<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
EXE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 7371 751719817
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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8787 STEMMONS FREEWAY
DALLAS, TEXAS 75247
(214) 775-6000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
RAYMOND R. HOOD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
EXE TECHNOLOGIES, INC.
8787 STEMMONS FREEWAY
DALLAS, TEXAS 75247
(214) 775-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
Copies of communications to:
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<S> <C>
DAVID W. POLLAK, ESQ. SETH R. MOLAY, P.C.
MORGAN, LEWIS & BOCKIUS LLP ALAN M. UTAY, ESQ.
101 PARK AVENUE AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
NEW YORK, NEW YORK 10178 1700 PACIFIC AVENUE, SUITE 4100
(212) 309-6000 DALLAS, TEXAS 75201
(214) 969-2800
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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,
check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1) REGISTRATION FEE(2)
<S> <C> <C>
Common stock, par value $.01 per share...................... $125,000,000 $33,000
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(o).
(2) Calculated pursuant to Rule 457(a) under the Securities Act based on an
estimate of the proposed maximum offering price.
------------------------------
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION -- APRIL , 2000
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY U.S. FEDERAL SECURITIES LAW TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN
DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR
OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE>
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PROSPECTUS
, 2000
[LOGO]
EXE TECHNOLOGIES, INC.
SHARES OF COMMON STOCK
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THE COMPANY: THE OFFERING:
- - We are a leading provider of supply - We are offering shares of our
chain execution software for common stock.
e-commerce and traditional sales - The underwriters have an option to
channels. purchase an additional shares of
- - EXE Technologies, Inc. common stock from us to cover
8787 Stemmons Freeway over-allotments.
Dallas, Texas 75247 - This is our initial public offering,
(214) 775-6000 and no public market currently exists
for our common stock.
PROPOSED SYMBOL & MARKET: - We anticipate that the initial
- - EXEE/Nasdaq National Market public offering price for our common
stock will be between $ and $
per share.
- We plan to use the proceeds from
this offering to repay indebtedness
and for working capital and general
corporate purposes.
- A group of our stockholders has the
right to purchase shares of our
common stock in this offering.
- Closing: , 2000.
</TABLE>
<TABLE>
<CAPTION>
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<S> <C> <C>
Per Share Total
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Public offering price: $ $
Underwriting fees:
Proceeds to EXE Technologies, Inc.:
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</TABLE>
THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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Neither the SEC nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful or complete nor
have they made, nor will they make, any determination as to whether anyone
should buy these securities. Any representation to the contrary is a criminal
offense.
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DONALDSON, LUFKIN & JENRETTE SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY DLJDIRECT INC.
<PAGE>
GRAPHIC
Graphic, entitled "Fulfilling the Demand of a New Economy," showing the flow
of goods and information through distribution points, including the
Transportation Provider, the Distributor's eFulfillment Center, the
Manufacturer's Fulfillment Center, the eFulfillment Center, the Retailer's
Fulfillment Center and the e-Tailer's eFulfillment Center in an array
surrounding the Customer. These distribution centers are linked to components of
the supply chain, including Procurement, Marketing and Sales, Outsourced
eCommerce Partners and Supplier's eFulfillment Center, which are also in an
array surrounding the Customer. The Customer is linked through the Customer
Portal to the eFulfillment Center. The Supplier is linked through the Supplier
Portal to the eFulfillment Center. The eFulfillment Center is further focused on
in a separate window and shows Crossdock, Receiving, Packing, Quality, Value,
Putaway, Packing, Labor, Shipping and Returns. The eFulfillment Center in the
separate window is surrounded by an array showing additional distribution
points, including two additional eFulfillment Centers, a Supplier, a
Manufacturer, a Customer and a Retail Store. The graphic is captioned with the
phrase "The EXceed-TM- eFulfillment System."
Graphic may also display customer logos that are mentioned in the customer
list.
<PAGE>
TABLE OF CONTENTS
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PAGE
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 4
Special Note Regarding
Forward-Looking Statements......... 14
Use of Proceeds...................... 15
Dividend Policy...................... 15
Company Information.................. 15
Capitalization....................... 16
Dilution............................. 17
Selected Consolidated Financial
Data............................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 19
</TABLE>
<TABLE>
Business............................. 29
<CAPTION>
PAGE
<S> <C>
Management........................... 43
Certain Transactions................. 52
Principal Stockholders............... 54
Description of Capital Stock......... 57
Shares Eligible for Future Sale...... 59
Underwriting......................... 61
Legal Matters........................ 63
Experts.............................. 63
Where You Can Find More Information.. 64
Index to Consolidated Financial
Statements......................... F-1
</TABLE>
------------------------
You should rely only on the 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 our 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 the
prospectus or any sale of the common stock. In this prospectus, unless the
context indicates otherwise, "EXE Technologies, Inc.," "we," "us" and "our"
refer to EXE Technologies, Inc., a Delaware corporation.
"EXE," "EXE Technologies," the EXE Technologies logo, "EXceed," "EXceed eFS
Fulfill," "EXceed eFulfillment System (eFS)," "EXceed eFS Collaborate," "GEM"
and "EXE University" are trademarks or service marks of EXE Technologies, Inc.
Other tradenames appearing in this prospectus are the property of their holders.
We were organized in July 1997 and commenced operations in September 1997
following the acquisition of Dallas Systems Corporation, based in Dallas, Texas,
by Neptune Systems, Inc., based in Philadelphia, Pennsylvania. Although Dallas
Systems had been in existence for 18 years and Neptune for five years, we have
operated on a combined basis as EXE Technologies, Inc. for less than three
years.
Unless otherwise indicated, all information in this prospectus:
- assumes no exercise of the underwriters' over-allotment option; and
- gives effect to the conversion into common stock, on a one-for-one basis,
of all our issued and outstanding Series A, Series B, Series C and
Series D preferred stock and our Class B common stock.
i
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS. THIS SUMMARY
MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND
THIS OFFERING FULLY, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING
THE RISK FACTORS AND THE FINANCIAL STATEMENTS.
OUR BUSINESS
We are a leading provider of supply chain execution software for e-commerce
and traditional sales channels. Supply chain execution encompasses ordering,
transporting, handling, storing and delivering inventory as it moves from
manufacturer to the end customer. Our software allows companies to manage both
e-commerce and traditional fulfillment activities and to optimize the operations
of warehouses and distribution centers. Our software is an Internet-enabled
solution that enhances the tracking and control of inventory throughout the
supply chain and is designed to help companies increase customer loyalty and
satisfaction by providing personalized and reliable order fulfillment. We
provide global service and support for our software from established facilities
in North America, Europe, the Middle East, Asia and Australia.
We sell our software through a direct sales force of 71 employees worldwide
and through strategic alliances with complementary software vendors and systems
integrators, including Cap Gemini, i2 Technologies, IBM Global Services,
Microsoft, Oracle and PricewaterhouseCoopers. We target companies in industries
characterized by large product selections, high transaction volumes and
increased demands for personalized fulfillment, including traditional retailers,
newly-created e-tailers, manufacturers and outsourced e-commerce and third-party
logistics providers. Our customers include barnesandnoble.com, ConAgra,
Consolidated Freightways (Redwood Systems), Ford, Fritz Companies,
GroceryWorks.com, K-Mart, Safeway and Safeway(.com).
We offer e-fulfillment software designed to meet the fulfillment needs of
e-commerce companies. Revenue from these products and their predecessors
increased 109.6% to $41.3 million in 1999 from $19.7 million in 1998, and
accounted for 42.7% of our total revenue in 1999 compared to 21.6% in 1998. The
increase in demand for these eFS products contributed to our total revenue of
$96.8 million in the year ended December 31, 1999.
THE OPPORTUNITY
The rapid emergence of the Internet as a medium for commerce has shifted the
focus of supply chain execution to fulfillment systems. Many traditional
retailers, who have historically relied on warehouse management and
replenishment solutions, are evolving into e-tailers with the capability to
transact directly with customers worldwide. Many traditional manufacturers, who
have historically relied on distributors and retailers to transact with
customers, are now directly engaged in one-to-one fulfillment. In addition, many
e-commerce companies are relying on third party logistics providers and business
process outsourcers to satisfy their fulfillment needs. We believe that the
ability of fulfillment systems to facilitate value-added, one-to-one order
completion on a global scale will be a critical success factor for these
e-commerce and traditional businesses as they implement their Internet
strategies. We believe many of these companies must now invest in and rapidly
deploy new e-fulfillment software to meet the specific requirements of their
individual customer bases.
1
<PAGE>
OUR SOLUTION
Our software manages the fulfillment of orders initiated through both
e-commerce and traditional sales channels and provides the following benefits to
our customers:
- RAPID TIME TO MARKET. We believe our software provides all of the
functionality necessary for e-fulfillment in a single, packaged solution
that can improve time to market for companies launching or enhancing
e-commerce initiatives.
- ONE-TO-ONE FULFILLMENT. Our software allows companies to treat each
transaction individually by automating and coordinating complex
fulfillment, assembly, product configuration and one-to-one marketing
campaigns across multiple sales channels.
- FLEXIBILITY, SCALABILITY AND RELIABILITY. Our software can be deployed
across most major computing platforms and has been proven reliable in high
volume, multi-channel and multi-language environments.
- SUPPLY CHAIN VISIBILITY. Our software provides suppliers and customers a
real-time view of order status and fulfillment activities.
- GLOBAL CAPABILITY. We believe our software is unique in its ability to be
installed and supported around the world. Our software currently operates
in 35 countries and 15 different languages.
- ADAPTABILITY FOR NEW BUSINESS MODELS. Our software is designed to handle
complex logistics situations. This adaptability is increasingly critical
in environments where it is necessary to handle products owned by multiple
companies.
OUR STRATEGY
Our goal is to be the leading global provider of fulfillment software to
companies offering products and services through both e-commerce and traditional
sales channels. We plan to:
- Leverage our experience and established market position;
- Use our international infrastructure to gain global market share;
- Expand our strategic alliances;
- Enhance our e-commerce solutions;
- Capture the growing opportunity created by electronic marketplaces; and
- Exploit the growing demand for application service providers and business
process outsourcers.
2
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THE OFFERING
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<S> <C>
Common stock offered...................... shares
Common stock to be outstanding after this
offering................................ shares(1)
Use of proceeds........................... We intend to use the net proceeds from this offering to
repay indebtedness and for working capital and other
general corporate purposes, including potential future
acquisitions.
Proposed Nasdaq National Market symbol.... EXEE
</TABLE>
- ------------------------
(1) The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of December 31, 1999. This
number does not include:
- an aggregate of 4,471,975 shares of common stock issuable upon exercise of
options outstanding as of December 31, 1999 at a weighted average exercise
price of $4.59 per share, of which 1,554,570 are fully vested at a
weighted average exercise price of $3.27 per share;
- an aggregate of 1,085,000 shares of common stock issuable upon the
exercise of warrants outstanding as of December 31, 1999 at a weighted
average exercise price of $4.16 per share, of which 755,000 are fully
vested at a weighted average exercise price of $4.23 per share; and
- an additional 4,050,984 shares of common stock reserved as of December 31,
1999 for issuance under our equity-based compensation plans.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE PURCHASING
OUR COMMON STOCK. OUR MATERIAL RISKS AND UNCERTAINTIES ARE DESCRIBED BELOW. IF
ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED, THE TRADING PRICE
OF OUR COMMON STOCK COULD DECLINE AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT. ADDITIONAL RISKS AND UNCERTAINTIES, INCLUDING THOSE THAT ARE NOT YET
IDENTIFIED OR THAT WE CURRENTLY THINK ARE IMMATERIAL, MAY ALSO ADVERSELY AFFECT
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS.
RISKS RELATING TO OUR BUSINESS
WE EXPECT TO CONTINUE TO INCUR LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE.
We have experienced quarterly and annual losses since the acquisition of
Dallas Systems in September 1997. We experienced a pro forma net loss of
$5.7 million for 1997 and net losses of $19.6 million for 1998 and
$24.0 million for 1999. We may continue to incur losses on both a quarterly and
an annual basis, and we are uncertain if or when we will become profitable.
Moreover, we expect to continue to incur significant sales and marketing and
research and development expenses, and, as a result, we will need to generate
significant revenue to achieve and maintain profitability. We may not achieve
our planned growth or generate sufficient revenue to attain profitability.
WE CAN GIVE YOU NO ASSURANCE THAT WE WILL BE ABLE TO GROW AND INCREASE OUR LEVEL
OF REVENUE OR
ACHIEVE PROFITABILITY IN THE FUTURE.
Our growth rates and, consequently, our future operating results may be
affected by any of the following factors:
- the overall growth rate of the markets in which we compete;
- the level of market acceptance of, and demand for, our software;
- our competitors' products and prices;
- our ability to establish strategic marketing relationships and to develop
and market new and enhanced products;
- our ability to successfully enter into agreements with and train alliance
companies and systems integrators;
- our ability to consummate strategic acquisitions;
- our ability to control costs;
- changes in our products and services mix;
- our ability to expand our direct sales force and indirect distribution
channels worldwide; and
- our ability to attract, train and retain consulting, technical and other
key personnel.
OUR BUSINESS COULD BE HARMED IF OUR CUSTOMERS DO NOT ACCEPT OUR NEW PRODUCTS,
INCLUDING
E-FULFILLMENT PRODUCTS, AS QUICKLY AS WE ANTICIPATE.
We expect to derive a majority of our product license revenue in the future
from our new e-fulfillment products and their components, which were released in
1999. Our business depends on successful customer acceptance of these products
and the release, introduction and customer acceptance of new products, in
addition to the continued acceptance of our traditional products. We expect that
we will continue to depend on revenue from new and enhanced versions of our
e-fulfillment
4
<PAGE>
products, and our business would be harmed if our target customers do not adopt
and expand their use of these products and their components.
OUR QUARTERLY OPERATING RESULTS DEPEND HEAVILY ON SOFTWARE LICENSE REVENUE,
WHICH IS DIFFICULT TO
FORECAST AND MAY FLUCTUATE.
Our quarterly software license revenue is difficult to forecast because our
sales cycles, from initial evaluation to delivery of software, vary
substantially from customer to customer. Revenue in any quarter is dependent on
orders received, contracts signed and products shipped in that quarter. We
typically recognize the majority of our revenue in the last month of the
quarter, frequently in the last week or even days of the quarter. In addition,
the timing of large individual license sales is difficult for us to predict,
and, in some cases, transactions are concluded later than anticipated. Since our
operating expenses are based on anticipated revenue levels and most of our
operating expenses, particularly personnel and facilities costs, are relatively
fixed in advance of any particular quarter, any revenue shortfall may cause
fluctuations in operating results in any particular quarter. We can give you no
assurance that revenue will grow in future periods, that revenue will grow at
historical rates or that we will achieve and maintain positive operating margins
in future quarters. If revenue falls below our expectations in a particular
quarter, our operating results could be harmed.
BECAUSE OUR SALES CYCLES ARE LENGTHY AND SUBJECT TO UNCERTAINTIES, IT IS
DIFFICULT TO FORECAST OUR SALES, AND THE DELAY OR FAILURE OF A SIGNIFICANT
SOFTWARE LICENSE TRANSACTION OR OUR INABILITY TO ANTICIPATE A DELAY COULD HARM
OUR BUSINESS OR OPERATING RESULTS.
Our software is used for critical division- or enterprise-wide purposes and
involves a significant commitment of resources by customers. A customer's
decision to license our software usually involves the evaluation of the
available alternatives by a number of personnel in multiple functional and
geographic areas, each often having specific and conflicting requirements.
Accordingly, we typically must expend substantial resources educating
prospective customers about the value of our solutions. For these and other
reasons, the length of time between the date of initial contact with the
potential customer and the execution of a software license agreement typically
ranges from three to nine months, and is subject to delays over which we may
have little or no control. As a result of the length and variability of the
sales cycle for our software products, our inability to forecast the timing and
amount of specific sales is limited, and the delay or failure to complete one or
more anticipated large license transactions could harm our business.
FAILURE TO EXPAND OUR ALLIANCE RELATIONSHIPS WITH SYSTEMS INTEGRATORS,
CONSULTING FIRMS AND COMPLEMENTARY SOFTWARE VENDORS AND TO ESTABLISH NEW
STRATEGIC ALLIANCES MAY SLOW ACCEPTANCE OF OUR SOFTWARE AND DELAY THE GROWTH OF
OUR REVENUE.
To supplement our direct sales force and our implementation capabilities, we
have established strategic marketing alliances with systems integrators,
consulting firms and complementary software vendors, and we rely on them to
recommend our software to their customers and to periodically install and
support our software for their customers. To increase our sales and
implementation capabilities, one of our key strategies is to expand our existing
relationships and establish new strategic alliances with systems integrators,
consulting firms and complementary software vendors. The loss of, or failure to
expand, existing relationships or our failure to establish new strategic
alliances could limit the number of transactions we may complete and may result
in our inability to recognize revenue.
OUR INTERNATIONAL OPERATIONS, WHICH WE PLAN TO EXPAND, ARE SUBJECT TO HEIGHTENED
RISKS THAT COULD HARM OUR BUSINESS.
International revenue accounted for approximately 36% of our total revenue
during 1999. We expect international revenue to continue to account for a
significant percentage of total revenue in the
5
<PAGE>
future, and we plan to continue to expand our international activities as part
of our growth strategy. This expansion will require significant financial
resources and management attention that could have a negative effect on our
earnings. As our international operations continue to develop, they may become
increasingly subject to risks inherent in international business activities,
including:
- difficulty in staffing and managing geographically diverse operations;
- longer accounts receivable payment cycles in certain countries;
- compliance with a variety of foreign laws and regulations;
- unexpected changes in regulatory requirements and overlap of different tax
structures;
- greater difficulty in safeguarding intellectual property;
- trade restrictions;
- changes in tariff rates and import and export licensing requirements; and
- general economic conditions in international markets.
Our business could be harmed by any of these or other factors affecting
international operations.
BECAUSE MANY OF OUR CUSTOMERS PAY US IN FOREIGN CURRENCIES, WE MAY BE EXPOSED TO
EXCHANGE RATE RISKS AND OUR NET INCOME MAY SUFFER DUE TO CURRENCY TRANSLATIONS.
Some revenue and the majority of the expenses incurred by our international
operations are denominated in currencies other than the United States dollar. In
particular, our revenue and costs of operations in Japan and Singapore are
denominated in Japanese yen and Singapore dollars. In addition, with the
expansion of international operations, the number of foreign currencies in which
we must operate is likely to increase, resulting in increased exposure to
exchange rate fluctuations. Exchange rate fluctuations have caused and will
continue to cause currency transaction gains and losses. While such currency
transaction gains and losses have not been material to date, we can give you no
assurance that currency transaction losses will not harm our results of
operations in future periods.
FAILURE TO INTEGRATE NEW MEMBERS OF OUR MANAGEMENT TEAM MAY HARM OUR OPERATIONS.
We have recently made additions to our senior management team, upon whom we
rely to support our anticipated growth. In August 1999, we hired Michael
Burstein, our Senior Vice President, Finance, Chief Financial Officer and
Treasurer, and in December 1999, we hired Frederick Gattelaro, our Senior Vice
President, Professional Services, Americas. Also, several members of our senior
management team have recently assumed new responsibilities or roles.
Accordingly, some members of our senior management team have been in place for
less than one year. Our success will depend on our ability to integrate new
members of our senior management into our operations.
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL, IN
PARTICULAR PROFESSIONAL SERVICES PERSONNEL. IF WE ARE UNABLE TO ATTRACT THESE
PERSONNEL AND USE THEM EFFICIENTLY, OUR ABILITY TO IMPLEMENT OUR SOFTWARE COULD
BE HARMED.
We believe our success will depend significantly on our ability to attract,
motivate and retain additional highly skilled technical, managerial, consulting,
sales and marketing and, in particular, professional services, personnel. We
compete intensely for these personnel and we may be unable to achieve our
personnel goals. Our failure to attract, motivate and retain such highly skilled
personnel could seriously limit our ability to expand our business.
6
<PAGE>
Also, we believe our success will depend on our ability to productively
manage an increase in the number of our personnel. Our professional services
staff for our e-fulfillment and their predecessor products has increased since
1998, and we expect to continue to increase the number of our professional
services staff following completion of this offering. This growth may result in
increased salary expenses and training costs in advance of any corresponding
revenue due to the typically lower productivity levels of newer service
personnel. Moreover, any growth in software license revenue will likely generate
the need for more professional services personnel to deploy and implement
software and to train customers. A shortage in the number of trained personnel,
either within our company or available from outside consulting firms, could
limit our ability to implement our software on a timely and cost-effective
basis. Our business will be harmed if we generate insufficient revenue to cover
growth-related expenses, significantly strain management resources with
additional responsibilities, fail to successfully expand our relationships and
develop additional relationships with third party implementers or fail to have
sufficiently trained professional services personnel.
WE DEPEND ON THE SERVICES OF A NUMBER OF KEY PERSONNEL, AND A LOSS OF ANY OF
THESE PERSONNEL COULD DISRUPT OUR OPERATIONS AND RESULT IN REDUCED REVENUE.
Our success depends on the continued services and performance of our senior
management staff, in particular, Raymond Hood, our President and Chief Executive
Officer. The loss of the services of Mr. Hood or any of our other senior
management staff or key employees could seriously impair our ability to operate
and achieve our objectives, which could reduce our revenue. We have
$3.0 million of key man life insurance on Mr. Hood. This amount may not be
sufficient to compensate us for the loss of his services. We also have
employment agreements with Mr. Hood and with most of our executive officers.
However, these employment agreements do not prevent Mr. Hood, or other key
employees, from voluntarily terminating his or her employment with us.
IF WE ARE UNSUCCESSFUL IN IDENTIFYING, FINANCING AND INTEGRATING SUITABLE
ACQUISITION CANDIDATES, INCLUDING BUSINESSES, PRODUCTS AND TECHNOLOGIES, OUR
GROWTH COULD BE HARMED.
Due to the intense competition we face, we may not be able to identify
suitable acquisition candidates available for purchase at reasonable prices,
consummate any acquisition or successfully integrate any acquired business into
our operations. Further, acquisitions may involve a number of additional risks,
including:
- diversion of management's attention;
- failure to retain key personnel of the acquired businesses;
- unanticipated events or circumstances;
- legal liabilities; and
- amortization of acquired intangible assets.
We expect to finance any future acquisitions with cash on hand, which may
include the proceeds of this offering, as well as with possible debt financing
or the issuance of common or preferred stock. If we were to proceed with one or
more future acquisitions for cash, a substantial portion of our available cash
could be used to complete them. If we were to proceed with one or more
acquisitions for stock, our stockholders would suffer dilution of their
interests. We can give you no assurance that we would be able to arrange for any
needed debt financing on terms acceptable to us. Most of the businesses that
might be attractive acquisition candidates are likely to have significant
intangible assets, and acquisition of these businesses would typically result in
substantial goodwill amortization charges to us, reducing future earnings. For
example, in connection with Neptune's acquisition of Dallas Systems, we acquired
$18.1 million of goodwill, and $6.9 million of other intangible assets, which
are being amortized over three to six years and resulted in amortization expense
of $4.8 million in 1999. In addition, acquisitions could involve
acquisition-related charges, such as one-time acquired research and
7
<PAGE>
development charges, reducing future earnings. For example, we recorded a
one-time research and development charge of $2.7 million in 1997 in connection
with Neptune's acquisition of Dallas Systems.
THE LENGTH AND COMPLEXITY OF OUR IMPLEMENTATION CYCLE MAY RESULT IN
IMPLEMENTATION DELAYS, WHICH MAY CAUSE CUSTOMER DISSATISFACTION.
Due to the size and complexity of some of our software implementations, our
implementation cycle can be lengthy and may result in delays. These delays could
result in customer dissatisfaction, which could adversely affect our reputation.
Additional delays could result if we fail to attract, train and retain services
personnel, or if our alliance companies fail to commit sufficient resources
towards implementing our software. These delays and resulting customer
dissatisfaction could harm our business.
THE USE OF FIXED-PRICE SERVICE CONTRACTS SUBJECTS US TO THE RISK THAT WE MAY NOT
SUCCESSFULLY COMPLETE THESE CONTRACTS ON BUDGET.
We offer software implementation and related consulting services to our
customers. Although we typically provide services on a "time and material"
basis, we have from time to time entered into fixed-price service contracts, and
we expect that some customers will demand these contracts in the future. These
contracts specify certain milestones to be met by us regardless of actual costs
incurred in meeting those obligations. If we are unable to successfully complete
these contracts on budget, our business could be harmed.
WE MAY BE UNABLE TO OBTAIN ADDITIONAL FUNDING ON SATISFACTORY TERMS TO MEET OUR
FUTURE CAPITAL REQUIREMENTS.
We believe that the proceeds received by us from this offering, together
with current cash balances, cash flows from operations and available borrowings
under our revolving credit facility will be sufficient to meet our working
capital requirements in the near future. Any acquisitions of businesses,
products or technologies or joint ventures could require us to obtain additional
financing. We can give you no assurance that additional financing will be
available, on terms favorable to us, to fund our working capital requirements.
Moreover, additional financing may cause dilution to existing stockholders.
WE RELY ON SOFTWARE LICENSES THAT MAY BE TERMINATED OR UNAVAILABLE TO US ON
COMMERCIALLY REASONABLE TERMS.
We market and resell, under license, third party software, including:
- software embedded in our products;
- software that enables our software to interact with other software systems
or databases; and
- software in conjunction with which our software operates.
We also license software tools used to develop our software and software for
internal systems. We cannot assure you that the third party software or software
tools will continue to be available to us on commercially reasonable terms. The
loss or inability to maintain any of these software licenses could result in
delays or reductions in product shipments until equivalent software could be
identified and licensed or compiled, which could harm our business.
WE MAY EXPERIENCE DELAYS IN THE SCHEDULED INTRODUCTION OF NEW OR UPGRADED
SOFTWARE, AND OUR PRODUCTS MAY CONTAIN UNDETECTED "BUGS," RESULTING IN LOSS OF
REVENUE AND HARM TO OUR REPUTATION.
Historically, we have issued significant new releases of our software
periodically, with interim releases issued more frequently. Our software is
particularly complex, because it must perform in multi-platform environments and
respond to customer demand for high performance e-fulfillment and supply
8
<PAGE>
chain execution applications and major new product enhancements. Our new
products can require long development and testing periods before they are
commercially released. If we experience delays in the scheduled introduction of
new software or software upgrades, our customers may become dissatisfied and our
business could be harmed.
Also, despite testing by us, our software may contain undetected errors or
"bugs." In the past, we have discovered software bugs in new versions of our
software after its release. We may experience software bugs in the future. These
bugs could result in a delay or loss of revenue, diversion of development
resources, damage to our reputation, increased service and warranty costs, or
impaired market acceptance and sales of these products, any of which could harm
our business.
PRODUCT LIABILITY AND OTHER CLAIMS RELATED TO OUR CUSTOMERS' BUSINESS OPERATIONS
COULD RESULT IN SUBSTANTIAL COSTS.
Many of our installations involve projects that are critical to the
operations of our clients' businesses and provide benefits that may be difficult
to quantify. Any failure in a client's system could result in a claim for
substantial damages against us, regardless of our responsibility for the
failure. Although we attempt to limit contractually our liability for damages
arising from breaches of warranty, negligent acts and errors, we can give you no
assurance that the limitations of liability in our contracts will be enforceable
in all instances or will otherwise protect us. Although we maintain general
liability insurance coverage, including coverage for errors or omissions, there
can be no assurance that this coverage will continue to be available on
reasonable terms or will be available in sufficient amounts to cover one or more
large claims, or that the insurer will not disclaim coverage.
The successful assertion of one or more large claims against us that exceeds
available insurance coverage or changes in our insurance policies, including
premium increases or the imposition of large deductible or co-insurance
requirements, could harm our business.
RISKS RELATING TO OUR INDUSTRY
WE FACE INTENSE COMPETITION FROM NUMEROUS COMPETITORS, SOME OF WHOM HAVE A
SIGNIFICANT COMPETITIVE ADVANTAGE OVER US.
The market for e-fulfillment solutions is intensely competitive, fragmented
and subject to rapid technological change. The principal competitive factors in
our market include:
- adherence to emerging Internet-based technology standards;
- comprehensiveness of applications;
- adaptability, flexibility and scalability;
- real-time, interactive capability with customer and partner systems;
- global capability;
- ability to support vertical industry requirements;
- ease of application use and deployment;
- speed of implementation;
- customer service and support; and
- initial price and total cost of ownership.
9
<PAGE>
Because we offer both e-fulfillment and traditional supply chain software,
we consider a number of companies in different market categories to be our
competitors. Our competitors include companies and groups that:
- focus on providing e-fulfillment applications;
- offer fulfillment solutions for traditional supply chains;
- offer enterprise platforms for order management and fulfillment; and
- service internal customers, such as internal information technology
groups.
We believe that the market for integrated e-fulfillment solutions is still
in its formative stage, and that no currently identified competitor represents a
dominant presence in this market.
We expect competition to increase as a result of software industry
consolidation. New competitors could emerge and rapidly capture market share. We
can give you no assurance that we can maintain our competitive position against
current and potential competitors, especially those with greater name
recognition, comparable or superior products, significant installed customer
bases, long-standing customer relationships or the ability to price products as
incremental add-ons to existing systems.
ACCOUNTING RULES REGARDING THE RECOGNITION OF SOFTWARE REVENUE HAVE CHANGED, AND
THE UNCERTAINTY REGARDING THEIR INTERPRETATION COULD IMPACT OUR ABILITY TO
RECOGNIZE REVENUE.
Software license revenue for periods subsequent to December 31, 1997 is
recognized in accordance with the American Institute of Certified Public
Accountants' (AICPA) Statement of Position 97-2, "Software Revenue Recognition."
Under these rules, software license revenue is recognized upon execution of a
contract and delivery of software, provided that the license fee is fixed and
determinable, no significant production, modification or customization of the
software is required and management considers collection probable. As the
practice under these rules is relatively new, interpretations of these rules may
be issued by the AICPA or the SEC in the future which may change how these
software revenue recognition rules are to be applied. We can give no assurance
that the application of any new interpretation of these rules will not impact
the timing of our revenue recognition in the future.
THE MARKET FOR OUR SOFTWARE IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE. IF
WE FAIL TO RESPOND PROMPTLY AND EFFECTIVELY TO TECHNOLOGICAL CHANGE AND
COMPETITORS' INNOVATIONS, OUR BUSINESS COULD BE HARMED.
The market for e-fulfillment and supply chain execution systems experiences
rapid technological change, changing customer needs, frequent new product
introductions and evolving industry standards that may render existing products
and services obsolete. Our growth and future operating results will depend in
part on our ability to enhance existing applications and develop and introduce
new applications or components. These new applications must:
- meet or exceed technological advances in the marketplace;
- meet changing customer requirements;
- respond to competitive products; and
- achieve market acceptance.
Our product development and testing efforts have required, and are expected
to continue to require, substantial investments. Also, we may be unable to
successfully identify new software opportunities and develop and bring new
software to market quickly and efficiently. Our software may not achieve market
acceptance and current or future products may not conform to industry standards
10
<PAGE>
in the markets served. If we are unable to develop and introduce new and
enhanced software in a timely manner, our business could be harmed.
IF THE E-COMMERCE MARKET DOES NOT CONTINUE TO DEVELOP, OR IF ITS DEVELOPMENT IS
DELAYED, OUR BUSINESS COULD BE HARMED.
Our software addresses the e-commerce market. The failure of this market to
develop, or a delay in the development of this market, could seriously harm our
business. The success of e-commerce depends substantially upon the widespread
adoption of the Internet as a primary medium for commerce and business
applications. Critical issues concerning the commercial use of the Internet,
such as security, reliability, cost, accessibility and quality of service,
remain unresolved and may negatively affect the growth of Internet use or the
attractiveness of commerce and business communications over the Internet.
CAPACITY CONSTRAINTS MAY RESTRICT THE USE OF THE INTERNET AS A COMMERCIAL
MARKETPLACE, RESULTING IN DECREASED DEMAND FOR OUR PRODUCTS.
The Internet infrastructure may not be able to support the demands placed on
it by increased usage or by the transmission of large quantities of data. Other
risks associated with commercial use of the Internet could slow its growth,
including:
- outages and other delays resulting from inadequate network infrastructure;
- slow development of enabling technologies and complementary products; and
- limited availability of cost-effective, high-speed access.
Delays in the development or adoption of new equipment standards or
protocols required to handle increased levels of Internet activity, or increased
governmental regulation, could cause the Internet to lose its viability as a
means of communication among participants in the supply chain, resulting in
decreased demand for our products.
WE DEPEND ON INTELLECTUAL PROPERTY LAWS, WHICH MAY NOT FULLY PROTECT US FROM
UNAUTHORIZED USE OR MISAPPROPRIATION OF OUR PROPRIETARY TECHNOLOGIES.
We rely on intellectual property laws, confidentiality procedures and
contractual provisions to protect our proprietary rights in our products and
technology. These measures afford only limited protection to us, particularly on
an international basis. We may be unable to avoid infringement or
misappropriation claims regarding current or future technology, or unable to
adequately deter misappropriation or independent third party development of our
technology. In addition, policing unauthorized use of our products is difficult.
We are unable to determine the extent to which piracy of our software products
exists and software piracy could become a problem. Litigation to defend and
enforce our intellectual property rights could result in substantial costs and
diversion of resources and could have a material adverse effect on our business,
regardless of the final outcome of such litigation.
RISKS RELATING TO THIS OFFERING
WE EXPECT OUR RESULTS OF OPERATIONS TO FLUCTUATE, AND THE PRICE OF OUR COMMON
STOCK COULD FALL IF QUARTERLY RESULTS ARE LOWER THAN THE EXPECTATIONS OF
SECURITIES ANALYSTS.
Our operating results historically have fluctuated on a quarterly basis and
may continue to do so in the future. These fluctuations could cause our stock
price to fluctuate significantly or decline. Some of the factors which could
cause our operating results to fluctuate include:
- demand for our products and services;
11
<PAGE>
- our competitors' products and prices;
- the timing and market acceptance of new product introductions and upgrades
by us or our competitors;
- our success in expanding our services, customer support and marketing and
sales organizations, and the timing of these activities;
- the mix of products and services sold;
- delays in, or cancellations of, customer implementations;
- customers' budget constraints;
- the level of research and development expenditures;
- the size of recurring compensation charges;
- changes in foreign currency exchange rates;
- our ability to control costs;
- the timing of acquisitions; and
- general economic conditions.
A large portion of our expenses, including expenses for facilities,
equipment and personnel, is relatively fixed. Accordingly, if our revenue
declines or does not grow as anticipated, we may not be able to correspondingly
reduce our operating expenses in a timely manner. Failure to achieve anticipated
levels of revenue could therefore significantly harm our operating results for a
particular fiscal period.
THERE IS NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK, AND THE PRICE OF OUR
COMMON STOCK MAY BE VOLATILE.
