per User
SupportLogix (Basic Search) 3% of Net Revenues
Subject to a US$10.00 per
User minimum
Options to SupportLogix*
------------------------
Bundled with Web Self Help additional 1% of Net Revenues
Application Subject to a US$3.00 per
User Minimum
Bundled with Advanced Search additional 1% of Net Revenues
Subject to a US$3.00 per
User Minimum
Bundled with KeyView Viewing additional 2% of Net Revenues
Subject to a US$6.00 per
User Minimum
<PAGE> 16
Web Self Help (as an additional and
separate module)
With Basic Search only* 3% of such module Net Revenues
With Advanced Search* 4% of such module Net Revenues
With KeyView Viewing* additional 2% to the Basic Search
or Advanced Search as Applicable
* The above stated Sublicense Fees shall apply only in the event the Run-Time
Software is included in such application.
"User" means an individual authorized by the licensee of the Application
to use or access the functionality of the Application, regardless of whether the
individual is actually using or accessing the Application at any given time.
"Net Revenues" means gross revenues accrued and/or paid to Licensee, less
applicable taxes, shipping and handling charges related to distribution or
licensing of the Application.
D. That portion of Exhibit A of the OEM Agreement labeled "Evaluation Copies"
shall be deleted and replaced in its entirety with the following:
"Notwithstanding Paragraph 2 above, Verity grants Licensee the right to provide
evaluation copies of the Application incorporating the Run-Time Software
("Evaluation Copies") to End Users. Each Evaluation Copy shall be limited to an
evaluation period of sixty (60) days from receipt by the End User, after which
such Evaluation Copy shall be automatically disabled by means of a time bomb
expiration mechanism. The End User shall be authorized to use the Evaluation
Copy solely for evaluating its applicability to its requirements and shall not
be for any commercial or private benefit use. Licensee may provide Evaluation
Copies only to End Users who have agreed to a written evaluation agreement
(either a signed agreement or in shrinkwrap form where an affirmative act of
consent is required) substantially similar to Verity's standard evaluation
agreement, a copy of which will be provided to Licensee upon request.
E. Section 4 of Exhibit A of the OEM Agreement labeled "Internal Support" shall
be amended to include the following:
The annual fee for internal support for each copy of the Software used by
Licensee shall be $1,495.00 per annum. Upon execution of this Addendum, Licensee
shall pay to Verity the amount of US$1,495 as first year internal support fee
for the Verity products stated in Paragraph B of this Addendum, above.
F. Exhibit A of the OEM Agreement is amended to include the following paragraph
regarding Consulting Services.
CONSULTING. The fees for any consulting services provided by Verity to
Licensee shall be paid in addition to any consideration paid pursuant to this
Agreement. During the initial term of the Agreement, all consulting shall be
done at the rate not to exceed Two Thousand Dollars (US$2,000.00) per day plus
travel and living expenses.
G. Exhibit C of the Agreement is hereby deleted and replaced in its entirety
with the following:
EXHIBIT C
OEM APPLICATION
Description of Application(s):
The Application shall consist solely of: (i) Licensee's software application
program developed for and/or by Licensee and in existence as of the Effective
Date, currently known as "SALESLOGIX", together with substantially similar
versions of such Application as enhanced to include upgrades, updates, bug fixes
and other error corrections made from time to time; (ii) Licensee's software
application program developed for and/or by Licensee and in existence as of the
Effective Date, currently known as "SUPPORTLOGIX", together with substantially
similar versions of such Application as enhanced to include upgrades, updates,
bug fixes and other error corrections made from time
<PAGE> 17
to time; and (iii) Licensee's software application program developed for and/or
by Licensee and in existence as of the Effective Date, currently known as "WEB
SELF HELP", together with substantially similar versions of such Application as
enhanced to include upgrades, updates, bug fixes and other error corrections
made from time to time.
SALESLOGIX APPLICATION shall be limited to the Basic Search functionality.
Search is designed for files external to the SalesLogix database and blobs and
the memo field in the SalesLogix database. In the event of changes to the stated
search limitation, the parties shall negotiate a royalty structure in good
faith.
SUPPORTLOGIX APPLICATION shall include Advanced Search, KeyView viewing and
External Web Self Help functionality.
G. ENTIRE AGREEMENT. The OEM Agreement together with the Exhibits, and this
First Addendum replaces and supersedes all other agreements, written or oral
with respect to its subject matter. Except as expressly amended and supplemented
hereby, the OEM Agreement remains in full force and effect. In the event of any
conflict between the terms of this First Addendum and the terms of the OEM
Agreement, the terms of this First Addendum shall prevail.
The foregoing is agreed to be effective as of the last execution date below
("Addendum Effective Date").
VERITY, INC. SALESLOGIX CORPORATION
By: /s/ J. E. Ticehurst By: /s/ Jim Valenzuela
------------------------------ ---------------------------------
Name: J. E. TICEHURST Name: Mr. Jim Valenzuela
----------------------------- --------------------------------
Title Vice President Administration & Title Vice President - Finance
Controller -------------------------------
--------------------------
Date: August 28, 1998 Date: August 28, 1998
---------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.17
FORM OF STANDARD MULTI-USER LICENSE AND WARRANTY AGREEMENT
SALES INFORMATION SYSTEM(TM) VERSION 3.0
MULTI-USER LICENSE AND WARRANTY AGREEMENT
The following license and warranty terms are qualified by those additional or
different terms, if any, contained in any signed license agreement between you
and SalesLogix or one of SalesLogix's distributors.
IMPORTANT-READ CAREFULLY: This Multi-User License and Warranty Agreement (the
"Agreement") is a legal agreement between you and SalesLogix Corporation for the
software product identified above (the "Software"), which includes computer
software and associated media and printed materials (the printed materials are
hereafter referred to as the "Documentation"). By downloading, installing,
copying or otherwise using the Software, you agree to be bound by the terms of
this Agreement. If you do not agree to the terms of this Agreement, promptly
return the unused Software to the place from which you obtained it for a full
refund. The Software is the property of SalesLogix or its licensors and is
protected by copyright law. While SalesLogix continues to own the Software, you
will have certain rights to use the Software after your acceptance of this
Agreement. Except as may be modified by a license addendum which accompanies
this Agreement, your rights and obligations with respect to the use of this
Software are as follows:
________________________________________________________________________________
1. GRANT OF LICENSE. SalesLogix grants to you, and you accept by downloading the
software or opening the sealed media package, a non-exclusive license to use the
Software and the Documentation on the following terms.
- - SOFTWARE. You may install and use one copy of the Software for each
user license you have purchased, and you may make one copy of the
Software solely for back-up purposes. If you have paid for and been
granted a Workgroup Server License, Synchronization Server License, or
Web Client License, you may install the Software on a single client
server system at any one time. If you have purchased a Synchronization
Server License, you may allow remote access to the Software on the
server by that number of remote users for whom you have purchased
Client Licenses, and no more. If you have purchased a Workgroup Server
License, you may allow access to the Software on the client-server by
that number of networked users for whom you have purchased Client
Licenses, and no more. If you have purchased a Web Client License, you
may allow internet access to the Software on the client-server by that
number of users for whom you have purchased Client Licenses, and no
more. Upon paying for the Software, you will receive a set of license
numbers which, when entered on the Software, will allow access to the
Software by the number of Client License users permitted by your
purchased licenses. You agree not to disclose these key numbers to
third parties or attempt to make any use of the key numbers to expand
the number of users who may access the Software in excess of the Client
Licenses purchased by you. If you wish to expand the number of users
who can access the Software beyond the number for whom you have
purchased licenses, you may purchase additional licenses from
SalesLogix, which licenses will take the form of additional key numbers
provided to you by SalesLogix.
- - TRANSFER. You may permanently transfer all of your rights under this
Agreement, provided you retain no copies and transfer all of the
Software (including all component parts, the media and related
Documentation, any upgrades, and this Agreement) and the recipient
agrees to accept the terms and conditions of this Agreement.
- - RESTRICTIONS. You may not: use, copy, or transfer copies of the
Software except as provided for in this Agreement; reverse engineer,
modify, decompile or disassemble the Software; or rent, lease,
sublicense or assign the Software or any copy thereof, including any
related Documentation, except only to the extent expressly permitted by
law. If notwithstanding the foregoing applicable law grants you the
right to decompile the Software to the extent necessary to obtain
information to achieve interoperability with an independently created
computer program, you may exercise such right if SalesLogix shall fail,
upon your prior written request, to provide the relevant
interoperability information within a reasonable amount of time.
2. LIMITED WARRANTY. SalesLogix warrants that it has the right to grant the
license set forth in Section 1 and that the media, if any, on which the Software
is furnished to be free from defects in material and workmanship under normal
use for a period of six (6) months from the date of delivery of the Software to
you. Any replacement Software will be warranted for the remainder of the
original warranty period or sixty (60) days, whichever is longer. EXCEPT FOR THE
LIMITED WARRANTY DESCRIBED ABOVE, THIS SOFTWARE IS PROVIDED "AS IS" WITHOUT
WARRANTIES OR IMPLIED TERMS OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, TITLE,
NONINFRINGEMENT, THE CONDITION OF THE SOFTWARE, OR FITNESS FOR A PARTICULAR
PURPOSE. THE ENTIRE RISK ARISING OUT OF THE USE OR PERFORMANCE OF THE SOFTWARE
AND DOCUMENTATION REMAINS WITH YOU. Saleslogix does not warrant the functions
contained in the Software will meet your requirements or that operation of the
product will be uninterrupted or error free.
3. LIMITATIONS OF REMEDIES. SalesLogix's entire liability and your exclusive
remedy shall be: replacement of any diskette not meeting SalesLogix's "Limited
Warranty" and which is promptly returned to SalesLogix. TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL SALESLOGIX OR ITS SUPPLIERS BE
LIABLE TO YOU FOR ANY CONSEQUENTIAL, INCIDENTAL, DIRECT, INDIRECT, SPECIAL,
PUNITIVE, OR OTHER DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES
FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS
INFORMATION, OR OTHER PECUNIARY LOSS) ARISING OUT OF THIS AGREEMENT OR THE USE
OF OR INABILITY TO USE THE SOFTWARE, EVEN IF SALESLOGIX HAD BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
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4. SUPPORT AND UPDATES. SalesLogix provides maintenance and/or technical support
(including upgrades and enhancements) for the Software only through separate
Software Support Agreements. Please contact SalesLogix if you wish to obtain
support through the execution of such an agreement.
5. EXPORT CONTROL. You may not export, ship, transmit or reexport the Software
or Documentation in violation of any applicable law or regulation including,
without limitations, the Export Administration Regulations issued by the United
States Department of Commerce.
6. UNITED STATES GOVERNMENT RESTRICTED RIGHTS. The Software and Documentation
are provided with restricted rights. If you are purchasing this product for use
by the United States government or any of its agencies, you need to enter into a
separate restricted rights agreement with SalesLogix. Use, duplication or
disclosure by the United States government is subject to restricted rights as
set forth in subparagraph (c)(1)(ii) of The Rights in Technical Data and
Computer Software clause of DFARS at 252.227-7013 and in the Federal Acquisition
Regulations, 48 C.F.R. Sections sections 12.212 and 52.227-19.
7. GOVERNING LAW. The validity, construction and performance of this Agreement
and legal relations between the parties to this Agreement shall be governed and
construed in accordance with the laws of the State of Arizona, United States of
America, excluding that body of law applicable to conflicts of law and excluding
the United Nations Convention on Contracts for the International Sale of Goods,
if applicable.
8. GENERAL. You may terminate your license at any time by destroying all your
copies of the Software. SalesLogix or its authorized distributor may terminate
your license if you fail to comply with the terms and conditions of this
Agreement. Upon such termination, you agree to destroy all your copies of the
Software. Should you have any questions concerning this Agreement, write to
SalesLogix Corporation, 8800 North Gainey Center Drive, Suite 200, Scottsdale,
Arizona 85258, U.S.A.
SalesLogix Multi-User License Agreement
Revision Date: December 15, 1998
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EXHIBIT 10.18
FORM OF EXTENDED SOFTWARE LICENSE AGREEMENT
[SALES LOGIX LOGO]
AGREEMENT NO._____
SALES INFORMATION SYSTEM(TM) (3.0)
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("Agreement") is effective as of
__________________, 199_ (the "Effective Date") by and between SalesLogix
Corporation, an Arizona corporation ("SalesLogix"), with offices at 8800 North
Gainey Center Drive, Suite 200, Scottsdale, Arizona 85258, and
__________________________, with offices at _____________________ ("Licensee").
1. DEFINITIONS AND SPECIFICATION SCHEDULE
1.1 "SPECIFICATION SCHEDULE" shall mean the schedule attached to this
Agreement.
1.2 "SOFTWARE" shall mean the proprietary computer software product of
SalesLogix known as Sales Information System, Release 3.0, including
Documentation related to this product, and any updated version or portion of
such product provided to Licensee by SalesLogix. More specifically, the term
"Software" shall refer to the version(s) of Sales Information System, Release
3.0 -- i.e., Remote Client, Workgroup Client, Information Server,
Synchronization/Agent Server -- designated in the Specification Schedule
(including subsequent amendments to the Specification Schedule) as subject to
this Agreement.
1.3 "DOCUMENTATION" shall mean the standard user documentation, manuals
and other printed materials delivered to Licensee by SalesLogix which relate to
the Software.
1.4 "REMOTE CLIENT LICENSE" shall mean a license to use the Software by
one user on a single personal computer ("PC"). This license also permits the
user to access a client server that is running the Software pursuant to a
Synchronization Server License.
1.5 "WORKGROUP CLIENT LICENSE" shall mean a license to use the Software
by one user connected to a client server based network that is running the
Software pursuant to an Information Server License.
1.6 "INFORMATION SERVER LICENSE" shall mean a license to use the
Software on a single client server so as to allow use of the Software by a
number of users equal to the number of Workgroup Client Licenses purchased.
1.7 "SYNCHRONIZATION SERVER LICENSE" shall mean a license to use the
Software on a single client server so as to allow remote access by a number of
users equal to the number of Remote Client Licenses.
1.8 "MAINTENANCE SUPPORT" shall mean those maintenance support services
described in detail on EXHIBIT A to this Agreement.
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1.9 "TECHNICAL SUPPORT" shall mean those technical support services
described in detail on EXHIBIT B to this Agreement.
1.10 "UPDATE" shall have the meaning set forth in EXHIBIT A to this
Agreement.
1.11 "UPGRADE" shall have the meaning set forth in EXHIBIT A to this
Agreement.
1.12 "SYSTEM MANAGER" as identified in the Specification Schedule shall
mean Licensee's contact person for the purpose of SalesLogix's provision of
Maintenance and Technical Support, as more fully described in EXHIBIT A and
EXHIBIT B to this Agreement.
2. GRANT OF LICENSE
Subject to the terms and conditions of this Agreement, SalesLogix
hereby grants and Licensee hereby accepts a non-transferable, non-exclusive
license to use the versions of the Software for the number of users identified
in the Specification Schedule, as they may be amended or supplemented by the
parties from time to time.
2.1 SCOPE OF LICENSE. The Software licensed pursuant to a
Synchronization Server or Information Server License, if any, may be used only
on the Designated Computer System at the Designated Facility described in the
Specification Schedule, and the Licensee may use such Software and related
Documentation only for internal operations at the Designated Facility and, at
any given time, only to support the number of separate Remote Client and/or
Workgroup Client Licenses purchased by the Licensee. Licensee shall not use the
Software licensed pursuant to a Information Server or Synchronization Server
License, if any, at a non-Designated Facility or on a non-Designated Computer
System without first obtaining an additional written license from SalesLogix to
do so. Software licensed pursuant to a single Remote Client License may be
installed on only one PC at any one time. Licensee may make one copy of the
licensed Software solely for back-up purposes. Licensee shall not make copies of
the Documentation, but may purchase additional copies of Documentation from
SalesLogix at SalesLogix's then standard rates.
2.2 OWNERSHIP OF SOFTWARE. Exclusive title to and ownership of the
Software, the Documentation, and all copies thereof shall at all times remain
with SalesLogix.
2.3 TERM OF LICENSE. Unless terminated by SalesLogix or Licensee
pursuant to Section 8 of this Agreement, the licenses granted to Licensee by
this Agreement shall be perpetual; provided, however, that the Information
Server or Synchronization Server License shall remain limited to use of the
Software at the Designated Facility on the Designated Computer System unless
otherwise agreed by SalesLogix.
3. DELIVERY, INSTALLATION, TRAINING AND MAINTENANCE AND TECHNICAL SERVICES
3.1 GENERAL. SalesLogix shall deliver to Licensee the Software and the
Documentation within business days of SalesLogix's execution of this
Agreement. Unless otherwise agreed in writing by SalesLogix, SalesLogix shall
have no obligation to: (i) install or to oversee the installation of the
Software and shall have no liability arising out of or in connection with
installation of the Software; (ii) provide training under this Agreement; or
(iii) (unless Licensee purchases optional Maintenance and/or Technical Support
services pursuant to the other provisions of this Section 3) provide any
Maintenance or Technical Support services to Licensee.
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3.2 MAINTENANCE SUPPORT. If Licensee purchases Maintenance Support,
SalesLogix shall provide the services described on EXHIBIT A for the Initial
Term specified in the Specification Schedule. Following the Initial Term,
SalesLogix will offer Maintenance Support on an annual basis for a fee, payable
12 months in advance, equal to ten percent (10%) of SalesLogix's list price for
the Software in effect at the commencement of the renewal period. If originally
purchased, Maintenance Support shall be extended and renewed automatically for
an additional 12-month renewal period on each anniversary date of the Effective
Date, unless either SalesLogix or Licensee provides the other with written
notice in advance of such anniversary date of its election to terminate
Maintenance Support as of the anniversary date.
3.3 TECHNICAL SUPPORT. If Licensee purchases Maintenance Support,
SalesLogix shall provide the services described on EXHIBIT B for the Initial
Term specified in the Specification Schedule. Following the Initial Term,
SalesLogix will offer Technical Support on an annual basis for a fee, payable 12
months in advance, equal to ten percent (10%) of SalesLogix's list price for the
Software in effect at the commencement of the renewal period. If originally
purchased, Technical Support shall be extended and renewed automatically for an
additional 12-month renewal period on each anniversary date of the Effective
Date, unless either SalesLogix or Licensee provides the other with written
notice in advance of such anniversary date of its election to terminate
Technical Support as of the anniversary date.