Prior to this offering, there has been no public market for our common
stock, and an active trading market may not develop or be sustained after this
offering. The initial public offering price of our common stock will be
determined by negotiation between us and the representatives of the underwriters
and may bear no relationship to the market price of our common stock after this
offering. The market price of our common stock could be subject to significant
fluctuations in response to variations in quarterly operating results and other
factors. In addition, the securities markets have experienced significant price
and volume fluctuations from time to time that have often been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may cause the market price of our common stock to decline.
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF OUR
COMMON STOCK FROM THE INITIAL PUBLIC OFFERING PRICE.
If you purchase common stock in this offering, you will experience immediate
and substantial dilution of $ per share, based upon the anticipated initial
public offering price of $ per share, because the price you pay will be
substantially greater than the net tangible book value per share of $ for
the shares you acquire. This dilution is due in large part to the fact that
prior investors paid an average price of $ per share when they purchased
their shares of common stock, which is substantially less than the anticipated
initial public offering price, as well as the fact that a considerable portion
of our assets are intangible assets.
12
<PAGE>
OUR MANAGEMENT WILL HAVE BROAD DISCRETION TO SPEND THE NET PROCEEDS OF THIS
OFFERING, AND MAY SPEND THE PROCEEDS IN WAYS WITH WHICH YOU DO NOT AGREE.
Our management will have broad discretion over the use of proceeds from this
offering. We intend to use the proceeds of this offering to repay all
indebtedness under our revolving credit facility and for working capital and
general corporate purposes, including acquisitions. Our management may allocate
the net proceeds among these purposes as it determines is necessary. In
addition, market factors may require our management to allocate all or portions
of the net proceeds for other purposes. Management may use the proceeds in ways
with which you do not approve. Accordingly, you will be relying on the judgment
of our management with regard to the use of proceeds from this offering.
FUTURE SALES OF OUR STOCK COULD CAUSE OUR STOCK PRICE TO DECLINE.
Sales of a substantial number of shares of our common stock in the public
market after this offering, or the perception that these sales may occur, could
cause the market price of our common stock to decline. In addition, the sale of
these shares could impair our ability to raise capital through the sale of
additional common or preferred stock.
Substantially all of the holders of our common stock and stock options are
subject to agreements that limit their ability to sell common stock. These
holders cannot sell or otherwise dispose of any shares of common stock for a
period of at least 180 days after the date of this prospectus without the prior
written approval of the underwriters. However, if the average price of our
shares appreciates by a specified amount following the date of this prospectus,
those holders who are not executive officers, directors or affiliates of ours
may be eligible to sell up to 25% of their shares either 90 days after the date
of this prospectus or on the second business day following the release of our
next quarterly financial statements, whichever day comes first. Under these
agreements, such holders may also be eligible to sell an additional 25% of their
shares 135 days after the date of this prospectus if the average price of our
shares continues to equal or exceed the targeted amount. When these agreements
expire, of the shares of common stock and the shares underlying the
options will become eligible for sale, in most cases only pursuant to volume,
manner of sale and notice requirements of Rule 144.
THE CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK MAY HAVE THE EFFECT OF
DELAYING OR PREVENTING A CHANGE OF CONTROL OF US.
After this offering, our directors, executive officers and their affiliated
companies will beneficially own approximately % of our outstanding common
stock. As a result, these stockholders will have the ability to elect our
directors and to determine the outcome of corporate actions requiring
stockholder approval. This concentration of ownership may have the effect of
delaying or preventing a change of control of us. Moreover, Mr. Baack,
Mr. Bahadur, Mr. Belsky and Mr. Hood together will beneficially own % of
our outstanding common stock. As a result, if they voted as a group, they would
have the ability to significantly influence the outcome of corporate actions
requiring stockholder approval.
WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS THAT MAY DISCOURAGE A CHANGE OF
CONTROL.
Upon completion of this offering, our certificate of incorporation will
authorize the issuance of 20,000,000 shares of preferred stock. Our board of
directors will have the power to determine the price and terms of any preferred
stock. The ability of our board of directors to issue one or more series of
preferred stock without stockholder approval could deter or delay unsolicited
changes of control by discouraging open market purchases of our common stock or
a non-negotiated tender or exchange offer for our common stock. Discouraging
open market purchases may be disadvantageous to our stockholders who may
otherwise desire to participate in a transaction in which they would receive a
premium for their shares.
13
<PAGE>
In addition, some provisions of our certificate of incorporation and by-laws
may also discourage a change of control by means of a tender offer, open market
purchase, proxy contest or otherwise. These provisions include:
- a board that is divided into three classes, each of which is elected to
serve staggered three year terms;
- provisions under which only the board of directors or our president or
secretary may call a special meeting of the stockholders;
- provisions which permit the board of directors to increase the number of
directors and to fill these positions without a vote of the stockholders;
- provisions under which no director may be removed at any time except for
cause and by a majority vote of the outstanding shares of voting stock;
and
- provisions under which stockholder action may be taken only at a
stockholders meeting and not by written consent of the stockholders.
These provisions may have the effect of discouraging takeovers and
encouraging persons seeking to acquire control first to negotiate with us.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historical or current facts. These statements may
include words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe" and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. In particular,
these include, among other things, statements relating to e-commerce strategy,
growth strategy, global expansion, use of proceeds, dividend policy, projected
capital expenditures, sales and marketing expenses, research and development
expenditures, other costs and expenses, revenue, profitability, liquidity and
capital resources, development and maintenance of alliances, the e-commerce and
e-fulfillment markets, market acceptance of the Internet, personnel expansion,
technological advancement, competition and the capabilities of our software.
Any or all of our forward-looking statements in this prospectus may turn out
to be wrong. They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties. Many factors mentioned in our
discussion in this prospectus, including the risks outlined under "Risk
Factors," will be important in determining future results. Actual future results
may vary materially.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
Other factors besides those listed here could also adversely affect us. This
discussion is provided as permitted by the Private Securities Litigation Reform
Act of 1995.
This prospectus includes statistical data regarding us, the Internet and the
industry in which we compete. This data is based on our records or is taken or
derived from information published or prepared by various sources, including ARC
Advisory Group, Forrester Research and International Data Corporation.
14
<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds of $ million from this
offering (after deducting estimated underwriting discounts and commissions and
offering expenses payable by us) assuming an initial public offering price of
$ per share. If the underwriters exercise their over-allotment option in
full, we estimate that we will receive net proceeds of $ from this
offering.
We intend to use the net proceeds from this offering to repay all
outstanding amounts under our loan agreement with Greyrock Capital, which as of
March 31, 2000 was $15.6 million. Our loan agreement with Greyrock provides for
a revolving credit line of up to $20 million and a term loan of $5 million, both
of which are secured by our assets. The interest rate under the loan agreement
is adjusted monthly and is computed as the highest LIBOR in effect each month
plus 4.87% per year. The interest rate may not be less than 8%, and the interest
charged for each month may not be less than $20,000. As of March 31, 2000, our
average annual interest rate for the current calendar year was 10.84%. We intend
to terminate the loan agreement upon closing of this offering.
The remaining net proceeds of $ will be used for working capital and
other general corporate purposes. These purposes may include the funding of new
product development efforts, expanding the number of sales and marketing and
research and development personnel and possible acquisitions of, or investments
in, businesses, products and technologies that are complementary to our
business. We have no specific agreements, commitments or understandings to make
new acquisitions or investments. The amounts actually spent for each purpose may
vary significantly and are subject to change depending upon different factors,
including economic or industry conditions, changes in the competitive
environment and strategic opportunities that may arise. Pending application of
the net proceeds as described above, we intend to invest the net proceeds of
this offering in interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
anticipate that we will retain all future earnings and other cash resources for
investment in our business. Accordingly, we do not intend to declare or pay cash
dividends in the foreseeable future. Payment of any future dividends will be at
the discretion of our board of directors after taking into account many factors,
including our financial condition, operating results, current and anticipated
cash needs and plans for expansion.
COMPANY INFORMATION
Our principal headquarters are located at 8787 Stemmons Freeway, Dallas,
Texas 75247, and our telephone number is (214) 775-6000. Information contained
on our web site is not a part of this prospectus.
15
<PAGE>
CAPITALIZATION
The following table sets forth our cash and cash equivalents and total
capitalization as of December 31, 1999, and as adjusted to reflect the
application of our net proceeds from this offering in the manner described in
"Use of Proceeds" and the conversion of our convertible preferred stock,
Series A through D, and our Class B common stock into common stock. You should
read this table in conjunction with our consolidated financial statements and
notes which are included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 8,932 $
======== ========
Revolving credit line and current portion of long term
debt...................................................... $ 9,595 $
======== ========
Long-term debt, net of current portion...................... $ 5,333 $
Stockholders' equity:
Convertible preferred stock, Series A through D, $.01 par
value: 22,000,000 shares authorized and 17,687,562
issued and outstanding at December 31, 1999, aggregate
liquidation value of $52,000,000, actual; and no shares
outstanding as adjusted................................. 52,000 --
Common stock, Class A voting, $.01 par value: 75,000,000
shares authorized and 16,766,529 shares issued and
outstanding, actual; and shares outstanding as
adjusted................................................ 167
Common stock, Class B non-voting, $.01 par value:
12,000,000 shares authorized and 380,022 shares issued
and outstanding, actual; and no shares outstanding as
adjusted................................................ 4
Additional paid-in capital................................ 23,568
Treasury stock at cost, 924,071 shares of common stock,
actual and as adjusted.................................. (3,209)
Accumulated deficit....................................... (50,218)
Deferred compensation..................................... (314)
Other comprehensive loss.................................. (766)
-------- --------
Total stockholders' equity.............................. 21,232
-------- --------
Total capitalization.................................. $ 26,565 $
======== ========
</TABLE>
- --------------------------
The table does not include:
- an aggregate of 4,471,975 shares of common stock issuable upon exercise of
options outstanding as of December 31, 1999 at a weighted average exercise
price of $4.59 per share, of which 1,554,570 are fully vested at a
weighted average exercise price of $3.27 per share;
- an aggregate of 1,085,000 shares of common stock issuable upon the
exercise of warrants outstanding as of December 31, 1999 at a weighted
average exercise price of $4.16 per share, of which 755,000 are fully
vested at a weighted average exercise price of $4.23 per share; and
- an additional 4,050,984 shares of common stock reserved as of
December 31, 1999 for issuance under our equity-based compensation plans.
16
<PAGE>
DILUTION
The net tangible book value of our common stock as of December 31, 1999,
after giving effect to the conversion of all our issued and outstanding
Series A, Series B, Series C and Series D preferred stock and Class B common
stock into common stock, was $6,586,196, or $0.19 per share. Net tangible book
value per share represents the amount of total tangible assets less total
liabilities, divided by the common stock outstanding as of December 31, 1999.
After giving effect to our sale of shares of common stock offered by us
through this prospectus at the anticipated initial public offering price of
$ per share and application of the net proceeds from this offering, and
after deducting the estimated underwriting discounts and offering expenses
payable by us, our net tangible book value as adjusted, as of December 31, 1999,
would have been $ million, or $ per share. This represents an
immediate increase in net tangible book value as adjusted of $ per share to
existing stockholders, and an immediate dilution in net tangible book value as
adjusted of $ per share to new investors purchasing common stock in this
offering.
The following table illustrates the per share dilution as described above:
<TABLE>
<S> <C> <C>
Anticipated initial public offering price................... $
Net tangible book value before this offering.............. $0.19
Increase attributable to new investors in this offering...
-----
Net tangible book value as adjusted after this offering.....
-----
Dilution to new investors................................... $
=====
</TABLE>
The following table summarizes, on an as adjusted basis, as of December 31,
1999, the number of shares of common stock purchased in this offering, the
aggregate cash consideration paid and the average price per share paid by
existing stockholders for common stock and by new investors to purchase common
stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------------- ---------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Existing stockholders.................... % $ % $
New investors............................
------- --- -------- --- -------
Total................................ 100% $ 100% $
======= === ======== === =======
</TABLE>
The table does not include:
- an aggregate of 4,471,975 shares of common stock issuable upon exercise of
options outstanding as of December 31, 1999 at a weighted average exercise
price of $4.59 per share, of which 1,554,570 are fully vested at a
weighted average exercise price of $3.27 per share;
- an aggregate of 1,085,000 shares of common stock issuable upon the
exercise of warrants outstanding as of December 31, 1999 at a weighted
average exercise price of $4.16 per share, of which 755,000 are fully
vested at a weighted average exercise price of $4.23 per share; and
- an additional 4,050,984 shares of common stock reserved as of
December 31, 1999 for issuance under our equity-based compensation plans.
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements and the related notes and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statement of operations
data for the years ended December 31, 1997, 1998 and 1999 and the balance sheet
data as of December 31, 1998 and 1999 are derived from our audited consolidated
financial statements included elsewhere in this prospectus. The statement of
operations data for the years ended December 31, 1995 and 1996 and the balance
sheet data as of December 31, 1995, 1996 and 1997 are derived from our audited
financial statements for the years then ended which are not included in this
prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1997
1995 1996 1997(1) PRO FORMA(2) 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Software license........................................ $ 1,085 $ 4,326 $ 8,429 $ 11,467 $ 22,418 $ 25,390
Services and maintenance................................ 1,431 3,390 12,781 34,898 59,758 64,103
Resale software and equipment........................... 252 698 5,562 13,510 9,114 7,307
------- ------- ------- -------- -------- --------
Total revenue......................................... 2,768 8,414 26,772 59,875 91,290 96,800
Cost and expenses:
Cost of software licenses............................... -- 206 749 749 234 254
Cost of services and maintenance........................ 989 2,146 9,967 26,931 46,474 53,473
Cost of resale software and equipment................... 193 608 4,129 9,797 7,206 5,851
Sales and marketing..................................... 555 1,258 6,721 9,685 23,806 25,052
Research and development................................ -- 600 3,534 7,351 15,473 11,544
General and administrative.............................. 589 2,219 4,263 6,836 12,813 15,493
Amortization of intangibles............................. -- -- 1,430 4,526 4,452 4,819
Write-off of in-process research and development........ -- -- 2,700 -- -- --
Loss on lease abandonment............................... -- -- -- -- 1,000 288
Restructuring costs..................................... -- -- -- -- -- 1,952
------- ------- ------- -------- -------- --------
Total costs and expenses.............................. 2,326 7,037 33,493 65,875 111,458 118,726
------- ------- ------- -------- -------- --------
Operating income (loss)..................................... 442 1,377 (6,721) (6,000) (20,168) (21,926)
Other income (expense)...................................... (11) (22) (208) (3) (14) (2,030)
------- ------- ------- -------- -------- --------
Income (loss) before minority interest and taxes............ 431 1,355 (6,929) (6,003) (20,182) (23,956)
Minority interest in subsidiary loss (income)............... -- 94 76 76 (30) --
------- ------- ------- -------- -------- --------
Income (loss) before income taxes and pro forma income
taxes(3).................................................. 431 1,449 (6,853) (5,927) (20,212) (23,956)
Provision (benefit) for income taxes and pro forma income
taxes(3).................................................. 157 609 (225) (227) (578) --
------- ------- ------- -------- -------- --------
Net income (loss)........................................... $ 274 $ 840 $(6,628) $ (5,700) $(19,634) $(23,956)
======= ======= ======= ======== ======== ========
Net income (loss) per share-basic........................... $ 0.03 $ 0.10 $ (0.59) $ (0.51) $ (1.24) $ (1.49)
Net income (loss) per share-diluted......................... $ 0.03 $ 0.10 $ (0.59) $ (0.51) $ (1.24) $ (1.49)
Shares used in computing net income (loss) per share-basic
and diluted............................................... 8,500 8,500 11,228 11,228 15,885 16,096
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------
1995 1996 1997(1) 1998 1999
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 569 $1,804 $ 6,653 $ 780 $ 8,932
Working capital............................................. 740 1,518 12,039 1,135 920
Total assets................................................ 2,234 5,208 40,249 57,063 67,670
Long-term debt (less current portion)....................... 500 590 17 5,420 5,333
Stockholders' equity........................................ 816 2,034 21,607 24,824 21,233
</TABLE>
- ----------------------------------
(1) We commenced operations on September 15, 1997, following the acquisition of
Dallas Systems by Neptune, which was accounted for as a purchase of Dallas
Systems by Neptune. As such, the historical financial statements of Neptune
are presented as our historical financial statements. The assets and
liabilities of Dallas Systems were recorded at the fair market value at the
date of the acquisition. Included in the 1997 consolidated results of
operations is a write-off of in-process research and development of
$2.7 million at the date of the acquisition. In connection with the
acquisition, we acquired $18.1 million of goodwill and $6.9 million of other
intangible assets, which are being amortized over three to six years.
Amortization of such goodwill and other intangible assets was approximately
$1,430,000 in 1997, $4,452,000 in 1998 and $4,819,000 in 1999. We do not
believe that our financial statements for the periods prior to the
acquisition are comparable to the periods after the acquisition due to the
significant impact of the acquisition.
(2) Our pro forma information reflects the acquisition as if it had taken place
on January 1, 1997. The pro forma information is unaudited and does not
purport to represent the actual operating results had the acquisition taken
place on January 1, 1997, nor does it purport to indicate the results that
will be obtained in the future. The unaudited pro forma information excludes
the impact of a $2.7 million write-off of in-process research and
development associated with the acquisition, and reflects the amortization
of purchased intangible assets, including goodwill, as though the business
had been combined for the full year.
(3) Effective February 1, 1997, Neptune changed its taxable status from an S
Corporation to a C Corporation. Accordingly, the consolidated statement of
operations data for the periods prior to February 1, 1997 reflect a pro
forma tax provision determined by applying the statutory tax rate to the
historical pre-tax income (loss), adjusted for permanent tax differences.
Net income (loss) and net income (loss) per share for periods prior to
December 31, 1997 give effect to the pro forma tax provision.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH "SELECTED CONSOLIDATED
FINANCIAL DATA" AND OUR FINANCIAL STATEMENTS AND RELATED NOTES APPEARING
ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION AND ANALYSIS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS.
OUR ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE FACTORS SET FORTH UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
We are a leading provider of supply chain execution software for e-commerce
and traditional sales channels. We began operations following the acquisition of
Dallas Systems by Neptune on September 15, 1997. Prior to the acquisition,
Neptune was focused on delivering packaged supply chain execution software
solutions primarily for manufacturing and third party logistics companies.
Dallas Systems was focused on the development and sale of supply chain execution
software solutions, primarily for retail companies, capable of operating in
complex business environments. Dallas Systems also provided implementation and
consulting services.
Upon completion of the acquisition, we began to focus our efforts on
developing a flexible, scalable and rapidly deployable software application
capable of running on most hardware and software platforms and supporting
numerous databases. This product, our 4000 WMS, was designed to be usable by a
wider variety of businesses than our traditional EXceed 2000 warehouse
management system and to be more easily adaptable to new and emerging
technologies. We also focused on expanding our sales and marketing efforts
internationally by establishing offices in Japan, Korea and the United Arab
Emirates, and expanding our existing operations in Western Europe, China and
Southeast Asia.
During the second half of 1998, with the growing acceptance of the Internet
as a serious competitor to the traditional commerce markets, we began to focus
on meeting the fulfillment needs of e-commerce companies and began to develop
our eFS products, which are based upon our 4000 WMS and related products. Our
focus was not only on existing and startup e-commerce companies, but also on
traditional businesses looking to implement e-commerce strategies.
During the third quarter of 1999, we realigned our operations, focused on
strategic alliances as additional sales channels and sources of additional
implementation personnel and reduced our workforce by approximately 14.0%. As a
result of our restructuring efforts, we were able to reduce operating expenses
in the third and fourth quarters of 1999 by approximately 9.5% as compared to
the first and second quarters of 1999. Software license revenue from our eFS
products and their predecessors increased from $9.1 million in 1998 to
$17.9 million in 1999 and overall revenue from our eFS products and their
predecessors increased from $19.7 million in 1998 to $41.3 million in 1999. We
anticipate that software license revenue will continue to grow as a result of
increased market acceptance of our eFS products, expansion into new geographical
markets, increased sales through our strategic alliances and an increase in the
size and productivity of our sales force. We also anticipate a decline in
revenue generated from our EXceed 2000 warehouse management system product as
demand continues to shift towards products with e-fulfillment capabilities.
We derive our revenue from:
- the sale of software licenses, which we recognize as software license
revenue;
- product related consulting, training, maintenance and support, which we
recognize as services and maintenance revenue; and
19
<PAGE>
- the resale of hardware and software, which we recognize as resale software
and equipment revenue.
We recognize revenue under Statement of Position, or SOP, No. 97-2. Under
SOP No. 97-2, software license revenue is recognized upon execution of a
contract and delivery of the software, provided that the license fee is fixed
and determinable, no significant production, modification or customization of
the software is required and collection of the license fee is considered
probable by management. Prior to the adoption of SOP No. 97-2 on January 1,
1998, software license revenue was recognized in accordance with SOP No. 91-1,
"Software Revenue Recognition." Under SOP No. 91-1, software license revenue was
recognized upon execution of a contract and shipment of the software and after
any customer cancellation right had expired, provided that no significant vendor
obligations remained outstanding, amounts were due within one year and
collection of license fees was considered probable by management. Product
related maintenance and support revenue is recognized ratably over the term of
the contract, which is typically one year, and revenue from product related
consulting and training is recognized as such services are performed.
We offer a variety of pricing options, which allow our customers to purchase
our software for a single site, a business unit or an entire enterprise. We
market our software and services through our direct sales organization in North
America, Europe, the Middle East, Asia and Australia and through our strategic
alliance relationships. We intend to expand our international sales activities
by opening additional offices in Europe and South America in 2000 and by
expanding the size of our existing offices. In addition, we plan to expand
strategic relationships with industry leaders whose business offerings
complement our own.
We offer professional services that help facilitate the successful
implementation and integration of our products with our customers' existing
systems. Our professional services include implementation project management,
on-site software training, operational engineering, industrial engineering,
software modification and supply chain consulting. Our professional services are
billed on a time and material basis or, when requested, on a fixed fee basis.
20
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth our statement of operations data as a
percentage of total revenue for the three years ended December 31, 1999:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1998 1999
<S> <C> <C> <C>
Revenue:
Software license........................................ 31.5 % 24.6 % 26.2 %
Services and maintenance................................ 47.7 65.4 66.2
Resale software and equipment........................... 20.8 10.0 7.6
----- ----- -----
Total revenue......................................... 100.0 100.0 100.0
Cost and expenses:
Cost of software licenses............................... 2.8 0.3 0.3
Cost of services and maintenance........................ 37.2 50.9 55.2
Cost of resale software and equipment................... 15.4 7.9 6.0
Sales and marketing..................................... 25.1 26.1 25.9
Research and development................................ 13.2 16.9 11.9
General and administrative.............................. 15.9 14.0 16.0
Amortization of intangibles............................. 5.3 4.9 5.0
Write-off of in-process research and development........ 10.1 -- --
Loss on lease abandonment............................... -- 1.1 0.3
Restructuring costs..................................... -- -- 2.0
----- ----- -----
Total costs and expenses.............................. 125.0 122.1 122.6
Operating loss............................................ (25.1) (22.1) (22.6)
Other expense............................................. (0.8) -- (2.1)
----- ----- -----
Loss before minority interest and taxes................... (25.9) (22.1) (24.7)
Minority interest in subsidiary loss (income)............. 0.3 -- --
----- ----- -----
Loss before income taxes and pro forma income taxes....... (25.6) (22.1) (24.7)
Provision (benefit) for income taxes and pro forma income
taxes................................................... (0.8) (0.6) --
----- ----- -----
Net loss.................................................. (24.8)% (21.5)% (24.7)%
===== ===== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998
REVENUE
TOTAL REVENUE. Total revenue increased $5.5 million, or 6.0%, to
$96.8 million for the year ended December 31, 1999, from $91.3 million for the
year ended December 31, 1998. International revenue accounted for 36.2% of total
revenue in 1999 and 27.5% of total revenue in 1998. No single customer accounted
for more than 10% of total revenue in 1999 or 1998.
SOFTWARE LICENSE. Our software license revenue increased $3.0 million, or
13.3%, to $25.4 million for the year ended December 31, 1999, from
$22.4 million for the year ended December 31, 1998. This increase was due to
increased volume as a result of market acceptance of our eFS and predecessor
products and our expansion into Japan and Korea, offset by a decrease in volume
of our EXceed 2000 warehouse management system and mainframe products. Total
software license revenue from our eFS and predecessor products increased by
$8.8 million, while sales of our EXceed 2000 warehouse management system and
mainframe products decreased by $5.9 million. Software license revenue as a
percentage of total revenue was 26.2% for the year ended December 31, 1999
versus 24.6% for the
21
<PAGE>
year ended December 31, 1998. Our eFS and predecessor products accounted for
70.6% of total software license revenue in 1999 and 40.5% of total software
license revenue in 1998.
SERVICES AND MAINTENANCE. Services and maintenance revenue increased
$4.3 million, or 7.3%, to $64.1 million for the year ended December 31, 1999,
from $59.8 million for the year ended December 31, 1998. This increase was
primarily due to increases in revenue generated in our Asia/Pacific and
Europe/Middle East regions as compared to the same period in 1998. A significant
portion of this increase was a result of increased revenue from maintenance on
initial license contracts and maintenance contract renewals. Services and
maintenance revenue as a percentage of total revenue was 66.2% for the year
ended December 31, 1999 versus 65.4% for the year ended December 31, 1998. Our
eFS and predecessor products accounted for 36.5% of total services and
maintenance revenue in 1999 and 17.9% of total services and maintenance revenue
in 1998.
RESALE SOFTWARE AND EQUIPMENT. Our resale software and equipment revenue
decreased $1.8 million, or 19.8%, to $7.3 million for the year ended
December 31, 1999, from $9.1 million for the year ended December 31, 1998. This
decline was due to the shift in demand to our eFS products, which do not provide
the same opportunity to resell software and hardware as the EXceed
2000 warehouse management system product. Resale software and equipment revenue
as a percentage of total revenue was 7.6% for the year ended December 31, 1999
versus 10.0% for the year ended December 31, 1998.
COST AND EXPENSES
COST OF SOFTWARE LICENSES. Cost of software licenses consists primarily of
the cost of royalties associated with tools used to develop our software
products and the cost of reproduction. Cost of software licenses represented
1.0% of software license revenue in each of the years ended December 31, 1999
and December 31, 1998.
COST OF SERVICES AND MAINTENANCE. Cost of services and maintenance consists
primarily of salaries of professional staff, costs associated with
implementation, consulting, training services, hotline telephone support, new
releases of software, bug fixes and updated user documentation. Our cost of
services and maintenance increased $7.0 million, or 15.1%, to $53.5 million for
the year ended December 31, 1999, from $46.5 million for the year ended
December 31, 1998. The increase in cost of services and maintenance for the year
ended December 31, 1999 was due primarily to the expansion in Japan and Korea
and incremental costs associated with providing new office space for services
and maintenance personnel. As a percentage of services and maintenance revenue,
cost of services and maintenance increased to 83.4% for the year ended
December 31, 1999, from 77.8% for the year ended December 31, 1998. Our cost of
services and maintenance increased in the year ended December 31, 1999 due to
costs associated with training new and existing personnel on implementation of
our eFS products and delays in project implementations as we encountered,
identified and fixed bugs. In addition, we maintained more services and
maintenance personnel for our EXceed 2000 warehouse management system than we
needed during 1999. We expect that this trend will not continue in future
periods as we continue to grow and increase the efficiency of our services and
maintenance organizations.
COST OF RESALE SOFTWARE AND EQUIPMENT. Cost of resale software and
equipment consists primarily of the costs of the software and hardware we
purchase to resell to our customers. Our cost of resale software and equipment
decreased $1.3 million, or 18.8%, to $5.9 million for the year ended
December 31, 1999, from $7.2 million for the year ended December 31, 1998. The
decrease in cost of resale software and equipment for the year ended
December 31, 1999 was due primarily to a decrease in volume of reselling
activities. As a percentage of resale software and equipment revenue, cost of
resale software and equipment increased to 80.1% for the year ended
December 31, 1999, from 79.1% for the year ended December 31, 1998. The
percentage increase for the year ended December 31, 1999
22
<PAGE>
was due primarily to our lower volume of reselling activities and an inability
to obtain better pricing from our suppliers due to the decrease in sales volume.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions, bonuses, recruiting costs, travel, marketing materials
and trade shows. Sales and marketing expenses increased $1.3 million, or 5.2%,
to $25.1 million for the year ended December 31, 1999, from $23.8 million for
the year ended December 31, 1998. The increase in sales and marketing expenses
was related primarily to the expansion of our office in Japan and the opening of
a new office in Korea, rebuilding our market presence in Europe and incremental
commissions earned as a result of an increase in the sale of software licenses.
Although our office in Japan opened in 1998, we only incurred expenses for a
portion of the 1998 year because the office was opened during the second half of
the year. As a percentage of total revenue, sales and marketing expenses
decreased to 25.9% for the year ended December 31, 1999, from 26.1% for the year
ended December 31, 1998. The percentage decrease for the year ended
December 31, 1999 was due primarily to revenue increasing at a more rapid rate
than sales and marketing expenses.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and other personnel-related costs for our product
development activities. Research and development expenses decreased
$4.0 million, or 25.4%, to $11.5 million for the year ended December 31, 1999,
from $15.5 million for the year ended December 31, 1998. The decrease in
research and development expenses was related primarily to a 79.0% reduction in
the average number of outside contractors and a 15.9% reduction in the average
number of employees used to develop our products. As a percentage of total
revenue, research and development expenses decreased to 11.9% for the year ended
December 31, 1999 from 16.9% for the year ended December 31, 1998. The
percentage decrease for the year ended December 31, 1999 was due primarily to
the reduction in workforce and the decrease in allocation of overhead costs
related to a reduction in development efforts for our EXceed 2000 warehouse
management system and mainframe products.
In accordance with SFAS 86, "Accounting for the Costs of Computer Software
to be Sold, Leased, or Otherwise Marketed," software development costs are
expensed as incurred until technological feasibility has been established, at
which time such costs are capitalized until the product is available for general
release to customers. Since our inception, the establishment of technological
feasibility of our products and general release of such software have
substantially coincided. As a result, software development costs qualifying for
capitalization have been insignificant and, therefore, we have expensed all
software development costs.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and other personnel-related costs of our finance, human
resources, information systems, legal, administrative and executive departments,
insurance costs and the costs associated with legal, accounting and other
administrative services. General and administrative expenses increased
$2.7 million, or 20.9%, to $15.5 million for the year ended December 31, 1999,
from $12.8 million for the year ended December 31, 1998. The increase in general
and administrative expenses was related primarily to an increased number of
employees in internal support functions worldwide, the issuance of warrants to a
consulting firm in exchange for services performed in 1999 and the incremental
costs associated with leasing a larger and more expensive headquarters facility.
As a percentage of total revenue, general and administrative expenses increased
to 16.0% for the year ended December 31, 1999 from 14.0% for the year ended
December 31, 1998. General and administrative expenses in 1998 included
$2.3 million in expenses associated with our initial public offering process,
which we did not complete. We expect that as a percentage of total revenue, our
general and administrative expenses will begin to decline because we believe
that we have the infrastructure in place to support our growth.
23
<PAGE>
AMORTIZATION OF INTANGIBLES. Amortization of intangibles increased
$0.4 million to $4.8 million for the year ended December 31, 1999, from
$4.5 million for the year ended December 31, 1998. The amortization relates to
intangibles acquired in connection with the acquisition of Dallas Systems.
LOSS ON LEASE ABANDONMENT. Loss on lease abandonment was $0.3 million for
the year ended December 31, 1999 and $1.0 million for the year ended
December 31, 1998. Loss on lease abandonment resulted from our decision to
vacate our old corporate headquarters and relocate to our current headquarters
in Dallas, Texas during 1998. During 1999, we reached an agreement with the
owner of the building we vacated, LAB Holdings, a company controlled by our
Chairman of the Board, at which time we recorded the additional $0.3 million
loss on abandonment.
RESTRUCTURING COSTS. In August 1999, we implemented a restructuring plan to
reduce costs and improve operating efficiency. In connection with this plan, we
recorded a charge of $2.0 million for the year ended December 31, 1999. The
restructuring charge included $0.7 million for severance and other employee
related costs for the termination of 97 services, sales, development and
administrative employees; $0.8 million for the abandonment of certain leased
office space less estimated sublease rentals for the corporate facility in
Dallas, Texas and a sales and service office in Australia; and $0.5 million for
the abandonment of leased equipment and disposal of other fixed assets. As of
December 31, 1999, cash charges of $1.3 million have been applied against the
original restructuring charge.
OTHER INCOME (EXPENSE) ITEMS
OTHER INCOME (EXPENSE). Other income (expense) primarily consists of
interest expense and loan cost amortization on outstanding debt offset by
interest income on short-term investments and currency gains. Other expense
increased to $2.0 million for the year ended December 31, 1999. The increase was
due to interest expense on debt from increased borrowings under our
$20.0 million revolving credit line and $5.0 million term loan facility during
the year ended December 31, 1999.
PROVISION (BENEFIT) FOR INCOME TAXES. There was no income tax benefit
recorded in 1999. In 1998, a $0.6 million income tax benefit was recorded. The
recorded benefit differs from the amount computed at the statutory rate due to
operating losses generated in 1999 and 1998, for which no benefit was recorded
due to the uncertainty of the timing and amount of future taxable income.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
REVENUE
TOTAL REVENUE. Total revenue increased $64.5 million, or 241.0%, to
$91.3 million for the year ended December 31, 1998, from $26.8 million for the
year ended December 31, 1997. No single customer accounted for more than 10% of
total revenue in 1998 and one customer accounted for approximately 11% of our
total revenue in 1997.
SOFTWARE LICENSES. Our software license revenue increased $14.0 million, or
166.0%, to $22.4 million for the year ended December 31, 1998, from
$8.4 million for the year ended December 31, 1997. This increase resulted from
the acquisition of Dallas Systems and the performance of a larger sales and
marketing group. Software license revenue as a percentage of total revenue was
24.6% for the year ended December 31, 1998 versus 31.5% for the year ended
December 31, 1997.
SERVICES AND MAINTENANCE. Our services and maintenance revenue increased
$47.0 million, or 367.6%, to $59.8 million for the year ended December 31, 1998,
from $12.8 million for the year ended December 31, 1997. This increase was due
to additional revenue recognized from services performed as a result of the sale
of mainframe and EXceed 2000 warehouse management systems software acquired
through the acquisition of Dallas Systems. In addition, revenue in 1998
represented a complete year of post-acquisition activity as compared to 1997.
Services and maintenance revenue as a percentage of
24
<PAGE>
total revenue was 65.4% for the year ended December 31, 1998 versus 47.7% for
the year ended December 31, 1997.
RESALE SOFTWARE AND EQUIPMENT. Our resale software and equipment revenue
increased $3.5 million, or 63.9%, to $9.1 million for the year ended
December 31, 1998, from $5.6 million for the year ended December 31, 1997. This
increase was due to the overall increase in the sale of our products and the
acquisition of Dallas Systems and its customer base. Resale software and
equipment revenue as a percentage of total revenue was 10.0% for the year ended
December 31, 1998 versus 20.8% for the year ended December 31, 1997.
COST AND EXPENSES
COST OF SOFTWARE LICENSES. Our cost of software licenses decreased
$0.5 million, or 68.8%, to $0.2 million for the year ended December 31, 1998,
from $0.7 million for the year ended December 31, 1997. As a percentage of
software license revenue, cost of software licenses decreased to 1.0% for the
year ended December 31, 1998, from 8.9% for the year ended December 31, 1997.
The percentage decrease for the year ended December 31, 1998 was due primarily
to the write-off of certain previously capitalized software development costs in
1997 related to products that had diminished in value to our ongoing operations.
COST OF SERVICES AND MAINTENANCE. Our cost of services and maintenance
revenue increased $36.5 million, or 366.3%, to $46.5 million for the year ended
December 31, 1998, from $10.0 million for the year ended December 31, 1997. The
increase in cost of services and maintenance revenue for the year ended
December 31, 1998 was due primarily to the acquisition of Dallas Systems. As a
percentage of services and maintenance revenue, cost of services and maintenance
remained consistent at 77.8% for the year ended December 31, 1998 and 78.0% for
the year ended December 31, 1997.
COST OF RESALE SOFTWARE AND EQUIPMENT. Our cost of resale software and
equipment increased $3.1 million, or 74.5%, to $7.2 million for the year ended
December 31, 1998, from $4.1 million for the year ended December 31, 1997. The
increase in cost of resale software and equipment for the year ended
December 31, 1998 was due primarily to the 63.9% increase in resale software and
equipment revenue. As a percentage of resale software and equipment revenue,
cost of resale software and equipment revenue increased to 79.1% for the year
ended December 31, 1998, from 74.2% for the year ended December 31, 1997. The
percentage increase for the year ended December 31, 1998 was due primarily to
our inability to secure more favorable pricing than in the previous year and the
smaller proportion of higher margin products sold in 1998 versus 1997.
SALES AND MARKETING. Sales and marketing expenses increased $17.1 million,
or 254.2%, to $23.8 million for the year ended December 31, 1998, from
$6.7 million for the year ended December 31, 1997. The increase in sales and
marketing expenses was related primarily to the increased hiring of sales and
marketing personnel, the increase in sales commissions earned as a result of the
increase in revenue and the increase in marketing and promotional activities. As
a percentage of total revenue, sales and marketing expenses increased to 26.1%
for the year ended December 31, 1998 from 25.1% for the year ended December 31,
1997.
RESEARCH AND DEVELOPMENT. Research and development expenses increased
$12.0 million, or 337.8%, to $15.5 million for the year ended December 31, 1998,
from $3.5 million for the year ended December 31, 1997. The increase in research
and development expenses was related primarily to the increase in personnel as a
direct result of the acquisition of Dallas Systems. As a percentage of total
revenue, research and development expenses increased to 16.9% for the year ended
December 31, 1998 from 13.2% for the year ended December 31, 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$8.6 million, or 200.6%, to $12.8 million for the year ended December 31, 1998,
from $4.3 million for the year ended
25
<PAGE>
December 31, 1997. The increase in general and administrative expenses was
related primarily to increased staffing and related costs associated with our
growth following the acquisition of Dallas Systems. During the year ended
December 31, 1998, we incurred $2.3 million in expenses associated with our
originally planned initial public offering. These expenses included fees for
accounting, legal, valuation, printing and other services related to that
offering. That offering was withdrawn on March 17, 1999. As a percentage of
total revenue, general and administrative expenses decreased to 14.0% for the
year ended December 31, 1998 from 15.9% for the year ended December 31, 1997.
The percentage decrease for the year ended December 31, 1998 was due primarily
to a substantial increase in total revenue and our ability to leverage our base
of resources to support a larger organization.
AMORTIZATION OF INTANGIBLES. Amortization of intangibles increased
$3.0 million, or 211.3%, to $4.5 million for the year ended December 31, 1998,
from $1.4 million for the year ended December 31, 1997. The increase in
amortization of intangibles was related primarily to the amortization of
goodwill, purchased technology and work force as a result of our acquisition of
Dallas Systems.
WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT. In 1997, we recorded a
write-off of in-process research and development of $2.7 million in connection
with the acquisition of Dallas Systems by Neptune. This acquisition was
accounted for as a purchase, and the total consideration paid by Neptune for
Dallas Systems was $30.2 million. Based upon the results of an independent
appraisal, we allocated $2.7 million of the Dallas Systems purchase price to
in-process research and development costs at the date of acquisition. This
amount was expensed as a non-recurring charge on the acquisition date because
the acquired technology had not yet reached technological feasibility and, as
acquired, had no future alternative use. The remaining purchase price was
allocated to net tangible assets acquired of $2.5 million and intangible assets
acquired, including goodwill, of $25.0 million.
The value attributable to the in-process technology was determined as follows:
- We evaluated the status at the acquisition date of the development of each
of the projects that were in-process and expressed that status as a
percentage of completion;
- We then estimated the revenue streams from the projects upon their
completion based upon assumptions as to the expected sales to existing and
new customers, historical retention rates for existing customers and our
experience with prior product releases;
- We then multiplied the percentage of completion of each in-process project
by the projected revenue streams associated with the in-process
technology;
- We then used the revised revenue streams to compute projected net cash
flows based on our estimates of operating profits related to such
projects; and
- Finally, we discounted these cash flows to their net present value using a
25% discount rate.
The in-process projects included one major project, which accounted for a
substantial amount of the $2.7 million write-off. We completed the development
of this project and several other projects in the second half of 1998 and the
first half of 1999, and, in January 1999, we launched the resulting products as
packaged components of our EXceed eFS Fulfill and eFS Collaborate Suites. We
experienced cost overruns and delays in completing the in-process projects
compared to the original estimates incorporated into the analysis used to
determine the value of the in-process technology. The cost overruns and delays
resulted from enhancements to the original design specifications.
LOSS ON LEASE ABANDONMENT. During the year ended December 31, 1998, we
entered into a 15 year lease for corporate office space in Dallas, Texas. We
estimated that the loss from the abandonment of the old corporate headquarters
facility would be $1.0 million. Final resolution of the loss to be incurred as a
result of vacating this office space was not reached until August 1999.
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OTHER INCOME (EXPENSE) ITEMS
PROVISION FOR INCOME TAXES. The recorded benefit differs from the amount
computed at the statutory rate in 1997 primarily as a result of non-deductible
in-process research and development expense. The recorded benefit differs from
the amount computed at the statutory rate in 1998 due to operating losses for
which no benefit was recorded due to the uncertainty of the timing and amount of
future taxable income.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations through the issuance of our preferred and
common stock, bank borrowings and cash flow from operations. As of December 31,
1999, we had $8.9 million in cash and cash equivalents and $0.9 million in
working capital.
Net cash used in operating activities was $11.3 million for the year ended
December 31, 1999, $15.1 million for the year ended December 31, 1998 and
$1.7 million for the year ended December 31, 1997. The cash used for operating
activities in each of these years reflects net losses and accounts receivable,
offset by non-cash charges for depreciation, amortization and the provision for
losses on receivables, as well as deferred revenue and accruals.
Net cash used in investing activities was $5.3 million for the year ended
December 31, 1999, $7.1 million for the year ended December 31, 1998 and
$0.5 million for the year ended December 31, 1997. We used cash primarily for
the purchase of capital equipment, such as computer equipment and furniture and
fixtures, to support our growth.
Net cash provided by financing activities was $24.8 million for the year
ended December 31, 1999, $16.3 million for the year ended December 31, 1998 and
$7.0 million for the year ended December 31, 1997. In 1997, we issued preferred
and common stock for $28.7 million, paid $15.0 million to acquire the common
stock of Dallas Systems, distributed $1.4 million to stockholders and repaid
$5.3 million of debt. In 1998, we issued preferred and common stock for
$9.9 million, received proceeds from the issuance of debt of $9.5 million, and
purchased treasury stock of $3.1 million. In 1999, we issued preferred and
common stock for $19.5 million and received net proceeds from the issuance of
debt of $5.3 million.
We have a loan agreement in place which provides for a revolving credit line
and a $5.0 million term loan. Borrowings under the loan agreement may not exceed
$25.0 million in the aggregate. The loan agreement is subject to a specified
advance rate and is secured by all of our assets. As of March 31, 2000 we had
$10.6 million outstanding under the revolving credit line and $5.0 million
outstanding under the term loan. The loan agreement restricts the declaration
and payment of dividends and a merger or consolidation. We intend to use
$15.6 million of the proceeds from this offering to repay all outstanding
amounts under the loan agreement and to terminate the loan agreement.
We expect to experience significant growth in our operating expenses. In
particular, we expect sales and marketing and research and development expenses
to increase substantially due to expansion into new markets and additional
investments in the development of complementary products as well as improvements
in our existing products. As a result, we expect to continue to generate
operating losses. In addition, we may use our cash to fund acquisitions,
purchase new technologies or acquire complementary businesses. We have no
specific agreements, commitments or understandings to make new acquisitions or
investments. We believe that the net proceeds of this offering, together with
our existing working capital immediately prior to this offering, will be
sufficient to fund our operations for the near future. However, there can be no
assurance that we will not require additional financing in the future. We cannot
be sure that we will be able to obtain this additional financing or that, if we
can, the terms will be acceptable to us.
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IMPACT OF YEAR 2000
In late 1999, we completed the preparation and testing of our systems for
Year 2000 issues. As a result of those efforts, no significant disruptions in
our systems were observed, and the systems responded successfully to the
Year 2000 change. Expenses for preparing our systems were minimal during the
year ended December 31, 1999. Additionally, no material Year 2000 issues arose,
either with our products or internal systems or products and services provided
by third parties. We will continue to monitor our computer applications and
those of suppliers and vendors throughout the year to ensure that we are in a
position to address any latent Year 2000 issues.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS 133, as
amended, is effective for all quarters in fiscal years beginning after June 15,
2000. We do not currently use derivative financial instruments. Therefore, we do
not expect that the adoption of SFAS 133 will have a material impact on our
results of operations or financial position.
In December 1998, the AICPA issued SOP 98-9, "Software Revenue Recognition
with Respect to Certain Arrangements." This SOP requires recognition of revenue
using the "residual method" in a multiple element arrangement when fair value
does not exist for one or more of the delivered elements in the arrangement.
Under the "residual method," the total fair value of the undelivered elements is
deferred and subsequently recognized in accordance with SOP 97-2. We do not
expect to have a material change to our accounting for revenue as a result of
the provisions of SOP 98-9. We adopted the provisions of SOP 98-9 in January of
2000.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
We develop products in the United States and market our products in North
America, Europe, the Middle East, Asia and Australia. As a result, our financial
results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in foreign markets. Substantially all
of our sales are currently made in U.S. dollars and a strengthening of the
dollar could make our products less competitive in foreign markets. We intend to
use a portion of the proceeds of this offering to repay and terminate our loan
agreement and thus we are not subject to any exposure based on fluctuations in
interest rates. Therefore, no quantitative tabular disclosures are required. To
the extent that we enter into a new credit facility in the future, future
interest expense could be subject to fluctuations based on the general level of
U.S. interest rates.
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BUSINESS
THE FOLLOWING DESCRIPTION OF OUR BUSINESS SHOULD BE READ IN CONJUNCTION WITH
THE INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DESCRIPTION CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE FACTORS SET FORTH IN "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
We are a leading provider of supply chain execution software for e-commerce
and traditional sales channels. Supply chain execution encompasses ordering,
transporting, handling, storing and delivering inventory as it moves from
manufacturer to the end customer. Our software allows companies to manage both
e-commerce and traditional fulfillment activities and to optimize the operations
of warehouses and distribution centers. Our software is an Internet-enabled
solution that enhances the tracking and control of inventory throughout the
supply chain and is designed to help companies increase customer loyalty and
satisfaction by providing personalized and reliable order fulfillment. We
provide global service and support for our software from established facilities
in North America, Europe, the Middle East, Asia and Australia.
We sell our software through a direct sales force of 71 employees worldwide
and through strategic alliances with complementary software vendors and systems
integrators, including Cap Gemini, i2 Technologies, IBM Global Services,
Microsoft, Oracle and PricewaterhouseCoopers. We target companies in industries
characterized by large product selections, high transaction volumes and
increased demands for personalized fulfillment, including traditional retailers,
newly-created e-tailers, manufacturers and outsourced e-commerce and third-party
logistics providers. Our customers include barnesandnoble.com, ConAgra,
Consolidated Freightways (Redwood Systems), Ford, Fritz Companies,
GroceryWorks.com, K-Mart, Safeway and Safeway(.com).
THE OPPORTUNITY
The Internet has emerged as a powerful global commerce and communications
medium, creating opportunities for companies to conduct business and interact
directly with their customers. Forrester Research predicts that the amount of
worldwide business-to-business, or B2B, commerce conducted over the Internet
will increase from approximately $400 billion in 2000 to approximately $2.7
trillion in 2004. The United States has been the primary country driving the
development of the Internet and is one of the most advanced countries in the
acceptance of e-commerce. However, International Data Corporation predicts that
over the next several years the Western European market will experience
substantial Internet growth, with e-commerce spending estimated to increase from
approximately $49 billion in 2000 to approximately $430 billion in 2003. Similar
growth is anticipated in the Asia Pacific market, with e-commerce spending
estimated to increase from approximately $4 billion in 2000 to approximately
$28 billion in 2003.
As a result of the dramatic growth in B2B and business-to-consumer, or B2C,
e-commerce, companies that conduct business over the Internet face the challenge
of not only attracting customers to their marketplaces and web sites, but also
of delivering goods once an order has been placed. The Internet economy and the
new relationships created between buyer and seller, especially in the B2B
market, are driving a fundamental change in supply chain execution and order
fulfillment. Because competitive information is easily accessible over the
Internet, companies are finding it increasingly difficult to differentiate their
offerings solely on product, location or price. Accordingly, we believe that
companies must distinguish their product and service offerings by providing
reliable delivery and value-added services during the fulfillment process
according to the consumers' individual preferences.
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E-FULFILLMENT IS MORE COMPLEX THAN TRADITIONAL FULFILLMENT
Traditional fulfillment solutions were primarily intended for replenishing
"bricks-and-mortar" establishments, such as retail stores and distributors,
where orders are typically large, undifferentiated and not shipped directly to
the consumer. The majority of these traditional solutions were designed before
the widespread commercial use of the Internet, and were not intended for large
scale, Internet-based, customer-driven transactions.
We believe the challenges of e-fulfillment, which are confronted by both B2B
and B2C companies, are more complex than those associated with traditional
fulfillment. These challenges include:
- Supporting business models, such as vertical trading hubs, with complex
vendor and product combinations;
- Facilitating visibility of inventory, delivery and order status to both
customers and suppliers;
- Providing personalized service during fulfillment, including value-added
services such as one-to-one marketing, product assembly and product
configuration;
- Developing global fulfillment capabilities;
- Processing orders from multiple media, including the Internet, facsimile,
electronic data interchange and telephone;
- Scaling to handle significant and rapid increases in the volume of
transactions;
- Determining optimal locations from which to ship and optimal methods of
how to ship inventory; and
- Processing returns.
In addition to these challenges, companies are faced with the task of
rapidly developing their e-fulfillment capabilities in response to the increased
competition for customers resulting from the evolution of the Internet.
B2B AND B2C COMPANIES MUST IMPLEMENT E-FULFILLMENT SOLUTIONS
The rapid evolution and acceptance of the Internet has dramatically shifted
the focus of supply chain execution to fulfillment systems. We believe that the
ability of fulfillment systems to facilitate value-added, one-to-one order
completion on a global scale will be a critical success factor for both
e-commerce and traditional businesses as they implement their Internet
strategies. Many traditional retailers, who have historically relied on
warehouse management and replenishment solutions, are evolving into e-tailers
with the capability to transact directly with customers worldwide through
multiple channels. In addition, many traditional manufacturers, who have
historically relied on distributors and retailers to transact with customers,
are now directly handling one-to-one fulfillment or looking to use third party
logistics providers or vertical trading hubs to manage their supply chain. We
believe that many vertical trading hubs will evolve into supply chain managers
and must provide, either directly or through alliance companies, visibility to
the logistics process and guaranteed product delivery.
Many companies that implemented traditional warehouse management systems
have discovered that their existing systems do not allow them to provide
value-added, one-to-one order completion on a global scale. e-Fulfillment
solutions offer new opportunities for companies to engage in one-to-one
fulfillment for the benefit of both buyers and sellers. Buyers benefit since
products can be assembled, configured and personalized to meet their individual
needs. At the same time, sellers benefit since they are able to pursue targeted
marketing campaigns, where promotions, customer loyalty programs and other
retention enhancement strategies can be pursued quickly and effectively.
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A NEW GENERATION OF E-FULFILLMENT SOFTWARE IS REQUIRED
We believe B2B and B2C companies must now invest in and rapidly deploy new
e-fulfillment software to meet the specific requirements of their individual
customer bases. To date, we believe that businesses have focused the majority of
their Internet-related investments on marketing and have overlooked the
strategic complexity of delivering goods through the supply chain. We believe
that the success of many e-commerce initiatives will lie in effective
implementation and management of new e-fulfillment processes and meeting
stringent customer service requirements. Many companies launching e-commerce
initiatives must invest in and rapidly deploy advanced, Internet-enabled
technologies that offer efficient control of physical fulfillment processes and
are scaleable and reliable. This e-fulfillment software must also capitalize on
the ability of the Internet to interact in real-time with suppliers, customers,
customer relationship management systems and advanced planning systems, so
suppliers and customers share a common view of customer fulfillment activity.
THE EXE SOLUTION
Our software manages the fulfillment of orders initiated through both
e-commerce and traditional sales channels. Our software provides customers and
suppliers with a real-time view of customer fulfillment and provides the basis
for developing improved procurement, logistics and distribution processes and
personalized one-to-one order fulfillment. In addition, we complement our
software with a global professional services organization, which facilitates
implementation, integration and modification of our software to meet the
specific needs of our customers.
We provide the following benefits to our customers:
- RAPID TIME TO MARKET. We believe our software provides all of the
functionality necessary for e-fulfillment in a single, packaged solution.
Our easy-to-install applications speed time to market for companies
launching or enhancing e-commerce initiatives, while simultaneously
automating their traditional supply chains.
- ONE-TO-ONE FULFILLMENT. Our software allows companies to treat each
transaction individually by automating and coordinating complex
fulfillment, assembly, product configuration and one-to-one marketing
campaigns across multiple sales channels. Through the value-added
personalization of each customer order, companies are able to enhance
customer interaction and maximize customer retention.
- FLEXIBILITY, SCALABILITY AND RELIABILITY. Our software has the flexibility
to be deployed across most major computing platforms and can be operated
in a hosted environment. Our software is expandable to meet growing client
needs which is increasingly critical in e-commerce fulfillment
environments, as well as in broader enterprise environments that support
multiple sales channels. Our software has been proven reliable in high
volume, multi-channel and multi-language environments.
- SUPPLY CHAIN VISIBILITY. Our software provides a real-time view of
customer fulfillment activities and order status across multiple channels
and platforms. This allows suppliers to track orders and to implement
targeted marketing campaigns at strategic times during the fulfillment
cycle.
- GLOBAL CAPABILITY. We believe our software is unique in its ability to be
installed and supported around the world. Our software currently operates
in 15 languages and is designed to accommodate rapid translations of
product upgrades. In addition, we provide local service and support from
established facilities in North America, Europe, the Middle East, Asia and
Australia. We believe that our global presence benefits our customers by
providing localized service and global customer support.
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- ADAPTABILITY FOR NEW BUSINESS MODELS. Our software is designed to handle
complex logistics situations. This adaptability is increasingly critical
to third party logistics providers and vertical trading hubs where the
ability to handle products owned by multiple companies is fundamental to
their success.
STRATEGY
Our goal is to be the leading global provider of fulfillment software to
companies offering products and services through both e-commerce and traditional
sales channels. To achieve this goal, we plan to:
- LEVERAGE OUR EXPERIENCE AND ESTABLISHED MARKET POSITION. We are a leading
provider of fulfillment software to traditional retailers, manufacturers
and third-party logistics providers. We intend to leverage this position,
our strategic relationships and our brand recognition from the traditional
fulfillment market to grow our share of the e-fulfillment market. We
intend to accomplish this by providing comprehensive, scalable and
flexible solutions for our customers as they develop e-commerce
initiatives and integrate them with traditional sales channels.
- USE OUR INTERNATIONAL INFRASTRUCTURE TO GAIN GLOBAL MARKET SHARE. We
believe there is significant demand for our software solutions in
international markets and have established a global infrastructure to
target leading businesses worldwide. We provide sales, service and support
from locations in North America, Europe, the Middle East, Asia and
Australia. Our software is installed in 35 countries and currently
operates in 15 languages, including Chinese, French, German, Japanese and
Spanish. We intend to continue to invest in our infrastructure and
increase our sales and marketing efforts in Europe, Asia and South
America.
- EXPAND OUR STRATEGIC ALLIANCES. We have established strategic alliances
with industry leading systems integrators, including Cap Gemini, IBM
Global Services and PricewaterhouseCoopers, to supplement our direct sales
force and professional services organization. These alliances help extend
our market coverage and provide us with new business leads and access to
trained implementation personnel, which we believe are crucial to the
deployment of complex software solutions. We also have alliances with
complementary software vendors, such as i2 Technologies and Microsoft,
which allow us to offer a comprehensive solution for e-commerce
fulfillment and supply chain execution. We will continue to seek to expand
the number of companies with which we work to further penetrate our global
market.
- ENHANCE OUR E-COMMERCE SOLUTIONS. Since their introduction in 1998, we
have enhanced our Internet-enabled products by releasing upgrades and
introducing value-added modular components. We believe our customers will
continue to demand greater breadth and depth from e-commerce solutions. We
intend to broaden our product offerings to integrate additional
functionality and new technologies. We also intend to leverage our
end-to-end fulfillment solution to incorporate additional front-end
applications that will allow us to manage the entire order process. Our
modular component product delivery model allows us to rapidly introduce
new product features and functionality and to penetrate accounts that are
in different stages of developing and implementing their e-commerce
strategies.
- CAPITALIZE ON OUR EXPERIENCE WORKING WITH THIRD-PARTY LOGISTICS PROVIDERS
TO CAPTURE THE GROWING VERTICAL TRADING HUB MARKET. Our experience with
third party logistics providers has helped us create software well suited
for multi-tenant, shared service logistics models. We believe that
vertical trading hubs that deal in physical goods will need to provide,
either directly or through their alliances, physical settlement of the
business transaction. We intend to use our technology to provide the
software and process infrastructure for them to offer these services to
their market participants.
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- EXPLOIT THE GROWING DEMAND FOR APPLICATION SERVICE PROVIDERS AND BUSINESS
PROCESS OUTSOURCERS. We intend to pursue additional relationships with
specialized application service providers, or ASPs, and business process
outsourcers, or BPOs, that will deliver our solution as an outsourced,
externally hosted service to be packaged with their differentiated service
and technology offerings. We believe there is a significant need for
e-commerce companies to outsource their business processes, including
their e-fulfillment needs. By using an outsourced service, a company can
improve its time-to-market without making the investment in technology and
staff necessary to support a complex e-commerce solution. We believe our
relationships with ASPs and BPOs will enable our hosted solutions to
become more broadly available and increase our market reach to companies
outside our target markets, especially small- and medium-sized companies.
EXE SOFTWARE
Our EXceed e-Fulfillment System, or eFS software, includes the EXceed eFS
Fulfill and eFS Collaborate Suites, which were launched in January 1999. They
are cross-platform, Internet-enabled software applications that allow companies
to deploy integrated e-commerce order fulfillment solutions. The suites include
packaged software components for:
- operating fulfillment centers;
- creating personalized fulfillment services;
- integrating fulfillment centers to web front ends and planning engines;
- optimizing fulfillment center layout; and
- connecting multiple centers with each other and other e-commerce and
enterprise systems.
Our eFS software is designed to run on the most widely used hardware,
operating system and database platforms, with a single consistent user
interface. Depending on our customers' specific needs, the EXceed eFS Fulfill
and eFS Collaborate Suites can be deployed on UNIX, Windows NT/2000, IBM O/S 390
with Oracle, SQL Server or DB2 as the database engine.
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The table below describes the components and functionality of the EXceed eFS
Fulfill and eFS Collaborate Suites:
<TABLE>
<CAPTION>
EXCEED EFS FULFILL SUITE
<S> <C>
COMPONENTS FUNCTIONALITY
- ------------------------------- ------------------------------------------------------------
4000 WMS Provides core functionality for fulfillment center or
warehouse management, including order management,
receiving, stocking, replenishment, picking, labor
control, radio frequency support and task management.
VALUE Automates one-to-one marketing activities and other more
complex make-to-order operations.
CROSSDOCK Merges inbound products shipped directly from suppliers with
inventoried products in a high speed fashion.
BILLING Generates activity based charges for storage and labor to
charge to customers or divisions.
OPTIMIZE Simulates and optimizes the attributes of a fulfillment
center.
MANIFEST Coordinates with third party software to perform rating,
routing, best-way shipping, carrier tender, carrier
labeling and consolidation functions.
RETURNS Controls the disposition of returned items, including
rework, repackaging, return to stock and other operations.
QUALITY Manages inbound and outbound quality control processes and
associated rework activities.
DOCK Schedules and coordinates shipping and receiving functions
with transportation.
EXCEED EFS COLLABORATE SUITE
<CAPTION>
COMPONENTS FUNCTIONALITY
- ---------- -------------
CONNECT Connects our eFS to other applications using messaging architectures.
<S> <C>
ALERT Sends electronic notifications of fulfillment activity and issues to
e-mail, pagers, fax or other media.
TRACKER Provides customer "self help" order tracking over the Internet.
SUPPLIER PORTAL Coordinates with third party software to link suppliers to
fulfillment centers over the Internet, allowing them to perform
vendor managed inventory activities.
CUSTOMER PORTAL Coordinates with third party software to link customers to
fulfillment centers over the Internet, allowing them to manage
their orders through the entire fulfillment process.
</TABLE>
In addition to these offerings, our EXceed 2000 warehouse management system,
launched in 1995, continues to address the traditional fulfillment needs of
high-volume retail distribution centers. Our EXceed 2000 warehouse management
system was designed and positioned as a pre-packaged UNIX-based solution and
delivers fulfillment solutions to traditional sales channels. We continue to
enhance and support this product.
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EXCEED EFS FULFILL SUITE COMPONENTS
4000 WMS
4000 WMS manages complex fulfillment center activities for a wide variety of
scenarios including the one-to-one fulfillment required by B2B and B2C
e-commerce and for traditional supply chain activities. 4000 WMS provides full
functionality, including order management, receiving, stocking, replenishment,
picking, labor control, radio frequency support and task management. 4000 WMS
has proven adaptable to small- and large-scale enterprise environments, supports
multiple operating systems and databases and provides user interface through
personal computers, workstations running browser applications and mobile radio
frequency devices. The product was designed to run multiple languages within the
same environment.
VALUE
Value is a component designed to automate fulfillment centers that perform
one-to-one marketing activities, add value to existing commodities or combine
component commodities into finished good commodities or sub-assemblies. Value
lets companies leverage the customer data they collect through the Internet to
execute targeted marketing activities including promotions, cross-selling and
other programs. Value is an essential part of our clients' inventory management
strategies, whether it be mass customization, make-to-order or deferred
manufacturing.
CROSSDOCK
Crossdock is a component that adds inventory flow-through and transshipment
capability to fulfillment centers. Crossdock allows businesses to offer a large
range of products without taking inventory ownership. Instead, in-transit
inventory can be merged on an as-needed basis with owned inventory to reduce
costs.
BILLING
Billing provides data for activity-based costing and charge back for
fulfillment center operations that handle multi-tenant or multi-owner scenarios.
Billing gives outsourced e-fulfillment providers, such as third party logistics
providers, ASPs, BPOs and vertical trading hubs, the revenue and costing tools
needed to run their operations. Large enterprises with divisional structures can
also benefit by having proper costing applied to product line fulfillment.
OPTIMIZE
Optimize is a fulfillment center optimization and simulation tool. Using
product and order volume information along with capital, labor and equipment
costs, Optimize builds a model of the planned or existing facility and optimizes
facility layout, product placement and labor routing. Optimize works for both
new sites and existing facilities and can be used in combination with our 4000
WMS and EXceed 2000 warehouse management system to facilitate optimization moves
as part of a continuous improvement process.
MANIFEST
Manifest is designed for one-to-one fulfillment environments utilizing
parcel carriers. Manifest coordinates with third party software to perform
carrier selection, rating, routing, load tender, labeling and consolidation
functions.
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RETURNS
Returns controls the disposition of returned items including rework,
repackaging, return to stock and other operations. Returns adds value by
increasing the usability of returned products and minimizing the labor
associated with returns processing.
QUALITY
Quality enforces quality control processes and associated rework activities
on inbound and outbound order and other processes.
DOCK
Dock schedules and coordinates shipping and receiving functions in multiple
transportation settings, including air, ship and rail. Using customer specific
restrictions, such as type of load or equipment, Dock can set appointments for
shipping and receiving from multiple points within a distribution center or one
central department.
EXCEED EFS COLLABORATE SUITE COMPONENTS
CONNECT
Connect is event-based, publish and subscribe messaging software that
connects EXceed eFS to other applications. Connect provides application
integration, visibility and exception management, as well as interfaces to
popular e-commerce, advanced planning systems (APS) and enterprise resource
planning (ERP) vendors through application program interfaces.
ALERT
Alert provides automated notification of events that occur during the
e-fulfillment life cycle. For example, a page, an e-mail, or other modes of
personal communication can be sent in real-time when on-the-spot management is
necessary. Some example "events" which might trigger an alarm include customer
order acceptances, fill and shipment notifications, carrier arrivals with
critical inventory, an on-hand quantity passing a minimum threshold or
order-fill service levels dropping below a target.
TRACKER
Tracker allows organizations to empower their customers through web-based,
self-help functions such as detailed order status and delivery. Customers can
see where their order is throughout the entire fulfillment cycle, from "ordered"
to "reserved" to "on the floor" to "picked, packed and shipped" through a
specific carrier with estimated time of arrival.
SUPPLIER PORTAL
Supplier Portal coordinates with third party software to provide access to a
network of EXceed fulfillment centers for vendor-managed inventory activities.
Suppliers accessing the Supplier Portal can monitor inventory status, generate
re-stock orders, create and manage advanced shipping notices and prepare product
for crossdock or transshipment. Supplier Portal allows e-businesses to integrate
their suppliers into their supply chain, thus extending their merchandise
offerings while minimizing inventory costs.
CUSTOMER PORTAL
Customer Portal coordinates with third party software to provide access to a
network of EXceed fulfillment centers for customer-managed order activities.
Customers can create and manage their
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orders, issue change requests, generate re-orders and create and approve all
shipping documentation. Customer Portal is targeted at B2B and trading exchange
environments where complex goods and rapidly changing requirements require
cooperation between the fulfillment center and the end customer.
EXE PRODUCT PACKAGING AND PRICING
We offer a variety of packaging options for our software. These options
allow us to market our technology to companies in different stages of executing
their fulfillment strategies. For example, customers seeking an enterprise
e-fulfillment solution may license our EXceed eFS Fulfill and eFS Collaborate
Suites, including all associated components. Companies pursuing less
comprehensive e-commerce initiatives may license our 4000 WMS and Connect as
stand alone applications, with additional software components to be added later.
Flexible packaging options allow our customers to make investments in our
technology without committing to a larger enterprise platform.
We offer a variety of pricing options, which allow our customers to purchase
our software for a single site, a business unit or an entire enterprise. License
fees for our products typically range from approximately several hundred
thousand dollars to several million dollars. Recently, we have introduced
additional pricing options which we believe may allow us to expand our market
presence. For example, we have entered into an agreement with an application
service provider that hosts and licenses our software to small- and medium-sized
businesses. Our license revenue under this agreement will be determined by the
number of users who contract to use the system. In addition, we offer
transaction-based pricing that ties the overall cost of our software to the
value provided to the customer.
PROFESSIONAL SERVICES
We offer a range of professional services that help facilitate the
successful implementation and integration of our software with our customers'
existing systems. Our professional services include implementation project
management, on-site software training, operational engineering, industrial
engineering, software modification and supply chain consulting. Our professional
services are billed on a time and material basis or, when requested, on a fixed
fee basis.
Our internally developed Global Execution Methodology, or GEM, allows us and
our strategic alliance companies to follow uniform procedures when implementing
our software. GEM includes a globally deployed application that provides
planning, change management and quality control during system implementation.
GEM allows our professional services staff, customers and alliance companies to
access project information on a global basis and provides a system for quality
control and project monitoring.
Our professional services personnel typically have extensive experience in
the deployment of fulfillment systems. When we assist companies in the
implementation of our software, we help them determine how to use our technology
in a way that fits their individual fulfillment strategy. We can, if requested,
adapt the software to specific customer business practices.
We believe that the use of outside consulting and service providers is an
important component of our strategy to expand our professional services business
and support the growth in our software license revenue. We currently intend to
expand our relationships with and reliance on strategic alliance companies and
systems integrators. We also believe this will allow us to manage the growth of
our own professional services group without affecting other parts of our
business.
We provide a comprehensive support program through which our customers,
should they choose to participate, can receive upgrades to our licensed products
and access to our support center. These services are typically offered under
annual maintenance and support contracts or under separate annual support and
annual software upgrade contracts. Our support center is open year round, seven
days per
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<PAGE>
week and twenty-four hours per day. Our support center can remotely access the
customers' systems and provide on-line assistance, diagnostics and software
upgrades.
We also offer an intensive education and training program for our customers,
employees and third-party service providers, either at our offices or at the
customer's site, through our EXE University. Students who are certified by EXE
University are qualified to implement our software. EXE University also offers
an accreditation program for those wishing to train others. We currently offer
training in North America, Europe and Asia.
SALES AND MARKETING
We have multi-disciplined sales teams that consist of sales, technical and
sales support professionals. Our senior management also takes an active role in
our sales efforts. We market and sell our software through our direct sales
force, which is located in North America, Europe, the Middle East, Asia and
Australia, and through our strategic alliances. In North America, our sales
organization is focused on our targeted vertical markets, with resources
assigned to e-commerce, retail, manufacturing and third party logistics. In
Europe and Asia, our sales organization is deployed by geographic region, but
targets the same vertical markets as in North America.
We have sales offices in the Dallas, Philadelphia, London, Paris, Amsterdam,
Dubai, Tokyo, Seoul, Hong Kong, Singapore, Kuala Lumpur and Melbourne
metropolitan areas. As of March 1, 2000, our worldwide sales organization
consisted of 71 employees. We also supplement our sales organization with our
Channel Sales Program. We use this program to sell to companies around the world
that we do not service directly and supplement our sales initiatives in certain
overseas markets.