4. LICENSE FEES AND PAYMENT
4.1 LICENSE AND SUPPORT FEES. In exchange for the licenses granted by
this Agreement, Licensee shall pay SalesLogix the respective license fees set
forth in the Specification Schedule. In exchange for the Maintenance and
Technical Support services, if any, specified in the Specification Schedule,
Licensee shall pay SalesLogix the respective support fees set forth in the
Specification Schedule.
4.2 PAYMENT. All fees and charges under this Agreement shall be paid in
U. S. Dollars within thirty (30) days of Licensee's receipt of SalesLogix's
invoice. All amounts not paid within thirty (30) days shall bear interest at the
lesser of one and one-half percent (1.5%) per month or the highest contract rate
allowed by law, from the date due until paid.
4.3 TAXES. Licensee shall pay all personal property, sales, use,
value-added and similar taxes (other than taxes on SalesLogix' income) arising
from the transactions described in this License.
5. INTELLECTUAL PROPERTY RIGHTS; CONFIDENTIALITY
Licensee acknowledges that the Software, including methods, processes
or techniques utilized therein, are proprietary to and valuable trade secrets of
SalesLogix and are protected by United States copyright law and international
treaties. Licensee shall take no actions which impair or infringe SalesLogix's
intellectual property rights. Licensee shall not use, copy, modify, transfer,
download, merge, make any translation or derivative work or otherwise deal with
the Software except as expressly provided in this Agreement. In no event shall
Licensee cause or permit the disassembly, reverse compilation or other decoding
of any Software. Licensee agrees not to remove or destroy any copyright notices,
other proprietary markings or confidentiality legends placed upon or contained
within the Software.
6. LIMITED WARRANTY; INFRINGEMENT INDEMNIFICATION; LIMITATIONS ON
LIABILITY
6.1 LIMITED WARRANTIES. SalesLogix warrants the diskette(s), if any, on
which the Software is furnished shall be free from defects in material and
workmanship under normal use for a period of ninety (90) days from the date of
delivery to Licensee. Any replacement Software will be warranted for the
remainder of the original warranty period or thirty (30) days, whichever is
longer. SalesLogix further warrants to Licensee for a period of [SIX MONTHS]
(the "warranty period") that the Software will perform substantially as set
forth in the Documentation. SalesLogix does not warrant that the Software will
operate in combination with other software selected by Licensee, or that the
Software will operate uninterrupted or free of non-material errors. Provided
SalesLogix is able to reproduce an error reported by Licensee, SalesLogix will
modify or replace, at no additional charge to Licensee, the Software to correct
any error which causes the Software not to perform substantially as set forth in
the
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Documentation, provided that Licensee reports the malfunction to SalesLogix
during the foregoing warranty period. In the event that SalesLogix is unable
after reasonable efforts to correct any such material error, Licensee may at its
option terminate this License and, upon return of the Software to SalesLogix,
SalesLogix shall provide to Licensee a pro rata refund of the license fees paid
based on a useful life of the Software of [THREE (3)] years, and any unearned
prepaid Maintenance or Technical Support fees. SalesLogix further warrants that:
(i) the Software does not contain any malicious code, program, or other internal
component (e.g., computer worm, time bomb, or similar component) and has been
screened using customary procedures in the industry for viruses; and (ii) the
Software will, under normal use and service, record, store, process and present
calendar dates falling on or after January 1, 2000, in the same manner, and with
the same functionality, data integrity and performance, as the Software records,
stores and presents calendar dates on or before December 31, 1999. The Software
uses two date formats (YYYYMMDD and MMDDYYYY) which it inherits from Microsoft
Windows 95 or Windows NT. SalesLogix warrants that the Software will lose no
functionality with respect to the introduction of records (in a Year 2000
compatible format) containing dates falling on or after January 1, 2000.
Notwithstanding the foregoing, SalesLogix does not warrant and hereby expressly
disclaims any warranty that the Software supports Year 2000 date processing and
displays caused by external sources of date input which are not generally in a
Year 2000 compatible format. SalesLogix will modify or replace the portions of
the Software that fail the foregoing virus or Year 2000 warranty. The remedies
described in this Section 6.1 shall be Licensee's sole and exclusive remedies
for errors contained in and for the performance of the Software.
6.2 CONDITIONS TO LIMITED WARRANTIES. The limited warranties in Section
6.1 are conditioned upon Licensee's use of the Software in accordance with the
terms of the Documentation. The limited warranties set forth in Section 6.1
shall not apply to the extent that an error occurs because of and would not have
occurred but for: (i) modifications made to the Software by a party other than
SalesLogix; (ii) Licensee's failure to implement enhancements provided by
SalesLogix to Licensee; or (iii) use of the Software in connection with any
computer equipment or devices not meeting the minimum requirements set forth in
the Documentation.
6.3 DISCLAIMERS. EXCEPT FOR THE LIMITED WARRANTIES DESCRIBED IN SECTION
6.1, SALESLOGIX DISCLAIMS ALL OTHER WARRANTIES CONCERNING THE SOFTWARE AND
EQUIPMENT, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WHETHER OR NOT ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, SALESLOGIX SHALL NOT UNDER ANY CIRCUMSTANCES BE
LIABLE TO LICENSEE OR ANY OTHER PARTY FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF
GOODWILL, WORK STOPPAGE, LOST PROFITS, LOST DATA OR COMPUTER HARDWARE OR
SOFTWARE DAMAGE, FAILURE OR MALFUNCTION.
6.4 INDEMNIFICATION FOR INFRINGEMENT. SalesLogix agrees to either
defend or settle, at SalesLogix's expense and discretion, any claim against
Licensee arising from a claim that Licensee's authorized and proper use of the
Software or Documentation under this Agreement infringes any U.S. patent,
copyright, trade secret or other proprietary right and to indemnify Licensee
from any settlement or final judgment against Licensee related to such
infringement claim. If, in SalesLogix' opinion, the Software is likely to become
or does become the subject of a claim of infringement or misappropriation of a
U.S. patent, copyright, trade secret or other proprietary right, SalesLogix, at
its election, may either: (i) promptly replace the Software with a substantially
compatible and functionally equivalent non-infringing software product, (ii)
promptly modify the Software to make it non-infringing and substantially
compatible and functionally equivalent, (iii) promptly procure the right of
Licensee to continue using the Software; or (iv) if none of the first three
options is commercially feasible, refund a pro rata portion of the license fee
(based on a useful life of three (3) years), and any unearned prepaid
Maintenance or Technical Support fees and the license for such Software shall be
terminated. Licensee shall promptly notify SalesLogix of any claims concerning
its use of the Software, and shall not independently defend or respond to any
such claim. Licensee shall cooperate with SalesLogix in the defense of any such
claims, at SalesLogix' expense, as reasonably requested by SalesLogix.
Licensee's failure to implement an enhancement required by SalesLogix shall void
the indemnification provided in this Section 6.4. THE REMEDIES SET FORTH IN THIS
SECTION 6.4 SHALL BE LICENSEE'S SOLE REMEDIES IN THE EVENT OF AN INFRINGEMENT
CLAIM RELATING TO THE SOFTWARE.
7. COMPLIANCE WITH EXPORT LAWS
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Licensee shall not export, ship, transmit or re-export the Software of
Documentation in violation of any applicable law or regulation including,
without limitations, the Export Administration Regulations issued by the United
States Department of Commerce.
8. TERMINATION
8.1 TERMINATION OF AGREEMENT BY SALESLOGIX. If Licensee defaults in
performing any material obligations required under this Agreement, SalesLogix
may give written notice of its intention to terminate this Agreement, describing
in reasonable detail the default. If Licensee fails to remedy such material
default within thirty (30) days following such written notice, or if such
default is not capable of cure within such thirty (30)-day period, and Licensee
fails to commence cure procedures within such thirty (30)-day period and
diligently prosecute such procedures until the default is cured, then SalesLogix
may, in addition to all other remedies available at law or in equity, terminate
this Agreement and the Software licenses.
8.2 TERMINATION OF LICENSE BY LICENSEE. Licensee may, at its option,
terminate the licenses granted under this Agreement for convenience upon written
notice to SalesLogix.
8.3 EFFECT OF TERMINATION. In the event this Agreement is terminated
for any reason, Licensee shall immediately discontinue use of and shall return
to SalesLogix or destroy all Software and Documentation, including all copies
thereof. Sections 2.2, 5, 6.3, 9.3 and 9.4 shall survive any termination of this
Agreement.
9. GENERAL
9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and all prior
agreements, representations, and statements with respect to such subject matter
are superseded hereby. This Agreement may not be altered, modified, amended,
changed, rescinded or discharged in whole or in part, except by written
agreement executed by both Licensee and SalesLogix.
9.2 ASSIGNMENT. This Agreement and the licenses granted hereunder may
not be assigned without the prior written consent from SalesLogix and any
attempt to do so without permission shall be void.
9.3 SEVERABILITY. To the fullest extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable for particular facts or circumstances, such provision shall remain
in full force and effect for all other facts or circumstances. If any provision
of this Agreement is declared entirely void or unenforceable, such provision
shall be deemed severed from this Agreement, which shall otherwise remain in
full force and effect.
9.4 GOVERNING LAW. The validity and performance of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Arizona, excluding that body of law applicable to choice of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
SALESLOGIX, CORPORATION, an [INSERT LICENSEE'S NAME]
Arizona corporation
By: By:
-------------------------------- --------------------------------
Print Name: Print Name:
----------------------- ------------------------
Its: Its:
------------------------------ -------------------------------
SalesLogix Corporation "Licensee"
8800 North Gainey Center Drive, Site Address
Suite 200 ----------------------
Scottsdale, AZ 85258 ----------------------
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SPECIFICATION SCHEDULE
Address following issues in schedule:
Each Type of License Purchased
Synchronization Server License
Remote Client License
Information Server License
Workgroup Client License
Number of Each Type of License Purchased
Price Per License
Total Costs of Licenses
Type of Support Purchased
Maintenance Support
Technical Support
Total Cost of Support
Licensee's "Designated Facility" (required if Server License
purchased)
Licensee's "Designated Computer System" (required if Server License
purchased)
Licensee's "System Manager":
-----------------------------
-----------------------------
Phone:
-----------------------
Fax:
-----------------------
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EXHIBIT A -- MAINTENANCE SUPPORT SERVICES
This exhibit describes the terms and conditions relating to Maintenance
Support Services that SalesLogix will provide to Licensee during the Initial
Term of Maintenance Support and any renewals thereof.
SALESLOGIX PRODUCT UPDATES: From time to time SalesLogix may develop
permanent fixes or solutions to known problems or bugs in the Software and
incorporate them into a formal "Update" to the Software. If Licensee is
receiving Maintenance Support Services from SalesLogix on the general release
date for an Update, SalesLogix will provide the Licensee with the Update and
related Documentation, both at no additional charge to the Licensee.
SALESLOGIX PRODUCT UPGRADES: From time to time SalesLogix may release
to its end user licensees a major revision to the Software which adds new and
different functions or capabilities to the Software ("Upgrade"). If Licensee is
receiving Maintenance Support Services from SalesLogix on the general release
date for an Upgrade, SalesLogix will provide the Licensee with the Upgrade and
related Documentation, both at no additional charge to the Licensee.
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EXHIBIT B -- TECHNICAL SUPPORT SERVICES
This exhibit describes the terms and conditions relating to Technical
Support Services that SalesLogix will provide to Licensee during the Initial
Term of Technical Support and any renewals thereof. The Technical Support
Services described in this Exhibit do not expand on or change the Software
warranty provisions set forth in the Agreement between SalesLogix and Licensee.
A. TECHNICAL SERVICES
SalesLogix offers the following Technical Services for the Software
identified in the license Agreement:
TELEPHONE AND ELECTRONIC MAIL ASSISTANCE: Licensee's System Manager
will be given the telephone number for SalesLogix's support line and will be
entitled to contact the support line during normal operating hours (between 8:00
a.m. and 5:00 p.m. U.S. Mountain Standard Time) on regular business days,
excluding SalesLogix holidays, to consult with SalesLogix technical analysts
concerning problem resolution, bug reporting, documentation clarification, and
general technical guidance. Licensee may also contact SalesLogix through
electronic mail. SalesLogix will assist the System Manager in utilizing the
Software and in identifying and providing workarounds, if possible, for standard
component product problems. Assistance may include communicating via modem from
SalesLogix's facilities or through an electronic bulletin board.
WEB SITE SUPPORT: - online support is available 24 hours a day,
offering Licensee the ability to resolve its own problems with access to
SalesLogix's most current information. Licensee will need to enter its
designated user name and key number to gain access to the technical support
areas on SalesLogix's web site. SalesLogix's technical support areas allow the
Licensee to: (i) search an up-to-date knowledge base of technical support
information, technical tips and featured functions; (ii) access answers to
frequently asked questions; (iii) send e-mail inquiries to SalesLogix (current
response time is between 3-5 days); and (iv) access a BBS monitored by
SalesLogix technical representatives which serves as an interactive user forum
for customers to exchange ideas and solutions, list current hot topics, post
inquiries to SalesLogix technical analysts, and share experiences.
SOFTWARE PROBLEM REPORTING: Licensee may submit to SalesLogix requests
identifying potential problems in the Software. Requests should be in writing
and directed to SalesLogix by mail, courier, e-mail or by FAX. SalesLogix
retains the right to determine the final disposition of all requests, and will
inform Licensee of the disposition of each request. If SalesLogix decides in its
sole judgment to act upon a request, it will do so by providing a Bug Fix as
described below.
BUG FIXES: SalesLogix will use reasonable efforts to provide an
avoidance procedure for and a correction of each material defect in the Software
that causes the Software not to conform in all material respects with the
SalesLogix Documentation (a "Bug Fix").
B. DESIGNATED SYSTEM MANAGER.
Licensee shall designate a System Manager who shall be responsible for
maintaining the integrity of the hardware and software comprising Licensee's
Computer System of which the Software is a part. Requests for telephone
assistance or for on-site assistance may come only from the designated System
Manager. In the event that the System Manager leaves Licensee's employ, Licensee
shall designate a new System Manager. Licensee shall notify SalesLogix via
e-mail of change in System Manager prior to System Manager contacting
SalesLogix.
C. REMOTE SUPPORT
To the extent feasible, Technical Services shall be provided using
remote data links from SalesLogix to Licensee's Designated Computer System. To
facilitate remote support, Licensee shall maintain a suitable modem connected to
a direct telephone line and installed on a port of the Designated Computer
System.
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D. EXCLUSIONS FROM TECHNICAL SERVICES
SalesLogix shall have no support obligations with respect to any
hardware or software product other than the Software ("Nonqualified Products").
If SalesLogix provides support services for a problem caused by a Nonqualified
Product, or if SalesLogix's service efforts are increased as a result of a
Nonqualified Product, SalesLogix will charge time and materials for extra
service at its then current published rates for custom software services. If, in
SalesLogix's opinion, performance of Technical Support services is made more
difficult or impaired because of Nonqualified Products, SalesLogix shall so
notify Licensee, and Licensee will immediately remove the Nonqualified Product
at its own risk and expense during any efforts to render Technical Support
services under this Agreement. Licensee shall be solely responsible for the
compatibility and functioning of Nonqualified Products with the Software.
E. LICENSEE RESPONSIBILITIES
In connection with SalesLogix's provision of Technical Services as
described in this Exhibit, Licensee acknowledges that Licensee has the
responsibility to do each of the following: (1) maintain the Designated Computer
System and associated peripheral equipment in good working order in accordance
with the manufacturers' specifications, and insure that any problems reported to
SalesLogix are not due to hardware malfunction; (2) maintain the Designated
Computer System at the latest code revision level deemed necessary by SalesLogix
for proper operation of the Software; (3) supply SalesLogix with access to and
use of all information and facilities determined to be necessary by SalesLogix
to render the Technical Services described in this Exhibit; (4) perform any
tests or procedures recommended by SalesLogix for the purpose of identifying
and/or resolving any problems; (5) maintain a procedure external to the Software
for reconstruction of lost or altered files, data, or programs to the extent
deemed necessary by Licensee; (6) at all times follow routine operator
procedures as specified in the Documentation; (7) remain solely responsible at
all times for the safeguarding of Licensee's proprietary, confidential, and
classified information; and (8) ensure that the Designated Computer System is
isolated from any process links or anything else that could cause harm before
requesting or receiving remote support assistance.
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EXHIBIT 10.19
FORM OF SOFTWARE BUSINESS PARTNER AGREEMENT
SALESLOGIX CORPORATION
SOFTWARE BUSINESS PARTNER AGREEMENT
THIS AGREEMENT is made and entered into on ______________________, 199 _, by and
between SALESLOGIX CORPORATION, a Delaware corporation (hereinafter referred to
as "Vendor"), with its principal office currently located at 8800 North Gainey
Center Drive, Suite 200, Scottsdale Arizona, 85258, USA, and
- --------------------------------------------------------------------------------
(Business Partner Name)
(hereinafter referred to as "Business Partner"), who conducts business as
(please check applicable box)
/ / a sole proprietorship
/ / a general partnership organized under the laws of the State of
whose General Partner(s) is/are
/ / a limited partnership organized under the laws of the State of
whose General Partner(s) is/are
/ / a corporation organized under the laws of the State of
/ / other (identify in detail)
with its principal place of business currently located at:
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(City) (State/Province) (Zip Code)
- --------------------------------------------------------------------------------
(Telephone Number) (Country)
Vendor desires to distribute certain proprietary and licensed computer software
programs and related documentation and other materials ("Products"). Business
Partner desires to obtain the right to order Products from Vendor and act as an
independent marketer/consultant and reseller of Vendor's Products.
1. GRANT OF LICENSE
1.1. DISTRIBUTION LIMITATIONS - Business Partner shall market,
distribute, and license the Products only to end-users
("Customers") for their own internal use and not for resale.
Business Partner shall not authorize or appoint any dealers,
agents, representatives, sub-distributors, original equipment
manufacturers, value added resellers, systems integrators, or
other third parties to distribute or sub-license the Products.
Business Partner shall provide each Customer with the original
Vendor licenses included in the Product materials.
1.2. COPYRIGHT, TRADEMARK AND PROPRIETARY NOTICES - Business
Partner agrees not to remove any copyright notices, trademark
notices or any confidential or proprietary legends from any
Products. Business Partner agrees to reproduce all notices on
any copies or modifications of Products as permitted herein.
All materials containing Product names must contain applicable
trademark notices. No reproduction of Products or any part
thereof may be made without the prior written permission of
the Vendor signed by an officer of Vendor. Business Partner
will not publish, nor cause or permit to be published, any
advertising referring in any way to Vendor or Products without
the prior written permission of the Vendor signed by an
officer of Vendor.
<PAGE> 2
1.3. LICENSE LIMITATIONS - No ownership right is granted to
Business Partner in any intellectual property relating to the
Products. No right is granted for Business Partner to
replicate, produce, copy, or alter the Products. No right is
granted for Business Partner to use, distribute, rent, lease,
lend, supply, or market the Products, except as expressly
provided for in this Agreement. Business Partner shall not
decompile, disassemble, or reverse engineer the Products.
2. VENDOR'S RESERVED RIGHTS
2.1. NONEXCLUSIVITY; OTHER DISTRIBUTION - Business Partners rights
to distribute Products hereunder are nonexclusive. Vendor
reserves the right from time to time and in its sole
discretion to increase or decrease the number of authorized
Business Partners of the Products, and to distribute the
Products using its own personnel or independent sales
representatives, or via any other distribution channel.
2.2. DISCONTINUING PRODUCTS - Vendor reserves the right, at any
time, to discontinue distribution of any or all Products or
versions of Products, or to discontinue support, maintenance,
or the provision of new versions, updates, or corrections for
any Product without liability.
2.3. PRODUCT MODIFICATIONS - Vendor reserves the right, at any
time, to make such modifications to the Products as it sees
fit in the operation, performance, or functionality of the
Products.
2.4. END USER - Vendor reserves the right, with the consent of the
Customer, to intervene and take required measures to ensure
that the sales or implementation process is performed at
Vendor satisfaction.
3. PRODUCT ORDERS AND SUPPLY
3.1. ACCEPTANCE BY VENDOR - All orders placed with Vendor for
Products shall be subject to acceptance by Vendor, in its sole
good faith discretion, at its principal place of business.
3.2. DELIVERY SCHEDULE AND DELAYS - Vendor shall not be liable for
any damages to Business Partner or to any other person for
Vendor's failure to fill any orders or for any delay in
delivery or error in filling orders for any reason whatsoever.
Vendor reserves the right to apportion Products in its sole
discretion when demand exceeds available supply.
3.3. PARTIAL SHIPMENTS - Unless Business Partner clearly directs
otherwise, Vendor may make partial shipments against Business
Partner orders due to Product availability, which shipments
shall be separately invoiced and paid by Business Partner upon
shipment, without regard to subsequent shipments.
3.4. VENDOR CANCELLATION - Vendor reserves the right to cancel or
delay shipment of any orders placed by Business Partner and
accepted by Vendor, if Business Partner (a) fails to make any
payment as provided in this Agreement; (b) fails to meet
reasonable financial and Certification Program requirements
established by Vendor, or (c) otherwise fails to comply with
the terms and conditions of this Agreement.
3.5. SHIPMENT - All Products will be shipped F.O.B. point of
manufacture. All shipments will be made with shipping charges
prepaid by Vendor, and unless otherwise directed by Business
Partner, Vendor shall select a common carrier. Vendor shall
not bear any liability regarding delivery by that carrier.
Costs for shipment shall be included in the invoice price.
Risk of loss shall be borne by Business Partner upon delivery
of the Products to the carrier for shipment.
4. PRICES AND PAYMENTS FOR PRODUCT LICENSES
4.1. BUSINESS PARTNER PRICE - Business Partner shall be entitled to
receive Business Partner pricing as specified in the Business
Partner Discount Schedule and the Price List published by
Vendor and in effect at the time of the order. Prices or
discounts as offered are subject to change without prior
notice. All orders for Vendor's products must have a
confirming purchase order number from Business Partner.
4.2. PAYMENT - Payment for Products shall be due and paid prior to
shipment of Products, except as otherwise agreed by Vendor and
Business Partner. Vendor reserves the right, in its
discretion, and upon satisfactory completion by Business
Partner of Vendor's credit review, to grant payment terms to
Business Partner.
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<PAGE> 3
4.3. END-USER PRICES - Business Partner shall have sole and
absolute discretion to determine its own retail prices for the
Products.
5. OTHER OBLIGATIONS OF BUSINESS PARTNER
5.1. MARKETING - Business Partner shall use its best efforts to
promote and market the Products. Business Partner shall
provide sufficient qualified staff to carry out its obligation
to actively market and solicit sales of Products. Business
Partner will include a representative listing of all Products
in applicable catalogs and published price lists. Business
Partner will display and demonstrate appropriately configured
Products. Business Partner shall have at least one (1)
certified individual competent to demonstrate each Product.
Business Partner shall pursue all marketing leads received
from Vendor in accordance with established Vendor procedures.
5.2. PRODUCT APPLICABILITY - Business Partner assumes sole
responsibility for the selection and recommendation of the
Products to achieve the desired results and business purposes
of Customers.
5.3. VENDOR PACKAGING - Business Partner will distribute Software
Products as shipped by Vendor, with all packaging,
documentation, warranties, disclaimers, registration cards,
and license agreements intact.
5.4. PRODUCTION COPYING - Business Partner shall not under any
circumstances make any copies of the Products without Vendor's
prior written permission.
5.5. NOTIFICATION OF PRODUCT ERRORS AND OMISSIONS - Business
Partner shall identify and promptly inform Vendor of any
design or programming errors or omissions in the Products of
which it becomes aware and consult with Vendor regarding
necessary corrections and or modifications.
5.6. CUSTOMER LICENSE ENFORCEMENT - Business Partner shall use its
best efforts to assist Vendor in the protection of Vendor's
legal rights and to enforce the end user license agreements
relating to the Products. Business Partner shall cooperate
fully with Vendor in any action by Vendor in the event of an
actual or threatened violation of Vendor's proprietary rights
by any person or entity.
5.7. MARKETING PRACTICES - Business Partner shall (a) perform its
duties in a manner that will preserve the reputation and
promote the goodwill, name, and interests of Vendor and the
Products; (b) avoid deceptive, misleading, or unethical
practices that are or might be detrimental to Vendor, Products
or the public, including but not limited to disparagement of
Vendor or Products; (c) make no false or misleading
representation with respect to the Products or Vendor; (d) not
publish or use any misleading or deceptive advertising
material; and (e) make no representations with respect to the
Products or Vendor that are inconsistent with the literature
distributed by the Vendor, including all warranties,
disclaimers, and support policies contained in such
literature.
5.8. BUSINESS PRACTICES - Business Partner shall perform its duties
in compliance with all applicable laws and shall hold Vendor
harmless and indemnify Vendor for, from and against any loss,
claim, damage, liability, or expense, including reasonable
attorney's fees, arising from any violation of law by Business
Partner.
5.9. USE OF SALESLOGIX SYSTEM- Business Partner shall utilize the
"SalesLogix System" to obtain and report on leads generated by
Vendor.
5.10. BUSINESS PARTNER CERTIFICATION - See Exhibit _ for levels of
certification.
6. VENDOR SUPPORT OBLIGATION
6.1. PRODUCT PERFORMANCE - Vendor will use its reasonable efforts
to make the Products perform substantially in accordance with
the product description set forth in the relevant
Documentation that accompanies the Products, as it may exist
from time to time. However, Business Partner acknowledges that
inevitably some errors may exist in the Products, and the
presence of such errors shall not be a breach of this
provision.
6.2. BUSINESS PARTNER TECHNICAL SUPPORT - Business Partner will be
given access to Vendor's technical support telephone line,
along with access authorization for technical support. On-site
technical support may be provided by Vendor on a case-by-case
basis at Vendor's then-current fees or for a fee mutually
agreed to by Business Partner.
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<PAGE> 4
7. INDEMNIFICATION
7.1. AUTHORITY - Vendor warrants that the licensing of the Products
to Customers for commercial use will not infringe or violate
any copyright, patent, trade secret, trademark, or proprietary
right existing under the laws of the United States or any
state or territory thereof of any other person or entity.
7.2. VENDOR INDEMNIFICATION - Vendor agrees, for as long as copies
of the Products sold by Business Partner are in use by
Customers licensed by Business Partner, to indemnify and hold
Business Partner harmless for, from and against any loss,
claim, damage, liability, expense, or cost, including
reasonable attorneys' fees, arising out of any claim, demand,
or suit to the extent a Product violates any copyright,
patent, trade secret, trademark, or proprietary right existing
under the laws of the United States or any state or territory
thereof, provided that such indemnity shall not apply if the
violation arises out of use of the Products in combination or
in connection with other products or components, and such
violation would not have existed from use of the Products on a
stand-alone basis ("Claim").
7.3. INDEMNIFICATION TERMS - The indemnification obligation in
Section 8.2 shall be effective only if: (1) Business Partner
is not in default of its payment obligations to Vendor, (2)
Business Partner has given prompt notice of the Claim and
permitted Vendor to control the defense and settlement, if
any, and (3) Business Partner has reasonably cooperated in the
defense of the claim. To reduce or mitigate damages, Vendor
may at its own expense procure the right for Business Partner
to continue licensing and distributing the Product or replace
it with a non-infringing product. If Vendor supplies a
non-infringing update or version of the Product, Business
Partner shall promptly supply the same to its Customers and
install the same at its Customer locations. If, in its
judgment, Vendor deems that, due to the Claim or for any other
reason, it is not in Vendor's interest to continue
distributing the Products, Vendor, without breaching this
Agreement, may terminate the distribution of any or all of the
Products.
7.4. BUSINESS PARTNER INDEMNIFICATION - Business Partner will
defend and indemnify Vendor for, from and against, and hold
Vendor harmless from, any and all losses, claims, damages,
liabilities and expenses, including reasonable attorney fees
and costs of litigation, resulting from any improper acts or
omissions by Business Partner relating to its activities in
connection with this Agreement, or any material breach by
Business Partner of any of its obligations under this
Agreement, misrepresentations relating to Vendor, Products, or
this Agreement. Business Partner shall be solely responsible
for any claims, warranties, or representations made by
Business Partner or Business Partner's employees or agents
which differ from the warranty provided by the Vendor in the
Customer License, included by Vendor with Products. Vendor
shall have no obligation to Business Partner to defend or
satisfy any claims made against Business Partner that arise
from the use, marketing, licensing, or disposition of the
Products by Business Partner that is not expressly authorized
by this Agreement.
8. LIMITED WARRANTY POLICY
8.1. Vendor warrants that all materials furnished by Vendor
pursuant to this Agreement constitute an accurate manufacture
of such Vendor product at the time of purchase and that Vendor
will replace any such Vendor material found to be thus
defective, provided such defect is found within ninety (90)
days of purchase by Business Partner. The defective materials
(including the original distribution program diskettes) must
be returned to Vendor at Business Partner's expense, and the
Business Partner must obtain a Return Merchandise
Authorization number (an R.M.A. number) from Vendor before
sending materials to Vendor. The R.M.A. number must appear on
the outside of the package that is returned to Vendor.
Provided Business Partner has complied with this Section 9.1, all
software found to have a diskette media defect will be
repaired or replaced by Vendor at no charge if it is reported
to Vendor within ninety (90) days of purchase by Business
Partner. Repairs or replacements requested after the warranty
period will be subject to a handling charge which may include
cost of materials and charges for labor.
THE ORIGINAL DISTRIBUTION PROGRAM DISKETTE(S) IN RECOGNIZABLE FORM WILL
BE REQUIRED IN ORDER TO RECEIVE REPAIRS OR REPLACEMENTS.
8.2. VENDOR MAKES NO WARRANTIES OTHER THAN THOSE CONTAINED HEREIN.
Business Partner acknowledges that Vendor's sales literature
is intended to be descriptive only and does not create any
warranties. Any oral or written representations made by
Business Partner, and/or Business Partner's employees and/or
agents to any customers of Business Partner shall not be
binding on Vendor, unless such representation is limited to
the express warranties set forth in Section 9.1 above. In the
event Business Partner, and/or any employee, agent or
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<PAGE> 5
representative of Business Partner makes any representation
which exceeds the scope of any of said warranties, Business
Partner agrees to indemnify Vendor to the fullest extent
permitted by Section 8 hereof.
8.3. THE VENDOR MAKES NO EXPRESS, IMPLIED OR STATUTORY
REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR ANY PURPOSE. VENDOR SHALL NOT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, SUCH AS LOSS OF
PROFITS, INCREASED OR DUPLICATE COSTS, LOSS OF SAVINGS OR
INABILITY TO USE THE SOFTWARE RESULTING THEREFROM, EVEN IF
VENDOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
WHETHER THROUGH VENDOR'S NEGLIGENCE OR NOT. VENDOR SHALL NOT
BE LIABLE FOR ANY CLAIM OR DEMAND AGAINST BUSINESS PARTNER BY
ANY OTHER PARTY, EXCEPT TO THE EXTENT PROVIDED IN THIS
AGREEMENT. VENDOR SHALL NOT BE LIABLE FOR ANY WRITTEN OR ORAL
REPRESENTATIONS REGARDING PRODUCTS MADE BY BUSINESS PARTNER,
ITS EMPLOYEES, AGENTS OR REPRESENTATIVES. SOME STATES DO NOT
ALLOW THE EXCLUSION OR LIMITATION OF IMPLIED WARRANTIES OR
LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE
ABOVE LIMITATIONS OR EXCLUSIONS MAY NOT APPLY TO THE BUSINESS
PARTNER. IN SUCH CASES, VENDOR'S LIABILITY SHALL BE LIMITED TO
REFUND OF THE PRICE PAID TO VENDOR FOR THE SPECIFIC PRODUCT.
THE REMEDIES SPECIFIED HEREIN ARE EXCLUSIVE.
8.4. Vendor shall not have any warranty obligation whatsoever where
Vendor's Product has been subjected to physical abuse or used
in defective or noncompatible equipment.
9. ADDITIONAL LIMITATIONS OF LIABILITY
9.1. NO ACTION, REGARDLESS OF FORM, MAY BE BROUGHT AGAINST VENDOR
BY THE BUSINESS PARTNER MORE THAN TWO YEARS AFTER THE CLAIM
HAS ARISEN.
9.2. ALL LIMITATIONS UPON THE BUSINESS PARTNER'S REMEDIES ARE PART
OF THE BARGAIN BETWEEN THE VENDOR AND THE BUSINESS PARTNER.
THE BUSINESS PARTNER ACCEPTS THE ALLOCATIONS OF RISK SET FORTH
IN THIS AGREEMENT AND ACKNOWLEDGES THAT THE ALLOCATIONS OF
RISKS ARE IN EXCHANGE FOR OTHER ECONOMIC BENEFITS TO BUSINESS
PARTNER.
10. CONFIDENTIALITY
10.1. NON-DISCLOSURE - Each party acknowledges that it will receive
confidential information from the other party relating to
technical, marketing, product, and business matters. Each
party agrees that all confidential information of the other
party shall be held in strict confidence and shall not be
disclosed or used without express written consent of the other
party. Confidential information shall not include any
information already in the possession of a party or received
without violation of this Agreement or of confidentiality
obligations of the person or entity providing such
information, or information which is independently developed
by a party, is in the public domain, or has otherwise been
released without restriction by the party claiming
confidentiality. Notwithstanding the foregoing, Business
Partner agrees that any sales leads provided to it by Vendor
shall be deemed confidential information and shall be used by
Business Partner solely for purposes of this Agreement.
11. TERM AND TERMINATION
11.1. This Agreement becomes effective as of the day and year it is
countersigned by an office of Vendor. Except as otherwise
provided herein, the initial term of this Agreement shall be
for a period of one year. This Agreement may be terminated by
the Vendor (i) immediately if Business Partner violates or
fails to comply with any of the terms of this Agreement; or
(ii) upon thirty (30) days written notice from Vendor for any
reason. Upon termination, Business Partner will cease
marketing, selling or distributing Vendor Product(s) and
return all Products and other Vendor materials to Vendor
within seven (7) days of termination, at the expense of
Business Partner. Subject to the termination provisions set
forth above, this Agreement shall be automatically renewed
from year to year thereafter upon compliance with the
provisions of Appendix A - Business Partner Discount, unless
either party is otherwise notified by the other in writing of
the intent to terminate not later than thirty (30) days prior
to the date of this Agreement would otherwise be renewed.
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<PAGE> 6
11.2. FINANCIAL OBLIGATIONS - In the event that Business Partner
fails to maintain a satisfactory credit rating or financial
condition or if Vendor reasonably concludes that, for any
reason, Business Partner is or will become unable to discharge
its obligations hereunder, Vendor may terminate this Agreement
immediately upon written notice.
11.3. BANKRUPTCY - In the event of a filing by or against either
party of a petition for relief under the United States
Bankruptcy Code or any similar petition under the insolvency
laws of any jurisdiction, which in the case of a filing
against the party is not dismissed in sixty (60) days, or in
the event that either party shall make an assignment for the
benefit of creditors, permit any attachment on a substantial
portion of its assets to remain undissolved for a period of
sixty (60) days, or discontinue the business operations
relevant to this Agreement, then the other party may
immediately terminate this Agreement upon written notice.
11.4. OBLIGATIONS UPON TERMINATION - Upon termination of this
Agreement, and except as otherwise provided in this Agreement:
11.4.1. The license granted to Business Partner by this
Agreement shall be terminated immediately; Business
Partner shall make no further use of all or any part
of the Products or any confidential information
received from Vendor, except that Vendor at its
option shall either (1) permit Business Partner to
sell some or all of its then existing inventory of
Products to Customers or (2) direct Business Partner
to return to Vendor or ship to such person or entity
as Vendor may specify (at Business Partner's cost and
risk for shipping) some or all of such inventory for
a refund of the amount paid for such inventory;
11.4.2. Business Partner shall cease any public statements or
representations that it is an authorized Business
Partner or that it is in any way involved with
Vendor, and shall immediately cease use of any
trademark, service mark, or trade name of Vendor; and
11.4.3. Any support fee or other service or support revenues
relating to Products that are accrued or are received
by Business Partner after termination shall be turned
over to, shall be the property of, and may be
collected by Vendor or such person or entity as
Vendor may designate;
11.5. SURVIVAL OF CERTAIN PROVISIONS - Sections 8, 9, 10, 11 and 12
shall survive the termination of this Agreement, and
termination shall not relieve either party of the obligation
to pay any amount due to the other.
11.6. CUSTOMER RIGHTS ON TERMINATION - It is understood and agreed
that no termination of this Agreement, whatever the cause
thereof, shall in any way terminate, restrict, limit, or
affect in any way the right of any authorized Customer to
utilize the Products in accordance with the terms of the
applicable Customer License Agreement(s).