Our marketing organization uses a variety of programs to support our sales
efforts, including:
- market and product research and analysis;
- product and strategy updates with industry analysts;
- public relations activities and speaking engagements;
- Internet-based and direct mail marketing programs;
- seminars and trade shows;
- brochures, data sheets and white papers; and
- web site marketing.
As of March 1, 2000, our marketing organization consisted of nine employees.
STRATEGIC ALLIANCES AND RELATIONSHIPS
Another key element of our growth strategy is the formation of strategic
relationships with industry leaders whose business offerings complement our own.
We believe that these relationships will allow us to scale our business rapidly
and effectively by enabling the expansion of our:
- global brand;
- source of qualified sales opportunities;
- capacity to effectively implement our software offerings for new
customers; and
- ability to deliver enhanced value to our customers.
We have established relationships with large, international systems
integrators and consulting services companies, including Cap Gemini, IBM Global
Services and PricewaterhouseCoopers. We intend to expand these relationships and
add new relationships to increase our capacity to sell and
38
<PAGE>
implement our products on a global basis. Our existing alliances have been
aligned to coincide with our target vertical markets. We will continue to pursue
relationships that enhance our vertical market strategy.
We also have relationships with vendors of complementary software including
i2 Technologies, Microsoft and Oracle. For example, we have a resale agreement
with i2 Technologies under which we resell i2's transportation management,
transportation optimization and global visibility solutions, and i2 resells our
EXceed software suites.
We also have alliance relationships with hardware vendors such as
Hewlett-Packard, IBM, Intermec, Sun Microsystems, Symbol Technologies and
Telxon. We act as a marketer or reseller, or both, of their server and radio
frequency hardware. On an ongoing basis, we intend to pursue additional
technology relationships that we believe will increase our value to potential
customers, expand our ability to offer integrated enterprise solutions and
increase our market opportunities.
CUSTOMERS
We have targeted and will continue to target selected vertical industries
characterized by large product selections, high transaction volumes and
increased demands for personalized fulfillment, including traditional retailers,
newly-created e-tailers, manufacturers and outsourced e-commerce and third party
logistics providers. The following is a list of our top customers by revenue to
whom we have provided our products or services in 1999 or 2000:
<TABLE>
<CAPTION>
RETAIL THIRD PARTY LOGISTICS
- ------ ---------------------
<S> <C>
CVS BAX
Integrated Systems Solutions (Eckerds) Consolidated Freightways (Redwood Systems)
K-Mart DSL Transportation Services
Publix Frans Maas
Rykoff-Sexton Fritz Companies
Safeway Kuehne & Nagel
Sherwood Food Public Warehousing
<CAPTION>
MANUFACTURING E-COMMERCE
- ------------- ----------
ConAgra Ambuca
<S> <C>
Ford barnesandnoble.com
General Motors (EDS) Grocery Gateway
Hewlett-Packard GroceryWorks.com
H.J. Heinz Safeway(.com)
Johnson & Johnson Somerfield
LG-EDS Systems, Inc. 3Re.com
</TABLE>
RESEARCH AND DEVELOPMENT
As of March 1, 2000, we employed 37 people in research and development. This
team is responsible for product planning and design, development of
functionality within the EXceed eFS eFulfill and eFS eCollaborate Suites and
general release and quality assurance functions.
We have contracts with Hindustan Computers Limited, or HCL, and Span Systems
Corporation to provide software development and implementation services on an
outsourced basis. Under these arrangements, HCL and Span Systems provide project
dedicated software developers to develop products and application functionality
based on specifications provided by us and to provide implementation services to
our customers. The HCL agreement expires in November 2000, while the Span
Systems agreement does not have a defined termination date. We believe our
relationships with
39
<PAGE>
these firms provide us with access to a skilled labor pool, more rapid
development cycles and a cost-effective solution to our research and development
needs.
COMPETITION
The market for e-fulfillment solutions is intensely competitive, fragmented
and subject to rapid technological change. The principal competitive factors in
this market include:
- adherence to emerging Internet-based technology standards;
- comprehensiveness of applications;
- adaptability, flexibility and scalability;
- real-time, interactive capability with customer and partner systems;
- global capability;
- ability to support vertical industry requirements;
- ease of application use and deployment;
- speed of implementation;
- customer service and support; and
- initial price and total cost of ownership.
We believe that we compete favorably with competitors in terms of
comprehensiveness of our solutions and our global presence, as well as our
targeted vertical focus.
Because we offer both e-fulfillment solutions and solutions for traditional
supply chains, we consider a number of companies in different market categories
to be our competitors. These competitors include companies or groups that:
- focus on providing e-fulfillment applications, such as All-Points Systems,
McHugh Software International and Yantra;
- offer fulfillment solutions for traditional supply chains, such as
Catalyst International and Manhattan Associates;
- offer enterprise platforms for order management and fulfillment, such as
IMI and SAP; and
- service internal customers, such as internal information technology
groups.
There are a substantial number of other companies focused on providing
Internet-enabled software applications for fulfillment or related supply chain
functions that may offer competitive products in the future. We believe that the
market for integrated e-fulfillment solutions is still in its formative stage,
and that no currently identified competitor represents a dominant presence in
this market.
We expect competition to increase as a result of software industry
consolidation. For example, a number of enterprise software companies have
acquired point solution providers to expand their product offerings. Our
competitors may also package their products in ways that may discourage users
from purchasing our products. Current and potential competitors may establish
alliances among themselves or with third parties or adopt aggressive pricing
policies to gain market share. In addition, new competitors could emerge and
rapidly capture market share.
INTELLECTUAL PROPERTY
Our intellectual property rights are significant and are critical to our
success and our ability to compete. We rely on intellectual property laws,
including copyright, trademark, trade secret and other
40
<PAGE>
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights in our products and technology. Under the terms of our
agreements with our customers, we generally own all modifications to our
software that are implemented for a customer. We believe, however, that these
steps to protect our intellectual property afford only limited protection to us,
particularly on an international basis. We do not currently have any patents
issued or patent applications pending. We give some of our customers, alliance
companies, resellers and development partners access to our source code and
other intellectual property in certain limited circumstances when necessary to
facilitate a project. In addition, our source code is held in escrow to be
released on specific events such as bankruptcy or failure to provide support.
Access to our source code may create a risk of disclosure or other inappropriate
use. Despite our contractual protections, this access could enable a third party
to use our intellectual property, including our source code, to wrongfully
develop and manufacture competing products. In addition, policing unauthorized
use of our products is difficult.
We cannot be certain that others will not independently develop
substantially equivalent intellectual property, gain access to our trade secrets
or intellectual property, or disclose our intellectual property or trade
secrets. We also conduct a substantial amount of business abroad, and the laws
of many foreign countries do not protect our intellectual property to the same
extent as the laws of the United States.
Also, we may desire or be required to renew or to obtain licenses from
others to enable us to develop and market commercially viable products and to
run our internal software systems, including for financial reporting and other
purposes. We can give you no assurances that any necessary licenses will be
available on reasonable terms, if at all.
From time to time, third parties may assert claims or initiate litigation
against us or our alliance companies alleging that our products infringe their
proprietary rights. As the number of e-fulfillment and supply chain execution
applications in the industry increases and products overlap, we may become
increasingly subject to claims of infringement or misappropriation of the
intellectual property rights of others. In addition, we may in the future
initiate claims or litigation against third parties for infringement of our
proprietary rights to determine the scope and validity of our proprietary
rights. Litigation claims, with or without merit, could be time-consuming and
costly, divert management's attention, cause product shipment delays, require us
to develop non-infringing technology or enter into royalty or licensing
agreements. Royalty or licensing agreements, if required, may not be available
on acceptable terms, if at all.
We have recently received notices from three customers requesting
indemnification for threatened patent claims against them by a third party with
respect to the use of bar code technology. We are currently investigating these
claims. Based on our investigation to date, we do not believe that we ultimately
will have liability for these requests or claims. However, if the underlying
claims are resolved unfavorably, we may be required to modify our software,
obtain additional licenses and indemnify our customers.
EMPLOYEES
As of March 1, 2000, we had a total of 565 employees, of which 37 were in
research and development, 80 were in sales and marketing, 96 were in finance and
administration and 352 were in professional services and support. None of our
employees is represented by a labor union. We have not experienced any work
stoppages and consider our relations with our employees to be good.
FACILITIES
Our corporate headquarters occupy approximately 136,000 square feet in
Dallas, Texas. Our lease for this facility expires in May 2014. Our facility in
Philadelphia, Pennsylvania currently occupies approximately 16,000 square feet.
Our lease for this facility expires in July 2006. We believe these
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<PAGE>
existing facilities will be adequate to meet our needs for the next 12 months.
If our growth continues, we may need larger facilities after that time. We also
lease offices in London, Paris, Amsterdam, Dubai, Tokyo, Seoul, Hong Kong,
Singapore, Kuala Lumpur and Melbourne. We also have 59,000 square feet of
additional space available to us in our Dallas headquarters under a sublease
agreement that will expire in July 2001.
LEGAL PROCEEDINGS
We are engaged in legal proceedings incidental to the normal course of
business. Although the ultimate outcome of our pending legal proceedings cannot
be determined, we believe that the final outcome of these matters will not
seriously harm our business. Information concerning asserted and potential
claims regarding our intellectual property is discussed above under
"Intellectual Property."
42
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information regarding our executive officers
and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Lyle A. Baack (a)..................... 58 Chairman of the Board
Raymond R. Hood (b)................... 40 President, Chief Executive Officer and Director
Adam C. Belsky (c).................... 40 Senior Vice President, Mergers & Acquisitions
and Director
David E. Alcala....................... 54 Senior Vice President, Business Development
Nigel R. Bahadur...................... 30 Senior Vice President, Research and Development
Michael A. Burstein................... 36 Senior Vice President, Finance, Chief Financial
Officer and Treasurer
Frederick S. Gattelaro................ 37 Senior Vice President, Professional Services,
Americas
Richard J. Sherman.................... 50 Senior Vice President, Marketing
Mark R. Weaser........................ 37 Senior Vice President, International Operations
Christopher F. Wright................. 39 Senior Vice President, Administration, General
Counsel and Secretary
Klaus P. Besier (b)................... 49 Director
J. Michael Cline (a).................. 40 Director
Steven A. Denning (b)................. 51 Director
Jay C. Hoag (a)....................... 41 Director
John C. Phelan (c).................... 35 Director
Jeffrey R. Rodek (c).................. 47 Director
</TABLE>
- --------------------------
(a) Term as a director expires in 2002.
(b) Term as a director expires in 2003.
(c) Term as a director expires in 2001.
LYLE A. BAACK has served as the Chairman of our Board of Directors since
September 1997. From August 1980 to September 1997, Mr. Baack served as
president and chief executive officer of Dallas Systems, which he founded.
Mr. Baack holds a BS in Electrical Engineering from Colorado State University
and an MS in Computer Information and Control Engineering from the University of
Michigan.
RAYMOND R. HOOD has served as our President, Chief Executive Officer and as
a director since September 1997. From 1990 to September 1997, Mr. Hood served as
chief executive officer of Neptune, which he co-founded with Adam Belsky.
Neptune was focused on delivering rapidly deployable packaged supply chain
execution software solutions primarily for manufacturers and third party
logistics providers. Prior to 1990, Mr. Hood was a partner at Microtek.
Mr. Hood holds a BS in Economics from the Wharton School at the University of
Pennsylvania.
ADAM C. BELSKY has served as our Senior Vice President, Mergers &
Acquisitions since November 1999 and as a director since September 1997. From
September 1997 to November 1999, Mr. Belsky served as our Senior Vice President,
Chief Financial Officer and Treasurer. From September 1997 to August 1998,
Mr. Belsky also served as our Secretary. From 1990 to September 1997,
Mr. Belsky served as chief financial officer of Neptune, which he co-founded
with
43
<PAGE>
Mr. Hood. Mr. Belsky holds a BS in Economics from the Wharton School at the
University of Pennsylvania and received a certified public accountant license in
1984.
DAVID E. ALCALA has served as our Senior Vice President, Business
Development since August 1999. From April 1998 to August 1999, he served as our
Senior Vice President, Industry Marketing, and from September 1997 to
April 1998 he served as our Senior Vice President, Sales and Marketing. From
January 1997 to September 1997, Mr. Alcala served as the senior vice president
and chief operating officer of Neptune. From July 1995 to November 1996,
Mr. Alcala served as senior vice president/ general manager of the Logistics
Systems Division of HK Systems, Inc. From October 1993 to July 1995, Mr. Alcala
served as president and chief executive officer of MTA, Inc. Mr. Alcala attended
the University of Wisconsin.
NIGEL R. BAHADUR has served as our Senior Vice President, Research and
Development since February 2000. From September 1997 to February 2000,
Mr. Bahadur served as our Chief Technology Officer and Vice President of
Research and Development. From 1992 to September 1997, Mr. Bahadur held various
positions in Neptune Systems including vice president of research and
development prior to the formation of EXE. Mr. Bahadur attended the State
University of New York at Stonybrook where he studied computer engineering.
MICHAEL A. BURSTEIN has served as our Senior Vice President, Finance, Chief
Financial Officer and Treasurer since November 1999. From August 1999 to
November 1999, he served as our Director, Corporate Finance and Assistant
Treasurer. Prior to joining EXE, Mr. Burstein served as the chief financial
officer of Sequel Systems, Inc., from August 1998 to August 1999. From 1996 to
1998, Mr. Burstein served as the chief financial officer of Paradigm Geophysical
Ltd. From 1992 to 1998, Mr. Burstein served in a variety of capacities at
Occidental Chemical. Mr. Burstein holds a BS in Electrical Engineering and an
MBA from Southern Methodist University.
FREDERICK S. GATTELARO has served as our Senior Vice President, Professional
Services, Americas, since December 1999. From June 1999 to December 1999,
Mr. Gattelaro was APS supply chain manager at Arthur Andersen. From August 1998
to June 1999, Mr. Gattelaro served as our Vice President, Research and
Development. From November 1996 to August 1998, Mr. Gattelaro was the Mid-West
i2 program manager at PricewaterhouseCoopers. From February 1996 to
November 1996, Mr. Gatterlaro was a senior manager in the supply chain
management practice at Ernst & Young LLP. From March 1993 to February 1996, he
was a senior manager in the Financial Systems practice at Coopers & Lybrand.
Mr. Gattelaro holds a BS in Finance and Management Information Systems from the
State University of New York at Buffalo and an MBA from the University of
Rochester.
RICHARD J. SHERMAN has served as our Senior Vice President, Marketing since
July 1999. From March 1998 to July 1999, he was senior vice president, market
development for Syncra Systems. From October 1996 to March 1998, Mr. Sherman was
senior vice president, strategic research at Numetrix, Ltd. From June 1995 to
October 1996, he was director, supply chain management research at AMR Research.
From July 1993 to May 1995, Mr. Sherman was senior vice president, business
development, for the IRI Logistics division of Information Resources, Inc.
Mr. Sherman holds a BA in English/Social Sciences and an MA in Educational
Administration from the University of Notre Dame. He has also completed
Executive Development programs in logistics at Michigan State University and the
University of Tennessee.
MARK R. WEASER has served as our Senior Vice President, International
Operations since January 2000. From September 1997 to January 2000, he served as
our Managing Director of Asia/ Pacific and served in the same position for
Neptune since August 1996. From July 1995 to July 1996, he was the Asia vice
president for Telxon Corporation. From February 1993 to June 1995, Mr. Weaser
was the sales director for American President Lines in Hong Kong, Taiwan and
Vietnam. Mr. Weaser holds a BS in Business Administration from the University of
Southern California.
44
<PAGE>
CHRISTOPHER F. WRIGHT has served as our Senior Vice President,
Administration since November 1999 and as our General Counsel and Secretary
since July 1998. Prior to July 1998, Mr. Wright was a partner with Pepper
Hamilton LLP, which he joined as an associate in 1990. Mr. Wright holds a BA
from Brown University and a JD from the University of Pennsylvania.
KLAUS P. BESIER has served as our director since December 1998. Mr. Besier
has served as chairman of the board of directors of FirePond, Inc., a leading
global e-business software and services company, since October 1999. Mr. Besier
has served as president, chief executive officer and a director of FirePond
since July 1997. From 1996 to 1997, Mr. Besier was chairman, president and chief
executive officer of Primix Solutions, Inc., an Internet-enabled software firm.
From 1991 to 1996, Mr. Besier held various senior management postions, including
president and chief executive officer from 1994 to 1996, of SAP America, Inc., a
subsidiary of SAP AG, a leading provider of business applications software.
Mr. Besier is also a director of Intelligroup, a global professional services
firm.
J. MICHAEL CLINE has served as our director since September 1997. Since
December 1, 1999, Mr. Cline has been the managing partner of Accretive
Technology Partners, a private investment company focused on business process
outsourcing and business-to-business e-commerce. From 1989 to 1999, Mr. Cline
served as a managing member of General Atlantic Partners, LLC. He holds a BS in
Business from Cornell University and an MBA from Harvard Business School.
Mr. Cline also serves on the board of directors of Manugistics Group, Inc. and
several private companies.
STEVEN A. DENNING has served as our director since September 1997.
Mr. Denning is the executive managing member of General Atlantic Partners, LLC,
a venture capital firm. Mr. Denning has been with General Atlantic and its
predecessors since 1980. He holds a BS in Industrial Management from the Georgia
Institute of Technology, an MS in Management Science from the Naval Postgraduate
School and an MBA from Stanford University. Mr. Denning also serves on the board
of directors of Eclipsys Corporation, GT Interactive Software Corp. and several
private companies.
JAY C. HOAG has served as our director since September 1999. Since
June 1995, Mr. Hoag has been a general partner of Technology Crossover Ventures,
a venture capital firm. From 1982 to 1994, Mr. Hoag served in a variety of
capacities at Chancellor Capital Management, Inc. Mr. Hoag holds a BA in
Economics and Political Science from Northwestern University and an MBA from the
University of Michigan. Mr. Hoag also serves on the board of directors of
Autoweb.com, eLoyalty, iVillage and ONYX Software and several private companies.
JOHN C. PHELAN has served as our director since August 1999 and has been a
managing principal of MSD Capital, L.P., the private investment firm for Michael
S. Dell, which he co-founded, since April 1998. From 1992 to January 1998,
Mr. Phelan served as a principal and a limited partner of ESL Investments, an
investment firm. From 1990 to 1992, Mr. Phelan was vice president of
acquisitions (Western Region) for Zell-Merrill Lynch Real Estate Opportunity
Funds. Mr. Phelan began his career at Goldman, Sachs & Co., where he worked from
1986 to 1988. Mr. Phelan holds a BA in Economics and Political Science from
Southern Methodist University and an MBA from Harvard Business School. In
addition, Mr. Phelan serves on the board of directors of several private
companies.
JEFFREY R. RODEK has served as our director since October 1998. Since
August 1999, Mr. Rodek has served as chairman of the board and chief executive
officer of Hyperion Solutions Corporation. Prior to joining Hyperion, Mr. Rodek
served as president and worldwide chief operating officer of Ingram Micro Inc.
from December 1994 to August 1999. From July 1991 through September 1994, he
served as senior vice president, Americas and the Caribbean for Federal Express
Corporation. Mr. Rodek holds a BS in Mechanical Engineering and an MBA from Ohio
State University.
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<PAGE>
CLASSIFIED BOARD OF DIRECTORS
Our Board of Directors consists of nine members and is divided into three
classes of directors. Each class contains an equal number of directors. Each
year, the stockholders will elect the members of one of the three classes to a
three-year term of office. The year of expiration of the term of each of our
directors is set forth above under the caption "Executive Officers and
Directors." A classified board of directors may have the effect of deterring or
delaying any attempt by any group to obtain control of us by a proxy contest
since the third party would be required to have its nominees elected at two
separate annual meetings of our stockholders in order to elect a majority of the
members of the Board of Directors.
BOARD COMMITTEES
The Audit Committee consists of Mr. Cline, Mr. Denning and Mr. Rodek. The
Audit Committee recommends independent auditors, reviews with the independent
auditors the scope and results of the audit, monitors our financial policies and
internal control procedures and reviews and monitors the provisions of non-audit
services by our auditors.
The Compensation Committee consists of Mr. Besier, Mr. Cline and Mr. Hoag.
The Compensation Committee reviews and recommends salaries, bonuses and other
compensation for our officers. The Compensation Committee also acts as the Stock
Option Committee and determines which employees should be granted options and
the terms and conditions of those option grants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to October 1997, we had no compensation committee and our entire Board
of Directors made decisions concerning compensation of executive officers.
Currently, no member of the Compensation Committee is serving as an officer. No
interlocking relationship exists between our executive officers or directors and
the compensation committee of any other entity.
COMPENSATION OF DIRECTORS
Directors currently do not receive any compensation for their services as
directors; however, directors are reimbursed for reasonable expenses incurred in
attending board and committee meetings. We have and will continue to grant stock
options to the non-employee members of our Board of Directors under our stock
option plan for non-employee directors.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to our Chief
Executive Officer and each of our four other most highly compensated executive
officers during the year ended December 31, 1999:
46
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
<S> <C> <C> <C> <C>
Raymond R. Hood ....................................... $184,039 $ -- -- $ 114,881(1)
President, Chief Executive
Officer and Director
David E. Alcala ....................................... 175,008 100,000 50,000 109,000(2)
Senior Vice President,
Business Development
Mark R. Weaser ........................................ 152,219 56,151 50,000 104,690(3)
Senior Vice President,
International Operations
Christopher F. Wright ................................. 180,250 3,750 80,000 20,225(4)
Senior Vice President,
Administration, General
Counsel and Secretary
Adam C. Belsky ........................................ 153,125 -- -- 93,233(5)
Senior Vice President, Mergers &
Acquisitions and Director
</TABLE>
- --------------------------
(1) Includes housing payments of approximately $51,500.
(2) Includes a commission of $100,000 earned by Mr. Alcala.
(3) Includes housing payments of approximately $50,000 and a commission of
$32,500 earned by Mr. Weaser.
(4) Consists of car payments of approximately $10,500 and 401(k) contributions
of $9,725.
(5) Includes housing payments of approximately $40,081.
OPTION GRANTS IN 1999
The following table presents stock option grants during 1999 to our Chief
Executive Officer and each of our four other most highly compensated executive
officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------- ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
NAME OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
- ---- GRANTED 1999(1) SHARE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Raymond R. Hood............................. -- -- -- -- -- --
David E. Alcala............................. 50,000(3) 2.6% $3.00 9/30/09 $ 94,500 $239,000
Mark R. Weaser.............................. 50,000(3) 2.6% $3.00 9/30/09 $ 94,500 $239,000
Christopher F. Wright....................... 80,000(3) 4.2% $3.00 9/30/09 $151,200 $382,900
Adam C. Belsky.............................. -- -- -- -- -- --
</TABLE>
- --------------------------
(1) Based on an aggregate of 1,914,875 shares subject to options granted to
employees in 1999.
(2) Assumes stock price appreciation of 5% and 10% compounded annually from the
date of grant to the expiration date, as mandated by the rules of the
Securities and Exchange Commission and does not represent our estimate or
projection of the future appreciation of our stock price. Actual gains, if
any, are dependent on the timing of any exercises and the future performance
of our common stock and may be greater or less than
47
<PAGE>
the potential realizable value set forth in the table. The amounts reflected
in the table may not necessarily be achieved.
(3) These options vest 25% on April 1, 2000 and 25% on each of October 1, 2000,
October 1, 2001 and October 1, 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
The following table presents the number and the value of options exercised
by our Chief Executive Officer and each of our four other most highly
compensated executive officers in 1999 and the outstanding options we granted to
these individuals as of December 31, 1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AS
SHARES AS OF DECEMBER 31, 1999 OF DECEMBER 31, 1999(1)
NAME ACQUIRED ON VALUE --------------------------- ---------------------------
- ---- EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Raymond R. Hood........................ -- -- 125,000 375,000 -- --
David E. Alcala........................ -- -- 339,583 50,000 $554,979 --
Mark R. Weaser......................... -- -- 137,396 57,500 $166,570 $3,975
Christopher F. Wright.................. -- -- 40,000 120,000 -- --
Adam C. Belsky......................... -- -- -- -- -- --
</TABLE>
- --------------------------
(1) Based on the fair market value of our Class B common stock as of December
31, 1999 of $2.53 per share (as determined by the Board of Directors), less
the exercise price payable upon exercise of such options.
STOCK OPTION PLANS
AMENDED AND RESTATED 1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN. On
September 16, 1997, we adopted the 1997 Incentive and Non-Qualified Stock Option
Plan which replaced all previous plans of our predecessor companies. Under our
1997 plan, as amended and restated in October 1998, an aggregate of 8,500,000
shares of common stock is authorized for issuance. Our 1997 plan provides for
the grant of incentive stock options (ISOs) to our employees and nonqualified
stock options (NQSOs) to employees or consultants. Exercise prices for ISOs may
not be less than fair market value on the date of grant, and exercise prices for
NQSOs must be at least $.01 per share. Options vest and become exercisable as
specified by the terms of an option agreement, and unless specified otherwise in
an option agreement, expire after 10 years.
Our 1997 plan is administered by our board of directors. Our board of
directors has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to our 1997 plan generally and to interpret
the provisions thereof. Our board of directors is responsible for establishing
an annual budget for the total number of options authorized for issuance under
our 1997 plan. The board of directors or applicable committee determines, with
respect to each option grant:
- the number of shares of common stock issuable upon the exercise of
options;
- the exercise price;
- the vesting schedule; and
- the duration of the options.
Our 1997 plan permits the payment of the exercise price of options to be in
the form of cash, check or such other form of consideration and method of
payment as determined by our board of directors.
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No award may be made under the 1997 plan after September 15, 2007, but
awards previously granted may extend beyond that time. Our board of directors
may at any time terminate our 1997 plan. Any such termination will not affect
outstanding options.
In the event we are subject to a change in control (as defined in our 1997
plan), our board of directors shall have the right, in its sole discretion, to
accelerate the vesting of all options that have not vested as of the date of the
change in control. In addition, in the event we are subject to a change in
control (as defined in our 1997 plan), our board of directors shall have the
right, subject to and conditioned upon a sale of the company (as defined in our
1997 plan) to:
- arrange for the successor entity to assume all of our rights and
obligations under our 1997 plan; or
- terminate our 1997 plan; and:
- pay to all optionees cash with respect to those options that are vested
as of the date of the sale in an amount equal to the difference between
the exercise price of each option and the fair market value of a share
of our common stock (determined as of the date our 1997 plan is
terminated) multiplied by the number of options that are vested as of
the date of the sale of the company and are held by the optionee as of
such date;
- arrange for the exchange of all options for options to purchase common
stock in the successor corporation; or
- distribute to each optionee other property in an amount equal to what
the optionee would have received from the successor entity if the
optionee had owned the shares subject to vested options at the time of
the sale. The form of distribution to the optionees shall be determined
by our board of directors.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS. In September 1997, we adopted
the Stock Option Plan for Non-Employee Directors and reserved an aggregate of
300,000 shares of common stock for issuance under that plan. Members of the
board of directors who are not our employees are eligible to participate in this
directors plan, which was amended and restated in February 2000. Under our
directors plan, each eligible director is automatically granted an option for
25,000 shares on the date such director first becomes a director. In addition,
our board of directors has the discretion to grant additional options to
eligible directors. At the November 1999 meeting of the board of directors, the
board exercised its discretionary authority and granted an option to acquire
25,000 shares of common stock to each of Mr. Rodek and Mr. Besier. At each
annual meeting of stockholders after this offering, each eligible director who
is re-elected for another term at such meeting will automatically be granted an
additional option to purchase 25,000 shares. Unless otherwise provided in the
option agreements, all options will vest as to 25% of the total shares on each
of the first four anniversaries of the date of grant. Any unvested options will
terminate upon the termination of the optionee's service as a director. Options
will terminate at the earliest of:
- ten years after the date on which the option was granted;
- twelve months after the termination of services resulting from the
individual's death or disability; or
- three months after the termination of services resulting from any other
reason.
The exercise price of all options granted under our directors plan is the
fair market value of the common stock on the date of the grant.
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401(K) PLAN
We maintain a 401(k) Plan which is intended to be a tax-qualified retirement
plan under Section 401(k) of the Internal Revenue Code. Pursuant to the 401(k)
Plan, a participant may generally contribute, up to 15% of compensation to the
401(k) Plan. Employees are eligible to participate upon completion of their
first calendar month of employment. We will match contributions made by
employees pursuant to the 401(k) Plan at a rate of 100% of the participant's
contributions, up to 5% of the participant's total compensation. To be eligible
for this matching, the participant generally must be employed on the last day of
the calendar quarter for which the match is made. Our Board of Directors has
discretion to make an additional contribution to participants' accounts each
year. All of our employees who have completed one year of service with us
consisting of at least 1,000 hours of employment and are employed on the last
day of the plan year are eligible for the discretionary contribution. The
portion of a participant's account attributable to his or her own contributions
is 100% vested. The portion of the account attributable to our contributions
(including matching and discretionary contributions) vests over two to five
years of service with us. Distributions from the 401(k) Plan may be made in the
form of an annuity or lump-sum cash payment.
PENSION PLAN
We maintain a defined contribution pension plan for our employees in the
United Kingdom. Pursuant to the plan, a participant may generally contribute up
to 15% of his or her compensation to the plan. The plan covers all employees
located in the United Kingdom who have completed six months of service. We will
match contributions made by employees pursuant to the plan, up to 5% of the
employee's contributions of eligible earnings.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with some of our executive
officers. Our employment agreements with these executive officers generally
provide for one-year terms of employment that are automatically renewable for
successive one-year terms, unless either party to the agreement gives the other
party prior written notice of non-renewal. Each agreement requires that the
officer protect our confidential information and generally prohibits the officer
from competing with us or soliciting our employees, customers or vendors for a
purpose competitive with our business for two years. Each agreement also
specifies the severance compensation payable by us if the officer's employment
with us terminates for specified reasons.
DAVID E. ALCALA. Our employment agreement with David E. Alcala, our Senior
Vice President, Business Development, was entered into on November 18, 1996 and
was amended on September 11, 1997. Mr. Alcala currently receives an annual base
salary of $175,000 and an annual bonus of $100,000. Mr. Alcala receives a car
allowance of $9,000 per year. Notwithstanding the employment agreement, we may
terminate Mr. Alcala's employment, with or without cause, upon 90 days' written
notice. If Mr. Alcala is terminated without cause, he is entitled to receive a
severance payment equal to the greater of his remaining base salary for the term
of his employment agreement and $160,000. However, Mr. Alcala, in his
discretion, may waive our obligation to make such severance payment for the
right to terminate all non-competition provisions in the employment agreement.
If Mr. Alcala is terminated for cause, his base salary and benefits and bonuses
shall cease at the date of such termination if we release Mr. Alcala from
certain non-competition obligations contained in the employment agreement.
MARK R. WEASER. Our employment agreement with Mark R. Weaser, our Senior
Vice President, International Operations, was entered into on December 7, 1996.
Mr. Weaser currently receives an annual base salary of $185,000 and an annual
cash bonus of one month's base salary. Mr. Weaser receives a housing allowance
of approximately $50,000 per year and a car allowance of approximately $16,000
per year. In the event of a termination of Mr. Weaser's employment without
cause, we will pay
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severance to Mr. Weaser in the amount of six month's base salary at the date of
termination. Mr. Weaser has agreed not to compete with us and not to solicit our
employees, customers or vendors for a period of six months following his
termination of employment.
CHRISTOPHER F. WRIGHT. Our employment agreement with Christopher F. Wright,
our Senior Vice President, Administration, General Counsel and Secretary, was
entered into on July 13, 1998. The Agreement has a three year initial term with
one year annual renewals. Mr. Wright currently receives an annual base salary of
$185,500, as well as benefits including life insurance equal to $50,000.
Mr. Wright receives a car allowance of $10,500 per year. Mr. Wright is not
permitted to compete with us for a period of two years after termination.
Notwithstanding the employment agreement, we may terminate Mr. Wright without
cause upon 90 days' written notice. Upon termination of this agreement for any
reason (including a change of control), Mr. Wright will receive severance equal
to one year's base salary. In the event of the termination of the agreement due
to death, disability or by us without cause or by a change of control, all of
Mr. Wright's options become immediately vested. If the employment agreement is
terminated for any reason and Mr. Wright chooses to return to the private
practice of law at any time during the year following his termination, we, at
Mr. Wright's option, will engage Mr. Wright's firm to perform legal services for
us for two years following the beginning of this engagement.
LIMITATIONS OF LIABILITY
The Delaware General Corporation Law authorizes corporations to limit or
eliminate, subject to certain conditions, the personal liability of directors to
corporations and their stockholders for monetary damages for breach of their
fiduciary duties. Our certificate of incorporation and by-laws limit the
liability of our directors to the fullest extent permitted by Delaware law. Such
limitation of liability does not affect the availability of equitable remedies.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation and by-laws provide that we will indemnify
any of our directors and officers who, by reason of the fact that he or she is
one of our officers or directors, is involved in a legal proceeding of any
nature. We will repay expenses incurred by a director or officer in connection
with any civil or criminal action or proceeding, specifically including actions
by us or in our name (derivative suits). Indemnifiable expenses include
attorney's fees, judgments, civil or criminal fines, settlement amounts and some
other expenses customarily incurred in connection with legal proceedings. In
addition, we maintain directors and officers insurance to cover expenses
incurred in connection with legal proceedings. We have or will also enter into
indemnification agreements with each of our directors and officers that provide
that we will indemnify any director or officer if he is involved in a legal
proceeding relating to his duties as a director or officer.
This indemnification does not affect the availability of equitable remedies.
In addition, we have been advised that in the opinion of the SEC,
indemnification for liabilities arising under the Securities Act is against
public policy as expressed in the Securities Act and is therefore unenforceable.
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CERTAIN TRANSACTIONS
During 1997 and 1998, we advanced a total of $1,303,000 to Astrid
Holdings, Inc., a company which was then owned by Mr. Hood, our President and
Chief Executive Officer, Mr. Belsky, our Senior Vice President, Mergers &
Acquisitions, and Nigel Bahadur, a former principal shareholder of Neptune and
our Senior Vice President, Research and Development. As of May 21, 1998, these
advances, which included $950,000 in cash advances and $353,000 in services and
expenses, remained outstanding. As part of Neptune's acquisition of Dallas
Systems in September 1997, we were granted an option to acquire Astrid for an
aggregate purchase price of $1.5 million. On May 21, 1998, Mr. Hood, Mr. Belsky
and Mr. Bahadur sold their entire interest in Astrid to Lexye Sumantri, an
unaffiliated stockholder of our company, for a cash payment of $120 and the
assumption of all of Astrid's liabilities. In connection with that transaction,
we repurchased from Mr. Sumantri 487,037 shares of our Class A common stock
valued at $2,172,185 in exchange for a cash payment of $869,185 to
Mr. Sumantri, forgiveness of our $1,303,000 of advances to Astrid and
termination of our option to purchase Astrid.