12. GENERAL PROVISIONS
12.1. RELATIONSHIP OF PARTIES - This Agreement does not make either
party the employee, agent or local representative of the other
for any purpose whatsoever. Neither party is granted any right
or authority to assume or to create any obligation or
responsibility, expressed or implied, on behalf of or in the
name of the other party. In fulfilling its obligations
pursuant to this Agreement, each party shall be acting as an
independent contractor.
12.2. ENTIRE AGREEMENT - This Agreement, including any Appendix
attached to this Agreement, states the entire agreement
between the parties on the subject matter hereof and
supersedes all prior negotiations, understandings and
agreements between the parties concerning the subject matter.
No amendment or modification of this Agreement shall be made
except by a writing signed by both parties.
12.3. NO WAIVER - The failure of either party to exercise any right
or the waiver by either party of any breach, shall not prevent
a subsequent exercise of such right or be deemed a waiver of
any subsequent breach of the same of any other term of the
Agreement.
12.4. NOTICE - Any notice required or permitted to be sent hereunder
shall be in writing and shall be sent in a manner requiring a
signed receipt, such as Federal Express, courier delivery, or
if mailed, registered or certified mail, return receipt
requested. Notice is effective upon receipt. Notice of Vendor
shall be addressed as set forth below or such other person or
address as Vendor may designate:
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<PAGE> 7
SalesLogix Corporation
8800 North Gainey Center Drive, Suite 200
Scottsdale, AZ 85258 USA
Attn: Business Partner Administration
Notice to Business Partner shall be addressed as specified in
Appendix A.
12.5. PARTIAL INVALIDITY - Should any provision of this Agreement be
held to be void, invalid, or inoperative, the remaining
provisions of this Agreement shall not be affected and shall
continue in effect as though such provisions were deleted.
12.6. FORCE MAJEURE - Neither party shall be deemed in default of
this Agreement to the extent that performance of its
obligations or attempts to cure any breach are delayed or
prevented by reason of any act of God, fire, natural disaster,
accident, act of government, shortages of materials or
supplies, or any other cause beyond the control of such party
("Force Majeure"), provided that such party gives the other
party written notice thereof promptly and, in any event,
within fifteen (15) days of discovery thereof and uses its
best efforts to cure the delay. In the event of such Force
Majeure, the time for performance or cure shall be extended
for a period equal to the duration of the Force Majeure but
not in excess of three (3) months, subject to Vendor's
termination rights.
12.7. ASSIGNMENT - This Agreement may not be assigned by Business
Partner, nor any duty hereunder delegated by Business Partner,
without the prior written consent of Vendor.
12.8. TAXES - Business Partner is responsible for payment of any and
all applicable taxes, other than Vendor's net income taxes
relating, to Products and this Agreement. Orders are subject
to applicable sales, use and/or other such taxes unless a
resale card is on file with Vendor. In the event Vendor is
required to pay any applicable taxes with respect to any order
made pursuant to this Agreement, Business Partner shall pay
any such taxes, as included on the invoice or otherwise,
within thirty (30) days from the shipment date stated on the
invoice or, if not included on the invoice, within ten (10)
days of presentation of Vendor's statement.
12.9. INJUNCTIVE RELIEF - The parties recognize that a remedy at law
for a breach of the provisions of this Agreement relating to
confidential information, or use of Vendors' trademarks,
copyrights, and other intellectual property rights, will not
be adequate for Vendor's protection, and accordingly Vendor
shall have the right to obtain, in addition to any other
relief and remedies available to it, injunctive relief to
enforce the provisions of this Agreement.
12.10. HEADINGS - The titles and headings of the various sections and
paragraphs of this Agreement are intended solely for
convenience of reference and are not intended for any other
purpose whatsoever, or to explain, modify, or place any
construction upon or on any of the provisions of this
agreement.
12.11. GOVERNING LAW - This Agreement shall be governed and
interpreted in accordance with the substantive law of the
State of Arizona.
12.12. EXCLUSIVE JURISDICTION AND VENUE - Any legal action brought
concerning this Agreement or any dispute hereunder shall be
brought only in the courts of the State of Arizona or in the
federal courts located in such state. Both parties submit to
venue and jurisdiction in these courts.
13. EXECUTION IN COUNTERPARTS
13.1. The Agreement may be executed in any number of counterparts
with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and
shall constitute one Agreement.
14. AUDIT
14.1. Business Partner agrees to allow a mutually acceptable auditor
to audit and analyze appropriate accounting records of
Business Partner to insure compliance with this Agreement.
Business Partner shall have the right to object to the auditor
selected by Vendor for bona fide business reasons and in the
event of such an objection, Business Partner will select
another auditor mutually acceptable to Vendor. Business
Partner's agreement or consent to Vendor's selection of an
auditor shall not be unreasonably withheld or delayed. Any
such audits shall be permitted by
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<PAGE> 8
Business Partner during normal business hours at a time
mutually agreed upon between Vendor and Business Partner
within a reasonable time after Business Partner's receipt of
Vendor's written request to audit. The cost of such an audit
shall be borne by Vendor.
So agreed between the parties signing below.
SALESLOGIX CORPORATION -----------------------------------
[NAME OF BUSINESS PARTNER]
By: By:
------------------------------- --------------------------------
[Signature] [Signature]
- ---------------------------------- -----------------------------------
[Type/Print Name] [Type/Print Name]
Title: Title:
---------------------------- -----------------------------
Date: Date:
---------------------------- -----------------------------
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<PAGE> 9
APPENDIX A - BUSINESS PARTNER DISCOUNT
1. DISCOUNT
1.1. Based on annual revenue goal of $ net to Vendor,
Business Partner is entitled to a discount of % off of the
published retail prices for Products shown in the Retail Price
List.
1.2. Business Partner's revenue net to Vendor shall be reviewed
semi-annually. If that revenue is sufficient to reasonably
assume that the annual revenue goal will be met, Business
Partner's discount stated above shall remain in effect. If the
revenue is significantly above or below what would be
reasonably expected, Vendor reserves the right to adjust
Business Partner's discount, with 30 days notice, up or down
according to Vendor's then current discounting policies.
1.3. Business Partner is entitled to a discount of 10% for all
Support service and Product Upgrade offerings shown in the
Retail Price List. Business Partner shall provide Vendor with
the Customer name, a contact, and a phone number for any
Customer purchasing Support or Product Upgrade.
2. NOTICE CONTACT
2.1. Any notice to Business Partner as required and specified under
the terms of this Agreement shall be addressed to:
Name:
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Company:
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Address:
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<PAGE> 10
APPENDIX B - PRODUCT AUTHORIZATIONS
<PAGE> 1
EXHIBIT 10.20 - FORM OF OEM PARTNER AGREEMENT
SALESLOGIX CORPORATION
OEM PARTNER AGREEMENT WITH RESELLER OPTION
THIS AGREEMENT is made and entered into as of (the "Effective Date"), by and
between SALESLOGIX Corporation, a Delaware corporation (hereinafter referred to
as "SalesLogix"), with its principal office currently located at 8800 North
Gainey Center Drive, Suite 200, Scottsdale Arizona, 85258, USA, and ("OEM
Partner"), an corporation with its principal office currently located at.
RECITALS
A. SalesLogix licenses and distributes a certain software application
package known as SALES INFORMATION SYSTEM, and related documentation,
which are more particularly described in EXHIBIT 1 ("SIS").
B. OEM Partner intends to develop, manufacture and license a software
product known as ("Product");
C. SalesLogix and OEM Partner believe that SIS can offer OEM Partner
customers added functionality by embedding SIS into THE OEM PRODUCT.
SalesLogix desires to license to OEM Partner the right to use and
sublicense SIS under the terms of this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the recitals and promises contained herein,
SalesLogix and OEM Partner agree as follows:
1. DEFINITIONS
1.1. "Confidential Information" shall mean written or machine-readable
information (or oral information reduced to writing or summarized in writing
within 10 days of oral disclosure) that the disclosing party considers
proprietary or confidential and marks as confidential", "proprietary",
"sensitive" or with words of similar meaning.
1.2. "Documentation" shall mean the manuals and other instructional and
informational material regarding SalesLogix Products made commercially available
by SalesLogix in electronic media (if available) and hard copy.
1.3. "SalesLogix Products" shall mean the SalesLogix software
application package known as SIS described in EXHIBIT 1, and all future
derivations, upgrades and revisions thereto that are made commercially available
by SalesLogix to its end user customers in general releases.
<PAGE> 2
1.4. "Licensed Materials" shall mean SalesLogix Products and the
related Documentation and modified documentation.
1.5. "Modified Documentation" shall refer to the Documentation, as
modified by OEM Partner pursuant to Section 3.2.
1.6. "Object Code" shall mean software in machine executable, binary
format.
1.7. "OEM Affiliate" shall refer to all OEM Partner employees, agents,
contractors, representatives, distributors, joint venture partners, subsidiaries
(whether partially or wholly owned), and all other persons or entities working
for, through or on behalf of OEM Partner.
1.8. "OEM Bundling Products" shall mean the products, including
associated documentation, of OEM Partner described on EXHIBIT 2.
1.9. "OEM Products" shall mean the combined products consisting of
SalesLogix Products as embedded in one or more of the OEM Bundling Products.
1.10. "Source Code" shall refer to SalesLogix Products in
human-readable, high-level language form and such other documentation as
normally accompanies such Source Code including, but not limited to: test
scripts, design documents, make files, user documentation source files, on-line
help source files, 3rd party embedded source list, and 3rd party tools required
list.
1.11. "Support" shall mean the support of Licensed Materials offered by
SalesLogix, as described in Section 7 and EXHIBIT 8.
2. SCOPE; TERM OF AGREEMENT
2.1. Scope. The terms of this Agreement shall apply to OEM Partner's
use and sublicense of the OEM Products, all as more particularly described
herein. The terms of this Agreement shall be referenced in and govern all
purchase orders. The terms contained in acknowledgments, invoices or purchase
orders, and the terms of any prior agreements between SalesLogix and OEM
Partner, are hereby superseded by the terms of this Agreement and any terms that
are additional to or inconsistent with this agreement shall have no force or
effect.
2.2. Term. This Agreement shall remain in full force and effect from
the effective date first noted above until the earlier of its termination for
cause as set forth in Section 12 below or its cancellation by OEM Partner on 90
days prior written notice to SalesLogix.
3. LICENSES
3.1. OEM License. SalesLogix hereby grants to OEM Partner a
non-exclusive, perpetual (except as expressly set forth herein) license to embed
the Licensed Materials in object code form within the OEM Bundling Products, and
to market and sublicense the Licensed Materials in object code form as part of
the OEM Products. As part of this license, SalesLogix hereby grants OEM Partner
the right to use and copy the Licensed Materials in object code form, and to
sublicense the Licensed Materials to customers, directly and through OEM
Affiliates, all
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pursuant to the terms of this Agreement. SalesLogix Products shall be
distributed under this Agreement as part of the OEM Products with SalesLogix's
use protection system in place.
3.2. Reseller License. In addition to the OEM License, SalesLogix
hereby grants to OEM Partner a non-exclusive, worldwide license to market and
distribute the Licensed Materials apart from OEM Bundling Products on a
stand-alone basis. In such case OEM Partner shall act as a "reseller" of SIS and
shall use SalesLogix's trademark names to refer to the Licensed Materials. In
all cases where OEM Partner acts as a reseller, Section 4.1.3 shall apply and
OEM Partner shall comply with the Reseller provisions set forth in EXHIBIT 3.
3.3. Documentation Translation and Modification. SalesLogix hereby
grants to OEM Partner a non-exclusive, worldwide license to modify and translate
the Documentation so that it is consistent with, and in the same languages as,
OEM Partner's standard format for documentation used with OEM Bundling Products.
It is the parties' intention that this modified documentation (the "Modified
Documentation"), shall be substantially different from the Documentation in
format and languages only, and OEM Partner shall not make any claims with
respect SalesLogix Products that are not specifically included in the
Documentation provided by SalesLogix. OEM Partner shall deliver a copy of the
Modified Documentation to SalesLogix before such Modified Documentation is made
commercially available by OEM Partner. All Modified Documentation shall be
deemed a derivative work of the Documentation, SalesLogix shall own the
copyrights thereto, and OEM Partner (subject to the terms of this Agreement) and
SalesLogix each shall have the right to use such derivative works, without
paying any additional royalties to the other party other than as set forth in
this Agreement. Notwithstanding the aforesaid, it is expressly understood and
agreed that documentation pertaining specifically to Product ("Product
Documentation") shall be and remain the sole and exclusive property of OEM
Partner even if incorporated in or bundled with the Modified Documentation and
that SalesLogix acquires no right or license to said Product Documentation, by
implication or otherwise.
3.4. Customer Sublicenses. OEM Partner and OEM Affiliates shall
sublicense the Licensed Materials to end user customers under their respective
standard license agreements for their own similarly situated products, subject
to negotiated changes in the ordinary course, in substantially the form attached
as EXHIBIT 4. OEM Partner and OEM Affiliates shall cause such sublicenses to be
executed prior to the installation of the OEM Products. Immediately upon the
execution of a sublicense by OEM Partner, OEM Partner shall assign a license
number to that sublicense, and shall notify SalesLogix of the license number,
and installation date in the next Quarterly Report delivered pursuant to Section
4.3. OEM Affiliates shall do the same, reporting the information to OEM Partner,
who shall report it to SalesLogix in the next Quarterly Report to be issued
after receipt of the information from the OEM Affiliate.
3.5. OEM Partner's Use of Licensed Materials for Distribution Purposes.
SalesLogix shall deliver to OEM Partner two (2) master copies of the Licensed
Materials. OEM Partner may copy and use the Licensed Materials for the following
purposes only:
3.5.1. Use of the Licensed Materials as provided in Section 3.1 to
embed SalesLogix Products in object code form in the OEM Products, and using and
modifying the Documentation as part of OEM Product user, technical and training
documentation.
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3.5.2. Distribution of the OEM Products under the terms of the
license in Section 3.1.
3.5.3. Support by OEM Partner, as more fully described in Section
7, of customers using the OEM Products.
3.6. Trademark License. Each party is the owner of valuable trademark
rights in the trademarks and in other affiliated words, designs, and logos used
in conjunction with SalesLogix Products and the OEM Products. Except as
expressly permitted under this Agreement, the use of a party's marks, logos
and/or designs by the other party in advertising, or in any other manner, is
specifically prohibited without the prior written consent of the party owning
such marks, logos and/or designs. Specifically, OEM Partner will not use
SalesLogix's trademarks for SIS to describe the OEM Products without
SalesLogix's prior written consent, said consent not to be unreasonably withheld
or delayed. OEM Partner must, however, use the name SIS with respect to the
distribution of Licensed Materials pursuant to the reseller license in Section
3.2.
3.7. Customer Evaluations; Beta Test Sites. OEM Partner shall have the
right to install temporarily the OEM Products, only for demonstration purposes,
at sites other than OEM Partner facilities. OEM Partner shall not leave the OEM
Products unsecured and shall delete the same following the demonstration. If OEM
Products are to be left on a potential customer site unattended by OEM Partner,
an evaluation license agreement in substantially the form utilized by OEM
Partner for its own similarly-situated products will be executed by the
potential customer and OEM Partner, and such license shall be valid for the
period during which SalesLogix Products are on site unattended, but in no event
longer than thirty (30) days. A copy of OEM Partner's current form of such an
evaluation license is attached as EXHIBIT 5. SalesLogix shall provide to OEM
Partner, at no charge, one server license and up to ten site licenses for use by
OEM Partner during the term of this Agreement in beta testing in conjunction
with customers selected by OEM Partner. Said beta testing shall be done only
pursuant to a beta test agreement executed between OEM Partner and its customer
in substantially the form attached hereto as Exhibit 5A.
3.8. No Other License. No rights or licenses other than those
specifically described in this Agreement are intended and this Agreement shall
not be interpreted to include: (i) additional express or implied licenses to OEM
Partner of the Licensed Materials; or (ii) any licenses to SalesLogix of OEM
Bundling Products or underlying patents, copyrights, trademarks or trade
secrets.
3.9. Copyright Notices. Each OEM Product will display SalesLogix
copyright notices required by SalesLogix in the same locations, size and
typeface where OEM Partner sets forth other copyright legends in the OEM
Product. In addition to SalesLogix's copyright notices, OEM Partner agrees to
insert the phrase "Powered by SalesLogix [trademark]" in its splash screen in
reference to the product name for the OEM Product.
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4. ROYALTIES & MAINTENANCE FEES
4.1. Royalties. OEM Partner shall pay to SalesLogix royalties
("Royalties") for each copy of OEM Products distributed or used during the term
of this Agreement by OEM Partner or OEM Affiliates as follows:
4.1.1. Royalties for Demonstration/Promotional Copies. No
Royalties shall accrue pursuant to this Section 4 for use of Licensed Materials
solely for marketing, development, beta test, training, demonstration,
evaluation or support purposes.
4.1.2. Customer Licenses. OEM Partner shall pay to SalesLogix, as
a Royalty and in US Dollars, an amount equal to the SalesLogix published retail
price (as modified from time to time pursuant to Section 4.2), less the OEM
Discount set forth on EXHIBIT 6, for each copy of SalesLogix Products
sublicensed to customers pursuant to this Agreement (the "OEM Royalty").
4.1.3. Stand-Alone Licenses. This Agreement contemplates that OEM
Partner may act as a reseller of the Licensed Materials without bundling the
Licensed Materials with the OEM Product. In each case where OEM Partner sells
the Licensed Materials as a reseller, OEM Partner shall pay to SalesLogix, as a
Royalty and in US Dollars, an amount equal to the SalesLogix published retail
price (as modified from time to time pursuant to Section 4.2), less the Reseller
Discount set forth on EXHIBIT 6, for each copy of SalesLogix Products resold to
customers pursuant to this agreement (the "Reseller Royalties").
4.2. SalesLogix Retail Price List. SalesLogix has provided OEM Partner
with its standard retail price list, support pricing and hourly service rates,
as of the Effective Date. SalesLogix reserves the right to modify its standard
retail prices and will give OEM Partner thirty (30) days prior written notice of
such modification. The standard price list in effect at the time of the
customer's order shall control the calculation of Royalties under Section 4.1
and EXHIBIT 6.
4.3. Quarterly Reports. During the term of this Agreement, OEM Partner
agrees to provide SalesLogix within thirty (30) days of the end of each quarter
(said quarters to begin March 16 , June 16, September 16 and December 16
respectively)with a quarterly report detailing the number of copies of Licensed
Materials used internally, the number of sublicenses granted by it and OEM
Affiliates to its or their customers under this Agreement, and the number of
copies of Licensed Materials sold by OEM Partner as reseller during the
preceding quarter ("Quarterly Report").
4.4. Records and Audit. OEM Partner shall maintain reasonably complete
records of all copies of SalesLogix Products sublicensed or resold under this
Agreement by OEM Partner and OEM Affiliates, and all customer sublicenses,
license numbers, and installation dates. OEM Partner shall provide written
notice to SalesLogix not less frequently than quarterly of the number of
customer sublicenses sold and paid for by customers, and the license numbers for
each such sublicense. OEM Partner agrees to allow a mutually acceptable auditor
to audit and analyze appropriate accounting records of OEM Partner to insure
compliance with this Agreement, but not more frequently than once per calendar
year. OEM Partner shall have the
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right to object to the auditor selected by SalesLogix for bona fide business
reasons and in the event of such an objection, OEM Partner will select another
auditor mutually acceptable to SalesLogix. OEM Partner's agreement or consent to
SalesLogix's selection of an auditor shall not be unreasonably withheld or
delayed. Any such audits shall be permitted by OEM Partner during normal
business hours at a time mutually agreed upon between SalesLogix and OEM Partner
within a reasonable time after OEM Partner's receipt of SalesLogix's written
request to audit. SalesLogix shall have the right to audit such records during
regular business hours, at SalesLogix's reasonable request. In the event that
such audit shows that OEM Partner has underpaid SalesLogix by five percent (5%)
or more of the amounts due hereunder, then all reasonable out-of-pocket costs of
such audit shall be paid by OEM Partner, including reimbursing SalesLogix for
its reasonable actual costs. Otherwise, the cost of such an audit shall be borne
by SalesLogix.
4.5. Payments. OEM Partner shall pay Royalties and the Support Fees
described in EXHIBIT 6 quarterly within thirty (30) days following the end of
the fiscal quarter for which Royalties are being paid. OEM Partner shall submit
to SalesLogix with the quarterly Royalty payments the Quarterly Report required
pursuant to Section 4.3 above. OEM Partner shall remain solely responsible for
collection of license fees from OEM Affiliates and customers and shall promptly
pay to SalesLogix all amounts due hereunder regardless of whether OEM Partner
has collected payments from OEM Affiliates or customers.
4.6. Annual License Fee. OEM Partner shall pay to SalesLogix annual
license fees as set forth in EXHIBIT 6.
4.7. Support Fees. OEM Partner shall pay to SalesLogix Support Fees as
set forth in EXHIBIT 6.
5. TRAINING
In consideration of the Annual License Fees, SalesLogix shall provide
OEM Partner with sales, marketing and technical training as provided in EXHIBIT
7.
6. WARRANTY
6.1. Specific Warranties. SalesLogix warrants the following to OEM
Partner:
6.1.1. Warranty. The Licensed Materials delivered under Section
3.5, including modifications, updates and upgrades will materially comply with
SalesLogix's published specifications. In addition, SalesLogix represents and
warrants as follows: that the Licensed Materials are designed to be used prior
to, during, and after the year 2000 A.D. and that they will operate during such
time periods without error relating to date data which represent or reference
different centuries or more than one century; that no value for current date
will cause interruptions in normal operation; that all manipulations of
calendar-related data (dates, durations, days of week, etc.) will produce
correct results for all valid date values; that date elements in interfaces and
data storage permit specifying century to eliminate date ambiguity; and that for
any date element represented without century, the correct century is unambiguous
for all manipulations involving that element. If (a) OEM Partner notifies
SalesLogix of an error or defect in the Licensed Materials, (b) OEM Partner
provides to SalesLogix a description
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allowing the error to be repeated, and (c) the error or defect has not been
caused or introduced by OEM Bundling Products or modifications to the Licensed
Materials made by OEM Partner, then SalesLogix will either (i) modify, repair or
replace the Licensed Materials, or, at the election of OEM Partner, (ii) make
instructions available to OEM Partner to modify the Licensed Materials.
6.1.2. SalesLogix Authority. SalesLogix has full right, power and
authority to license the Licensed Materials to OEM Partner and its customers as
provided in this Agreement. Upon request from OEM Partner from time to time,
SalesLogix shall provide OEM Partner with legible copies of all license
agreements relating to third party Object Code embedded in the Licensed
Materials.
6.2. Remedies and Exclusions. SalesLogix's warranties hereunder shall
not apply to: (a) modifications to SalesLogix Products that are not made or
specifically required or written authorization by SalesLogix; (b) problems or
nonconformities caused by the use of SalesLogix Products with other software or
hardware that is not specifically identified in the Documentation as a
compatible product; or (c) any misuse or abuse of SalesLogix Products. Any labor
and other costs incurred by SalesLogix in the repair of faults or errors related
to these actions shall be reimbursed by OEM Partner at SalesLogix's then-current
rates. SalesLogix will have the option of classifying and responding to errors
by levels of severity, and shall have the option of modifying errors reasonably
classified as minor inconveniences in SalesLogix's regular software releases.
6.3. Limitations. THE WARRANTIES SET FORTH ABOVE SHALL BE EXCLUSIVE,
AND IN NO EVENT SHALL SALESLOGIX OR ANY SALESLOGIX-CONTROLLED AFFILIATE BE
LIABLE FOR ANY WARRANTIES IMPLIED BY LAW OR OTHERWISE, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH REGARD TO ANY GOODS
PROVIDED OR SUPPLIED PURSUANT TO THIS AGREEMENT.
7. ON-GOING SUPPORT; JOINT DEVELOPMENTS.
7.1. Support by SalesLogix. OEM Partner shall have the right to sell to
its customers post-warranty support of the OEM Products under OEM Partner's
then-current software support program. OEM Partner shall also have the right to
provide, on a time and expense basis, support services to customers that do not
purchase the post warranty support. OEM Partner acknowledges and agrees,
however, that as between OEM Partner and SalesLogix, OEM Partner shall be
responsible for providing support directly to its customers (i.e. "first line"
support), and SalesLogix has no obligation to provide any support directly to
OEM Partner customers. In consideration of the Annual License Fees and Support
Fees, SalesLogix shall provide the support services set forth on EXHIBIT 8
("Support").
7.2. Joint Developments. From time to time the parties may wish to work
together to develop products or new product interfaces. The parties shall set
forth the terms and conditions of such joint development efforts in either an
attachment to this Agreement or in a new agreement.
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8. SOURCE CODE ESCROW
The parties shall, within thirty (30) days following the effective date
of this Agreement, execute documents necessary and appropriate to add OEM
Partner to the list of licensees who are beneficiaries under SalesLogix's
existing Source Code escrow account. OEM Partner acknowledges that it has
received a copy of the existing account agreement and agrees to be bound by its
provisions and restrictions. Transfer of a copy of the Source Code to OEM
Partner pursuant to this Section 8 shall not pass title to the Source Code, but
shall effect only a perpetual, non-exclusive license from SalesLogix to OEM
Partner to use, copy and modify the Source Code for the sole purpose of
supporting the Licensed Materials sublicensed by OEM Partner as part of the OEM
Products to its then existing customers and not for any other purpose.
SalesLogix shall retain all right, title and interest in all modifications made
by OEM Partner to the Source Code and OEM Partner shall deliver to SalesLogix a
copy of all such modifications made by OEM Partner to the Source Code; provided,
however, that OEM Partner shall have the same license to such modifications that
it has to use the Source Code under this Section 8. Source Code received by OEM
Partner under this Section shall be deemed to be Confidential Information of
SalesLogix under this Agreement.
9. SOFTWARE OWNERSHIP.
9.1. SalesLogix Ownership; No Reverse Engineering. By granting OEM
Partner the rights described in this Agreement, SalesLogix does not relinquish
its ownership of or rights in the Licensed Materials, and retains title to all
copyrights, patents, trade secrets, trademarks, and other intellectual property
rights contained in the Licensed Materials as a whole. OEM Partner shall not
reverse compile, disassemble or reverse engineer SalesLogix Products, and OEM
Partner shall prohibit OEM Partner Affiliates and their respective customers
from reverse compiling, disassembling or reverse engineering SalesLogix
Products.
9.2. No Derivative Works. The Licensed Materials are protected by
copyright. No part of the Licensed Materials may be reproduced by customers, by
OEM Partner or by OEM Affiliates except as permitted under this Agreement. No
part of SalesLogix Products may be used to make a derivative work, such as a
translation, transformation or adaptation, without the express written
permission of SalesLogix, except as permitted under this Agreement.
10. INTELLECTUAL PROPERTY INDEMNITY
10.1. SalesLogix Indemnity. SalesLogix shall indemnify and hold
harmless OEM Partner from and against all damages and costs incurred by OEM
Partner in any action for infringement of any trade secret, copyright, or U.S.
patent by a third party related to the Licensed Materials, including SalesLogix
modifications, updates and upgrades, in the same form as delivered to OEM
Partner, provided that OEM Partner gives SalesLogix prompt written notice of any
action, claim or threat of infringement suit, either oral or written, and
opportunity to elect to take over, settle or defend any such claim, action or
suit through counsel of SalesLogix's own choosing. OEM Partner will make
available to SalesLogix all defenses against any such claim, action, suit or
proceeding and will give SalesLogix such information, assistance and authority
as is reasonably necessary to enable SalesLogix to defend against and settle
charges of infringement, provided that OEM Partner shall not be obligated in any
way to contribute any
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moneys to such defense or settlement without its prior consent, in its sole
discretion. OEM Partner shall have the right to be represented by counsel of its
own choosing in any such claim, action or suit to insure that its rights are
protected and shall bear all costs of such counsel. Should use of the Licensed
Materials be enjoined or restricted as a result of such a claim, SalesLogix
shall, at its expense and option (i) procure for OEM Partner the right to
continue using the Licensed Materials, or (ii) replace the Licensed Materials
with non-infringing materials of equivalent functionality; or (iii) modify the
Licensed Material so as to become non-infringing; all without material loss of
functionality, or (iv) if none of the foregoing are reasonably available to
SalesLogix, SalesLogix shall have the right to terminate the licenses granted
herein. The indemnity set forth in this Section 10.1 shall not apply to the
extent that the indemnity set forth in Section 10.2 applies.
10.2. OEM Partner Indemnity. OEM Partner shall indemnify and hold
harmless SalesLogix from and against all damages and costs incurred by
SalesLogix in any action for infringement of any trade secret, copyright, or
U.S. patent by a third party related to the Licensed Materials only to the
extent that such claims are made as a result of OEM Partner's modification of
the Licensed Materials, including OEM Partner's modifications and alterations
made in connection with embedding SalesLogix Products, and with respect to all
changes made to the Source Code by OEM Partner, provided that SalesLogix gives
OEM Partner prompt written notice of any action, claim or threat of infringement
suit, either oral or written, and opportunity to elect to take over, settle or
defend any such claim, action or suit through counsel of OEM Partner's own
choosing. SalesLogix will make available to OEM Partner all defenses against any
such claim, action, suit or proceeding and will give OEM Partner all needed
information, assistance and authority to enable OEM Partner to defend and settle
against charges of infringement, provided that SalesLogix shall not be obligated
in any way to contribute any moneys to such defense or settlement without its
prior consent, in its sole discretion. SalesLogix shall have the right to be
represented by counsel of its own choosing in any such claim, action or suit to
insure that its rights are protected and shall bear all costs of such counsel.
11. MUTUAL INDEMNITY AND LIMITATION OF LIABILITY
11.1. Indemnity. Each party shall indemnify the other party for all
claims, damages, or costs suffered by the indemnified party as a result of any
accident, injury or damage to persons or property caused solely, jointly or
contributorily by the negligence of the indemnifying party, including without
limitation misrepresentations made by the indemnifying party to third parties.
The indemnifying party shall be liable only to the extent that the indemnifying
party is at fault for such claims, damages, or costs. In situations where both
parties are found to be at fault, each party shall be responsible for its
proportionate share of the claims, damages or costs.
11.2. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER FOR INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES RELATING TO OR
ARISING OUT OF PERFORMANCE OF THIS AGREEMENT, INCLUDING DAMAGES BASED ON
CONTRACT, NEGLIGENCE, WARRANTY OR OTHERWISE, PROVIDED THAT THIS LIMITATION SHALL
NOT APPLY TO BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT OR TO
INDEMNIFICATION OBLIGATIONS.
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12. TERMINATION
12.1. Termination for Cause. In the event that either party, its
officers, agents, or employees, commits a material violation of any provision of
this Agreement other than an to obligation to pay money and fails to cure such
violation within forty-five (45) days after receiving written notice of default
from the other party, the non-defaulting party shall have the right immediately
to terminate this Agreement; provided, however, that if such default cannot be
cured within such forty-five (45) days and the defaulting party commences cure
within such forty-five (45) days then the non-defaulting party shall not be
entitled to terminate this Agreement so long as the defaulting party diligently
pursues such cure and cures such default no later than ninety (90) days
following the receipt of the initial notice of default. If OEM Partner is in
default for failure to pay money as and when due and fails to cure such default
within thirty (30) days after receiving written notice of default from
SalesLogix, then SalesLogix shall have the right to terminate this Agreement
effective upon delivering notice of termination to OEM Partner.
12.2. Return of Licensed Materials, Documentation and Confidential
Information. Within twenty (20) days after termination of this Agreement, (i)
OEM Partner shall return to SalesLogix all copies of the Licensed Materials and
all Confidential Information, including any modified or updated versions, in OEM
Partner's possession, custody or control, or certify to SalesLogix that all such
copies and Confidential Information have been destroyed (except only as provided
hereafter), provided, however, that OEM Partner may retain sufficient copies of
the Licensed Materials required for the continuing support of SalesLogix
Products sublicensed to customers prior to such termination, to the extent
permitted under Section 12.3; and (ii) OEM Partner shall also account to
SalesLogix for all of the Licensed Materials and Confidential Information
related to this Agreement that it has provided to OEM Affiliates by requiring
the OEM Affiliates to return them to SalesLogix or certify to SalesLogix that
all such materials have been destroyed. Within twenty (20) days after
termination of this Agreement, SalesLogix shall return to OEM Partner all copies
of OEM Partner Confidential Information, or certify to OEM Partner that all
copies of OEM Partner Confidential Information in SalesLogix's custody,
possession or control have been destroyed.
12.3. Sublicenses and Support Agreements. Sublicense agreements entered
into prior to the date of termination and Support agreements signed by OEM
Partner and customers relating to the Licensed Materials shall survive
termination of this Agreement provided they are in accordance with the terms and
conditions of this agreement and OEM Partner is not in default hereunder.
12.4. Remedies. Termination of this Agreement shall be in addition to
and not in lieu of any other legal and equitable remedies available to the
parties.
13. CONFIDENTIALITY
Each party agrees that all Confidential Information of the other party
shall be held in strict confidence and shall not be disclosed or used without
express written consent of the other party. Confidential information shall not
include any information already in the possession of a party or received without
violation of this Agreement or of confidentiality obligations of the
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person or entity providing such information, or information which is
independently developed by a party, is in the public domain, or has otherwise
been released without restriction by the party claiming confidentiality. Each
party agrees to require that its employees, agents, representatives, lenders,
potential investors, distributors, subsidiaries, joint ventures and affiliates
given access to the other party's Confidential Information shall be subject to
confidentiality obligations substantially the same as those described in this
Section 13. If public disclosure of Confidential Information is required under
applicable laws, rules or regulations, the party required to disclose may do so
provided (a) it shall give the other party prior notice of such disclosure to
the extent reasonably possible to permit the other party to take steps to obtain
protective orders or other similar relief as it may deem appropriate to seek and
(b) it cooperates with other party in such efforts. The provisions of this
Section 13 shall survive termination of this Agreement for a period of five
years from the effective date of termination.
14. TAXES
OEM Partner or its customers shall pay all sales or other similar taxes
and duties, however designated, which are levied or imposed because of this
Agreement or because of sublicenses granted to customers pursuant to this
Agreement, except for income or other similar taxes levied on SalesLogix's net
income.
15. COMMUNICATIONS
15.1. Focused Communications. The parties shall each designate a
specific person within their respective organizations to be the initial contact
for all communications between the parties; provided, however, that OEM
Partner's developer personnel and SalesLogix's developer personnel may have
on-going direct contacts as required by Section 7. At the effective date of this
Agreement, the initial contacts shall be:
OEM PARTNER:
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SALESLOGIX:
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The parties may change the person designated through written notice in
compliance with Section 16.2.
16. MISCELLANEOUS
16.1. Complete Agreement; No Assignment; No Waiver. This Agreement, the
Attachments hereto, and the separate escrow agreement referred to in Section 8
shall constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior understandings, proposals
negotiations and communications, oral or written, between the parties or their
representatives. This Agreement may not be modified except in a writing signed
by the duly authorized representatives of the parties hereto. Neither party may
assign its rights, duties or obligations under this Agreement to any entity in
whole or in part without the
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prior written consent of the other party. The failure of either party to
exercise any right or the waiver by either party of any breach, shall not
prevent a subsequent exercise of such right or be deemed a waiver of any
subsequent breach of the same of any other term of the Agreement.
16.2. Notices. All notices, demands, consents, approvals and other
communications shall be sufficient if in writing and sent by prepaid wire,
facsimile transmission (with confirming copy by mail) or registered or certified
mail, return receipt requested, postage prepaid to the addresses of the parties
specified below. Notices shall be effective when received, three (3) days
following mailing or upon confirmation of facsimile transmission, whichever is
earliest.
Notices should be sent to the parties at the following addresses:
SalesLogix Corporation
8800 North Gainey Center Drive, Suite 200
Scottsdale, AZ 85258 USA
Attn: OEM Partner Administration
If to OEM Partner:
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Attn:
------------------
The address for giving notice may be changed by complying with the written
notice provisions of this Section.
16.3. Severability. In case one or more provisions of this Agreement
shall be invalid, illegal or unenforceable, such provisions shall be severed and
the remaining provisions shall continue as valid, legal and enforceable. The
remaining provisions shall be integrated and interpreted in such a way as to
give them maximum enforceability and validity under the applicable law, while
retaining the original intent of the parties with respect to such provisions.
16.4. Disclaimer of Agency. This Agreement shall not constitute either
party the legal representative or agent of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, expressed or implied, against, or in the name of or on
behalf of the other party.
16.5. Injunctive Relief. The parties recognize that a remedy at law for
a breach of the provisions of this Agreement relating to confidential
information, or misuse of a party's trademarks, copyrights, and other
intellectual property rights, will not be adequate for a party's protection, and
accordingly each party shall have the right to obtain, in addition to any other
relief and remedies available to it, injunctive relief to enforce the provisions
of this Agreement.