On September 15, 1997, we issued 6,764,043 shares of Series A preferred
stock and 4,573,519 shares of Series B preferred stock for an aggregate purchase
price of $25,000,000 to General Atlantic Partners 41, L.P. and GAP Coinvestment
Partners, L.P., two investment limited partnerships that are affiliated with one
of our directors, Steven A. Denning. Mr. Denning is the executive managing
member of General Atlantic Partners, LLC, which is a general partner of GAP41,
and is a general partner of GAPCO.
On September 15, 1997, we repurchased 6,763,513 shares of our common stock
from our Chairman of the Board, Lyle Baack, for an aggregate purchase price of
$14,788,421.
From August 1997 to October 29, 1999, we leased office space in Dallas from
LAB Holdings, an entity owned and controlled by Lyle Baack, our Chairman of the
Board. On October 27, 1999, the lease was terminated and we reached an agreement
with LAB Holdings under which we agreed to pay a total of $852,047 to LAB
Holdings. Our payments under this agreement will end in June 2000.
On July 10, 1998, we issued 1,600,000 shares of Series C preferred stock for
an aggregate purchase price of $8,000,000 to MSD Capital, L.P., Triple Marlin
Investments, LLC and Rothko Investments, LLC. These entities are affiliated with
one of our directors, John C. Phelan. Mr. Phelan is the managing principal of
MSD Capital, which is a member of both Triple Marlin and Rothko.
On September 29, 1999, we issued an aggregate of 750,000 shares of Series D
preferred stock for an aggregate cash purchase price of $3,000,000 to General
Atlantic Partners 57, L.P. and GAP Coinvestment Partners II, L.P., two
partnerships that are affiliated with one of our directors, Steven A. Denning.
Mr. Denning is the executive managing member of General Atlantic Partners, LLC,
which is a general partner of GAP57, and is a general partner of GAPCOII.
We also issued 3,437,750 shares of Series D preferred stock to TCV III (Q),
L.P., 155,679 shares of Series D preferred stock to TCV III Strategic Partners,
L.P., 129,341 shares of Series D preferred stock to TCV III, L.P. and 27,230
shares of Series D preferred stock to TCV III (GP) for an aggregate purchase
price of $15,000,000. The purchase price consisted of $12,200,000 in cash, the
cancellation of a $2,566,853 bridge loan from TCV III (Q), L.P., the
cancellation of a $116,240 bridge loan from TCV III Strategic Partners, L.P.,
the cancellation of a $96,575 bridge loan from TCV III, L.P. and the
cancellation of a $20,332 bridge loan from TCV III (GP). The TCV Funds are
affiliated with one of our directors, Jay C. Hoag. Mr. Hoag is a managing member
of Technology Crossover Management III, L.L.C., which is a general partner of
each of the TCV Funds.
On September 29, 1999, we also issued 250,000 shares of Series D preferred
stock to MSD Portfolio L.P.--Investments for a purchase price of $1,000,000,
consisting of $800,000 in cash and the cancellation of a $200,000 bridge loan
from MSD Portfolio. MSD Portfolio is affiliated with one of our
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directors, John C. Phelan. Mr. Phelan is the managing principal of MSD Capital,
which is the general partner of MSD Portfolio.
On September 29, 1999, we entered into an allocation agreement with General
Atlantic Partners 57, L.P., GAP Coinvestment Partners II, L.P., TCV III (Q),
L.P., TCV III Strategic Partners, L.P., TCV III, L.P., TCV III (GP), and MSD
Portfolio. General Atlantic Partners 57, L.P. and GAP Coinvestment Partners II,
L.P. are affiliated with one of our directors, Steven A. Denning. Mr. Denning is
the executive managing member of General Atlantic Partners, LLC, which is a
general partner of GAP57, and is a general partner of GAPCOII. TCV III (Q),
L.P., TCV III Strategic Partners, L.P., TCV III, L.P. and TCV III (GP) are
affiliated with one of our directors, Jay C. Hoag. Mr. Hoag is a managing member
of Technology Crossover Management III, L.L.C., which is a general partner of
each of the TCV Funds. MSD Portfolio L.P.--Investments is affiliated with one of
our directors, John C. Phelan. Mr. Phelan is the managing principal of MSD
Capital, which is the general partner of MSD Portfolio. Under this agreement,
each of these Series D stockholders has the right to purchase common stock
offered in this offering. The maximum number of shares that they may purchase is
determined by dividing $10,000,000 by the mid-point of the range of the price
per share in the last preliminary prospectus circulated to investors. However,
the Series D Purchasers may not purchase more than 10% of the total shares
offered.
We entered into an Indemnification Agreement with Jay Hoag, one of our
directors, in connection with the Series D round of financing, in which we
agreed to indemnify Mr. Hoag if he is involved in a legal proceeding relating to
his duties as a director. We have entered or will enter into similar
indemnification agreements with all of our directors and officers.
In December 1999, we loaned Raymond R. Hood, our President and Chief
Executive Officer, a total of $50,000. The interest rate on the loan is 8.5% per
year. The loan must be repaid by December 2002 or thirty days after the
effective date of this initial public offering, whichever is earlier. Also, in
February 2000, we loaned Mr. Hood another $50,000. The interest rate on the loan
is 8.5% per year. The loan must be repaid by February 2004 or thirty days after
the effective date of this initial public offering, whichever is earlier.
We believe that all of the transactions described above were made on terms,
on the whole, no less favorable to us than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between us
and our officers, directors, principal stockholders and affiliates will be
approved by a majority of our board of directors, including a majority of our
independent and disinterested directors, and will be on terms no less favorable,
on the whole, to us than could be obtained from unaffiliated third parties.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 31, 2000, as adjusted to reflect the
sale of shares of common stock in this offering and the conversion of all
outstanding shares of our Series A, Series B, Series C and Series D preferred
stock and our Class B common stock into shares of common stock, by:
- each person or group known to us who beneficially owns more than 5% of our
outstanding common stock;
- each of our directors and each named executive officer; and
- all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES OWNED PRIOR TO SHARES OWNED AFTER THIS
THIS OFFERING OFFERING
--------------------- -----------------------
BENEFICIAL OWNER(1)(2) SHARES PERCENT SHARES PERCENT
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
General Atlantic Partners, LLC(3).................. 12,087,562 35.6% 12,087,562 %
Entities Associated with Technology Crossover
Ventures(4)....................................... 3,750,000 11.0 3,750,000
Michael S. Dell(5)................................. 1,850,000 5.4 1,850,000
DIRECTORS AND OFFICERS:
Steven A. Denning(3)............................... 12,087,562 35.6 12,087,562
Lyle A. Baack(6)................................... 5,002,188 14.7 5,002,188
Jay C. Hoag(4)..................................... 3,750,000 11.0 3,750,000
Raymond R. Hood(7)................................. 3,737,500 11.0 3,737,500
Adam C. Belsky(8).................................. 3,612,500 10.6 3,612,500
John C. Phelan(9).................................. 1,850,000 5.4 1,850,000
Nigel Bahadur(10).................................. 1,275,000 3.8 1,275,000
David E. Alcala(11)................................ 420,686 1.2 420,686
Mark R. Weaser(12)................................. 243,136 * 243,136
Christopher F. Wright(13).......................... 60,000 * 60,000
Jeffrey R. Rodek(14)............................... 6,250 * 6,250
Klaus P. Besier(15)................................ 6,250 * 6,250
J. Michael Cline................................... -- -- --
All executive officers and directors
as a group (16 persons)(16)....................... 32,064,969 92.3 32,064,969
</TABLE>
- --------------------------
(1) Beneficial ownership of shares is determined under the rules of the
Securities and Exchange Commission. Unless otherwise indicated, the persons
included in this table have sole voting and investment power with respect to
all shares beneficially owned, subject to community property laws, where
applicable. Shares of common stock subject to options currently exercisable
or exercisable within 60 days of March 31, 2000 are treated as outstanding
for the purpose of computing the percentage ownership of the persons holding
such options. However, these shares are not treated as outstanding for the
purposes of computing the percentage ownership of any other person.
Applicable percentage ownership in the above table is based on
33,977,875 shares of common stock outstanding as of March 31, 2000, after
giving effect to the conversion of all outstanding shares of preferred stock
into common stock upon the closing of this offering, and shares of common
stock outstanding immediately following the completion of this offering.
(2) Unless otherwise indicated, the address of each of the named individuals is
c/o EXE Technologies, Inc., 8787 Stemmons Freeway, Dallas, Texas 75247. The
percentages in the "Shares Owned After this Offering" column assume that the
underwriters do not exercise their over-allotment option to purchase up to
shares.
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(3) Includes 9,544,746 shares of common stock held by General Atlantic Partners
41, L.P. ("GAP 41"), 1,792,816 shares of common stock held by GAP
Coinvestment Partners, L.P. ("GAPCO"), 629,650 shares of common stock held
by General Atlantic Partners 57, L.P. ("GAP57") and 120,350 shares of common
stock held by GAP Coinvestment Partners II, L.P. ("GAPCOII"). General
Atlantic Partners, LLC ("GAPLLC") is the general partner of GAP41 and GAP57.
The managing members of GAPLLC are also the general partners of GAPCO and
GAPCOII. Mr. Denning is the executive managing member of General Atlantic
Partners, LLC. Mr. Denning disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest therein. In addition,
pursuant to an Option Agreement, dated as of September 15, 1997, among GAP
41, GAPCO and David Alcala, GAP 41 granted to Mr. Alcala an option to
purchase, at the exercise price of $2.1865 per share, 57,760 shares held by
GAP 41, and GAPCO granted to Mr. Alcala an option to purchase, at the
exercise price of $2.1865 per share, 10,843 shares held by GAPCO. The
address for Mr. Denning and various GAP entities is c/o General Atlantic
Service Corporation, 3 Pickwick Plaza, Greenwich, Connecticut 06830.
(4) Includes 3,437,750 shares of common stock held by TCV III (Q), L.P., 155,679
shares of common stock held by TCV III Strategic Partners, L.P., 129,341
shares of common stock held by TCV III, L.P. and 27,230 shares of common
stock held by TCV III (GP). Mr. Hoag is a managing member of Technology
Crossover Management III, L.L.C., which is the general partner of each of
the TCV Funds. Mr. Hoag disclaims beneficial ownership of such shares except
to the extent of his pecuniary interest therein. The address for each of
these persons and entities is c/o Technology Crossover Ventures, 575 High
Street, Suite 400, Palo Alto, California 94301.
(5) Includes 1,200,000 shares of common stock held by MSD 1998 GRAT #6, 200,000
shares of common stock held by Triple Marlin Investments, LLC, 200,000
shares of common stock held by Rothko Investments, LLC and 250,000 shares of
common stock held by MSD Portfolio L.P.--Investments. Mr. Dell disclaims
beneficial ownership of the shares held by Triple Marlin and Rothko.
Mr. Dell is the general partner of MSD Capital, L.P., which shares voting
and investment power over MSD 1998 GRAT #6, is a member of each of Triple
Marlin and Rothko and is the general partner of MSD Portfolio. The address
for Mr. Dell is c/o Dell Computer Corporation, One Dell Way, Round Rock,
Texas 78682.
(6) Includes 200,000 shares held by Baack Children's Trust. Mr. Baack disclaims
beneficial ownership of these shares.
(7) Includes 1,000,000 shares held by Hood Partnership, Ltd., 131,000 shares
held by the Adam Belsky Irrevocable GST Exempt Trust, of which Mr. Hood is
the sole trustee, 500,000 shares held by Mr. Hood's former spouse, over
which Mr. Hood retains voting power, and 125,000 shares of common stock
subject to options exercisable within 60 days of March 31, 2000. Mr. Hood
disclaims beneficial ownership of the shares held by the trust.
(8) Includes 1,000,000 shares held by Belsky Partnership, Ltd. and 131,000
shares held by the Raymond Hood Irrevocable GST Exempt Trust, of which
Mr. Belsky is the sole trustee. Mr. Belsky disclaims beneficial ownership of
the shares held by the trust.
(9) Includes 1,200,000 shares of common stock held by MSD 1998 GRAT #6, 200,000
shares of common stock held by Triple Marlin Investments, LLC, 200,000
shares of common stock held by Rothko Investments, LLC and 250,000 shares of
common stock held by MSD Portfolio, L.P.--Investments. Mr. Phelan is
managing principal of MSD Capital, L.P., which shares voting and investment
power over the shares held by MSD 1998 GRAT #6, is a member of each of
Triple Marlin and Rothko and is the general partner of MSD Portfolio.
Mr. Phelan disclaims beneficial ownership of all such shares except to the
extent of his pecuniary interest therein. Mr. Phelan's address is c/o MSD
Capital, L.P., 780 3(rd) Avenue, 43(rd) Floor, New York, New York
10017-1622.
(10) Includes 250,000 shares held by the N.R. Bahadur Partnership II, Ltd.
(11) Includes 339,583 shares of common stock subject to currently exercisable
options and 12,500 shares subject to options exercisable within 60 days of
March 31, 2000. Also includes 57,760 shares that Mr. Alcala has the option
to purchase from GAP41 and 10,843 shares that he has the option to purchase
from GAPCO.
(12) Includes 139,896 shares of common stock subject to options currently
exercisable and 12,500 shares of common stock subject to options exercisable
within 60 days of March 31, 2000.
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(13) Includes 40,000 shares of common stock subject to options currently
exercisable and 20,000 shares of common stock subject to options exercisable
within 60 days of March 31, 2000.
(14) Includes 6,250 shares of common stock subject to currently exercisable
options. Mr. Rodek's address is c/o Hyperion Solutions Corporation, 1344
Crossman Avenue, Sunnyvale, California 94089.
(15) Includes 6,250 shares of common stock subject to currently exercisable
options. Mr. Besier's address is c/o Firepond, Inc., 890 Winter Street,
Waltham, Massachusetts 02451.
(16) Includes 736,979 shares of common stock subject to currently exercisable
options and 47,500 shares of common stock subject to options exercisable
within 60 days of March 31, 2000.
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DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, we will be authorized to issue 150,000,000
shares of common stock and 20,000,000 shares of preferred stock, of which there
will be shares of common stock and no shares of preferred stock
outstanding.
COMMON STOCK
Upon the closing of this offering, the Class A common stock will be renamed
"common stock", all outstanding shares of Class B common stock will convert into
shares of common stock on a one-for-one basis and our Class B common stock will
cease to exist. The holders of common stock are entitled to one vote per share.
In the event of a liquidation, dissolution or winding up of our affairs, holders
of the common stock will be entitled to share ratably in all our assets that are
remaining after payment of our liabilities and the liquidation preference of any
outstanding shares of preferred stock. All outstanding shares of common stock
are fully paid and nonassessable. The rights, preferences and privileges of
holders of common stock are subject to any series of preferred stock that we
have issued or may issue in the future. The holders of common stock have no
preemptive or conversion rights (other than with respect to an initial public
offering as described above) and are not subject to future calls or assessments
by us.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of our Series A,
Series B, Series C and Series D preferred stock will be converted into shares of
common stock and there will be no shares of preferred stock outstanding. Subject
to Delaware law, the board of directors is authorized to provide for the
issuance of additional shares of preferred stock in one or more series, to
establish from time to time the number of shares to be included in each such
series, to fix the powers, designations, preferences and rights of the shares of
each wholly unissued series and designate any qualifications, limitations or
restrictions thereon and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then outstanding)
without any further vote or action by the stockholders. The issuance of
preferred stock could adversely affect the voting power of the holders of our
common stock or have the effect of deterring or delaying any attempt by a
person, entity or group to obtain control of us. We have no current plan to
issue any shares of preferred stock.
REGISTRATION RIGHTS
Pursuant to a Second Amended and Restated Registration Rights Agreement,
dated September 29, 1999, among General Atlantic Partners 57, L.P. ("GAP 57"),
General Atlantic Partners 41, L.P. ("GAP 41"), GAP Coinvestment Partners, L.P.
("GAPCO"), GAP Coinvestment Partners II, L.P. (together with GAP 57, GAP 41 and
GAPCO, the "GAP Stockholders"), MSD 1998 GRAT #6 ("MSD"), Triple Marlin
Investments, LLC ("Triple Marlin"), Rothko Investments, LLC ("Rothko"), MSD
Portfolio L.P.--Investments (collectively with MSD, Triple Marlin and Rothko,
the "Dell Stockholders"), TCV III (Q), L.P., TCV III Strategic Partners, L.P.,
TCV III, L.P., and TCV III (GP) (together with TCV III (Q), L.P., TCV III
Strategic Partners, L.P. and TCV III, L.P. collectively, the "TCV
Stockholders"), Lyle Baack ("Baack") and Nigel Bahadur, Adam Belsky and Raymond
Hood (collectively, the "Neptune Stockholders," and together with Baack, the
"Major Stockholders"), each of the GAP Stockholders, the Dell Stockholders, the
TCV Stockholders and the Major Stockholders are entitled to rights with respect
to the registration under the Securities Act, for resale to the public, of the
shares of common stock owned by them.
Our registration rights agreement permits the Neptune Stockholders to
include shares in this offering, subject to limitations and restrictions,
including the right of the underwriters to exclude all or a portion of the
Neptune shares from this offering.
57
<PAGE>
Our registration rights agreement permits the GAP Stockholders, the Dell
Stockholders and the TCV Stockholders, as a group, and the Major Stockholders,
as a group, each to twice require us, whether or not we propose to register our
common stock for sale, to register all or part of the total number of shares of
common stock held by each such group for sale to the public under the Securities
Act, subject to certain conditions and limitations. We are required to bear the
expenses of such registrations and to use our best efforts to effect such
registrations, subject to specified conditions and limitations. In addition to
the demand registration rights described above, our registration rights
agreement permits each of the GAP Stockholders, the Dell Stockholders, the TCV
Stockholders and the Major Stockholders, as a group, to require us to register
the shares held by each group on a Form S-3 once we have qualified to use
Form S-3, subject to specified conditions and limitations. Our registration
rights agreement also provides that, after this offering and subject to certain
exceptions, in the event we propose to file a registration statement under the
Securities Act with respect to an offering by us for our own account, each of
the GAP Stockholders, the Dell Stockholders, the TCV Stockholders and the Major
Stockholders are entitled to include their shares in such registration, subject
to specified conditions and limitations.
We granted warrants to some of our service providers and resellers to
acquire an aggregate of up to 1,035,000 shares of our Class B common stock.
These warrant holders are entitled to certain piggyback registration rights with
respect to offerings by us for our account, subject to some conditions and
limitations. These piggyback registration rights are not applicable to our
initial public offering.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION AND BY-LAWS
The provisions of Delaware law and of our certificate of incorporation and
by-laws discussed below could discourage or make it more difficult to accomplish
a proxy contest or other change in our management or the acquisition of control
by a holder of a substantial amount of our voting stock. It is possible that
these provisions could make it more difficult to accomplish, or could deter,
transactions that stockholders may otherwise consider to be in their best
interests or our best interests.
In addition, our certificate of incorporation and by-laws provide that no
director may be removed at any time except for cause and by the affirmative vote
of the holders of a majority of the outstanding shares of voting stock. Also,
stockholder action may be taken only at a stockholders meeting and not by
written consent of the stockholders.
Our certificate of incorporation and by-laws summarized in the preceding
paragraphs contain provisions that may have the effect of delaying, deferring or
preventing a non-negotiated merger or other business combination involving us.
These provisions are intended to encourage any person interested in acquiring us
to negotiate with and obtain the approval of the board of directors in
connection with the transaction. Certain of these provisions may, however,
discourage a future acquisition of us not approved by the board of directors in
which stockholders might receive an attractive value for their shares or that a
substantial number or even a majority of our stockholders might believe to be in
their best interest. As a result, stockholders who desire to participate in such
a transaction may not have the opportunity to do so. Such provisions could also
discourage bids for our common stock at a premium, as well as create a
depressive effect on the market price of our common stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is .
58
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering (assuming no exercise of the underwriters'
over-allotment option), we will have shares of common stock outstanding,
assuming no exercise of outstanding options. Of the total outstanding shares,
the shares sold in this offering, other than the shares purchased by
holders of our Series D preferred stock pursuant to the allocation agreement
described in "Certain Transactions," will be freely tradable without restriction
or further registration under the Securities Act, except that any shares held by
our affiliates, as that term is defined under the Securities Act, may generally
only be sold in compliance with the limitations of Rule 144 as described below.
SALES OF RESTRICTED SHARES
The remaining shares of common stock held by existing
stockholders were issued and sold by us in reliance on exemptions from the
registration requirements of the Securities Act. of the shares will be
subject to "lock-up" agreements providing that the stockholder will not offer,
sell or otherwise dispose of any of the shares of common stock owned by them for
a period of 180 days after the date of this offering. However, holders of such
restricted shares who have not been executive officers, directors or affiliates
of us on or since the date of this prospectus may offer, sell or otherwise
dispose of 25% of their shares on the earlier of 90 days after the date of this
offering or on the second trading day after the first public release of our
quarterly results if the last recorded sale price on the Nasdaq National Market
for 20 of the 30 trading days ending on such date is at least twice the price
per share in this offering. These stockholders may also offer, sell or otherwise
dispose of an additional 25% of their shares 135 days after the date of this
offering if the price per share of common stock has achieved the same target
level. However, Donaldson, Lufkin & Jenrette Securities Corporation and Salomon
Smith Barney Inc. may, in their sole discretion, at any time without notice,
release all or any portion of the shares subject to lock-up agreements. Upon
expiration of the lock-up agreements, shares will become eligible
for sale pursuant to Rule 144(k), shares will become eligible for
sale under Rule 144 and shares will become eligible for sale under
Rule 701.
ELIGIBILITY OF RESTRICTED SHARES FOR SALE IN THE PUBLIC MARKET
(LISTED BY DATE UPON WHICH SHARES BECOME SALEABLE)
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES COMMENTS
<S> <C> <C>
At the effective date.................... -- All shares restricted under lock-up
provision
90 days after the effective date or
second trading day following first Shares saleable under Rule 701
public release of quarterly
earnings(1)............................
135 days after the effective date(1)..... Shares saleable under Rule 701
180 days after the effective date Shares saleable under Rule 144, 144(k) or
(expiration of lock-up)................ 701
Various dates thereafter................. Shares saleable under Rule 144
</TABLE>
- --------------------------
(1) The number of shares listed may be offered, sold or traded provided that the
last recorded sale price per share for 20 of the 30 trading days ending on
such date is at least twice the initial public offering price per share.
After the completion of this offering, we intend to file a registration
statement on Form S-8 under the Securities Act to register all of the shares of
common stock reserved for future issuance under our stock option plans. Based
upon the number of shares subject to outstanding options as of March 31, 2000
and currently reserved for issuance under both of these plans, this registration
statement would cover approximately shares. Shares registered under the
registration statement will generally be available for sale in the open market
immediately after the 180-day lock-up agreements expire.
59
<PAGE>
RULE 144
In general, under Rule 144 as currently in effect, a person including an
affiliate, who has beneficially owned shares of our common stock for at least
one year would be entitled to sell in "broker's transactions" or to market
makers, within any three-month period, a number of shares that does not exceed
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 in the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are generally subject to the availability of current
public information about us.
RULE 144(k)
Under Rule 144(k), a person who is deemed to have not been our affiliate at
any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, is entitled to sell
such shares without having to comply with the manner of sale, public
information, volume limitation or notice filing provisions of Rule 144.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to sell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with the holding period requirements of Rule 144 and, in the case of
non-affiliates, without having to comply with the public information, volume
limitation or notice filing provisions of Rule 144. However, holders of shares
that would otherwise be saleable under Rule 701 are subject to the contractual
restrictions described above which restrict the sale or disposition of such
shares for up to 180 days following the effective date.
REGISTRATION RIGHTS
Upon completion of this offering, the holders of shares of common
stock and shares of common stock issuable upon the exercise of warrants,
will be entitled to various rights with respect to the registration of these
shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares becoming freely tradable without
restriction under the Securities Act immediately upon the effectiveness of the
registration, except for shares purchased by affiliates. See "Description of
Capital Stock--Registration Rights" for a more complete description of these
registration rights.
STOCK OPTIONS
As of March 31, 2000, options to purchase a total of shares of
common stock under our stock option plans were outstanding and were
exercisable. of the shares subject to options are subject to lock-up
agreements. An additional shares of common stock were available for
future option grants under our stock plans.
Upon completion of this offering, we intend to file a registration statement
under the Securities Act covering all shares of common stock subject to
outstanding options or issuable pursuant to our stock option plans. Subject to
Rule 144 volume limitations applicable to affiliates, shares registered under
any registration statements will be available for sale in the open market,
except to the extent that the shares are subject to vesting restrictions with us
or the contractual restrictions described above.
60
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement,
dated , 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, Salomon Smith Barney Inc.,
U.S. Bancorp Piper Jaffray Inc. and DLJDIRECT Inc., have severally agreed to
purchase from us the number of shares of common stock set forth opposite their
names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS: SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Salomon Smith Barney Inc....................................
U.S. Bancorp Piper Jaffray Inc..............................
DLJDIRECT Inc...............................................
------
Total...................................................
======
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of common stock in
this offering are conditioned on approval by their counsel of legal matters
concerning this offering and satisfaction of conditions precedent by us. The
underwriters are obligated to purchase and accept delivery of all the shares of
common stock in this offering, other than those shares covered by the
over-allotment option described below, if any are purchased.
The underwriters initially propose to offer some of 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 some of the shares to dealers at the
initial public offering price less a concession not in excess of $ per
share. The underwriters may allow, and those dealers may re-allow, to certain
other dealers a concession not in excess of $ per share on sales to other
dealers. After the initial offering of the common stock to the public, the
representatives may change the public offering price and concessions. The
underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
An electronic prospectus will be available on the web site maintained by
DLJDIRECT Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation. In addition, other dealers purchasing shares from DLJDIRECT in this
offering have agreed to make a prospectus in electronic format available on web
sites maintained by each of these dealers. Other than the prospectus in
electronic format, the information on these web sites relating to the offering
is not part of this prospectus and has not been approved or endorsed by us or
the underwriters, and should not be relied on by prospective investors.
The following table shows the underwriting fees to be paid by us in
connection with this offering. This information is presented assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares of our common stock.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
<S> <C> <C>
Per share............................................ $ $
Total................................................ $
</TABLE>
We will pay the offering expenses, estimated to be approximately
$ million. We will pay to the underwriters underwriting discounts and
commissions in an amount equal to the public offering price per share of common
stock less the amount the underwriters pay to us for each share of common stock
sold by us.
We have granted to the underwriters an option, exercisable within 30 days
after the date of this prospectus, to purchase up to additional shares of
common stock at the initial public offering
61
<PAGE>
price less the underwriting discounts and commissions. The underwriters may
exercise this option solely to cover over-allotments, if any, made in connection
with this offering. To the extent the underwriters exercise this option, each
underwriter will be obligated, upon satisfaction of certain conditions, to
purchase a number of additional shares approximately proportionate to that
underwriter's initial purchase commitments.
We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act, or to contribute to payments that the
underwriters may be required to make in respect thereof.
For a period ending 180 days from the date of this prospectus, subject to
exceptions, we and our executive officers and directors have agreed not to,
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation and Salomon Smith Barney Inc.:
- offer, pledge, sell, contract to sell or sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend or otherwise transfer or dispose of, directly
or indirectly, any shares of common stock or any securities convertible
into or exercisable or exchangeable for common stock; or
- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock,
regardless of whether any of the transactions described above is to be settled
by delivery of common stock or such other securities, in cash, or otherwise.
However, 25% of the shares of common stock subject to the restrictions described
above (other than shares owned by directors, executive officers or affiliates)
will be released from these restrictions if the reported last sale price of the
common stock on the Nasdaq National Market is at least twice the initial public
offering price for 20 of the 30 consecutive trading days ending on the last
trading day of the 90-day period after the date of this prospectus. These shares
will be released on the later to occur of the 90-day period after the date of
this prospectus and the second trading day after the first public release of our
quarterly results. An additional 25% of the shares subject to the restrictions
described above will be released from these restrictions if the reported last
sale price of the common stock on the Nasdaq National Market is at least twice
the initial public offering price for 20 of the 30 consecutive trading days
ending on the last trading day of the 135-day period after the date of this
prospectus.
In addition, during the lock-up period, we have also agreed not to file any
registration statement relating to, and each of our executive officers,
directors and stockholders have agreed not to make any demand for, or exercise
any right relating to, the registration of any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation and Salomon Smith Barney Inc.
Prior to this offering, no public market has existed for our common stock.
We will negotiate the initial public offering price for our common stock with
the representatives, but the price may not reflect the market price for our
common stock after this offering. The factors considered in determining the
initial public offering price include:
- the history of and prospects for our industry in which we compete;
- our past and present operations;
- our historical results of operations;
- our prospects for future operational results;
- the recent market prices of securities of generally comparable companies;
and
- the general conditions of the securities market at the time of this
offering.
62
<PAGE>
We have applied to have our common stock quoted on the Nasdaq National
Market under the symbol "EXEE."
Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
included in this offering in any jurisdiction where action for that purpose is
required. The shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other offering material
or advertisements in connection with the offer and sale of any shares of common
stock be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
this offering and the distribution of this prospectus. This prospectus is not an
offer to sell or a solicitation of an offer to buy any shares of common stock in
any jurisdiction where that would not be permitted or legal.
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may over-allot this offering,
creating a syndicate short position. The underwriters may bid for and purchase
our shares of common stock in the open market to cover such syndicate short
positions or to stabilize the price of our common stock. In addition, the
underwriting syndicate may reclaim selling concessions from syndicate members
and selected dealers if they repurchase previously distributed common stock in
syndicate covering transactions, in stabilizing transactions or otherwise, or if
Donaldson, Lufkin & Jenrette Securities Corporation or Salomon Smith Barney Inc.
receives a report which indicates that the clients of such syndicate members
have "flipped" our common stock. These activities may stabilize or maintain the
market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.
Pursuant to the allocation agreement described in "Certain Transactions,"
the holders of our Series D preferred stock have the right to purchase up to 10%
of the shares offered in this prospectus at the public offering price on the
same terms as shares sold to the public.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to % of the shares of common stock offered by this
prospectus for sale to our officers, directors, employees and their family
members and to business associates, including customers, consultants and other
friends. These persons must commit to purchase after the registration statement
has become effective but before the open of business on the following business
day. The number of shares available for sale to the general public will be
reduced to the extent these persons purchase the reserved shares.
LEGAL MATTERS
Morgan, Lewis & Bockius LLP, New York, New York, will provide us with an
opinion as to the validity of the common stock offered through this prospectus.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. will pass upon certain legal matters
relating to this offering for the underwriters.
EXPERTS
The consolidated financial statements of EXE Technologies, Inc. as of
December 31, 1998 and 1999 and for each of the three years in the period ended
December 31, 1999, and the consolidated financial statements of Dallas Systems
for the eight and one-half month period ended September 15, 1997, appearing in
this prospectus and registration statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere in this prospectus, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
63
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of
common stock offered through this prospectus. This prospectus does not contain
all of the information in the registration statement and the exhibits and
schedule to the registration statement. For further information with respect to
us and our common stock, we refer you to the registration statement and to the
exhibits and schedule to the registration statement. Statements contained in
this prospectus as to the contents of any contract or any other document
referred to are not necessarily complete, and in each instance, we refer you to
the copy of the contract or other document filed as an exhibit to the
registration statement. Each of these statements is qualified in all respects by
this reference. You may inspect a copy of the registration statement without
charge at the SEC's principal office in Washington, D.C., and copies of all or
any part of the registration statement may be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment
of fees prescribed by the SEC. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of the website is
http://www.sec.gov. The SEC's toll free investor information service can be
reached at 1-800-SEC-0330. Information contained on the web site does not
constitute part of this prospectus. In addition, we have applied for listing on
the Nasdaq National Market. You may inspect reports and other information
concerning us at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, DC.
Upon completion of this offering, we will be subject to the information
reporting requirements of the Securities Exchange Act of 1934 and we will file
reports, proxy statements and other information with the SEC.
We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent public accountants and quarterly
reports for the first three fiscal quarters of each fiscal year containing
unaudited interim financial information. To obtain a copy of these reports,
please contact Michael A. Burstein at (214) 775-6000, 8787 Stemmons Freeway,
Dallas, Texas 75247.
64
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
EXE Technologies, Inc. and Subsidiaries
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998, and 1999......................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1998 and 1999.............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to Consolidated Financial Statements.................. F-8
Dallas Systems Corporation and Subsidiary
Report of Ernst & Young LLP, Independent Auditors........... F-25
Consolidated Statement of Operations for the Eight and
One-Half Month Period Ended September 15, 1997............ F-26
Consolidated Statement of Stockholders' Equity for the Eight
and One-Half Month Period Ended September 15, 1997........ F-27
Consolidated Statement of Cash Flows for the Eight and
One-Half Month Period Ended September 15, 1997............ F-28
Notes to Consolidated Financial Statements.................. F-29
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Management and Board of Directors
EXE Technologies, Inc.