16.6. Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the substantive laws of the State
of Arizona (without regard to choice of laws). The U.N. Convention on the
International Sale of Goods shall not apply. Any legal action brought concerning
this Agreement or any dispute hereunder shall be brought only in the courts of
the State of Arizona or in the federal courts located in such state. Both
parties submit to venue and jurisdiction in these courts.
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<PAGE> 13
16.7. Survival. Each party's obligations to pay monies to the other
party which have accrued prior to the date of termination shall survive
termination of this Agreement, as will the following Sections: 9, 10, 11, 12.2,
12.3, 12.4, 13, 14 and 16.
16.8. Publicity. Unless an announcement of the terms of this Agreement
is agreed to in writing by the parties, each party shall treat the business
terms of this Agreement as Confidential Information and subject to Section 13.
16.9. Export Control. OEM Partner shall comply with all applicable
export control laws and regulations of the United States and any other country
having proper jurisdiction and shall obtain all necessary export licenses in
connection with any subsequent export, reexport, transfer and use of all
products, technology and software purchased or licensed under this Agreement.
16.10. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and shall constitute one
Agreement.
So agreed between the parties signing below.
SALESLOGIX CORPORATION
------------------------
[NAME OF OEM PARTNER]
By: By:
--------------------------- ----------------------
[Signature] [Signature]
--------------------------- ----------------------
[Type/Print Name] [Type/Print Name]
Title: Title:
--------------------------- ----------------------
Date: Date:
--------------------------- ----------------------
13
<PAGE> 14
EXHIBITS
1 SalesLogix Products
2 OEM Bundling Products
3 Provisions Applicable to Reseller License
4 OEM Partner's Standard Form Customer License Agreement
5 OEM Partner's Standard Form Evaluation License Agreement
5A OEM Partner's Standard Beta Test License Agreement
6 License Fees, Royalty Calculations, Discounts and Support Fees
7 Training
8 Support
1
<PAGE> 15
EXHIBIT 1
SALESLOGIX PRODUCTS
1
<PAGE> 16
EXHIBIT 2
OEM Bundling Products
<PAGE> 17
EXHIBIT 3
SalesLogix's Reseller Program; Provisions Applicable to Reseller License
As a reseller of the Licensed Materials OEM Partner will be treated as a
SalesLogix "Business Partner," and each of the following conditions shall apply
to the reseller license granted to OEM Partner (hereafter referred to as
"Business Partner" in this Exhibit ) under the foregoing Agreement:
1. Non-Exclusivity; Other Distribution. Business Partner's rights to resell the
Licensed Materials are entirely non-exclusive. SalesLogix reserves the right
from time to time and in its sole discretion to increase or decrease the number
of authorized resellers of the Licensed Materials within and without the
Territory, and to distribute the Products using its own personnel or independent
sales representatives, or via any other distribution channel.
2. Distribution Limitations. The reseller license granted under this Agreement
is personal to Business Partner; Business Partner shall not authorize or appoint
any dealers, agents, representatives, sub-distributors, original equipment
manufacturers, value added resellers, systems integrators, or other third
parties to distribute or license the Licensed Materials under the Reseller
License.
3. Customer Licenses. Business Partner shall provide each Customer with the
original SalesLogix licenses included in the Documentation for the Licensed
Materials. Pursuant to the reseller license Business Partner shall market,
distribute, and resell the Licensed Materials only to end-user customers for
their own internal use and not for resale.
4. Copyright, Trademark and Proprietary Notices. Business Partner agrees not to
remove any copyright notices, trademark notices or any confidential or
proprietary legends from any Licensed Materials. Business Partner agrees to
reproduce all copyright, trademark and similar notices on all copies of the
Licensed Materials. No reproduction of Licensed Materials or any part thereof
may be made pursuant to the reseller license without the prior written
permission of the SalesLogix signed by an officer of SalesLogix.
5. Advertisement. Business Partner will not publish, nor cause or permit to be
published, any advertising referring in any way to SalesLogix or the Licensed
Materials without the prior written permission of the SalesLogix signed by an
officer of SalesLogix.
6. Discontinuing Products; Product Modifications. SalesLogix reserves the right,
at any time, to discontinue distribution of any or all of the Licensed Materials
or versions of the Licensed Materials, or to discontinue support, maintenance,
or the provision of new versions, updates, or corrections for any Licensed
Materials without liability under the reseller license. SalesLogix reserves the
night, at any time, to make such modifications to the Licensed Materials as it
sees fit in the operation, performance, or functionality of the Licensed
Materials.
7. Acceptance of Orders by SalesLogix. All orders placed with SalesLogix for
Licensed Materials shall be subject to acceptance by SalesLogix, in its sole
good faith discretion, at its principal place of business.
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<PAGE> 18
8. Delivery Schedule and Delays. SalesLogix shall not be liable for any damages
to Business Partner or to any other person for SalesLogix's failure to fill any
orders or for any delay in delivery or error in filling orders for any reason
whatsoever. SalesLogix reserves the right to apportion Licensed Materials in its
sole discretion when demand exceeds available supply.
9. Partial Shipments. Unless Business Partner clearly directs otherwise,
SalesLogix may make partial shipments against Business Partner orders due to
availability of Licensed Materials, which shipments shall be separately invoiced
and paid by Business Partner upon shipment, without regard to subsequent
shipments.
10. SalesLogix Cancellation. SalesLogix reserves the right to cancel or delay
shipment of any orders placed by Business Partner and accepted by SalesLogix, if
Business Partner: (i) fails to make any payment as provided in this Agreement;
(ii) fails to meet reasonable financial requirements established by SalesLogix,
or (iii) otherwise fails to comply with the terms and conditions of this
Agreement.
11. Shipment. All Licensed Materials will be shipped F.O.B. point of
manufacture. All shipments will be made with shipping charges prepaid by
SalesLogix, and unless otherwise directed by Business Partner, SalesLogix shall
select a common carrier. SalesLogix shall not bear any liability regarding
delivery by that carrier. Costs for shipment shall be included in the invoice
price. Risk of loss shall be borne by Business Partner upon delivery of the
Products to the carrier for shipment.
12. Customer Prices. Business Partner shall be solely responsible for
determining its own retail prices for the Licensed Materials sold pursuant to
the reseller license.
13. Business Partner Price. Business Partner shall be entitled to receive the
Reseller Discounts set forth in Exhibit 6. All orders for SalesLogix's products
pursuant to the reseller license must have a confirming purchase order number
from Business Partner.
14. Payment. Payment for Licensed Materials shall be due and paid prior to
shipment of the Licensed Materials, except as otherwise agreed by SalesLogix and
Business Partner. SalesLogix reserves the right, in its discretion, and upon
satisfactory completion by Business Partner of SalesLogix's credit review, to
grant payment terms to Business Partner.
15. Demonstration Copies. SalesLogix shall provide Business Partner with a
demonstration copy of each of the Licensed Materials currently on SalesLogix's
retail price list. From time to time, SalesLogix may provide to Business Partner
additional sample copies of new versions of the Licensed Materials. Business
Partner may copy and distribute these demonstration copies at no charge to
Customers solely for demonstration and sales purposes. All demonstration copies
will be in some way limited versions of the Licensed Materials and may not be
represented or sold by the Business Partner as the actual Licensed Materials.
16. Marketing. Business Partner shall use its best efforts to promote and market
the Licensed Materials. Business Partner shall provide sufficient qualified
staff to carry out its obligation to actively market and solicit sales of
Licensed Materials. Business Partner will include a representative listing of
all Licensed Materials in applicable catalogs and published price lists.
Business Partner will display and demonstrate appropriately configured Licensed
Materials and
2
<PAGE> 19
prominently display Licensed Materials related literature at point of sale
locations. Business Partner shall have at least one (1) qualified individual
competent to demonstrate each Licensed Materials at each Business Partner
office. Business Partner shall pursue all marketing leads received from
SalesLogix.
17. Licensed Materials Applicability. Business Partner assumes sole
responsibility for the selection and recommendation of the Licensed Materials to
achieve the desired results and business purposes of end user customers.
18. SalesLogix Packaging. Business Partner will distribute the Licensed
Materials as shipped by SalesLogix, unopened with all packaging, documentation,
warranties, disclaimers, registration cards, and license agreements intact.
19. Licensed Materials Copying. Business Partner shall not under any
circumstances make any copies of the Licensed Materials without SalesLogix's
prior written permission except for evaluation copies as expressly permitted in
this Exhibit.
20. Customer License Enforcement. Business Partner shall use its best efforts to
assist SalesLogix in the protection of SalesLogix's legal rights and to enforce
the end user license agreements relating to the Licensed Materials. Business
Partner shall cooperate fully with SalesLogix in any action by SalesLogix in the
event of an actual or threatened violation of SalesLogix's proprietary rights by
any person or entity.
21. Support of Business Partner; Sale of Maintenance Support and Technical
Support. During the term of the Reseller License, SalesLogix shall provide the
Support described in EXHIBIT 8 to the Business Partner. A Customer of the
Business Partner who wishes to purchase extended Maintenance Support for the
Licensed Materials must execute a Maintenance Support agreement directly with
SalesLogix. Business Partner may sell technical support services directly to a
Customer or it may refer the Customer to SalesLogix for execution of a Technical
Support agreement directly with SalesLogix. In the event Business Partner
successfully refers a Customer to SalesLogix for execution of a Technical
Support agreement, SalesLogix shall remit to Business Partner twenty percent
(20%) of the Technical Support payments received from the Customer in connection
with the first twelve (12) months of the Technical Support agreement.
22. Marketing Practices. Business Partner shall: (i) perform its duties as
reseller in a manner that will preserve the reputation and promote the goodwill,
name, and interests of SalesLogix and the Licensed Materials; (ii) avoid
deceptive, misleading, or unethical practices that are or might be detrimental
to SalesLogix, the Licensed Materials or the public, including but not limited
to disparagement of SalesLogix or the Licensed Materials; (iii) make no false or
misleading representation with respect to the Licensed Materials or SalesLogix;
(iv) not publish or use any misleading or deceptive advertising material; and
(v) make no representations with respect to the Licensed Materials or SalesLogix
that are inconsistent with the literature distributed by SalesLogix, including
all warranties, disclaimers, and support policies contained in such literature.
23. Business Practices. Business Partner shall perform its duties in compliance
with all applicable laws and shall hold SalesLogix harmless and indemnify
SalesLogix for, from and
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<PAGE> 20
against any loss, claim, damage, liability, or expense, including reasonable
attorney's fees, arising from any violation of law by Business Partner.
24. Use of SalesLogix System. Business Partner shall utilize the "SalesLogix
System" to obtain and report on leads generated by SalesLogix.
25. Licensed Materials Performance. SalesLogix will use its reasonable efforts
to make the Licensed Materials perform substantially in accordance with the
product description set forth in the relevant Documentation that accompanies the
Licensed Materials, as it may exist from time to time. However, Business Partner
acknowledges that inevitably some errors may exist in the Licensed Materials,
and the presence of such errors shall not be a breach of this provision.
4
<PAGE> 21
EXHIBIT 5
OEM Partner's Standard Form Evaluation License Agreement
1
<PAGE> 22
EXHIBIT 6
Annual Prepaid Royalty Fees, Royalty Calculations, Discounts and
Support Fees
ANNUAL PREPAID ROYALTY FEES
OEM Partner shall pay SalesLogix nonrefundable prepaid royalties of $ per
year during the term of this Agreement, said prepaid royalties owed in the first
year, to be paid as follows: $ due upon signing, $ to be paid on
, $ to be paid on , and $ to be paid on
. Subsequent prepaid royalty payments shall be made as follows:
Each of the foregoing payments shall be credited in full against OEM partner's
OEM Royalty obligations, based on license, support and maintenance fees, (but
not the Reseller Royalty obligations) to SalesLogix during the relevant ensuing
year. If the credit represented by a Prepaid Royalty Fee is not used up by the
end of the year following the due date for its payment, the credit not used up
shall be forfeited by OEM partner.
OEM ROYALTY CALCULATION
For each year that this Agreement remains in effect, the following discounts
shall apply to the calculation of OEM Royalties under the Agreement:
Aggregate OEM Royalties and fees paid to SalesLogix Year to Date
Discount
<TABLE>
<S> <C>
less than $250,000
$250,000 - $500,000
$500,000 - $1,000,000
$1,000,000 - $2,000,000
over $2,000,000
</TABLE>
Upon each anniversary, the calculation of "OEM Royalties paid to SalesLogix Year
to Date" begins anew and the applicable discount reverts back to . Once OEM
partner passes an OEM Royalty threshold the change in applicable discount
applies prospectively and not retroactively.
MAINTENANCE FEES
In exchange for the maintenance of the product as described in EXHIBIT 8, OEM
partner will pay SalesLogix Maintenance fees equal to of the
published SRP of the SalesLogix
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<PAGE> 23
product, not the selling price of the bundled OEM package. Maintenance Fees
shall be calculated each time an OEM Partner makes a calculation of OEM
Royalties payable to SalesLogix under this Agreement and shall be added to the
payment of OEM Royalties made, or charged against the advance, to SalesLogix.
SUPPORT FEES
In exchange for the OEM Support described in EXHIBIT 8, OEM Partner shall pay
SalesLogix Support Fees equal to of the published SRP of the SalesLogix
product, not the selling price of the bundled OEM package. Support Fees shall be
calculated each time an OEM Partner makes a calculation of OEM Royalties payable
to SalesLogix under this Agreement and shall be added to the payment of OEM
Royalties made, or charged against the advance, to SalesLogix.
RESELLER ROYALTY CALCULATION
OEM Partner is entitled to a discount of off of the published retail
prices for Licensed Materials shown in SalesLogix's retail price list in the
event the OEM Partner wishes to sell SalesLogix product without the OEM
Partner's bundled application.
OEM Partner's Reseller Royalties paid to SalesLogix shall be reviewed
semi-annually. If the Reseller Royalties paid to date are sufficient to
reasonably assume that the annual revenue goal will be met, OEM Partner's
discount stated above shall remain in effect. If the Reseller Royalties are
significantly above or below what would be reasonably expected, SalesLogix
reserves the right to adjust Business Partner's discount, with 30 days notice,
up or down according to SalesLogix's then current discounting policies.
As a Business Partner, OEM Partner is also entitled to a discount of for
all support service and product upgrade offerings shown on SalesLogix's retail
price list.
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<PAGE> 24
EXHIBIT 7
SalesLogix Training
SalesLogix shall provide to OEM Partner the following sales, marketing and
technical training on the terms and conditions set forth herein:
1. Sales, Marketing and Technical Training. OEM Partner shall be entitled to
send two employees to SalesLogix's regularly scheduled training course on the
Licensed Materials. SalesLogix shall supply this training free of charge at
SalesLogix's facilities in Scottsdale, Arizona. OEM Partner shall pay for the
travel and living expenses for any employees it sends to SalesLogix for
training.
2. Training Documentation. SalesLogix hereby grants OEM Partner a license to
re-use, copy, modify and distribute SalesLogix training Documentation solely for
the purposes of training OEM Partner employees, customers and OEM Affiliates
worldwide.
3. SalesLogix Software Developer's Kit. Upon execution of this Agreement, OEM
Partner shall be provided with a copy of SalesLogix's Software Developer's Kit
to assist OEM Partner with the development of any interfaces between the
Licensed Materials and the OEM Bundling Products.
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<PAGE> 25
EXHIBIT 8
SalesLogix Support
OEM SUPPORT
SalesLogix agrees to make available to OEM Partner the following support
services (collectively, "OEM Support") for the OEM Royalties and Maintenance
Royalties set forth herein:
1. SalesLogix shall appoint a designated developer who is expert in the
Designated Materials who shall be available to assist OEM Partner's designated
developer with technical and support issues relating to the Licensed Materials.
OEM Partner agrees that the support provided by SalesLogix's designated
developer shall be "third tier" (i.e., developer to developer) and that OEM
Partner shall remain responsible for all "first tier" (customer to support
staff) and "second tier" (support staff to OEM Partner development staff)
support of the OEM Bundling Products and the Licensed Materials embedded
therein.
2. SalesLogix's initial designated developer is:
-----------------------------------
-----------------------------------
-----------------------------------
Tel
--------------------------------
Fax
--------------------------------
E-mail
-----------------------------
3. OEM Partner's initial designated developer is:
-----------------------------------
-----------------------------------
-----------------------------------
Tel
--------------------------------
Fax
--------------------------------
E-mail
-----------------------------
Either party may change its designated developer from time to time upon written
notice to the other.
4. OEM Partner shall be provided "Business Partner" level access to the support
sections of SalesLogix's web site.
5. Product Updates: From time to time SalesLogix may develop permanent fixes or
solutions to known problems or bugs in the Licensed Materials and incorporate
them into a formal "Update" to the Licensed Materials. SalesLogix will provide
OEM Partner with the Update and related Documentation, both at no additional
charge to the OEM Partner.
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<PAGE> 26
6. Product Upgrades: From time to time SalesLogix may release to its end users a
major revision to the Licensed Materials which adds new and different functions
or capabilities to the Licensed Materials ("Upgrade"). SalesLogix will provide
OEM Partner with the Upgrade and related Documentation, both at no additional
charge to the OEM Partner.
RESELLER SUPPORT
SalesLogix agrees to make available to OEM Partner the following support
services (collectively, "Reseller Support") for the Reseller Royalties and
Maintenance Royalties set forth herein:
1. OEM Partner, as a Business Partner, will be given access to SalesLogix's
technical support telephone line, along with access authorization for technical
support. On-site technical support may be provided by SalesLogix on a
case-by-case basis at SalesLogix's then-current fees or for a fee mutually
agreed to by Business Partner.
2. OEM Partner, as a Business Partner, shall be provided "Business Partner"
level access to the support sections of SalesLogix's web site.
3. Product Updates: From time to time SalesLogix may develop permanent fixes or
solutions to known problems or bugs in the Licensed Materials and incorporate
them into a formal "Update" to the Licensed Materials. SalesLogix will provide
OEM Partner with the Update and related Documentation, both at no additional
charge to the OEM Partner.
4. Product Upgrades: From time to time SalesLogix may release to its end users a
major revision to the Licensed Materials which adds new and different functions
or capabilities to the Licensed Materials ("Upgrade"). SalesLogix will provide
OEM Partner with the Upgrade and related Documentation, both at no additional
charge to the OEM Partner.
5. Telephone and Electronic Mail Assistance: OEM Partner, as a Business Partner,
will be given the telephone number for SalesLogix's support line and will be
entitled to contact the support line during normal operating hours (between 8:00
a.m. and 5:00 p.m. U.S. Mountain Standard Time) on regular business days,
excluding SalesLogix holidays, to consult with SalesLogix technical analysts
concerning problem resolution, bug reporting, documentation clarification, and
general technical guidance. OEM Partner, as a Business Partner, may also contact
SalesLogix through electronic mail. SalesLogix will assist the OEM Partner in
utilizing the Licensed Materials and in identifying and providing workarounds,
if possible, for problems found within the Licensed Materials. Assistance may
include communicating via modem from SalesLogix's facilities or through an
electronic bulletin board.
6. Problem Reporting: OEM Partner, as a Business Partner, may submit to
SalesLogix requests identifying potential problems in the Licensed Materials.
Requests should be in writing and directed to SalesLogix by mail, courier or by
FAX. SalesLogix retains the right to determine the final disposition of all
requests, and will inform OEM Partner of the disposition of each request. If
SalesLogix decides in its sole judgment to act upon a request, it will do so by
providing a Bug Fix as described below.
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<PAGE> 27
7. Bug Fixes: SalesLogix will use reasonable efforts to provide an avoidance
procedure for and a correction of each material defect in the Licensed Materials
that causes the Licensed Materials not to conform in all material respects with
the SalesLogix Documentation (a "Bug Fix").
3
<PAGE> 1
EXHIBIT 10.21
FORM OF PREMIUMCARE MAINTENANCE AND
TECHNICAL SUPPORT AGREEMENT
SALESLOGIX(R) CORPORATION
PREMIUMCARE MAINTENANCE AND TECHNICAL SUPPORT AGREEMENT
This PremiumCare Maintenance and Technical Support Agreement
("Agreement") is dated as of ______________,199 by and between SalesLogix
Corporation, a Delaware corporation ("SalesLogix"), with offices at 8800 North
Gainey Center Drive, Suite 200, Scottsdale, Arizona 85258, and , with offices at
("Licensee").
1. DEFINITIONS AND SPECIFICATIONS
The terms "Software," and "Documentation" shall have the meanings set
forth in the License Agreement.
"Anniversary Date" shall refer to each anniversary of the Commencement
Date.
"Commencement Date" shall refer to date the Software was first
delivered to Licensee by either SalesLogix or a SalesLogix Business Partner,
according to SalesLogix's records.
"License Agreement" shall refer to the International or Domestic
Multi-User License And Warranty Agreement received by Licensee with the package
containing the SalesLogix Software purchased by Licensee.
"Initial Support Term" shall mean the 12 month period commencing on the
Commencement Date.
"Renewal Term" shall mean any 12 month maintenance period subsequent to
the Initial Support Term and ending on an Anniversary Date.
"Maintenance Support" shall mean those maintenance services described
in detail on Schedule A to this Agreement.
"Technical Support" shall mean those maintenance services described in
detail on Schedule B to this Agreement.
"Support" when used without a modifier shall mean both Maintenance
Support and Technical Support.
2. AFFIRMATION OF LICENSE TERMS
Licensee hereby certifies that it has read, agrees with and hereby
reaffirms each of the terms and conditions contained in the License Agreement.
3. MAINTENANCE AND TECHNICAL SUPPORT
During the Initial Support Term and any applicable Renewal Term,
SalesLogix shall provide to Licensee the Maintenance Support described on
Schedule A and the Technical Support described on Schedule B. SalesLogix's
obligations under this Section 3 with respect to a Renewal Term are contingent
upon Licensee timely making the payments required by Section 4.1.
4. MAINTENANCE FEES AND PAYMENT; RENEWAL OF MAINTENANCE SUPPORT
4.1 SUPPORT FEES AND RENEWAL. Licensee in connection with purchasing a
license to the Software
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 1
<PAGE> 2
has already paid separately for Maintenance Support and Technical Support during
the Initial Support Term. Approximately 60 days prior to the expiration of the
Initial Support Term (and, if Maintenance Support is renewed, approximately 60
days prior to expiration of each Renewal Term thereafter) SalesLogix will
invoice Licensee for both: (i) Maintenance Support for the upcoming Renewal
Term, payable 12 months in advance, at a fee equal to ten percent (10%) of
SalesLogix's list price for the supported Software as of the effective date of
the relevant License Agreement; and (ii) Technical Support for the upcoming
Renewal Term, payable 12 months in advance, at a fee equal to ten percent (10%)
of SalesLogix's list price for the supported Software as of the effective date
of the relevant License Agreement. Licensee may accept Maintenance Support and
Technical Support for the upcoming Renewal Term by paying SalesLogix's invoice
in U.S. Dollars. If Licensee fails to pay such invoice within 30 days after the
commencement of the Renewal Term, SalesLogix may, notwithstanding Section 6 and
without further notice to Licensee, terminate Support and treat this Agreement
as terminated.
4.2 TAXES. Support fees and other charges set forth in this Agreement
do not include applicable taxes. In addition to the fees and charges due
SalesLogix under this Agreement, Licensee shall remain liable for and shall pay
all local, state, and federal sales, use, excise, personal property or other
similar taxes or duties, and all other taxes, which may now or hereafter be
imposed upon this Agreement or possession or use of the Software or
Documentation, excluding taxes based on SalesLogix's income.
5. WARRANTIES/LIMITATIONS OF LIABILITY
5.1 LIMITED PERFORMANCE WARRANTY. SalesLogix warrants that it will use
its best efforts to ensure that any Support it provides will be performed in a
professional and workmanlike manner. SalesLogix agrees to use reasonable efforts
to correct any error or defect in its provision of Support under this Agreement.
The foregoing warranty and remedy do not expand or extend any limited warranties
relating to the Software set forth in the relevant License Agreement. THE
PROVISIONS OF THIS SECTION SET FORTH THE ENTIRE LIABILITY OF SALESLOGIX AND THE
SOLE REMEDIES OF LICENSEE WITH RESPECT TO SALESLOGIX'S BREACH OF ITS OBLIGATIONS
UNDER THIS AGREEMENT.
5.2 DISCLAIMER OF OTHER WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN
THIS SECTION, ALL WARRANTIES, CONDITIONS, REPRESENTATIONS, INDEMNITIES AND
GUARANTEES, WHETHER EXPRESS OR IMPLIED, ARISING BY LAW, CUSTOM, PRIOR ORAL OR
WRITTEN STATEMENTS OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY, TITLE, THE CONDITION OF ANY PRODUCT OR SERVICES, OR FITNESS FOR
A PARTICULAR PURPOSE, ARE HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.
5.3 NO CONSEQUENTIAL DAMAGES. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, IN NO EVENT SHALL SALESLOGIX OR ITS SUPPLIERS BE LIABLE TO
LICENSEE FOR ANY CONSEQUENTIAL, INCIDENTAL, DIRECT, INDIRECT, SPECIAL, PUNITIVE,
OR OTHER DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF
BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR OTHER
PECUNIARY LOSS) ARISING OUT OF THIS AGREEMENT OR THE USE OF OR INABILITY TO USE
THE SOFTWARE, EVEN IF SALESLOGIX HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
5.4 ADDITIONAL LIMITATION OF LIABILITY. IN NO EVENT SHALL SALESLOGIX'S
TOTAL CUMULATIVE LIABILITY HEREUNDER, FROM ALL CAUSES OF ACTION OF ANY KIND,
WHETHER ARISING UNDER CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY,
BREACH OF WARRANTY OR OTHERWISE, EXCEED THE TOTAL AMOUNT PAID BY LICENSEE FOR
THE MAINTENANCE SUPPORT PROVIDED UNDER THIS AGREEMENT.
6. TERMINATION
If either party defaults in performing any material obligations
required under this Agreement, the non-defaulting party may give written notice
of its intention to terminate this Agreement, describing in reasonable detail
the default. If the defaulting party fails to remedy such material default
within thirty (30) days following such written notice, or if such default is not
capable of cure within such thirty (30)-day period, and the defaulting party
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 2
<PAGE> 3
fails to commence cure procedures within such thirty (30)-day period and
diligently prosecute such procedures until the default is cured, then the
nondefaulting party may terminate this Agreement.
7. GENERAL
7.1 ENTIRE AGREEMENT. This Agreement and the License Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof, and all prior agreements, representations, and statements with
respect to such subject matter are superseded hereby. This Agreement may not be
altered, modified, amended, changed, rescinded or discharged in whole or in
part, except by written agreement executed by both Licensee and SalesLogix.
7.2 ASSIGNMENT. This Agreement may not be assigned without the prior
written consent from SalesLogix and any attempt to do so without permission
shall be void.
7.3 FORCE MAJEURE. Notwithstanding anything to the contrary in this
Agreement, no default, delay or failure to perform on the part of either party
shall be considered a breach of this Agreement (other than nonpayment of money
or breach of confidentiality provisions) if such default, delay or failure to
perform is shown to be due entirely to causes beyond reasonable control of the
party charged with a default, including, but not limited to, causes such as
strikes, lock-outs or other labor disputes, riots, civil disturbances, actions
or inactions of governmental authorities or suppliers, epidemics, war,
embargoes, severe weather, fire, earthquakes, acts of God or the public enemy or
nuclear disasters.
7.4 GOVERNING LAW. The validity and performance of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Arizona, excluding that body of law applicable to choice of law.
7.5 ATTORNEYS' FEES. In any litigation or arbitration between parties,
the prevailing party shall be entitled to reasonable attorneys' fees and all
costs of proceedings, experts, investigations and related expenses, incurred in
enforcing, or pursuing other remedies with respect to, this Agreement, provided
that notice and an opportunity to cure pursuant to Section 6 was provided, to
the extent applicable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
SALESLOGIX, CORPORATION,
a Delaware corporation LICENSEE
By: By:
-------------------------------- -----------------------------
Print Name: Print Name:
------------------------ --------------------
Title: Title:
--------------------------- --------------------------
SalesLogix Corporation "Licensee"
8800 North Gainey Center Drive, Suite 200 Site Address
Scottsdale, AZ 85258 --------------------------
--------------------------
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 3
<PAGE> 4
SCHEDULE A -- PREMIUMCARE MAINTENANCE SUPPORT
This Schedule describes the terms and conditions relating to
PremiumCare Maintenance Support that SalesLogix will provide to Licensee during
the Initial Support Term and any Renewal Terms. The Maintenance Support
described in this Schedule does not expand on or change the Software warranty
provisions set forth in the License Agreement.
SALESLOGIX PRODUCT UPDATES: From time to time SalesLogix may develop
permanent fixes or solutions to known problems or bugs in the Software and
incorporate them into a formal "Update" to the Software. If Licensee is
receiving Maintenance Support from SalesLogix on the general release date for an
Update, SalesLogix will provide the Licensee with the Update and related
Documentation, both at no additional charge to the Licensee.
SALESLOGIX PRODUCT UPGRADES: From time to time SalesLogix may release
to its end user licensees a major revision to the Software which adds new and
different functions or capabilities to the Software ("Upgrade"). If Licensee is
receiving Maintenance Support from SalesLogix on the general release date for an
Upgrade, SalesLogix will provide the Licensee with the Upgrade or Release and
related Documentation, both at no additional charge to the Licensee.
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 1
<PAGE> 5
SCHEDULE B -- PREMIUMCARE TECHNICAL SUPPORT
This Schedule describes the terms and conditions relating to
PremiumCare Technical Support that SalesLogix will provide to Licensee during
the Initial Support Term and any Renewal Terms. The Technical Support described
in this Schedule does not expand on or change the Software warranty provisions
set forth in the License Agreement.
A. TECHNICAL SERVICES
For the purposes of receiving support from and communicating with
SalesLogix with respect to support issues, Licensee shall designate no more than
one "Designated Licensee Contact" for each 50 licensed users of the Software.
Requests for telephone or other assistance shall come only from a Designated
Licensee Contact. In the event that a specific Designated Licensee Contact
leaves Licensee's employ, Licensee may designate a replacement Designated
Licensee Contact.
SalesLogix offers the following Technical Services for the Software:
TELEPHONE AND ELECTRONIC MAIL ASSISTANCE: Licensee's system manager
will be given the telephone number for SalesLogix's support line and will be
entitled to contact the support line during normal operating hours (between 6:00
a.m. and 6:00 p.m. U.S. Mountain Standard Time) on regular business days,
excluding SalesLogix holidays, to consult with SalesLogix technical analysts
concerning problem resolution, bug reporting, documentation clarification, and
general technical guidance. Licensee may also contact SalesLogix through
electronic mail. SalesLogix will assist the system manager in utilizing the
Software and in identifying and providing workarounds, if possible, for standard
component product problems. Assistance may include communicating via modem from
SalesLogix's facilities or through an electronic bulletin board.
WEB SITE SUPPORT: Online support is available 24 hours a day, offering
Licensee the ability to resolve its own problems with access to SalesLogix's
most current information. Licensee will need to enter its designated user name
and key number to gain access to the technical support areas on SalesLogix's web
site. SalesLogix's technical support areas allow the Licensee to: (i) search an
up-to-date knowledge base of technical support information, technical tips and
featured functions; (ii) access answers to frequently asked questions; (iii)
access current software releases and documentation; and (iv) send e-mail
inquiries to SalesLogix (current response time is between 3-5 days).
SOFTWARE PROBLEM REPORTING: Licensee may submit to SalesLogix requests
identifying potential problems in the Software. Requests should be in writing
and directed to SalesLogix by mail, courier, e-mail or by FAX. SalesLogix
retains the right to determine the final disposition of all requests, and will
inform Licensee of the disposition of each request. If SalesLogix decides in its
sole judgment to act upon a request, it will do so by providing a Bug Fix as
described below.
SERVICE PACKS: SalesLogix will use reasonable efforts to provide an
avoidance procedure for and a correction of each material defect in the Software
that caused the Software not to conform in all material respects with the
SalesLogix Documentation (a "Service Pack").
B. EXCLUSIONS FROM TECHNICAL SERVICES
SalesLogix shall have no support obligations with respect to any
hardware or software product other than the Software ("Nonqualified Products").
If SalesLogix provides support services for a problem caused by a Nonqualified
Product, or if SalesLogix's service efforts are increased as a result of a
Nonqualified Product, SalesLogix will charge time and materials for extra
service at its then current published rates for custom software services. If, in
SalesLogix's opinion, performance of Technical Support is made more difficult or
impaired because of Nonqualified Products, SalesLogix shall so notify Licensee,
and Licensee will immediately remove the Nonqualified Product at its own risk
and expense during any efforts to render Technical Support under this Agreement.
Licensee shall be solely responsible for the compatibility and functioning of
Nonqualified Products with the Software.
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 1
<PAGE> 6
C. LICENSEE RESPONSIBILITIES
In connection with SalesLogix's provision of Technical Support as
described in this Exhibit, Licensee acknowledges that Licensee has the
responsibility to do each of the following: (1) maintain the designated computer
system and associated peripheral equipment in good working order in accordance
with the manufacturers' specifications, and insure that any problems reported to
SalesLogix are not due to hardware malfunction; (2) maintain the designated
computer system at the latest code revision level deemed necessary by SalesLogix
for proper operation of the Software; (3) supply SalesLogix with access to and
use of all information and facilities determined to be necessary by SalesLogix
to render the Technical Support described in this Exhibit; (4) perform any tests
or procedures recommended by SalesLogix for the purpose of identifying and/or
resolving any problems; (5) maintain a procedure external to the Software for
reconstruction of lost or altered files, data, or programs to the extent deemed
necessary by Licensee; (6) at all times follow routine operator procedures as
specified in the Documentation; (7) remain solely responsible at all times for
the safeguarding of Licensee's proprietary, confidential, and classified
information; and (8) ensure that the designated computer system is isolated from
any process links or anything else that could cause harm before requesting or
receiving remote support assistance.
SalesLogix Combined Support
Agreement (short form)
Revision Date: July 1, 1998 2
<PAGE> 1
EXHIBIT 10.22
FORM OF STANDARD CONSULTING AGREEMENT
CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement (the "Services Agreement") is made
between SalesLogix Corporation, a Delaware corporation ("SalesLogix") and
______________________________________________________, a _____________________
corporation ("Customer"). SalesLogix and Customer agree as follows:
1. DEFINITIONS; TERMS AND CONDITIONS
Invention - the term "Invention" shall mean any idea, design, concept,
technique, invention, discovery, enhancement or improvement, whether or not
patentable, that is conceived or reduced to practice by one or more persons
during or in connection with the performance of consulting services under this
Services Agreement.
Programs - the term "Programs" means any computer software program or
programs, or any portion of such program or programs, together with all related
materials, documentation and information, or any portion thereof and any
modifications, corrections, improvements, enhancements and updates thereto, in
any form, tangible or intangible, used by SalesLogix in connection with
providing consulting services under this Services Agreement.
Terms and Conditions - The "Terms & Conditions" attached are part of this
Services Agreement and are incorporated herein by this reference, with the same
force and effect as if fully set forth herein.
Tools - The term "Tools" means any method, process or technique used by
SalesLogix in connection with providing consulting services under this Services
Agreement.
2. SERVICES
This Services Agreement is a foundation document to establish a consulting
services relationship between SalesLogix and Customer. This Services Agreement
shall be supplemented from time to time by individual work orders, or other
agreements, signed by each party, which define the specifics of each consulting
project (each, a "Work Order"). Each Work Order shall describe the work to be
performed (the "Work Product"), the timeframe for the project, the compensation
to be paid SalesLogix and shall become part of this Services Agreement.
SalesLogix shall perform such services as set forth in the Work Order. Services
which are to be compensated on a per day basis shall be calculated based on an
eight (8) hour day. Any changes to a Work Order shall be made in a writing
signed by both parties.
3. CUSTOMER-FURNISHED PROPERTY
Customer shall furnish SalesLogix at Customer's expense (a) all technical
matter, data, information and operating supplies, together with knowledgeable
personnel, as determined by SalesLogix to be necessary for the performance of
the Work Orders, (b) suitable workspace, and (c) access to a Customer computer
so configured and at such times as SalesLogix requires for the performance of
the Work Orders.