We have audited the accompanying consolidated balance sheets of EXE
Technologies, Inc. and subsidiaries as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. 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 auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
EXE Technologies, Inc. and subsidiaries as of December 31, 1998 and 1999, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Dallas, Texas
March 24, 2000
F-2
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1998 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 779,896 $ 8,932,073
Accounts receivable, net of allowance for doubtful
accounts, returns and adjustments of approximately
$2,532,000 and $5,534,000 at December 31, 1998 and 1999,
respectively............................................ 23,365,324 30,617,523
Other receivables and advances............................ 390,148 757,140
Prepaid and other current assets.......................... 3,418,976 1,717,855
------------ ------------
Total current assets.................................. 27,954,344 42,024,591
Property and equipment, net................................. 8,556,410 9,996,453
Other assets................................................ 1,087,056 1,002,844
Intangible assets, net of accumulated amortization of
$5,883,000 and $10,701,000 at December 31, 1998 and 1999,
respectively.............................................. 19,465,080 14,646,410
------------ ------------
Total assets.......................................... $ 57,062,890 $ 67,670,298
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 5,770,641 $ 5,260,922
Accrued expenses.......................................... 4,778,165 8,673,369
Accrued payroll and benefits.............................. 3,352,571 3,459,531
Deferred revenue.......................................... 8,758,438 14,115,533
Revolving credit line and current portion of long-term
debt.................................................... 4,159,094 9,595,201
------------ ------------
Total current liabilities............................. 26,818,909 41,104,556
Long-term debt, net of current portion...................... 5,420,453 5,333,136
Commitments and contingencies............................... -- --
STOCKHOLDERS' EQUITY:
Convertible preferred stock, Series A through D, $.01 par
value: shares authorized--22,000,000; shares issued and
outstanding--12,937,592 and 17,687,562 at December 31,
1998 and 1999, respectively; aggregate liquidation
value--$52,000,000 at December 31, 1999................. 33,000,000 52,000,000
Common stock, Class A voting, $.01 par value: shares
authorized--75,000,000; shares issued and
outstanding--16,766,529 at December 31, 1998 and 1999... 167,665 167,665
Common stock, Class B non-voting, $.01 par value: shares
authorized--12,000,000; shares issued and
outstanding--127,875 and 380,022 at December 31, 1998
and 1999, respectively.................................. 1,279 3,800
Additional paid-in capital.............................. 22,092,993 23,567,716
Treasury stock, at cost, 906,777 shares and 924,071
shares of Class A at December 31, 1998 and 1999,
respectively.......................................... (3,115,439) (3,208,912)
Accumulated deficit..................................... (26,261,637) (50,217,661)
Deferred compensation................................... (525,960) (313,560)
Other comprehensive loss................................ (535,373) (766,442)
------------ ------------
Total stockholders' equity............................ 24,823,528 21,232,606
------------ ------------
Total liabilities and stockholders' equity............ $ 57,062,890 $ 67,670,298
============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1997 1998 1999
<S> <C> <C> <C>
REVENUE:
Software license.......................................... $ 8,428,538 $ 22,417,541 $ 25,389,808
Services and maintenance.................................. 12,781,016 59,758,460 64,103,262
Resale software and equipment............................. 5,561,963 9,114,495 7,307,199
----------- ------------ ------------
Total revenue......................................... 26,771,517 91,290,496 96,800,269
COSTS AND EXPENSES:
Cost of software licenses................................. 748,777 234,325 253,898
Cost of services and maintenance.......................... 9,966,923 46,474,254 53,473,619
Cost of resale software and equipment..................... 4,128,525 7,205,982 5,850,776
Sales and marketing....................................... 6,720,882 23,806,164 25,051,927
Research and development.................................. 3,533,875 15,472,884 11,544,037
General and administrative................................ 4,263,402 12,812,736 15,493,045
Amortization of intangibles............................... 1,430,472 4,452,069 4,818,670
Write-off of in-process research and development.......... 2,700,000 -- --
Loss on lease abandonment................................. -- 1,000,000 288,022
Restructuring costs....................................... -- -- 1,952,256
----------- ------------ ------------
Total costs and expenses.............................. 33,492,856 111,458,414 118,726,250
----------- ------------ ------------
Operating loss.............................................. (6,721,339) (20,167,918) (21,925,981)
Interest income............................................. 177,250 105,588 147,049
Interest expense............................................ (157,627) (199,765) (1,877,297)
Other....................................................... (227,085) 79,802 (299,795)
----------- ------------ ------------
Loss before minority interest and taxes..................... (6,928,801) (20,182,293) (23,956,024)
Minority interest in subsidiary loss (income)............... 75,729 (30,119) --
----------- ------------ ------------
Loss before taxes........................................... (6,853,072) (20,212,412) (23,956,024)
Income tax provision (benefit).............................. (225,101) (578,746) --
----------- ------------ ------------
Net loss.................................................... $(6,627,971) $(19,633,666) $(23,956,024)
=========== ============ ============
Net loss per common share--basic and diluted................ $ (0.59) $ (1.24) $ (1.49)
=========== ============ ============
Weighted average number of common shares
outstanding............................................... 11,228,407 15,885,212 16,095,682
=========== ============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK,
CLASS A CLASS B SERIES A
COMMON STOCK COMMON STOCK THROUGH D ADDITIONAL
---------------------- -------------------- ------------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997........... 8,500,000 $ 85,000 -- $ -- -- $ -- $ --
Net loss........................... -- -- -- -- -- -- --
Issuance of common stock........... 1,365,179 13,652 -- -- -- -- 3,686,348
Distributions to shareholders...... -- -- -- -- -- -- --
Reclassification of retained
earnings to paid-in capital...... -- -- -- -- -- -- 573,572
The Dallas Systems acquisition..... -- -- -- -- -- --
Net proceeds from issuance of
Series A convertible preferred
stock.......................... -- -- -- -- 6,764,043 15,000,000 --
Net proceeds from issuance of
Series B convertible preferred
stock.......................... -- -- -- -- 4,573,519 10,000,000 --
Acquisition of Dallas Systems...... 6,439,684 64,397 -- -- -- -- 15,135,603
Purchase of treasury stock......... -- -- -- -- -- -- --
Foreign currency translation
adjustment....................... -- -- -- -- -- -- --
---------- -------- ------- ------ ---------- ----------- -----------
Balance at December 31, 1997......... 16,304,863 163,049 -- -- 11,337,562 25,000,000 19,395,523
Net loss........................... -- -- -- -- -- -- --
Issuance of common stock........... 461,666 4,616 127,875 1,279 -- -- 1,811,260
Purchase of treasury stock......... -- -- -- -- -- -- --
Net proceeds from issuance of
Series C convertible preferred
stock............................ -- -- -- -- 1,600,000 8,000,000 --
Deferred compensation related to
stock options.................... -- -- -- -- -- -- 811,210
Amortization of deferred
compensation..................... -- -- -- -- -- -- --
Issuance of warrants............... -- -- -- -- -- -- 75,000
Foreign currency translation
adjustment....................... -- -- -- -- -- -- --
---------- -------- ------- ------ ---------- ----------- -----------
Balance at December 31, 1998......... 16,766,529 167,665 127,875 1,279 12,937,562 33,000,000 22,092,993
Net loss........................... -- -- -- -- -- -- --
Purchase of treasury stock......... -- -- -- -- -- -- --
Net proceeds from issuance of
Series D convertible preferred
stock............................ -- -- -- -- 4,750,000 19,000,000 --
Exercise of stock options.......... -- -- 252,147 2,521 -- -- 494,585
Amortization of deferred
compensation..................... -- -- -- -- -- --
Issuance of warrants............... -- -- -- -- -- -- 980,138
Foreign currency translation
adjustment....................... -- -- -- -- -- --
---------- -------- ------- ------ ---------- ----------- -----------
Balance at December 31, 1999....... 16,766,529 $167,665 380,022 $3,800 17,687,562 $52,000,000 $23,567,716
========== ======== ======= ====== ========== =========== ===========
<CAPTION>
RETAINED
TREASURY STOCK EARNINGS OTHER
---------------------- (ACCUMULATED DEFERRED COMPREHENSIVE
SHARES AMOUNT DEFICIT) COMPENSATION LOSS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997........... -- $ -- $ 1,949,752 $ -- $ (1,079) $ 2,033,673
Net loss........................... -- -- (6,627,971) -- -- (6,627,971)
Issuance of common stock........... -- -- -- -- -- 3,700,000
Distributions to shareholders...... -- -- (1,376,180) -- -- (1,376,180)
Reclassification of retained
earnings to paid-in capital...... -- -- (573,572) -- -- --
The Dallas Systems acquisition.....
Net proceeds from issuance of
Series A convertible preferred
stock.......................... -- -- -- -- -- 15,000,000
Net proceeds from issuance of
Series B convertible preferred
stock.......................... -- -- -- -- -- 10,000,000
Acquisition of Dallas Systems...... -- -- -- -- -- 15,200,000
Purchase of treasury stock......... 4,176 (9,262) -- -- -- (9,262)
Foreign currency translation
adjustment....................... -- -- -- -- (155,722) (155,722)
------- ----------- ------------ --------- --------- ------------
Balance at December 31, 1997......... 4,176 (9,262) (6,627,971) -- (156,801) 37,764,538
Net loss........................... -- -- (19,633,666) -- -- (19,633,666)
Issuance of common stock........... -- -- -- -- -- 1,817,155
Purchase of treasury stock......... 902,601 (3,106,177) -- -- -- (3,106,177)
Net proceeds from issuance of
Series C convertible preferred
stock............................ -- -- -- -- -- 8,000,000
Deferred compensation related to
stock options.................... -- -- -- (811,210) -- --
Amortization of deferred
compensation..................... -- -- -- 285,250 -- 285,250
Issuance of warrants............... -- -- -- -- -- 75,000
Foreign currency translation
adjustment....................... -- -- -- -- (378,572) (378,572)
------- ----------- ------------ --------- --------- ------------
Balance at December 31, 1998......... 906,777 (3,115,439) (26,261,637) (525,960) (535,373) 24,823,528
Net loss........................... -- -- (23,956,024) -- -- (23,956,024)
Purchase of treasury stock......... 17,294 (93,473) -- -- -- (93,473)
Net proceeds from issuance of
Series D convertible preferred
stock............................ -- -- -- -- -- 19,000,000
Exercise of stock options.......... -- -- -- -- -- 497,106
Amortization of deferred
compensation..................... -- -- -- 212,400 -- 212,400
Issuance of warrants............... -- -- -- -- -- 980,138
Foreign currency translation
adjustment....................... -- -- -- -- (231,069) (231,069)
------- ----------- ------------ --------- --------- ------------
Balance at December 31, 1999....... 924,071 $(3,208,912) $(50,217,661) $(313,560) $(766,442) $ 21,232,606
======= =========== ============ ========= ========= ============
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1997 1998 1999
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss.................................................... $(6,627,971) $(19,633,666) $(23,956,024)
Adjustments to reconcile net loss to net cash used in
operating activities, net of the effect in 1997 of the
Dallas Systems acquisition:
Depreciation and amortization............................. 2,642,327 7,323,683 8,602,458
Provision for losses on receivables....................... 634,449 2,252,000 6,973,886
Amortization of deferred compensation..................... -- 285,250 212,400
Deferred income taxes..................................... 768,766 (1,118,210) --
Issuance of warrants for services......................... -- -- 980,138
Write-off of in-process research and development.......... 2,700,000 -- --
Minority interest......................................... (85,170) 30,119 --
Changes in operating assets and liabilities:
Accounts receivable..................................... (5,715,607) (7,994,786) (14,226,085)
Other receivables and advances.......................... (239,208) 940,897 (366,992)
Prepaids and other assets............................... (205,228) (2,218,850) 1,701,121
Accounts payable........................................ 3,094,483 (656,413) (509,719)
Accrued payroll and benefits............................ 886,915 1,635,390 106,960
Deferred revenue and accrual for acquired contract
obligations........................................... 2,531,525 2,611,229 5,357,095
Income tax payable...................................... (1,169,491) (58,656) 496,887
Accrued expenses........................................ (637,752) 3,107,526 3,398,317
Other................................................... (249,739) (1,593,288) (91,402)
----------- ------------ ------------
Net cash used in operating activities............... (1,671,701) (15,087,775) (11,320,960)
CASH FLOW FROM INVESTING ACTIVITIES:
Sales of investments........................................ 235,428 -- --
Purchases of property and equipment......................... (2,296,252) (7,259,900) (5,380,184)
Net proceeds from sale of fixed assets...................... -- 625,225 100,898
Purchase of minority interest in subsidiary................. -- (490,000) --
Cash acquired in the Dallas Systems acquisition............. 1,579,591 -- --
----------- ------------ ------------
Net cash used in investing activities............... (481,233) (7,124,675) (5,279,286)
</TABLE>
F-6
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1997 1998 1999
<S> <C> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of preferred stock................................. 25,000,000 8,000,000 19,000,000
Issuance of common stock.................................... 3,700,000 1,892,155 497,106
Payments to acquire common stock of Dallas Systems.......... (15,000,000) -- --
Distributions to shareholders............................... (1,376,180) -- --
Payments on long-term debt.................................. (1,386,468) -- (8,087,317)
Proceeds from long-term debt................................ -- 9,553,740 8,000,000
Proceeds (payments) on revolving line of credit............. (3,926,117) -- 5,436,107
Purchase of treasury stock.................................. (9,262) (3,106,177) (93,473)
------------ ------------ ------------
Net cash provided by financing activities........... 7,001,973 16,339,718 24,752,423
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents........ 4,849,039 (5,872,732) 8,152,177
Cash and cash equivalents at beginning of year.............. 1,803,589 6,652,628 779,896
------------ ------------ ------------
Cash and cash equivalents at end of period.................. $ 6,652,628 $ 779,896 $ 8,932,073
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 194,618 $ 248,489 $ 1,801,264
============ ============ ============
Cash paid for income taxes.................................. $ -- $ 289,486 $ --
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
F-7
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
EXE Technologies, Inc. (the Company or EXE) is a leading provider of supply
chain execution software for e-commerce and traditional sales channels. EXE was
formed on September 15, 1997, by the merger of Neptune Systems, Inc. (Neptune)
and Dallas Systems Corporation (Dallas Systems) into EXE. Both Neptune, which
was incorporated in 1992, and Dallas Systems, which was established in 1980,
were providers of supply chain execution software and services.
The Company operates from its headquarters located in Dallas, Texas, and
through its various subsidiary and sales offices serving North America, Europe,
the Middle East, Asia and Australia. In addition, through July 31, 1998, the
Company had a 51% interest in a joint venture with Fuji SystemHouse, a Japanese
corporation, to operate EXE Technologies (SEA) Pte. Ltd. (formed in 1996 and
formerly known as Triton SystemHouse Pte. Ltd.), a Singapore corporation which
also is engaged in licensing software and providing services for the logistics
industry in Southeast Asia. During August 1998, the Company acquired the
remaining 49% interest in the joint venture for a cash payment of $490,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company's revenue consists of software license revenue, services and
maintenance revenue and revenue from the resale of software and equipment. For
periods prior to December 31, 1997, software license revenue was recognized in
accordance with the American Institute of Certified Public Accountants'
Statement of Position (SOP) 91-1, "Software Revenue Recognition." Under
SOP 91-1, software license revenue was recognized upon execution of a contract
and shipment of the software and after any customer cancellation rights had
expired, provided that no significant vendor obligations remained outstanding,
amounts were due within one year, and collection was considered probable by
management.
Effective January 1, 1998, software license revenue is recognized in
accordance with SOP 97-2, "Software Revenue Recognition." Under SOP 97-2,
software license revenue is recognized upon execution of a contract and delivery
of software, provided that the license fee is fixed and determinable; no
significant production, modification, or customization of the software is
required; vendor-specific objective evidence of fair value exists to allow for
the allocation of the total fee to elements of the arrangement; and collection
is considered probable by management.
Revenue from services is recognized as the services are provided.
Maintenance revenue is recognized on a straight-line basis over the period of
the obligation. Revenue from resale software and equipment is recognized upon
receipt of a purchase order and shipment of the equipment to the customer
provided the following criteria are met for transactions subsequent to
December 31, 1997, which transactions are subject to SOP 97-2: payment terms are
fixed and determinable; no significant production, modification, or
customization is required; and collection is considered probable by management.
Revenue from resale software and equipment is recognized upon receipt of a
purchase order and shipment of the equipment to the customer provided the
following criteria are met for transactions subject to SOP 91-1: customer
cancellation rights have expired, no significant vendor obligations remained
outstanding, amounts are due within one year, and collection was considered
probable by management.
The Company warrants that its products will function substantially in
accordance with the documentation provided to customers for periods ranging from
three to twelve months. As of December 31, 1999, the Company has not incurred
any expenses related to warranty claims.
F-8
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During the year ended December 31, 1997, one customer represented
approximately 11% of total revenue. No single customer represented greater than
10% of total revenue during the years ended December 31, 1998 and 1999.
SOFTWARE DEVELOPMENT
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed," software development costs are expensed as incurred until
technological feasibility has been established, at which time such costs are
capitalized until the product is available for general release to customers. The
establishment of technological feasibility of the Company's products and general
release of such software have substantially coincided. As a result, software
development costs qualifying for capitalization have been insignificant and,
therefore, the Company has expensed all software development costs.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
the Company and its subsidiaries. All significant intercompany transactions and
balances have been eliminated.
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.
FOREIGN CURRENCY TRANSLATION
Financial statements of foreign operations, where the local currency is the
functional currency, are translated using exchange rates in effect at period end
for assets and liabilities and average exchange rates during the period for
results of operations.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. The carrying value of cash
equivalents approximates fair market value.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentration of credit risk, principally consist of temporary cash investments
and accounts receivable, including receivables from license contracts. The
Company places temporary cash investments with financial institutions and limits
its exposure with any one financial institution. At December 31, 1997, one
customer represented approximately 11% of the total receivable balance. At
December 31, 1998 and 1999, no single customer represented greater than 10% of
the total receivable balance. A large portion of the Company's customer base is
composed of FORTUNE 1000 companies or foreign equivalents, which the Company
believes mitigates its credit risk. The Company maintains an allowance for
losses on receivables based upon the expected collectibility of all accounts
receivable. Write-offs of receivables during the three years ended December 31,
1997, 1998 and 1999 were $150,000, $710,000, and $3,972,000, respectively.
F-9
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation. All
property and equipment is depreciated using the straight-line method.
The estimated useful lives of property and equipment are as follows (in
years):
<TABLE>
<S> <C>
Computer equipment.......................................... 3-5
Furniture and equipment..................................... 5-7
Leasehold improvements...................................... 9-15
Other....................................................... 3-7
</TABLE>
LONG-LIVED ASSETS
The Company evaluates the carrying value of its long-lived assets under SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," which requires impairment losses to be recognized for
long-lived assets used in operations when indicators of impairment are present
and when the future estimated undiscounted cash flows generated by those assets
are not sufficient to recover the assets' carrying amount.
DEFERRED REVENUE
Deferred revenue primarily represents amounts collected prior to complete
performance of maintenance services. Deferred revenue also consists of amounts
billed or received in advance of satisfying revenue recognition criteria.
FINANCIAL INSTRUMENTS
The Company's financial instruments, including accounts receivable, accounts
payable and its revolving credit line, approximate fair value due to their
short-term nature. Based on prevailing interest rates at December 31, 1999,
management believes that the fair value of long-term debt approximates its book
value.
INCOME TAXES
The Company accounts for income taxes using the liability method under the
provisions of SFAS No. 109, "Accounting for Income Taxes."
STOCK-BASED COMPENSATION PLANS
The Company accounts for its stock-based compensation plans utilizing the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," because, as discussed in Note 7, the alternative fair
value accounting provided for under SFAS No. 123, "Accounting for Stock-Based
Compensation," requires the use of option valuation models that were not
developed for use in valuing employee stock options. However, SFAS No. 123
requires disclosure of pro forma information regarding net income (loss) and net
income (loss) per share based on fair value accounting for stock-based
compensation plans.
ADVERTISING COSTS
Advertising costs are expensed as incurred and were approximately
$1,369,000, $3,793,000 and $3,071,000 for the years ended December 31, 1997,
1998 and 1999.
F-10
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
The Company computes net income per share in accordance with the provisions
of SFAS No. 128, "Earnings per Share." Basic net income (loss) per common share
is computed using the weighted average number of shares of common stock
outstanding during each period. Diluted net income (loss) per common share is
computed using the weighted average number of shares of common stock outstanding
during each period and common equivalent shares consisting of preferred stock
and stock options (using the treasury stock method), if dilutive. Diluted loss
per share is the same as basic loss per share for all periods presented since
the dilutive effect of 4,471,975 shares of common stock resulting from the
exercise of stock options, 1,085,000 shares of common stock resulting from the
exercise of stock warrants and the conversion of 17,687,562 shares of
Convertible Preferred Stock, Series A through D, were not included in the
computation of diluted earnings per share because they are anti-dilutive for all
periods presented.
COMPREHENSIVE LOSS
For the periods presented, the Company had unrealized foreign currency
translation losses, which are components of its comprehensive loss, of $155,722,
$378,572 and $231,069 for the years ended December 31, 1997, 1998 and 1999,
respectively. Comprehensive loss totaled $6,783,693, $20,012,238 and $24,187,093
for the years ended December 31, 1997, 1998 and 1999, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the American Institute of Certified Public Accountants
issued SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition with
respect to Certain Transactions." SOP 98-9 requires the use of the residual
method when vendor specific objective evidence of fair value does not exist for
one or more delivered elements in an arrangement but there is vendor specific
objective evidence of the fair values of all undelivered elements in a multiple
element arrangement. The Company does not expect SOP 98-9 to materially impact
its future results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
effective for quarters beginning after June 15, 2000. The Company does not
currently utilize derivative financial instruments. Therefore, the Company does
not expect that the adoption of the new statement will have a material impact on
its results of operations or financial position.
F-11
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. FORMATION OF EXE
EXE was formed as a result of simultaneous interdependent transactions (the
Transaction) through which ultimately the stockholders of Neptune and Dallas
Systems exchanged their stock in Neptune and Dallas Systems for stock in EXE and
an investment group made a capital investment in EXE. In the Transaction, the
following steps occurred:
a. The former shareholders of Neptune received 9,819,444 shares of EXE
Class A Common Stock for their shares;
b. The former shareholders of Dallas Systems received $15 million in cash
and 6,439,684 shares (6,750,652 including outstanding options to purchase
common stock) of EXE Class A Common Stock for their shares;
c. The investment group received 6,764,043 shares of Series A Convertible
Preferred Stock (Series A Preferred Stock) for its $15 million investment
in EXE; and
d. The investment group then made an additional investment of $10 million
to purchase 4,573,519 shares of Series B Convertible Preferred Stock
(Series B Preferred Stock).
The Transaction was accounted for as a purchase of Dallas Systems by
Neptune. As such, the financial statements of Neptune are presented as the
historical financial statements of the combined companies, and the assets and
liabilities of Dallas Systems have been recorded at fair value. The equity of
Neptune has been presented as the equity of the combined companies. All share
and per share amounts of Neptune have been retroactively restated to reflect the
par value of the new Class A Common Stock. The consolidated results of
operations and cash flows for EXE exclude the results of operations and cash
flows of Dallas Systems prior to the date of acquisition.
The breakdown of the consideration, including transaction costs, exchanged
in excess of the fair value of the net assets acquired is as follows:
<TABLE>
<S> <C>
Consideration exchanged:
Cash...................................................... $15,000,000
EXE Class A Common Stock.................................. 15,000,000
Transaction costs......................................... 200,000
-----------
$30,200,000
===========
Fair value of tangible assets acquired, net of fair value of
liabilities assumed....................................... $ 2,541,560
-----------
Excess of consideration received over the fair value of net
tangible assets
acquired.................................................. $27,658,440
===========
Excess of consideration received over the fair value of net
tangible assets acquired, applied:
Purchased research and development...................... $ 2,700,000
Intangible assets:
Developed technology.................................. 3,700,000
Assembled work force.................................. 1,350,000
Customer base......................................... 1,800,000
Goodwill.............................................. 18,108,440
-----------
$27,658,440
===========
</TABLE>
F-12
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. FORMATION OF EXE (CONTINUED)
Based on the results of an independent appraisal, the Company determined
that $2.7 million of the Dallas Systems purchase price was to be allocated to
in-process research and development costs at the date of acquisition and such
amount, therefore, was recorded as an expense in the Company's consolidated
statement of operations for the year ended December 31, 1997. This write-off was
recorded because the acquired technology had not yet reached technological
feasibility and had no future alternative use. The Company is using the
in-process research and development to develop new products and additional
functionality.
The intangible assets, excluding assembled work force and goodwill,
resulting from the Transaction are amortized over six years based upon the
associated estimated revenue stream noted in the independent appraisal analysis.
Assembled work force and goodwill are amortized on a straight-line basis over a
three- and six-year period, respectively. The carrying value of intangible
assets will be reviewed if the facts and circumstances suggest that they may be
permanently impaired. If a comparison of the undiscounted cash flow method to
the carrying value of intangible assets indicates that the intangible assets
will not be recoverable, the asset will be reduced to their estimated
recoverable value. The amortization of intangibles related to the Transaction
was $1,430,472, $4,452,069 and $4,818,670, respectively, during the years ended
December 31, 1997, 1998 and 1999.
The following table presents unaudited pro forma information for EXE as if
the Transaction had taken place on January 1, 1997.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
(UNAUDITED)
<S> <C>
Total revenue............................................... $59,874,662
Net loss.................................................... (5,699,809)
Net loss per common share--basic and diluted................ (0.51)
</TABLE>
The $2.7 million write-off of the in-process research and development costs
at the date of acquisition, as well as certain other non-recurring
transaction-related costs of approximately $1,038,000, have been excluded from
the pro forma statement of operations since they represent non-recurring charges
resulting directly from the Transaction.
4. PROPERTY AND EQUIPMENT
Property and equipment, stated at cost, consist of the following:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1998 1999
<S> <C> <C>
Computer equipment.......................................... $ 8,906,041 $ 9,905,530
Furniture and equipment..................................... 1,076,849 4,768,973
Leasehold improvements...................................... 1,488,805 1,977,428
Other....................................................... 383,885 456,702
----------- -----------
11,855,580 17,108,633
Less accumulated depreciation............................... (3,299,170) (7,112,180)
----------- -----------
$ 8,556,410 $ 9,996,453
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1997, 1998 and 1999,
was approximately $730,000, $2,872,000 and $3,784,000, respectively.
F-13
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. DEBT
On December 1, 1997, the Company finalized a $13.5 million secured revolving
line of credit agreement (the Revolver) with a bank. At December 31, 1998,
$4,149,630 was outstanding under the Revolver. Interest rates under the Revolver
were at the bank's prime rate less 1/2% or at the bank's LIBOR rate plus 1 1/2%
to 2% LIBOR margin points depending on the ratio achieved of debt to cash flow
per a predefined matrix in the agreement. The Revolver was secured by
receivables and fixed assets.
On December 1, 1998, the Company finalized a $5.0 million three year term
loan (the Term Loan) with a bank. Interest on the Term Loan was at 12.16% per
annum. In connection with obtaining the Term Loan, the Company issued warrants
to the bank to acquire up to 50,000 shares of common stock (Note 11).
On May 10, 1999, the Company finalized a Loan and Security Agreement (the
Loan Agreement) with a bank. In connection with finalizing the Loan Agreement,
all borrowings under the Revolver and Term Loan were paid off and the Revolver
and Term Loan financing agreements were terminated.
The Loan Agreement provides for a revolving credit line and a $5 million
term loan. Borrowings under the Loan Agreement may not exceed $25 million in the
aggregate. Advances under the revolving credit line are subject to a specified
advance rate as defined in the Loan Agreement and are secured by the Company's
assets. At December 31, 1999, the Company had full availability of this
$25 million facility of which $9,418,251 was outstanding under the revolving
credit line and $5,000,000 was outstanding under the term loan leaving
$10,581,749 available for future borrowings. The Loan Agreement restricts, in
certain circumstances, the declaration and payment of dividends and a merger or
consolidation of the Company without the prior written consent of the bank.
The interest rate on borrowings under the Loan Agreement is adjusted monthly
and is computed as the highest LIBOR rate in effect during each month plus 4.87%
per annum, subject to certain limitations and adjustments as follows: 1) The
interest rate in effect in each month shall not be less than 8% per annum; and
2) the interest charged for each month shall not be less than $20,000. Interest
on borrowings under the Loan Agreement are payable on the last day of each
month.
The Loan Agreement shall continue in effect until January 31, 2001 (the
Maturity Date). On the Maturity Date, all borrowings under the Loan Agreement
are due in full. The $5 million term loan may not be renewed prior to the
Maturity Date.
6. INCOME TAXES
Components of the provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
<S> <C> <C> <C>
Current:
Federal................................................... $(1,019,161) $ (92,042) $ --
State..................................................... (1,406) (4,965) --
Foreign................................................... 26,700 636,472 --
Deferred:
Federal................................................... 683,027 (976,882) --
State..................................................... 85,739 (141,329) --
----------- --------- -----------
Total................................................... $ (225,101) $(578,746) $ --
=========== ========= ===========
</TABLE>
F-14
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes is reconciled with the federal
statutory rate as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
<S> <C> <C> <C>
Benefit computed at federal statutory rate.................. $(2,330,044) $(6,872,220) $(8,145,048)
Non-deductible in-process research and development expense
and goodwill amortization................................. 1,275,360 1,108,977 1,097,486
State income taxes, net of federal benefit.................. 33,324 (93,277) (143,852)
Foreign taxes............................................... -- 376,738 --
Foreign tax credit.......................................... -- (403,293) --
Net operating loss.......................................... 178,181 -- --
S Corporation loss.......................................... 88,093 -- --
Conversion from S Corporation to C Corporation.............. 267,394 -- --
Increase in valuation allowance............................. 87,128 5,223,604 7,082,026
Other, net.................................................. 175,463 80,725 109,388
----------- ----------- -----------
Income tax provision (benefit).......................... $ (225,101) $ (578,746) $ --
=========== =========== ===========
</TABLE>
The significant components of the Company's deferred tax liabilities and
assets are as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------
1998 1999
<S> <C> <C>
Deferred tax liabilities:
Identifiable intangible assets............................ $(1,816,619) $ (1,179,459)
Fixed assets.............................................. (95,025) --
----------- ------------
Total deferred tax liabilities........................ (1,911,644) (1,179,459)
Deferred tax assets:
Bad debt reserves......................................... 781,853 1,694,471
Fixed assets.............................................. -- 259,622
Net operating losses...................................... 4,739,073 9,583,554
Accrued contract obligations.............................. 1,006,337 976,888
Accrued expenses.......................................... 114,607 --
Foreign tax credits....................................... 462,905 696,084
Research and development credits.......................... 167,290 381,012
Other, net................................................ (49,689) (19,414)
----------- ------------
Total deferred tax assets............................. 7,222,376 13,572,217
Valuation allowance......................................... (5,310,732) (12,392,758)
----------- ------------
Total deferred tax assets, net........................ 1,911,644 1,179,459
----------- ------------
Deferred income tax liabilities, net of deferred
income tax assets................................... $ -- $ --
=========== ============
</TABLE>
F-15
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
At December 31, 1999, the Company had a federal net operating loss
carryforward and research and development credits of approximately $21,200,000
and $381,000, respectively, both of which will begin to expire in the year 2013.
The Company also had net operating loss carryforwards of approximately
$4,000,000 in foreign jurisdictions. The Company has established a valuation
allowance to fully reserve its deferred tax assets at December 31, 1998 and 1999
due to the uncertainty of the timing and amount of future taxable income.
7. STOCK OPTIONS
In October 1997, the Company adopted the 1997 Incentive and Nonqualified
Stock Option Plan (the 1997 Plan) which replaced all previous plans of Neptune
and Dallas Systems. Under the 1997 Plan, an aggregate of 8,500,000 shares of
Class A and B Common Stock are authorized for issuance. The 1997 Plan provides
for the grant of incentive stock options (ISOs) to employees of the Company and
nonqualified stock options (NQSOs) to employees or consultants. Exercise prices
for ISOs may not be less than fair market value and exercise prices for NQSOs
may be greater or less than fair market on the date of grant. The options vest
and become exercisable ratably over a four-year period and expire after ten
years unless determined otherwise by the Board of Directors.
In October 1997, the Company adopted the Non-Employee Directors Plan (the
Directors Plan). Under the Directors Plan, an aggregate of 300,000 shares of
Class B Common Stock are authorized for issuance. The Directors Plan provides
for the grant of a specified number of NQSOs to non-employee directors of the
Company as defined in the Directors Plan at exercise prices equal to the market
value of the Company's stock on the date of grant. The options vest over four
years. At December 31, 1999, 150,000 options were outstanding under the
Directors Plan, which have a weighted average exercise price of $5.33 per share.
As of December 31, 1999, 12,500 of these options were exercisable at a weighted
average exercise price of $10.00 per share.
Under the 1997 Plan, in the event of a change of control, the Board shall
have the right, in its sole discretion, to accelerate the vesting of all options
that have not vested as of the date of the change of control and/or establish an
earlier date for the expiration of the exercise of an option. In addition, in
the event of a change of control of the Company, the Board shall have the right,
in its sole discretion, subject to and conditioned upon a sale of the Company:
(a) to arrange for the successor company (or other entity) to assume all of the
rights and obligations of the Company under the 1997 Plan or (b) to terminate
the 1997 Plan and (i) pay to all optionees cash with respect to those options
that are vested as of the date of the sale of the Company in an amount equal to
the difference between the option price and the fair market value of a share of
common stock (determined as of the date the 1997 Plan is terminated) multiplied
by the number of options that are vested as of the date of the sale of the
Company which are held by the optionee as of the date of the sale of the
Company, (ii) arrange for the exchange of all options for options to purchase
common stock in the successor corporation, or (iii) distribute to each optionee
other property in an amount equal to and in the same form as the optionee would
have received from the successor corporation if the optionee had owned the
shares subject to options that are vested as of the date of the sale of the
Company rather than the option at the time of the sale of the Company. The form
of payment or distribution to the optionee pursuant to this section shall be by
the Board in its sole discretion.
F-16
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCK OPTIONS (CONTINUED)
Stock option transactions under the 1997 Plan for the years ended
December 31, 1997, 1998 and 1999, are summarized as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
---------------------
WEIGHTED
SHARES AVERAGE
AVAILABLE FOR NUMBER OF EXERCISE
GRANT SHARES PRICE
<S> <C> <C> <C>
Balance at January 1, 1997
Authorized................................................ 3,300,000 -- $ --
Grants.................................................... (1,239,013) 1,239,013 1.46
Transferred from Dallas Systems........................... (310,967) 310,967 0.66
Forfeitures............................................... 42,150 (42,150) 0.75
Canceled.................................................. 310,967 (310,967) 0.66
---------- ---------- -----
Balance at December 31, 1997................................ 2,103,137 1,196,863 1.48
Authorized................................................ 5,200,000 -- --
Grants.................................................... (4,255,008) 4,255,008 5.14
Exercised................................................. -- (127,550) 1.98
Forfeitures............................................... 295,601 (295,601) 2.79
---------- ---------- -----
Balance at December 31, 1998................................ 3,343,730 5,028,720 4.49
Grants.................................................... (1,914,875) 1,914,875 4.13
Exercised................................................. -- (149,491) 1.95
Forfeitures............................................... 2,472,129 (2,472,129) 4.23
---------- ----------
Balance at December 31, 1999................................ 3,900,984 4,321,975 $4.56
========== ==========
</TABLE>
The weighted average grant-date fair value of options granted under the 1997
Plan during the year ended December 31, 1997, 1998 and 1999 using a minimum
value option pricing model was $0.22, $0.94 and $0.71 per option. At
December 31, 1999, 1,542,070 shares are exercisable at the weighted average
exercise price of $3.22. The remaining estimated contractual life of the
4,321,975 options outstanding at December 31, 1999, is 8.8 years. Options
outstanding at December 31, 1999 have exercise prices ranging from $0.75 to
$13.00.
As of December 31, 1999, the Company has reserved 505,000 shares of Class A
Common Stock and 7,995,000 shares of the Class B Common Stock for potential
distribution under the 1997 Plan and 300,000 shares of the Class B Common Stock
for potential distribution under the Directors Plan. Additionally, during 1998,
the Company granted 102,656 options to purchase Class B Common Stock at $2.00
per share, outside the plans to a former employee. The employee exercised these
options in 1999.
SFAS No. 123, "Accounting for Stock Based Compensation" (SFAS No. 123),
requires the disclosure of pro forma net income and earnings per share
information computed as if the Company had accounted for its employee stock
options granted under the fair value method set forth in SFAS No. 123. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with no volatility and the following weighted-average
assumptions for 1997, 1998 and 1999: a risk-free interest rate of 6.15% in 1997,
5.33% in 1998 and 6.00% in 1999, no dividends, and an expected life of three
years. Pro forma net loss and loss per share for 1997, 1998 and 1999 would have
been $6,826,971 ($0.42 per share), $20,147,026 ($1.27 per share) and $24,485,781
($1.52 per share), respectively, determined as if the Company had accounted for
its stock options granted in 1997, 1998 and 1999 under the fair value method set
forth in SFAS No. 123.
F-17
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCK OPTIONS (CONTINUED)
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options. In addition, because
options vest over several years and additional option grants are expected, the
effects of these hypothetical calculations are not likely to be representative
of similar future calculations.
The Company recorded deferred compensation expense of $811,210 for the
difference between the grant price and the deemed fair market value of certain
of the Company's common stock options granted during 1998. The Company granted
options to purchase 2,517,758 shares of Class B Common Stock with an exercise
price ranging from $2.00 to $5.00 per share during 1998. Such exercise price was
less than the deemed fair market value of the Company's Class B common stock on
the date of grant. The fair market value of the Company's Class B Common Stock
as determined by the Board of Directors on the individual grant dates for these
option grants ranged from $2.20 to $7.50. The deferred compensation is being
amortized ratably over the vesting period of the individual options, generally
three to four years. Compensation expense recognized in 1998 and 1999 totaled
$285,250 and $212,400, respectively.
8. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1997 and 1998, the Company advanced
$1,112,172 and 190,328, repectively, to a company which was owned by the former
principal shareholders of Neptune. In May 1998, the former principal
shareholders of Neptune sold their entire interest in the company to a
shareholder of EXE, at which time EXE repurchased 487,037 EXE common shares for
an aggregate price of $2,172,185 from this EXE shareholder. In connection with
that transaction, the company's outstanding obligations to EXE were fully paid.
The Company also has various advances to officers and shareholders of the
Company. The total balance of these receivables at December 31, 1998 and 1999
was $59,214. Additionally, the Company has long-term notes receivable from
employees and shareholders which bear interest ranging from 7.8% to 8.5% and
have a remaining balance of $238,475 and $246,475 at December 31, 1998 and 1999,
respectively.
9. LEASE COMMITMENTS
The Company leases certain facilities and property and equipment for use in
operations. In May 1998, the Company entered into leases with terms of
ten-and-one-half-years for office space for its North American operations. The
leases provided for free rent during the first six months and contain an
escalation clause in year five. In March 1999, the Company amended the lease
agreements such that the leases were extended to fifteen year terms. The Company
intends to recognize the total minimum lease payments as expense on the
straight-line basis over the lease term. The leases have two five-year renewal
options which are at a rate not less than 95% of the then-prevailing market rate
for comparable premises.
The Company leased office space from a shareholder under a lease which was
to expire in August 2002, with monthly rental payments of $86,569. During 1998,
in connection with the move to
F-18
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. LEASE COMMITMENTS (CONTINUED)
new office space for the North American operations, the Company decided to
vacate the office space leased from the shareholder. The Company recorded a
$1,000,000 loss on abandonment related to the office space in 1998 for the
estimated loss to be incurred as a result of vacating the office space. In 1999,
the Company finalized an agreement with the shareholder and recorded an
additional $288,000 loss related to this abandonment.
The minimum rental commitments under operating leases and the minimum
rentals to be received under subleases and other leases with terms exceeding one
year, are as follows:
<TABLE>
<CAPTION>
LEASES SUBLEASES
<S> <C> <C>
2000........................................................ $ 7,042,372 $1,015,016
2001........................................................ 5,977,682 871,383
2002........................................................ 5,037,941 --
2003........................................................ 4,783,708 --
2004........................................................ 4,620,465 --
Thereafter.................................................. 38,894,804 --
----------- ----------
$66,356,972 $1,886,399
=========== ==========
</TABLE>
Total rent expense was approximately $1,264,000, $3,395,000 and $4,736,000
(net of sublease income of $0, $0 and $146,000) for the years ended
December 31, 1997, 1998 and 1999, respectively. Included in rent expense is
$297,514, $1,038,828 and $259,707 paid to a shareholder for facility rental in
1997, 1998 and 1999, respectively.
10. EMPLOYEE BENEFIT PLAN
As part of the Transaction, the Company assumed the obligations and adopted
the defined contribution plan of Dallas Systems. The plan covers all employees
located in the United States who have completed one month of service and have
attained the age of 21. The Company's contribution to the plan matches the first
5% of the employee's contributions of eligible earnings. Additionally,
discretionary contributions may also be made. The Company recognized expenses of
approximately $226,000, $1,147,000 and $931,000 for the defined contribution
plan during the years ended December 31, 1997, 1998 and 1999, respectively.
The Company also sponsors a defined contribution plan for its employees in
the United Kingdom. The plan covers all employees located in the United Kingdom
who have completed six months of service. The Company's contribution to the plan
matches the first 5% of the employee's contributions of eligible earnings. The
Company recognized expenses of approximately $193,000, $234,000 and $343,000 for
the defined contribution plan during the years ended December 31, 1997, 1998 and
1999, respectively.
11. STOCKHOLDERS' EQUITY
PREFERRED STOCK
In connection with the Transaction, the Company sold preferred stock to an
investment group in two separate transactions. In the first transaction, the
Company received $15 million in exchange for 6,764,043 shares of Series A
Preferred Stock, par value $0.01 per share. In the second transaction, the
Company received $10 million in exchange for 4,573,519 shares of Series B
Preferred Stock, par value $0.01 per share.
F-19
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCKHOLDERS' EQUITY (CONTINUED)
On July 10, 1998, the Company sold 1,600,000 shares of Series C Preferred
Stock, par value $0.01 per share, to a group of private investors for $5 per
share.
On September 29, 1999, the Company sold 4,750,000 shares of Series D
Preferred Stock, par value $0.01 per share, to a group of private investors for
$4 per share.
SERIES A CONVERTIBLE PREFERRED STOCK
The Company has designated 7,000,000 shares of its Preferred Stock as
"Series A Preferred Stock." These shares rank senior to all classes of common
stock and rank pari passu with Series B, C and D Preferred Stock. Each share of
the Series A Preferred Stock is convertible at the option of the holder, and
mandatorily upon a sale, merger or initial public offering with at least
$30 million in gross proceeds (with each event as further defined in the
Company's certificate of incorporation), into one share of EXE Class A common
stock, subject to certain adjustments. Each share of Series A Preferred Stock
has voting rights equal to the Class A common stock, and any dividends paid to
common stockholders shall also be paid to these stockholders in the same amount
per share and at the same time. These shares have a liquidation preference at an
amount equal to $2.22 per share, subject to certain adjustments, plus all
outstanding dividends.
Upon occurrence of a "Trigger Event" (defined as a sale, merger, or initial
public offering, as each is further defined in the Company's certificate of
incorporation), these stockholders are entitled to a participation adjustment in
shares of common stock (or, at the Company's option, in cash) based upon the
"Trigger Price", or market price of the shares in the Trigger Event, as Trigger
Price is defined in the Company's certificate of incorporation. If the Trigger
Price is equal to or greater than $11.00 per share, no participation adjustment
or payment is required. If the Trigger Price is equal to or less than $9.00 per
share, the participation adjustment or payment will be the equivalent in common
stock of $15 million or, at the Company's option, $15 million in cash. If the
Trigger Price is between $9.00 per share and $11.00 per share, the participation
adjustment or payment will be based on a pro rata formula. The preferred
stockholders retain their equity investment regardless of any participation
adjustment or payment.
The Company has reserved 6,764,043 shares of Class A common stock for
potential distribution upon the conversion of the Series A Preferred Stock.
SERIES B CONVERTIBLE PREFERRED STOCK
The Company has designated 5 million shares of its Preferred Stock as
"Series B Preferred Stock." These shares rank senior to all classes of common
stock and rank pari passu with Series A, C and D Preferred Stock. Each share of
the Series B Preferred Stock is convertible at the option of the holder, and
mandatorily upon a sale, merger or initial public offering with at least
$30 million in gross proceeds (with each event as further defined in the
Company's certificate of incorporation), into one share of EXE Class A common
stock, subject to certain adjustments. Each share of Series B Preferred Stock
has voting rights equal to the Class A common stock, and any dividends paid to
common stockholders shall also be paid to these stockholders in the same amount
per share and at the same time. These shares have a liquidation preference at an
amount equal to $2.19 per share, subject to certain adjustments, plus all
outstanding dividends.
The Company has reserved 4,573,519 shares of Class A Common Stock for
potential distribution upon the conversion of the Series B Preferred Stock.
F-20
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCKHOLDERS' EQUITY (CONTINUED)
SERIES C CONVERTIBLE PREFERRED STOCK
The Company has designated 2 million shares of its preferred stock as
"Series C Preferred Stock." These shares rank senior to all classes of common
stock and rank pari passu with Series A, B and D Preferred Stock. Each share of
the Series C Preferred Stock is convertible at the option of the holder, and
mandatorily upon a sale, merger or initial public offering with at least
$30 million in gross proceeds (with each event as further defined in the
Company's certificate of incorporation), into one share of EXE Class A Common
Stock, subject to certain adjustments. Each share of Series C Preferred Stock
has voting rights equal to the Class A Common Stock, and any dividends paid to
common stockholders shall also be paid to these stockholders in the same amount
per share and at the same time. These shares have a liquidation preference at an
amount equal to $5 per share, subject to certain adjustments, plus all
outstanding dividends.
In the event the Company pays a participation adjustment or payment to the
holders of Series A Preferred Stock, in accordance with the Company's
Certificate of Incorporation, the Company will repay to the purchasers of the
Series C Preferred Stock a purchase price adjustment in cash of up to
$3 million. The total amount of the purchase price adjustment owed to the
purchasers of the Series C Preferred Stock will be equal to 20% of the cash
value of the participation adjustment or payment actually received by the
holders of the Series A Preferred Stock.
The Company has reserved 1.6 million shares of Class A Common Stock for
potential distribution upon the conversion of the Series C Preferred Stock.
SERIES D CONVERTIBLE PREFERRED STOCK
On September 21, 1999, the Company designated 7 million shares of its
preferred stock as "Series D Preferred Stock" and, on September 29, 1999, issued
4,750,000 shares at a price of $4 per share. These shares rank senior to all
classes of common stock and rank pari passu with Series A, B, and C Preferred
Stock. Each share of the Series D Preferred Stock is convertible at the option
of the holder, and mandatorily upon a sale, merger or initial public offering
with at least $30 million in gross proceeds (with each event as further defined
in the Company's certificate of incorporation), into one share of EXE Class A
Common Stock, subject to certain adjustments. Each share of Series D Preferred
Stock has voting rights equal to the Class A Common Stock, and any dividends
paid to common stockholders shall also be paid to these stockholders in the same
amount per share and at the same time. These shares have a liquidation
preference at an amount equal to $4 per share, subject to certain adjustments,
plus all outstanding dividends.
Upon occurrence of a "Trigger Event" (defined as a sale, merger, or initial
public offering, as each is further defined in the Company's certificate of
incorporation), these stockholders are entitled to a participation adjustment in
shares of common stock (or, at the Company's option, in cash) based upon the
"Trigger Price", or market price of the shares in the Trigger Event, as Trigger
Price is defined in the Company's certificate of incorporation. If the Trigger
Price is equal to or greater than $11.00 per share, no participation adjustment
or payment is required. If the Trigger Price is equal to or less than $9.00 per
share, the participation adjustment or payment will be the equivalent in common
stock of $11.4 million or, at the Company's option, $11.4 million in cash. If
the Trigger Price is between $9.00 per share and $11.00 per share, the
participation adjustment or payment will be based on a pro rata formula. The
preferred stockholders retain their equity investment regardless of any
participation adjustment or payment.
F-21
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCKHOLDERS' EQUITY (CONTINUED)
The Company has reserved 4.75 million shares of Class A Common Stock for
potential distribution upon the conversion of the Series D Preferred Stock.
CLASS B COMMON STOCK
The Company has authorized 12,000,000 shares of non-voting Class B Common
Stock. Each share outstanding and each outstanding stock option to purchase
Class B Common Stock will convert to Class A Common Stock or an option to
purchase Class A Common Stock, respectively, upon an initial public offering of
the Company's stock.
WARRANTS
In December 1998, and in connection with obtaining the Term Loan (Note 5),
the Company issued warrants to acquired up to 50,000 shares of the Company's
Class A common stock. The warrants have an exercise price of $7.50 share, are
exercisable upon issuance and expire the later of December 31, 2001, or two
years after the completion of an initial public offering of the Company's common
stock but in no event later than December 31, 2002. The warrants were valued at
$75,000, which was recorded as additional interest expense over the term of the
Term Loan.
In March 1999, the Company entered into a two year sales and marketing
agreement with an independent third party. The Company and the third party each
have a non-exclusive right to market and resell the other party's products. As
part of the agreement, the Company issued warrants to purchase the Company's
Class B common stock with an exercise price of $4 per share, of which, 330,000
of the warrants were immediately vested, exercisable and nonforfeitable. The
remaining 330,000 warrants vest at a rate of 110,000 warrants for each
$2,000,000 of net license revenue the Company recognizes on sales of the
Company's products sold by the third party. The fair value of the 330,000
warrants, which were immediately vested, of $640,000 is being amortized to
operating expense over the term of the agreement. The 330,000 warrants which
vest over time are marked to fair value at the end of each period and the
remeasured value is amortized to operating expense on a straight line basis over
the term of the agreement. The Company recorded expense of $481,000 for the
warrants during 1999. The fair value of the warrants was calculated using a
Black-Scholes option pricing model with the following assumptions: risk-free
interest rate of 4.60%; dividend yield of zero; volatility of 85%; and a warrant
life of five years.
In October 1999, the Company entered into a consulting agreement with an
independent third party. The Company issued 375,000 warrants to purchase the
Company's Class B common stock to the third party for consulting services
rendered. The warrants were immediately vested, exercisable and non-forfeitable
and have an exercise price of $4 per share. The fair value of the warrants of
approximately $499,000 was recorded as expense in 1999. The fair value of the
warrants was calculated using a Black-Scholes option pricing model with the
following assumptions: risk-free interest rate of 5.11%; dividend yield of zero;
volatility of 85%; and a warrant life of three years.
12. CONTINGENCIES
The Company is involved in various legal actions and claims which arise in
the normal course of business. In the opinion of management, the final
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.
F-22
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. RESTRUCTURING
In August 1999, the Company implemented a restructuring plan to reduce costs
and improve operating efficiency. The Company recorded a pretax charge of
$1,952,256 for its restructuring plan. The Company recorded liabilities
associated with the restructuring in the amounts of approximately $709,000 for
severance and other employee related costs for the termination of 97 services,
sales, development and administrative employees, $803,000 for the abandonment of
certain leased office space less estimated sublease rentals at the Company's
North American and Australian facilities, $179,000 for the abandonment of leased
equipment and $261,000 for the disposal of other fixed assets. The Company
recorded $1,321,000 of cash charges against the original restructuring reserve
during 1999.
14. SHARES RESERVED FOR FUTURE ISSUANCE
The Company has reserved common shares for issuance as of December 31, 1999
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON COMMON
SHARES SHARES
<S> <C> <C>
Conversion of Series A through D preferred stock............ 17,687,562 --
Exercise of stock options................................... 505,000 8,017,959
Exercise of warrants........................................ 50,000 1,035,000
---------- ---------
18,242,562 9,052,959
========== =========
</TABLE>
F-23
<PAGE>
EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SEGMENT INFORMATION
The Company is engaged in the design, development, marketing and support of
supply chain execution software for e-commerce and traditional sales channels.
All financial information is reviewed on a consolidated basis with additional
information by geographic region used to make operating decisions and assess the
results of the Company. The Company's geographic information as of and for the
years ended December 31, 1997, 1998 and 1999 is as follows:
<TABLE>
<CAPTION>
EUROPE
UNITED AND THE ASIA
STATES MIDDLE EAST PACIFIC ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C>
December 31, 1997
Revenue............................. $ 18,432,550 $ 3,718,086 $ 4,620,881 $ -- $ 26,771,517
Amortization of intangibles......... 1,430,472 -- -- -- 1,430,472
Write-off of in-process research and
development....................... 2,700,000 -- -- 2,700,000
Operating income (loss)............. (6,758,537) 46,173 (8,975) -- (6,721,339)
Property and equipment, net......... 3,290,351 493,990 528,853 -- 4,313,194
Total assets........................ 49,629,126 4,542,682 3,706,860 (1,471,944) 56,406,724
December 31, 1998
Revenue............................. 66,168,055 15,843,179 9,279,262 -- 91,290,496
Amortization of intangibles......... 4,452,069 -- -- -- 4,452,069
Loss on lease abandonment........... 1,000,000 -- -- -- 1,000,000
Operating income (loss)............. (16,872,813) (557,885) (2,737,220) (20,167,918)
Property and equipment, net......... 6,357,983 1,000,437 1,197,990 -- 8,556,410
Total assets........................ 54,128,526 4,840,421 1,103,474 (3,009,531) 57,062,890
December 31, 1999
Revenue............................. 61,793,501 19,187,242 15,819,526 -- 96,800,269
Amortization of intangibles......... 4,818,670 -- -- -- 4,818,670
Loss on lease abandonment........... 288,022 -- -- -- 288,022
Restructuring costs................. 1,795,713 -- 156,543 -- 1,952,256
Operating income (loss)............. (18,837,782) (328,696) (2,759,503) -- (21,925,981)
Property and equipment, net......... 7,841,274 987,103 1,168,076 -- 9,996,453
Total assets........................ 59,523,158 8,855,736 2,535,546 (3,244,142) 67,670,298
</TABLE>
F-24
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Dallas Systems Corporation and Subsidiary
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows, of Dallas Systems Corporation and
Subsidiary for the eight and one-half month period ended September 15, 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 audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of Dallas Systems Corporation
and Subsidiary's operations and cash flows for the eight and one-half month
period ended September 15, 1997, in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG LLP
Dallas, Texas
July 10, 1998
F-25
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EIGHT AND
ONE-HALF
MONTH
PERIOD ENDED
SEPTEMBER 15,
1997
<S> <C>
REVENUE:
Software license.......................................... $ 3,037,993
Services and maintenance.................................. 22,116,983
Resale software and equipment............................. 7,948,169
-----------
Total revenues........................................ 33,103,145
COSTS AND EXPENSES:
Cost of licenses, services and maintenance................ 17,039,193
Cost of resale software and equipment..................... 5,668,090
Sales and marketing....................................... 2,972,020
Research and development.................................. 3,908,150
General and administrative................................ 3,436,597
-----------
Total costs and expenses.............................. 33,024,050
-----------
Operating income............................................ 79,095
Interest expense.......................................... (238,695)
Interest income........................................... 27,496
Other..................................................... 19,775
-----------
Loss before income taxes.................................... (112,329)
Benefit for income taxes.................................... 514,417
-----------
Net loss.................................................... $ (626,746)
===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-26
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK, COMMON STOCK,
CLASS A CLASS B ADDITIONAL TREASURY STOCK
------------------- ------------------- PAID-IN -------------------
SHARES AMOUNT SHARES AMOUNT CAPITAL SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997................ 200,000 $100 23,193 $12 $ 485,781 1,492 $(49,036)
Net loss................................ -- -- -- -- -- -- --
Proceeds from sale of Class B Common
Stock................................. -- -- 3,147 1 76,307 -- --
Purchase of treasury stock.............. -- -- -- -- -- 410 (38,110)
Stock option compensation expense....... -- -- -- -- 139,000 -- --
Contribution of capital................. -- -- -- -- 631,912 -- --
Unrealized foreign currency translation
loss.................................. -- -- -- -- -- -- --
Receivable from related party........... -- -- -- -- -- -- --
------- ---- ------ --- ---------- ----- --------
Balance at September 15, 1997............. 200,000 $100 26,340 $13 $1,333,000 1,902 $(87,146)
======= ==== ====== === ========== ===== ========
<CAPTION>
FOREIGN RECEIVABLE
CURRENCY FROM
RETAINED TRANSLATION RELATED
EARNINGS ADJUSTMENT PARTY TOTAL
<S> <C> <C> <C> <C>
Balance at January 1, 1997................ $6,029,429 $ 69,772 -- $6,536,058
Net loss................................ (626,746) -- -- (626,746)
Proceeds from sale of Class B Common
Stock................................. -- -- -- 76,308
Purchase of treasury stock.............. -- -- -- (38,110)
Stock option compensation expense....... -- -- -- 139,000
Contribution of capital................. -- -- -- 631,912
Unrealized foreign currency translation
loss.................................. -- (68,419) -- (68,419)
Receivable from related party........... -- -- (631,912) (631,912)
---------- -------- --------- ----------
Balance at September 15, 1997............. $5,402,683 $ 1,353 $(631,912) $6,018,091
========== ======== ========= ==========
</TABLE>
SEE ACCOMPANYING NOTES.
F-27
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
EIGHT AND
ONE-HALF MONTH
PERIOD ENDED
SEPTEMBER 15,
1997
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) income........................................... $ (626,746)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 834,450
Provision for losses on receivables....................... 630,604
Gain on sale of equipment................................. (145,887)
Stock option compensation expense......................... 139,000
Deferred income taxes..................................... (784,476)
Changes in operating assets and liabilities:
Accounts receivable..................................... (4,752,633)
Prepaids and other assets............................... (293,250)
Accounts payable........................................ 1,960,349
Accrued profit sharing and bonus........................ (252,465)
Deferred revenue........................................ 682,241
Income tax payable...................................... 1,047,313
Accrued expenses........................................ 212,784
Other................................................... (54,032)
-----------
Net cash used in operating activities................. (1,402,748)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment......................... (1,054,327)
Proceeds from asset deposits................................ 523,505
Increase in surrender value of life insurance............... --
-----------
Net cash used in investing activities................. (530,822)
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit...................... 1,581,000
Borrowings on long-term debt................................ 324,785
Purchase of treasury stock.................................. (38,110)
Proceeds from stock sale.................................... 76,308
Refund of security deposits................................. (5,426)
-----------
Net cash provided by financing activities............. 1,938,557
-----------
Net increase in cash and cash equivalents................... 4,987
Cash and cash equivalents at beginning of period............ 1,574,604
-----------
Cash and cash equivalents at end of period.................. $ 1,579,591
===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 221,527
===========
Cash paid for income taxes.................................. $ 215,000
===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-28
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Dallas Systems Corporation and Subsidiary (the Company) is a leader in
providing integrated software products and consulting services addressing all
phases of the logistics process from manufacturing to consumer. The Company has
been providing software products and services to the logistics market since its
incorporation in 1980 and presently operates from its headquarters located in
Dallas, Texas, a sales office serving Asia Pacific from Melbourne, Australia,
and through its European Subsidiary, Dallas Systems Plc, located in Bracknell,
U.K.
The consolidated financial statements of the Company include the accounts of
the Company and its subsidiary. All significant intercompany transactions and
balances have been eliminated.
On July 31, 1997, the Company entered into a definitive agreement with
Neptune Systems, Inc. (Neptune) and an investment group to form EXE
Technologies, Inc. (EXE). EXE was formed as a result of a simultaneous
transaction (the Merger Transaction) in which the stockholders of Neptune and
the Company effectively exchanged their stock in the predecessor companies for
stock in EXE. The merger, which was completed September 15, 1997, was accounted
for pursuant to the purchase method of accounting as a reverse acquisition with
Neptune acquiring the Company. The consolidated financial statements of the
Company as of and for the eight and one-half month period ended September 15,
1997 do not reflect the Merger Transaction since the Company was the acquired
entity.
2. SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. The carrying value of cash
equivalents approximates fair market value.
REVENUE RECOGNITION
The Company's revenue consists of software license revenue, services and
maintenance revenue and revenue from the resale of software and equipment. The
Company recognizes revenue from software licenses upon the delivery and
acceptance of the software product to a customer, the receipt of a signed
license agreement, and after any customer cancellation right has expired,
provided no significant vendor obligations remain outstanding and collection is
probable. Revenue from services is recognized as the services are provided.
Maintenance revenue is recognized on a straight-line basis over the period of
the obligation. Revenue from resale software and equipment is recognized upon
execution of a contract and shipment of the equipment to the customer provided
customer cancellation rights have expired, no significant vendor obligations
remain outstanding and collection is considered probable by management.
The Company generally warrants that its products will function substantially
in accordance with the documentation provided to customers for periods ranging
from six to twelve months. As of September 15, 1997, the Company had not
incurred any expenses related to warranty claims.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentration
of credit risk principally consist of temporary cash investments and accounts
receivable, including receivables from license contracts. The Company places
temporary cash investments with financial institutions and limits
F-29
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
its exposure with any one financial institution. At September 15, 1997, one
customer represented approximately 12% of the total receivable balance. A large
portion of the Company's customer base is composed of Fortune 1000 companies or
foreign equivalents, which the Company believes mitigates its credit risk.
PROPERTY AND EQUIPMENT
Provisions are made for depreciation of property and equipment over the
estimated useful lives of the assets using an accelerated method. The estimated
useful lives of the assets range from three to seven years. Depreciation expense
for the eight and one-half month period ended September 15, 1997 was $780,769.
SOFTWARE DEVELOPMENT COSTS
In accordance with SFAS No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed," software development costs
are expensed as incurred until technological feasibility has been established,
at which time such costs are capitalized until the product is available for
general release to customers. To date, the establishment of technological
feasibility of the Company's products and general release of such software have
substantially coincided. As a result, software development costs qualifying for
capitalization have been insignificant and, therefore, the Company has not
capitalized any software development costs.
STOCK-BASED COMPENSATION PLANS
The Company accounts for its stock-based compensation plan utilizing the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," because, as discussed in Note 9, the alternative fair
value accounting provided for under SFAS No. 123, "Accounting for Stock-Based
Compensation," requires use of option valuation models that were not developed
for use in valuing employee stock options. However, SFAS No. 123 requires
disclosure of pro forma information regarding net income based on fair value
accounting for stock-based compensation plans.
FOREIGN CURRENCY TRANSLATION
Financial statements of foreign operations, where the local currency is the
functional currency, are translated using exchange rates in effect at period end
for assets and liabilities and average exchange rates during the period for
results of operations.
The Company's European subsidiary had total net revenue and total net (loss)
of approximately $4,427,000 and $(552,000) for the eight and one-half month
period ended September 15, 1997, respectively.
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.
F-30
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. PROPERTY AND EQUIPMENT
During the eight and one-half month period ended September 15, 1997, the
Company sold a townhouse for $478,517 and recognized a gain of $138,561, which
has been included in other income on the statement of operations.
4. DEBT OBLIGATIONS
The Company's revolving line of credit (the Revolver) is secured by accounts
receivable and equipment. Interest, which is paid monthly, is charged at the
bank's prime rate plus 1/2%. The Revolver agreement expires March 21, 2000.
Under the agreement, the Company receives funds as needed for operations and is
limited to a defined advance rate on the underlying collateral up to a maximum
of $2,500,000. The Revolver requires compliance with certain financial covenants
for minimum current ratio, net worth, and debt and interest coverage ratios
which are defined by the agreement.
The bank's prime rate at September 15, 1997, was 8.25%.
5. INCOME TAXES
The Company accounts for income taxes using the liability method under the
provisions of SFAS No. 109, "Accounting for Income Taxes."
Components of the provision (benefit) for income taxes were as follows:
<TABLE>
<CAPTION>
EIGHT AND
ONE-HALF
MONTH PERIOD
ENDED
SEPTEMBER 15,
1997
<S> <C>
Current provision:
Federal................................................... $1,101,826
State..................................................... 9,846
Deferred tax benefit:
Federal................................................... (677,085)
State..................................................... (93,837)
Foreign tax expense......................................... 173,667
----------
Total income tax provision............................ $ 514,417
==========
</TABLE>
The provision (benefit) for income taxes is reconciled with the federal
statutory rate as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 15,
1997
<S> <C>
Provision computed at federal statutory rate................ $ (49,754)
Research and development tax credits........................ (56,000)
State income taxes, net of federal tax effect............... (34,561)
Disposition of building..................................... 631,912
Capitalized merger costs.................................... 54,701
Other....................................................... (31,881)
----------
$ 514,417
==========
</TABLE>
F-31
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LEASE COMMITMENTS
The Company leases certain facilities and property and equipment for use in
operations. The minimum rental commitments under operating leases with terms
exceeding one year are as follows:
<TABLE>
<S> <C>
Remainder of 1997........................................... $ 421,450
1998........................................................ 1,598,824
1999........................................................ 1,488,236
2000........................................................ 1,434,040
2001........................................................ 1,284,347
2002........................................................ 816,825
Thereafter.................................................. 307,838
----------
$7,351,560
==========
</TABLE>
Total rental expense for the the eight and one-half month period ended
September 15, 1997 was approximately $483,000.
7. RELATED PARTY TRANSACTION
In August 1997, the Company formed a wholly owned subsidiary, LAB Holdings,
Inc. (LAB), for the purpose of disposing of the Company's ownership of a
building and certain other property and equipment (the LAB Assets) and related
liabilities. An agreement was entered between the Company and LAB in advance of
the Merger Transaction whereby the LAB Assets were transferred in a tax free
exchange to LAB along with the associated mortgage payable. The net book value
of the LAB Assets and the associated mortgage payable on the date of transfer
was $2.4 million. Subsequent to the transfer to LAB, the stock of LAB was
distributed to the principal stockholder of the Company, which resulted in the
recognition of a $1.8 million gain for tax purposes and an associated $632,000
tax liability to the Company. No gain or loss was recognized on the transaction
for financial reporting purposes. This tax liability was assumed by the
principal stockholder in connection with the Merger Transaction. As such, the
Company has recognized a $632,000 receivable from the principal stockholder for
the tax liability, and an associated capital contribution.
The Company subsequently signed a lease with LAB to rent the LAB Assets for
a period of five years at a rate of approximately $85,000 per month. The total
rent expense paid to the related party for the period from the date of the
disposition of the building to September 15, 1997, was approximately $85,000.
Additionally, the Company has long-term notes receivable from employees and
stockholders which bear interest ranging from 7.5% to 8.5% and have a remaining
balance of approximately $50,000.
8. EMPLOYEE STOCK PURCHASE PLAN
In connection with its Class B non-voting stock, the Company has initiated
the Employee Stock Purchase Plan (the Plan) in the United States. Under terms of
the Plan, employees with more than two years of service may designate from 15%
to 50% (depending upon length of service) of any bonus toward purchase of this
stock. The price of the stock is in inverse proportion to years of service and
varies as a percent of market valuation, as determined as of each December 31.
Employees purchased 3,147 shares during the eight and one-half month period
ended September 15, 1997. The Company is required to buy back shares upon
termination, death, or request of employees at the fair market value,
F-32
<PAGE>
DALLAS SYSTEMS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE STOCK PURCHASE PLAN (CONTINUED)
or cost, depending on the length of time the shares were owned. During the eight
and one-half month period ended September 15, 1997, the Company purchased 410
shares at a cost of $38,110.
9. STOCK OPTIONS
In July 1997, the Company adopted a non-qualified stock option plan (the
Plan) to permit certain key employees to purchase Class B common stock of the
Company. Under the Plan, an aggregate of 5,286 shares of Class B common stock
are authorized for issuance, all of which were granted during 1997 at an
exercise price of $38.97. The options vested immediately upon grant. In
connection with the grant, $139,000 of compensation expense was recognized in
the consolidated financial statements. No exercises, cancellations, or
expirations occurred during the eight and one-half month period ended
September 15, 1997. The Company has reserved 5,286 shares of the Class B common
stock for potential distribution under the Plan.
The weighted average fair value of options granted during 1997 using a
minimum value option pricing model was $32.87 per option; resulting in a pro
forma net expense to the Company of approximately $115,000 if the Company had
accounted for its stock options granted in 1997 under the fair value method set
forth in SFAS No. 123.
At September 15, 1997, options to purchase 5,286 shares were exercisable at
the weighted average price of $38.97 and the remaining estimated contractual
life is 9.8 years.
10. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution plan. The plan covers all employees
located in the United States who have completed six months of service, worked a
minimum of 1,000 hours, and attained the age of twenty-one. The Company made
contributions to this plan at a rate of 2% of eligible earnings until
January 1, 1997, at which time contributions to the plan were made at a rate of
5% of eligible earnings. Additionally, discretionary contributions may also be
made. The Company has expensed for the eight and one-half month period ended
September 15, 1997, approximately $369,000 for the defined contribution plan.
Additionally, the Company's expenses for the eight and one-half month period
ended September 15, 1997, include a discretionary bonus of approximately
$425,000 for its employees based upon a plan which rewards employees for
achievement of corporate and individual objectives.
11. COMMON STOCK
At September 15, 1997, the Company had two classes of common stock issued
and outstanding, Class A voting shares and Class B non-voting shares. Class B
shares are issued in connection with the Plan and are convertible one-for-one
into Class A shares upon certain conditions as defined by the Plan. All Class B
shares are restricted from disposition or transfer.
12. CONTINGENCIES
The Company is involved in various legal actions and claims which arise in
the normal course of business. In the opinion of management, the final
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.
F-33
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 2000
[LOGO]
EXE TECHNOLOGIES, INC.
SHARES OF COMMON STOCK
----------------------------------------
PROSPECTUS
----------------------------------------
DONALDSON, LUFKIN & JENRETTE
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
DLJDIRECT INC.
- ------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales hereunder after the date of this prospectus shall create an implication
that the information contained herein or the affairs of EXE Technologies, Inc.
have not changed since the date hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Until , 2000 (25 days after the date of this prospectus), all dealers that
effect transactions in these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $33,000
NASD and Blue Sky fees and expenses......................... 20,000
Nasdaq National Market listing fee.......................... 95,000
Accountants' fees and expenses.............................. *
Legal fees and expenses..................................... *
Transfer Agent's fees and expenses.......................... *
Printing and engraving expenses............................. *
Miscellaneous............................................... *
-------
Total Expenses $ *
=======
</TABLE>
- ------------------------
* To be completed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
each Delaware business corporation to indemnify its directors, officers,
employees and agents against liability for each such person's acts taken in his
or her capacity as a director, officer, employee or agent of the corporation if
such actions were taken in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action, if he or she had no reasonable cause to
believe his or her conduct was unlawful. Section 9 of our certificate of
incorporation and Article of our by-laws provides that we, to the full extent
permitted by Section 145 of the DGCL, shall indemnify all of our past and
present directors or officers and may indemnify all of our past or present
employees or other agents. To the extent that our director, officer, employee or
agent has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in our certificate of incorporation and by-laws,
or in defense of any claim, issue or matter therein, we shall indemnify them
against actually and reasonably incurred expenses in connection therewith. Such
expenses may be paid by in advance of the final disposition of the action upon
receipt of an undertaking to repay the advance if it is ultimately determined
that such person is not entitled to indemnification.