4. SALESLOGIX-FURNISHED PROPERTY; INVENTIONS
SalesLogix has designed and developed certain Programs and Tools which are
helpful in performing certain consulting services. In connection with providing
consulting services under this Services Agreement, SalesLogix may use, in its
discretion, such Programs and Tools. SalesLogix may also use or develop new
Programs, Tools or Inventions while providing services to Customer under this
Services Agreement. SalesLogix retains ownership of and all rights to any
Programs, Tools and Inventions and Customer agrees to cooperate with SalesLogix
in executing and recording any additional documents which are necessary or
desirable to vest these rights in SalesLogix. Except as otherwise expressly
provided in a separate, written license agreement signed by SalesLogix, if any,
no license or other right to the Programs, Tools or Inventions is granted or
transferred to Customer by this Services Agreement or any Work Order.
5. CONFIDENTIAL INFORMATION
SalesLogix shall not use or disclose Customer Confidential Information
except as necessary to perform services pursuant to this Services Agreement. For
purposes of this Services Agreement, "Customer Confidential Information" shall
mean written information which relates to Customer's research, development or
business activities, which is designated as confidential by Customer in writing
to SalesLogix and which is disclosed to SalesLogix in connection with
SalesLogix's performance of services pursuant to this Services Agreement, but
shall not include any Invention or any information which is previously known to
SalesLogix without obligation of confidence or without breach of this Services
Agreement, is publicly disclosed either prior to or subsequent to SalesLogix's
receipt of such information, is rightfully received by SalesLogix from a third
party without obligation of confidence or is independently developed by
SalesLogix.
6. WORK PRODUCT/RIGHTS IN DATA
The Work Product prepared for and submitted to Customer pursuant to
each Work Order shall become the property of Customer, subject to the provisions
of Section 1 of the Terms & Conditions and Section 4 above; provided however,
that with respect to a Work Order requesting that SalesLogix develop a "Software
Interface" (as defined below) the following provisions in this Section 6 shall
control issues relating to ownership. If SalesLogix is asked to develop a
Software Interface pursuant to specifications provided by Customer, then
Customer shall own all rights to the Software Interface, including copyrights
and object code embodied in the Software Interface, except to the extent the
Software Interface contains any confidential or proprietary information of
SalesLogix (including SalesLogix source code and object code) which existed as
of the date SalesLogix received the specifications from Customer. Whether or not
SalesLogix uses such preexisting confidential or proprietary information
(including source code or object code) in building the Software Interface, all
ownership rights to such preexisting confidential or proprietary information
shall remain with SalesLogix. To the extent SalesLogix embeds any preexisting
confidential or proprietary information (including source code or object code)
in the Software Interface, SalesLogix shall be deemed to confer to Customer an
object code license to use and distribute such preexisting confidential or
proprietary information on the same terms (and without any additional royalty
obligation) that Customer is licensed to use and distribute the SalesLogix
software products upon which the Software Interface is built. As used in this
Section, "Software Interface" means an object code and/or source code product
which is created as an industry template or similar specialized interface for
use with one or more SalesLogix software products.
<PAGE> 2
7. INDEPENDENT CONTRACTOR
The parties agree that SalesLogix is an independent contractor and shall
retain sole discretion and judgment in the manner the services are to be
performed. Neither party is, nor shall be considered to be, an agent,
distributor, partner, joint venturer or representative of the other party for
any purpose.
8. NONSOLICITATION OF EMPLOYEES
During the term of this Services Agreement and for twelve (12) months
thereafter, the parties agree not to solicit or hire any person who, to the
soliciting or employing party's knowledge, was an employee of the other at any
time during the prior twelve (12) months.
9. DELAYS
SalesLogix shall exercise reasonable, good-faith efforts in performing the
services to be provided under this Services Agreement in a timely manner as
specified in the Work Order but shall not be liable for any delays resulting
from circumstances or causes beyond its reasonable control.
10. INSURANCE
SalesLogix agrees to carry the following types and amounts of insurance and
shall deliver, upon written request by Customer, evidence of such insurance:
a. Workers' Compensation insurance in an amount sufficient by virtue of
the laws of the State of Arizona;
b. General Liability insurance in which the limit of liability for injuries,
including accidental death, and property damage is no less than U.S. $1,000,000
for any one occurrence; and
11. CANCELLATION OF WORK ORDERS
Customer may cancel any outstanding Work Order upon written notice of such
cancellation. Cancellation of a Work Order shall be effective on the first
business day following actual receipt by SalesLogix of written notice of
cancellation. In the event of a cancellation of a Work Order, Customer shall pay
SalesLogix for all services performed, if any, as of the effective date of the
cancellation at the rates provided in the applicable Work Order, together with a
cancellation fee equal to the greater of: (a) twenty percent (20%) of the total
price for services to be rendered pursuant to the applicable Work Order, or (b)
the amount of fees that would have accrued for services performed during the ten
(10) day period following the effective date of the cancellation had the Work
Order not been cancelled.
12. TERM OF SERVICES AGREEMENT; TERMINATION
a. Termination. The effective date of this Services Agreement is noted
below. Either party may terminate this Services Agreement by written notice to
the other party. The Termination Date shall be the date sixty (60) calendar days
after the effective date of the written notice of termination. No new Work
Orders may be entered into after the Termination Date, but termination of this
Services Agreement by either party will not effect a cancellation or termination
of any Work Orders signed by both parties prior to the Termination Date (the
"Remaining Work Orders"). Services to be performed under Remaining Work Orders
will continue until completion unless Customer cancels any or all of such
Remaining Work Orders pursuant to Section 11 hereof. This Services Agreement
will remain in effect with respect to the Remaining Work Orders until their
completion, at which time this Services Agreement will expire automatically.
b. Expiration. If no new Work Orders are executed during a period of twelve
(12) consecutive months, this Services Agreement shall expire automatically,
unless there are then outstanding Work Orders, in which case this Services
Agreement shall expire upon completion of all services pursuant to outstanding
Work Orders.
<PAGE> 3
Customer, by signing below, expressly affirms to SalesLogix that
Customer has carefully read and understands this entire Agreement, including the
Terms and Conditions attached hereto, and that this Agreement contains the
complete and exclusive statement of the agreement between Customer and
SalesLogix and supersedes and replaces all prior proposals, understandings and
agreements, oral or written.
The effective date of this Services Agreement is the _______ day of
_____________, 19___. This Services Agreement is binding only if executed by a
SalesLogix corporate officer.
Customer SalesLogix
By: By:
------------------------------ ------------------------------
Authorized Signature Authorized Signature
- -------------------------------- -----------------------------------
Printed Name Printed Name
- -------------------------------- -----------------------------------
Title Title
- -------------------------------- -----------------------------------
Address SalesLogix Corporation
8800 North Gainey Center Drive
- -------------------------------- Suite 200
City, State & Zip Scottsdale, AZ 85258
- --------------------------------
Country
<PAGE> 4
TERMS & CONDITIONS
PLEASE NOTE: These terms and conditions are incorporated by reference into
Customer's agreement with SalesLogix Corporation
("SalesLogix"). "Services Agreement" shall mean any
"Consulting Services Agreement" between Customer and
SalesLogix. "Agreement" shall mean these Terms & Conditions,
and any Services Agreement or Work Order. Capitalized terms
not otherwise defined shall have the meanings ascribed in the
Services Agreement.
1. INTELLECTUAL PROPERTY RIGHTS; CONFIDENTIALITY
a. Intellectual Property Rights. Customer hereby acknowledges that the
Programs, Tools and Inventions, if any (including methods, processes or
techniques utilized in such Programs, Tools and Inventions) are proprietary to
and valuable trade secrets of SalesLogix and are protected by United States
copyright law and international treaties. Neither these Terms & Conditions nor
any Services Agreement transfer any title to or ownership rights in any Program,
Tool or Invention, or copy thereof, to Customer. Customer shall take no actions
which impair or infringe SalesLogix's intellectual property rights and shall
give immediate written notice to SalesLogix of any claim of infringement it
becomes aware of with respect to any Program, Tool or Invention. Customer shall
not use, copy, modify, transfer, download, merge, make any translation or
derivative work or otherwise deal with the Programs, Tools and Inventions except
as expressly provided in this Agreement. In no event shall Customer cause or
permit the disassembly, reverse compilation or other decoding of any Program,
Tool or Invention.
b. Confidentiality. Customer agrees to maintain the confidential nature of
the Programs, Tools and Inventions. Customer shall maintain the Tools, Programs
and Inventions free of all liens or claims and shall take all reasonable steps
required by SalesLogix to confirm title to the Tools, Programs and Inventions in
SalesLogix. Customer shall exercise at least the same degree of care to protect
the confidentiality of the Tools, Programs and Inventions as Customer would
exercise in protecting Customer's own similar confidential information. Customer
agrees to take all steps necessary to ensure that the Tools, Programs and
Inventions shall not be disclosed to, or used by, any person, association or
entity except Customer's own employees and consultants and then only on a need
to know basis
c. Defined Term. For purposes of this Section 1, the term "SalesLogix" shall
include SalesLogix Corporation and any third party from whom SalesLogix
Corporation has received the right to license the Programs, Tools and
Inventions.
d. Survival. The obligations and agreements in this Section shall survive
any expiration or termination of this Agreement.
2. PAYMENT TERMS
a. Due Date; Late Payments. All payments due under Customer's Agreement with
SalesLogix are due upon receipt of invoice (unless otherwise noted on the
invoice). If any amount is not paid within thirty (30) days after the due date,
SalesLogix shall be entitled to receive, in addition to such amount, interest
thereon at the rate of two percent (2%) per month (or such lower rate as shall
be the highest permissible contract rate under applicable law) from and after
the date the amount was due.
b. Expenses. When commercial transportation, overnight accommodations,
living expenses or computer costs are incurred by SalesLogix in carrying out
activities under this Agreement, Customer shall pay to SalesLogix those actual
expenses upon presentation of invoice.
c. Taxes. Customer shall pay all international, federal, state or local
tariffs, duties, withholdings and taxes (other than taxes on SalesLogix's net
income), including, without limitation, sales, use, excise, privilege, ad
valorem and property taxes, or amounts in lieu thereof, based on any fees or
charges payable under this Agreement or based on the Programs, Tools and
Inventions, their use or any services performed hereunder, whether such tariffs,
duties or taxes are now or hereafter imposed by said jurisdictions.
3. WARRANTIES
a. Disclaimer of Warranties. EXCEPT FOR THE EXPRESS LIMITED WARRANTIES
CONTAINED IN THIS SECTION, ALL OTHER WARRANTIES CONCERNING SERVICES PROVIDED BY
SALESLOGIX, EXPRESS OR IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS
AGREEMENT INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, TITLE,
THE CONDITION OF ANY PRODUCT, FITNESS FOR A PARTICULAR PURPOSE, OR INCREASED
EFFICIENCY OF USE OF HARDWARE OR SOFTWARE COMPUTER SYSTEMS, DATA OR PROGRAMS,
ARE HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.
b. Service Agreement Warranties. SalesLogix makes the following warranties
to Customer: (i) SalesLogix warrants that it has the right to use the Programs
and Tools in connection with the performance of the Services Agreement; and (ii)
SalesLogix will use its best efforts to ensure that the Work Product will
substantially conform to the description on the applicable Work Order.
4. REMEDIES
a. Indemnification. SalesLogix agrees to defend or settle, at SalesLogix's
expense, option and discretion, any claim against Customer arising from a claim
that SalesLogix's use of the Programs or Tools in connection with performing any
Services Agreement, infringes any United States patent or copyright and to
indemnify Customer from any settlement or final judgment against Customer
related to such infringement claim. Customer shall promptly notify SalesLogix of
any claims for which it seeks indemnification hereunder and shall cooperate with
SalesLogix in the defense of any such claims as reasonably requested by
SalesLogix. Customer shall not independently defend or respond to any such
claim. Customer's failure to promptly notify SalesLogix of any claim shall void
this indemnification agreement and the warranties made in Section 3(b). THIS IS
CUSTOMER'S SOLE REMEDY WITH RESPECT TO A BREACH OF THE WARRANTIES IN SUBSECTION
3(b)(i) OF THESE TERMS & CONDITIONS. SalesLogix's indemnification obligations
are also subject to Section 5 of these Terms & Conditions.
b. Correction of Errors. SalesLogix agrees to use reasonable efforts to
correct any error or defect in any Work Product that does not substantially
conform to the description on the Work Order. THIS IS CUSTOMER'S SOLE REMEDY
WITH RESPECT TO A BREACH OF THE WARRANTY IN SUBSECTION 3(b)(ii) OF THESE TERMS &
CONDITIONS.
5. LIMITATION OF LIABILITY
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SALESLOGIX SHALL
NOT UNDER ANY CIRCUMSTANCE BE LIABLE TO CUSTOMER OR ANY OTHER PARTY FOR
<PAGE> 5
ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF GOODWILL, WORK STOPPAGE, LOST PROFITS, LOST DATA
OR COMPUTER HARDWARE OR SOFTWARE DAMAGE, FAILURE OR MALFUNCTION.
6. TERMINATION
a. Termination for Breach. Either party may terminate this Agreement upon a
material breach of the Agreement by the other, if the breaching party does not
cure the breach within forty-five (45) days after written notice from the
nonbreaching party specifying the breach. Notwithstanding the foregoing,
SalesLogix may terminate this Agreement upon written notice if Customer fails to
pay any sums due under this Agreement within thirty (30) days after the due
date. Termination by either party for breach shall not release the other party
from any liability to the nonbreaching party for such breach.
b. Duties Upon Termination. Upon expiration or earlier termination of this
Agreement, Customer will return to SalesLogix, at Customer's expense, all
originals and copies of all Programs (including user manuals and other
maintenance and support materials furnished by SalesLogix), permanently purge
all machine-readable copies of the Programs from all CPU(s) and storage devices
and certify to SalesLogix in writing that the foregoing duties have been
performed and that Customer will not in any way use or permit the use of the
Programs.
7. ASSIGNMENT
Customer's rights and obligations under this Agreement are limited
exclusively to Customer and may not be voluntarily or involuntarily (by
operation of law or otherwise) assigned, sublicensed or otherwise transferred by
or through Customer, in whole or in part, in any manner. A transfer or issuance
of any ownership interest shall constitute such a transfer. Any attempted
transfer, assignment or sublicense in contravention of this provision shall be
void and of no effect.
8. EXPORT
Customer will not, without the prior written consent of SalesLogix and, if
required, of any governmental authority having jurisdiction, transmit, ship,
export or reexport, or disclose, directly or indirectly: (i) any technical data
received under or in connection with this Agreement; or (ii) any direct product
(including processes and services) produced by the use of any such technical
data; to any restricted country or recipient specified in the Export
Administration Regulations except as authorized by the United States Department
of Commerce or other applicable laws or regulations.
9. GENERAL PROVISIONS
a. Amendments. This Agreement may not be amended or modified except in a
writing signed by both parties, and any attempt at oral modification shall be
void and of no effect.
b. Entire Agreement. This Agreement, including any Services Agreement, these
Terms & Conditions and any Work Orders, contains all the understandings between
the parties on the subject matter of this Agreement (superseding any prior oral
or written understandings) and there are no other warranties, representations or
agreements between them except as set forth in this Agreement.
c. Delay. Neither party to this Agreement shall be liable for delays or
failures in performance (other than payment of money or breach of
confidentiality requirements) resulting from acts beyond the reasonable control
of such party.
d. Costs and Attorney Fees. The prevailing party shall be entitled to
recover, in addition to any other remedy, reimbursement for reasonable attorney
fees, court costs, costs of investigation, expert fees and other related
expenses incurred in connection with any enforcement of rights under this
Agreement.
e. Applicable Law. The validity, construction and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of Arizona, excluding that body of law applicable to choice of law. The
parties consent and submit to the jurisdiction and venue of the state and
federal courts located in Maricopa County of the State of Arizona to determine
the validity, construction and performance of this Agreement. Notwithstanding
the foregoing, SalesLogix shall have the right to seek relief in any court of
competent jurisdiction to prevent or enjoin the misappropriation, misuse,
infringement or unauthorized disclosure of SalesLogix's confidential information
or intellectual property rights.
f. Waivers. The failure or delay of any party to exercise any right or
option arising out of a breach of this Agreement shall not be deemed a waiver of
any right or option with respect to any subsequent or different breach, or the
continuance of any existing breach, after demand for strict performance.
g. Interpretation. To the fullest extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable for particular facts or circumstances, such provision shall remain
in full force and effect for all other facts or circumstances. If any provision
of this Agreement is declared entirely void or unenforceable, such provision
shall be deemed severed from this Agreement, which shall otherwise remain in
full force and effect.
h. Notices. Any notice or other communication required or permitted
hereunder shall be given in writing to the other party at the address stated in
the Services Agreement or at such other address as shall be given by either
party to the other in writing. Such notice shall be deemed to have been given or
made when delivered personally, by confirmed facsimile transmission or five (5)
days after being placed, properly addressed with first class, postage prepaid,
return receipt requested, in the United States mail, or sent by registered
airmail, properly addressed, postage prepaid and return receipt requested.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF SALESLOGIX CORPORATION
Opis SupportExpress, Inc., an Arizona subsidiary
SalesLogix International, Inc., an Arizona subsidiary
SalesLogix Europe Ltd., United Kingdom subsidiary
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" and to the use of our report dated
January 29, 1999, except Note 15, as to which the date is March 24, 1999, with
respect to the financial statements of SalesLogix Corporation included in the
Registration Statement (Form S-1) and in the related Prospectus of SalesLogix
Corporation for the registration of shares of its common stock.
Our audit also included the financial statement schedule of SalesLogix
Corporation listed in Item 16(b). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
March 25, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 22, 1999, with respect to the financial
statements of Opis Corporation included in the Registration Statement (Form S-1)
and in the related Prospectus of SalesLogix Corporation for the registration of
shares of its common stock.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
March 25, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 15, 1999, except for Note 10, as to which the
date is March 24, 1999, with respect to the financial statements of Enact
Incorporated included in the Registration Statement (Form S-1) and in the
related Prospectus of SalesLogix Corporation for the registration of shares of
its common stock.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the audited
financial statements of SalesLogix Corporation and subsidiary as of December 31,
1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 11,377,236
<SECURITIES> 0
<RECEIVABLES> 5,025,115
<ALLOWANCES> (455,396)
<INVENTORY> 0
<CURRENT-ASSETS> 16,869,335
<PP&E> 3,611,238
<DEPRECIATION> (1,067,152)
<TOTAL-ASSETS> 23,974,158
<CURRENT-LIABILITIES> 6,026,608
<BONDS> 0
0
33,482,215
<COMMON> 3,301
<OTHER-SE> (16,885,428)
<TOTAL-LIABILITY-AND-EQUITY> 23,974,158
<SALES> 10,105,401
<TOTAL-REVENUES> 15,642,611
<CGS> 4,903,043
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</TABLE>