As permitted by Section 102(b)(7) of the DGCL, Section 8 of our certificate
of incorporation provides that none of our directors shall be liable to us 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 us or our
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the unlawful
payment of dividends on or redemption of our capital stock or (iv) for any
transaction from which the director derived an improper personal benefit.
We have obtained a policy insuring us and our directors and officers against
certain liabilities, including liabilities under the Securities Act, and have
entered or will enter into indemnification agreements with our directors and
officers.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of us and our
officers and directors for certain liabilities arising under the Securities Act
or otherwise.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, we have sold the securities set forth below
which were not registered under the Securities Act:
1. In March 1997, we sold an aggregate of 1,319,444 shares of common stock to
certain non-U.S. investors in a private placement exempt from registration
pursuant to Regulation S of the Securities Act, for an aggregate offering
price of $3,600,000.
2. On September 15, 1997, we issued an aggregate of 16,272,519 shares of common
stock to the former stockholders of Neptune and Dallas Systems for an
aggregate offering price of $30,200,000. Simultaneously, we sold an
aggregate of 11,337,562 shares of preferred stock to GAP 41 and GAPCO,
entities affiliated with GAP LLC, for an aggregate offering price of
$25,000,000.
3. In December 1997, we sold an aggregate of 45,735 shares of common stock to
our consultant for a purchase price of $100,000.
4. In June and July 1998, we sold an aggregate of 371,666 shares of common
stock to certain of our employees and consultants for an aggregate purchase
price of $1,114,998 pursuant to certain commitments therewith, that were
previously approved by our Board on April 6, 1998.
5. In July 1998, we sold 1,600,000 shares of preferred stock to several
accredited investors for an aggregate offering price of $8,000,000.
6. In July 1998, we sold an aggregate of 90,000 shares of common stock to an
employee of ours and to two accredited investors for an aggregate purchase
price of $450,000.
7. From November 1997 through March 31, 2000, we issued an aggregate of 448,230
shares of Class B common stock upon exercise of stock options at exercise
prices per share ranging from $0.75 to $2.00.
8. In December 1998, we issued a warrant to a financial institution in
connection with a loan for 50,000 shares at an exercise price of $7.50 per
share.
9. In 1999, we issued warrants to other companies for an aggregate of 1,035,000
shares of Class B common stock at an exercise price of $4.00 per share.
10. On September 29, 1999, we sold shares of preferred stock to several
accredited investors for an aggregate offering price of $19,000,000.
11. As of December 31, 1999, we had outstanding options to purchase 4,321,975
shares under our Amended and Restated 1997 Incentive and Non-Qualified Stock
Option Plan and 150,000 shares under our Amended and Restated Stock Option
Plan for Non-Employee Directors.
We believe that the transaction described in paragraph 1 above was exempt
from registration under the Securities Act because the subject securities were
issued outside the United States in compliance with Regulation S under the
Securities Act. The issuances of the securities described in paragraphs 2, 3, 4,
5, 6, 8, 9 and 10 were deemed to be exempt from registration under
Section 3(b) or 4(2) of the Securities Act because the subject securities were
sold to a limited group of persons, each of whom was believed to have been a
sophisticated investor or to have had a pre-existing business or personal
relationship with us or our management and to have been purchasing for
investment without a view to further distribution. We believe that the
transactions described in paragraph 7 were exempt from registration under
Section 3(b) or 4(2) of the Securities Act because the subject securities were
issued pursuant to a compensatory benefit plan pursuant to Rule 701 under the
Securities Act. We believe that the transactions reflected in paragraph 11 were
exempt from registration under the Securities Act under one or more of the
exemptions described in this paragraph. In addition, the recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and
II-2
<PAGE>
appropriate legends were affixed to the share certificates issued in such
transactions. All recipients had adequate access, through their relationships
with us, to information about us.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1a Amended and Restated Certificate of Incorporation of the
Company.
3.1b Form of Second Amended and Restated Certificate of
Incorporation of the Company.
3.2a By-laws of the Company, as amended.
3.2b* Form of Amended and Restated By-laws of the Company.
5.1* Opinion of Morgan, Lewis & Bockius LLP, counsel to the
Company, as to the legality of the shares being
registered.
10.1 Amended and Restated EXE Technologies, Inc. 1997 Incentive
and Non-Qualified Stock Option Plan.
10.2 EXE Technologies, Inc. Amended and Restated Stock Option
Plan for Non-Employee Directors.
10.3 Employment Agreement dated November 18, 1996 between Neptune
Systems, Inc. and David E. Alcala, as amended as of
September 11, 1997.
10.3a Acknowledgement dated January 5, 2000 between the Company
and David E. Alcala.
10.4 Employment Agreement dated December 7, 1996 between Triton
SystemHouse Pte. Ltd. and Mark R. Weaser, as amended as of
March 5, 1997, July 25, 1997 and September 12, 1997.
10.5 Employment Agreement dated as of July 13, 1998 between the
Company and Christopher F. Wright.
10.6* Employment Agreement dated , 2000 between the
Company and Raymond R. Hood.
10.7a Office Lease dated May 18, 1999 between the Company and
BLI-8787, Ltd, as amended by letter agreement dated
February 22, 2000.
10.7b Sublease Agreement dated July 7, 1999 between the Company
and Cook Inlet/Voicestream PCS, L.L.C., as amended by
Amendment No. 1 dated October 28, 1999 between the Company
and Cook Inlet/Voicestream PCS, L.L.C.
10.7c Sublease Agreement and Consent to Sublease dated
November 11, 1999 between the Company and Fritz
Companies, Inc.
10.8a Office Lease dated April 3, 1995 between Neptune
Systems, Inc. and Baldwin Towers Associates, L.P., as
amended on July 6, 1995, June 17, 1996, June 26, 1996,
October 29, 1996, November 27, 1996, March 25, 1997,
March 23, 1998 and November 8, 1999.
10.8b Sublease dated December 29, 1999 between the Company and
i-Open.com, LLC.
10.9 Letter Agreement dated October 7, 1999 between the Company
and LAB Holdings, Inc.
10.10 Second Amended and Restated Registration Rights Agreement
dated as of September 29, 1999 among the Company, General
Atlantic Partners 57, L.P., General Atlantic
Partners 41, L.P., GAP Coinvestment Partners, L.P., GAP
Coinvestment Partners II, L.P., MSD 1998 GRAT #6, Triple
Marlin Investments, LLC, Rothko Investments, LLC, MSD
Portfolio L.P.--Investments, TCV III (Q), L.P., TCV III
Strategic Partners, L.P., TCV III, L.P., TCV III (GP) and
the stockholders named therein.
10.11 Allocation Agreement dated September 29, 1999 between the
Company and the Purchasers named therein.
10.12* Form of Indemnification Agreement.
10.13 Common Stock Purchase Warrant dated as of November 19, 1999
issued to 52(nd) Street Associates, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.14 Stock Repurchase Agreement dated as of May 21, 1998 among
the Company, Lexye Sumantri and Astrid Holdings, Inc.
10.15* Mutual Reseller and Marketing Partner Agreement and
Development Agreement dated March 30, 1999 between the
Company and i2 Technologies, Inc.
21.1 List of Subsidiaries.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Morgan, Lewis & Bockius LLP (included in
Exhibit 5.1).
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by Amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned Company hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The Company hereby undertakes that:
(i) 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 the form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the Registration
Statement as of the time it was declared effective.
(ii) For purposes 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
the 19th day of April, 2000.
<TABLE>
<S> <C> <C>
EXE TECHNOLOGIES, INC.
By: /s/ RAYMOND R. HOOD
-----------------------------------------
Raymond R. Hood
CHIEF EXECUTIVE OFFICER, PRESIDENT AND
DIRECTOR
</TABLE>
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Each person in so signing also makes, constitutes and appoints Raymond R.
Hood and Michael A. Burstein, and each of them acting alone, his true and lawful
attorney-in-fact, with full power of substitution, to execute and cause to be
filed with the Securities and Exchange Commission pursuant to the requirements
of the Securities Act of 1933, as amended, any and all amendments and
post-effective amendments to this registration statement, and including any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, with exhibits thereto and
other documents in connection therewith, and hereby ratifies and confirms all
that said attorney-in-fact or his or her substitute or substitutes may do or
cause to be done by virtue hereof.
<TABLE>
<CAPTION>
TITLE DATE
----- ----
<C> <S> <C>
/s/ LYLE A. BAACK
------------------------------------------- Chairman of the Board of April 19, 2000
Lyle A. Baack Directors
/s/ RAYMOND R. HOOD Chief Executive Officer,
------------------------------------------- President and Director April 19, 2000
Raymond R. Hood (Principal Executive Officer)
Senior Vice President, Finance,
/s/ MICHAEL A. BURSTEIN Chief Financial Officer and
------------------------------------------- Treasurer April 19, 2000
Michael A. Burstein (Principal Financial and
Accounting Officer)
/s/ ADAM C. BELSKY Senior Vice President,
------------------------------------------- Mergers & Acquisitions and April 19, 2000
Adam C. Belsky Director
/s/ KLAUS P. BESIER
------------------------------------------- Director April 19, 2000
Klaus P. Besier
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
TITLE DATE
----- ----
<C> <S> <C>
/s/ J. MICHAEL CLINE
------------------------------------------- Director April 19, 2000
J. Michael Cline
/s/ STEVEN A. DENNING
------------------------------------------- Director April 19, 2000
Steven A. Denning
/s/ JAY C. HOAG
------------------------------------------- Director April 19, 2000
Jay C. Hoag
/s/ JOHN C. PHELAN
------------------------------------------- Director April 19, 2000
John C. Phelan
------------------------------------------- Director April 19, 2000
Jeffrey R. Rodek
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1a Amended and Restated Certificate of Incorporation of the
Company.
3.1b Form of Second Amended and Restated Certificate of
Incorporation of the Company.
3.2a By-laws of the Company, as amended.
3.2b* Form of Amended and Restated By-laws of the Company.
5.1* Opinion of Morgan, Lewis & Bockius LLP, counsel to the
Company, as to the legality of the shares being
registered.
10.1 Amended and Restated EXE Technologies, Inc. 1997 Incentive
and Non-Qualified Stock Option Plan.
10.2 EXE Technologies, Inc. Amended and Restated Stock Option
Plan for Non-Employee Directors.
10.3 Employment Agreement dated November 18, 1996 between Neptune
Systems, Inc. and David E. Alcala, as amended as of
September 11, 1997.
10.3a Acknowledgement dated January 5, 2000 between the Company
and David E. Alcala.
10.4 Employment Agreement dated December 7, 1996 between Triton
SystemHouse Pte. Ltd. and Mark R. Weaser, as amended as of
March 5, 1997, July 25, 1997 and September 12, 1997.
10.5 Employment Agreement dated as of July 13, 1998 between the
Company and Christopher F. Wright.
10.6* Employment Agreement dated , 2000 between the
Company and Raymond R. Hood.
10.7a Office Lease dated May 18, 1999 between the Company and
BLI-8787, Ltd, as amended by letter agreement dated
February 22, 2000.
10.7b Sublease Agreement dated July 7, 1999 between the Company
and Cook Inlet/Voicestream PCS, L.L.C., as amended by
Amendment No. 1 dated October 28, 1999 between the Company
and Cook Inlet/Voicestream PCS, L.L.C.
10.7c Sublease Agreement and Consent to Sublease dated
November 11, 1999 between the Company and Fritz
Companies, Inc.
10.8a Office Lease dated April 3, 1995 between Neptune
Systems, Inc. and Baldwin Towers Associates, L.P., as
amended on July 6, 1995, June 17, 1996, June 26, 1996,
October 29, 1996, November 27, 1996, March 25, 1997,
March 23, 1998 and November 8, 1999.
10.8b Sublease dated December 29, 1999 between the Company and
i-Open.com, LLC.
10.9 Letter Agreement dated October 7, 1999 between the Company
and LAB Holdings, Inc.
10.10 Second Amended and Restated Registration Rights Agreement
dated as of September 29, 1999 among the Company, General
Atlantic Partners 57, L.P., General Atlantic
Partners 41, L.P., GAP Coinvestment Partners, L.P., GAP
Coinvestment Partners II, L.P., MSD 1998 GRAT #6, Triple
Marlin Investments, LLC, Rothko Investments, LLC, MSD
Portfolio L.P.--Investments, TCV III (Q), L.P., TCV III
Strategic Partners, L.P., TCV III, L.P., TCV III (GP) and
the stockholders named therein.
10.11 Allocation Agreement dated September 29, 1999 between the
Company and the Purchasers named therein.
10.12* Form of Indemnification Agreement.
10.13 Common Stock Purchase Warrant dated as of November 19, 1999
issued to 52(nd) Street Associates, Inc.
10.14 Stock Repurchase Agreement dated as of May 21, 1998 among
the Company, Lexye Sumantri and Astrid Holdings, Inc.
10.15* Mutual Reseller and Marketing Partner Agreement and
Development Agreement dated March 30, 1999 between the
Company and i2 Technologies, Inc.
21.1 List of Subsidiaries.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Morgan, Lewis & Bockius LLP (included in
Exhibit 5.1).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by Amendment.
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EXE TECHNOLOGIES, INC.
The following certificate has been duly adopted in accordance with Section
245 of the General Corporation Law of the State of Delaware (the "General
Corporation Law"):
1. NAME. The name of the corporation is EXE Technologies, Inc. (the
"Corporation"). The date of filing of the Corporation's original certificate of
incorporation with the Secretary of State for the State of Delaware was July 28,
1997.
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the Corporation's
registered office is 1201 Market Street, Suite 1600, Wilmington, Delaware 19801
and its registered agent is PHS Corporate Services, Inc.
3. PURPOSES. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that the
Corporation shall have authority to issue is: 109,000,000 consisting of
75,000,000 shares of voting Class A Common Stock, par value one cent ($.01) per
share (the "Class A Shares"), and 12,000,000 shares of non-voting Class B Common
Stock, par value one cent ($.01) per share (the "Class B Shares" and, together
with the Class A Shares, the "Common Stock") and 22,000,000 shares of Preferred
Stock, par value one cent ($.01) per share (the "Preferred Stock")."
5. COMMON STOCK
5.1 RANK. With respect to payment of dividends and the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, the Class A Shares and the Class B Shares
shall rank PARI PASSU with each other and junior to the Preferred Stock.
5.2 DIVIDENDS. Subject to the rights of the holders of shares of the
Preferred Stock, dividends may be declared and paid to the holders of the Common
Stock, and any such dividends shall be declared and paid pro rata on a
share-by-share basis among all of the Class A Shares and Class B Shares then
outstanding.
5.3 LIQUIDATION. Subject to the rights of the holders of shares of the
Preferred Stock, upon the voluntary or involuntary liquidation, dissolution or
winding up of the
1
<PAGE>
Corporation, the holders of the shares of Common Stock shall be entitled to
receive as a group all assets of the Corporation remaining to be distributed,
and such funds shall be paid pro rata on a share-by-share basis among all of the
Class A Shares and the Class B Shares then outstanding.
5.4 VOTING RIGHTS. Except as expressly provided by law and subject to
the rights of the holders of shares of the Preferred Stock, (a) all voting
rights shall be vested in the holders of the Class A Shares and (b) the holders
of the Class B Shares shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the stockholders of the Corporation.
At each meeting of stockholders of the Corporation, each holder of Class A
Shares shall be entitled to one vote for each such share on each matter to come
before the meeting, except as otherwise provided by law.
5.5 AUTOMATIC CONVERSION.
5.5.1 CLASS A SHARES. The Class A Shares shall not be convertible into
any other securities of the Corporation.
5.5.2 CLASS B SHARES.
(a) Each outstanding Class B Share shall be deemed automatically
converted into one fully paid and non-assessable Class A Share (as such Class A
Share shall then be constituted) upon the earlier of: (I) immediately prior to
the closing of a firm commitment underwritten initial public offering of the
Corporation pursuant to an effective registration statement under the Securities
Act of 1933, as amended; (II) immediately prior to (x) the merger or
consolidation of the Corporation with one or more other persons or (y) the
merger or consolidation of one or more persons into or with the Corporation, if,
in the case of (x) or (y), the stockholders of the Corporation prior to such
merger or consolidation do not retain at least a majority of the voting power of
the surviving person; and (III) the sale, conveyance, exchange or transfer to
another person of (x) the voting capital stock of the Corporation if after such
sale, conveyance, exchange or transfer the stockholders of the Corporation prior
to such sale, conveyance, exchange or transfer do not retain at least a majority
of the voting power of the Corporation, or (y) all or substantially all of the
assets of the Corporation. Any such event as described above is herein referred
to as a "Class B Conversion Event." On or after a Class B Conversion Event, and
in any event within ten (10) days after receipt of notice, sent by telecopier,
personal delivery or certified mail, return receipt requested, from the
Corporation of the occurrence of the Class B Conversion Event, each holder of
record of Class B Shares shall surrender such holder's certificates evidencing
such shares at the principal office of the Corporation or at such other place as
the Corporation shall designate, and shall thereupon be entitled to receive
certificates evidencing the number of Class A Shares into which such Class B
Shares are converted. On the date of the occurrence of a Class B Conversion
Event, each holder of record of Class B Shares shall be deemed to be the holder
of record of the Class A Shares issuable upon such conversion, and at such time
the rights of the holder as holder of the converted Class B Shares shall cease
and no Class B Shares shall be considered outstanding,
2
<PAGE>
without any further action by the holders of such shares and whether or not the
certificates representing such Class B Shares are then or subsequently
surrendered to the Corporation or its transfer agent.
(b) The Corporation will at all times reserve and keep available
out of its authorized but unissued Class A Shares, solely for the purpose of
issuance upon the conversion of Class B Shares, the maximum number of Class A
Shares as could be issuable upon the conversion of all then outstanding Class B
Shares. All Class A Shares which are issuable upon conversion of Class B Shares
in accordance with this Certificate of Incorporation will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable. The Corporation
will take all action that may be necessary to assure that all Class A Shares
issuable upon such conversion may be so issued without violation of any law,
regulation or agreement applicable to the Corporation.
(c) The issuance of certificates representing Class A Shares upon
conversion of Class B Shares as hereinabove set forth shall be made without
charge for any expense or issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the holder of shares converted.
(d) No fractional Class A Shares shall be issued upon the
conversion of Class B Shares. Instead of any fractional Class A Shares which
would otherwise be issuable upon conversion of Class B Shares, the Corporation
shall pay to the holder of the Class B Shares which were converted a cash
adjustment in respect of such fractional shares in an amount equal to the same
fraction of the fair market value per share of the Class A Shares (as determined
in a reasonable manner prescribed by the Corporation's Board of Directors (the
"Board")) immediately prior to the close of business on the date of conversion.
5.6 STOCK SPLITS, SUBDIVISIONS AND COMBINATIONS. In case the Corporation
shall at any time subdivide its outstanding Class A Shares into a greater number
of shares, the number of Class B Shares outstanding immediately prior to such
subdivision shall be proportionately increased, and in case at any time the
outstanding Class A Shares of the Corporation shall be combined into a smaller
number of shares, the number of Class B Shares outstanding immediately prior to
such combination shall be proportionately reduced.
5.7 OTHER RIGHTS. The Class A Shares and the Class B Shares shall be pari
PASSU with respect to all other rights, designations, qualifications or
restrictions under applicable law and not specifically modified by the
provisions described above or by the provisions contained in the Bylaws of the
Corporation, as from time to time amended (the "Bylaws").
3
<PAGE>
6. PREFERRED STOCK. The shares of Preferred Stock may be issued from time
to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Preferred Stock hereinabove
authorized, and with distinctive serial designations, all as shall hereafter be
stated and expressed in the resolution or resolutions providing for the issue of
such shares of Preferred Stock from time to time adopted by the Board pursuant
to authority so to do which is hereby vested in the Board. Each series of shares
of Preferred Stock: (a) may have such voting powers, full or limited, or may be
without voting powers; (b) may be subject to redemption at such time or times
and at such prices; (c) may be entitled to receive dividends (which may be
cumulative or non-cumulative) at such rate or rates, on such conditions and at
such times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of stock; (d) may have such
rights upon the dissolution of, or upon any distribution of the assets of, the
Corporation; (e) may be made convertible into or exchangeable for, shares of any
other class or classes or of any other series of the same or any other class or
classes of shares of the Corporation at such price or prices or at such rates of
exchange and with such adjustments; (f) may be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of such
series in such amount or amounts; (g) may be entitled to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional shares (including additional
shares of such series or of any other series) and upon the payment of dividends
or the making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of, any outstanding shares of
the Corporation; and (h) may have such other relative, participating, optional
or other special rights, qualifications, limitations or restrictions thereof;
all as shall be stated in said resolution or resolutions providing for the issue
of such shares of Preferred Stock. Shares of Preferred Stock of any series that
have been redeemed or that, if convertible or exchangeable, have been converted
into or exchanged for shares of any other class or classes shall have the status
of authorized and unissued shares of Preferred Stock undesignated as to any
series and may be reclassified and reissued as part of any series of shares of
Preferred Stock, all subject to the conditions or restrictions on issuance set
forth in the resolution or resolutions adopted by the Board providing for the
issue of any series of shares of Preferred Stock.
6.1 Subject to the provisions of any applicable law or of the
Bylaws, with respect to the closing of the transfer books or the fixing of a
record date for the determination of stockholders entitled to vote and except
as otherwise provided in Section 6.3 or by law or by the resolution or
resolutions providing for the issue of any series of shares of Preferred
Stock, the holders of outstanding Class A Shares shall exclusively possess
voting power for the election of directors and for all other purposes, each
holder of record of Class A Shares being entitled to one vote for each Class
A Share standing in his or her name on the books of the Corporation. Except
as otherwise provided in Section 6.3 or by the resolution or resolutions
providing for the issue of any series of shares of Preferred Stock, the
holders of shares of Common Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and all series, to receive such
dividends as from time to time may be declared by the
4
<PAGE>
Board. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of shares of Preferred Stock of the full amount to which
they shall be entitled pursuant to Section 6.3 or the resolution or resolutions
providing for the issue of any series of shares of Preferred Stock, the holders
of shares of Common Stock shall be entitled, to the exclusion of the holders of
shares of Preferred Stock of any and all series, to share, ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution to its stockholders.
6.2 Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the stock of the Corporation, regardless of
class, may be issued for such consideration and for such corporate purposes as
the Board may from time to time determine.
6.3 Unless otherwise defined, capitalized terms used in this Section 6.3
shall have the respective meanings ascribed to them in paragraph 6.3.13 hereof.
6.3.1 DESIGNATION AND NUMBER OF SHARES. There shall be hereby
established and designated the following series of Preferred Stock:
(a) Series A Convertible Participating Preferred Stock, par value
$0.01 per share (the "Series A Preferred Stock"), the authorized number of
shares of which shall be 7,000,000.
(b) Series B Convertible Preferred Stock, par value $0.01 per
share (the "Series B Preferred Stock"), the authorized number of shares of which
shall be 5,000,000.
(c) Series C Convertible Preferred Stock, par value $0.01 per
share (the "Series C Preferred Stock"), the authorized number of shares of which
shall be 2,000,000.
(d) Series D Convertible Preferred Stock, par value $0.01 per
share (the "Series D Preferred Stock"), the authorized number of shares of which
shall be 7,000,000.
Each of the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock are referred to herein
individually as a "Series of Designated Stock" and collectively as the
"Designated Stock."
6.3.2 RANK. Each Series of Designated Stock shall, with respect to
distributions of assets and rights upon the liquidation, dissolution or winding
up of the Corporation (a "Liquidation"), rank (a) PARI PASSU with each other
Series of Designated Stock,
5
<PAGE>
and (b) senior to (i) all classes of the Common Stock and (ii) each other
class or series of Capital Stock of the Corporation hereafter created that
does not expressly rank PARI PASSU with, or senior to, such Series of
Designated Stock ((i) and (ii) are together referred to as the "Junior
Stock"). Upon the occurrence of a Trigger Event (as defined below), the
distribution or payment of the Participation Adjustment (as defined below) or
the Cash Participation Payment (as defined below) to the holders of shares of
Series A Preferred Stock and the holders of Series D Preferred Stock shall
rank senior to any distributions or payments to the Series B Preferred Stock,
the Series C Preferred Stock (other than any Purchase Price Adjustment
payable to the holders of Series C Preferred Stock in accordance with the
Series C Convertible Preferred Stock Purchase Agreement dated July 10, 1998
among the Corporation and the purchasers named therein, as amended) and the
Junior Stock. There shall be no other class or series of Capital Stock of the
Corporation hereafter created, issued, or authorized, which shall be senior
to any Series of Designated Stock with respect to dividends, liquidation,
redemption, voting, antidilution or any similar economic term without the
prior written consent of the holders of a majority of the then outstanding
shares of such Series of Designated Stock.
6.3.3 DIVIDENDS.
(a) Beginning on the Filing Date, if the Board shall declare a
dividend or make any other distribution (including, without limitation, in cash
or other property or assets) to the holders of shares of Common Stock, then the
holders of each share of Designated Stock shall be entitled to receive, out of
funds legally available therefor, a dividend or distribution in an amount equal
to the amount of such dividend or distribution received by a holder of the
number of Class A Shares for which such share of Designated Stock is convertible
on the record date for such dividend or distribution. Any such amount shall be
paid to the holders of shares of Designated Stock at the same time such dividend
or distribution is made to holders of Common Stock.
(b) Beginning on the Filing Date, if the Board shall declare a
dividend or make any other distribution (including, without limitation, in cash
or other property or assets) to the holders of shares of any Series of
Designated Stock without declaring a similar dividend or making a similar
distribution to the holders of shares of all Series of Designated Stock, then
the holders of shares of each Series of Designated Stock for which no
corresponding dividend has been declared or other distribution made, shall be
entitled to receive a ratable dividend or distribution based on the number of
Class A Shares for which each share of Designated Stock is convertible on the
record date for such dividend or distribution. Any such amount shall be paid to
the holders of all shares of Designated Stock at the same time.
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<PAGE>
6.3.4 LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary Liquidation, the
holders of shares of each Series of Designated Stock then outstanding shall be
entitled to be paid for each share of Designated Stock held thereby, out of the
assets of the Corporation available for distribution to its stockholders, before
any payment shall be made or any assets distributed to the holders of any shares
of Junior Stock, an amount in cash (the following (i) and (ii) together, with
respect to each Series of Designated Stock, the "Liquidation Amount" for such
series) equal to (i) the Purchase Price for such Series of Designated Stock,
subject to adjustment with respect to each Series of Designated Stock for any
stock splits, stock dividends, combinations, recapitalizations or the like of
such Series of Designated Stock (with respect to each Series of Designated
Stock, its "Liquidation Preference") plus (ii) all declared and unpaid dividends
thereon to the date fixed for the Liquidation. Except as provided in the
preceding sentence, holders of Designated Stock shall not be entitled to any
distribution in the event of any Liquidation. If, upon any Liquidation, the
assets of the Corporation available for distribution to its stockholders shall
be insufficient to pay to the holders of Designated Stock the full amount as to
which each such holder of Designated Stock shall be entitled by reason of such
Liquidation, then each holder of Designated Stock shall share ratably in such
distribution of assets in accordance with the respective amounts which would be
payable to such holder of Designated Stock in respect of the shares held upon
such distribution if all amounts payable on or with respect to such shares were
paid in full.
(b) After the holders of all shares of Designated Stock have been
paid in full the amounts to which such holders are entitled under this Amended
and Restated Certificate of Incorporation, as amended from time to time as the
case may be, the remaining net assets of the Corporation shall be distributed to
the holders of Junior Stock.
(c) Written notice of a Liquidation, stating a payment date and
the Liquidation Amount, as the case may be, and the place where such amount
shall be payable, shall be delivered in person, mailed by certified or
registered mail, return receipt requested, mailed by overnight mail or sent by
telecopier, not less than ten (10) days prior to the payment date stated
therein, to the holders of record of Designated Stock, such notice to be
addressed to each such holder at its address as shown by the records of the
Corporation.
6.3.5. REDEMPTION. The shares of Designated Stock shall not be
redeemed or subject to redemption, whether at the option of the Corporation
or any holder thereof, or otherwise.
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<PAGE>
6.3.6. VOTING RIGHTS.
(a) The holders of Designated Stock, except as otherwise required
under Delaware law or as set forth in paragraphs 6.3.2 above and 6.3.6(b) and
6.3.6(c) below, shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the stockholders of the Corporation.
(b) Each outstanding share of Designated Stock shall entitle the
holder thereof to vote, in person or by proxy, at a special or annual meeting of
stockholders, on all matters entitled to be voted on by holders of Common Stock
voting together as a single class with other shares entitled to vote thereon.
With respect to any such vote, each share of Designated Stock shall entitle the
holder thereof to cast that number of votes per share as is equal to the number
of votes that such holder would be entitled to cast had such holder converted
its shares of Designated Stock into Class A Shares on the record date for
determining the stockholders of the Corporation eligible to vote on any such
matters.
(c) If GAP LP, GAP Coinvestment and/or any affiliate (as defined
in Rule 12b-2 under the Exchange Act) thereof own in the aggregate (i) at least
a majority of the outstanding shares of Series B Preferred Stock and (ii) Class
A Shares and/or Series A Preferred Stock, Series B Preferred Stock or other
securities of the Corporation convertible into or exchangeable for shares of
voting Capital Stock of the Corporation that represent (after giving effect to
any adjustments) at least five percent (5%) of the total number of Class A
Shares outstanding on an as-converted basis, then the holders of the Series B
Preferred Stock, voting as a separate series, shall be entitled to elect one (1)
director of the Corporation. The Series B Preferred Stock shall vote together
with all other classes and series of stock of the Corporation as a single class
with respect to the election of all of the other directors of the Corporation;
PROVIDED, HOWEVER, that if the conditions set forth in the first sentence of
this paragraph 6.3.6(c) necessary for the holders of the Series B Preferred
Stock to vote as a separate series for the election of one (1) director are not
satisfied, then the Series B Preferred Stock shall vote together with all other
classes and series of stock of the Corporation as a single class with respect to
the election of all of the directors of the Corporation. At any meeting (or in a
written consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Series B Preferred Stock then outstanding shall
constitute a quorum of the Series B Preferred Stock for the election of the
director to be elected solely by the holders of the Series B Preferred Stock. A
vacancy in the directorship elected by the holders of the Series B Preferred
Stock pursuant to this paragraph 6.3.6(c) shall be filled only by vote or
written consent of the holders of the Series B Preferred Stock.
6.3.7 OPTIONAL CONVERSION.
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<PAGE>
(a) Any holder of Designated Stock shall have the right, at its
option, at any time and from time to time, to convert, subject to the terms and
provisions of this paragraph 6.3.7, any or all of such holder's shares of
Designated Stock into such number of fully paid and non-assessable Class A
Shares as is equal to the product of (x) the number of shares of Designated
Stock being so converted, multiplied by (y) the Conversion Price then in effect
for the Series of Designated Stock of the shares to be converted, which
Conversion Price shall be set at the time of such conversion with respect to
such shares being so converted. The "Conversion Price" for each Series of
Designated Stock shall be equal to the sum of the following:
(i) the quotient of (A) the Liquidation Preference then in
effect for such Series of Designated Stock divided by (B) the Effective Purchase
Price then in effect for such Series of Designated Stock; plus
(ii) in the case of a Trigger Event (as defined in paragraph
6.3.8 below), only and solely with respect to the Series A Preferred Stock and
the Series D Preferred Stock, the Participation Adjustment (as calculated in
accordance with paragraph 6.3.8 below) with respect to such series, if any. The
calculation of the Conversion Price is illustrated in the following formula:
Conversion Price = Liquidation Preference
------------------------ + Participation Adjustment
Effective Purchase Price
Such conversion right shall be exercised by the surrender of the shares of
Designated Stock to be converted to the Corporation at any time during usual
business hours at its principal place of business, accompanied by written notice
that the holder elects to convert such shares of Designated Stock and specifying
the name or names (with address) in which a certificate or certificates for
Class A Shares are to be issued and (if so required by the Corporation) by a
written instrument or instruments of transfer in form reasonably satisfactory to
the Corporation duly executed by the holder or its duly authorized legal
representative and transfer tax stamps or funds therefor, if required pursuant
to paragraph 6.3.7(k). All shares of Designated Stock surrendered for conversion
shall be delivered to the Corporation for cancellation and canceled by it.
(b) As promptly as practicable after the surrender, as herein
provided, of any shares of Designated Stock for conversion pursuant to paragraph
6.3.7(a), the Corporation shall deliver to or upon the written order of the
holder of such shares of Designated Stock so surrendered a certificate or
certificates representing the number of fully paid and non-assessable Class A
Shares into which such shares of Designated Stock may be or have been converted
in accordance with the provisions of this paragraph 6.3.7. Subject to the
following provisions of this paragraph and of paragraph 6.3.7(d), such
conversion shall be deemed to have been made immediately prior to the close of
business on the date that such shares
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<PAGE>
of Designated Stock shall have been surrendered in satisfactory form for
conversion, and the Person or Persons entitled to receive the Class A Shares
deliverable upon conversion of such shares of Designated Stock shall be treated
for all purposes as having become the record holder or holders of such Class A
Shares at such appropriate time, and such conversion shall be at the Conversion
Price in effect at such time; PROVIDED, HOWEVER, that no surrender shall be
effective to constitute the Person or Persons entitled to receive the Class A
Shares deliverable upon such conversion as the record holder or holders of such
Class A Shares while the share transfer books of the Corporation shall be closed
(but not for any period in excess of five (5) days), but such surrender shall be
effective to constitute the Person or Persons entitled to receive such Class A
Shares as the record holder or holders thereof for all purposes immediately
prior to the close of business on the next succeeding day on which such share
transfer books are open, and such conversion shall be deemed to have been made
at, and shall be made at the Conversion Price in effect at, such time on such
next succeeding day.
(c) To the extent permitted by law, when shares of Designated
Stock are converted, all dividends declared and unpaid on the shares of
Designated Stock so converted to the date of conversion shall be immediately due
and payable and must accompany the Class A Shares issued upon such conversion.
(d) The Effective Purchase Price for each Series of Designated
Stock is subject to adjustment as follows:
(i) In the event that the Corporation shall at any time or
from time to time (A) pay a dividend or make a distribution (other than a
dividend or distribution paid or made to holders of shares of Designated Stock
in the manner provided in paragraph 6.3.3) on the outstanding Class A Shares,
(B) subdivide the outstanding Class A Shares into a larger number of shares, (C)
combine the outstanding Class A Shares into a smaller number of shares or (D)
issue any Class A Shares in a reclassification of the Corporation's Capital
Stock, then, and in each such case, the Effective Purchase Price in effect
immediately prior to such event for each Series of Designated Stock shall be
adjusted (and any other appropriate actions shall be taken by the Corporation)
so that the holder of any share of Designated Stock thereafter surrendered for
conversion shall be entitled to receive the number of Class A Shares or other
securities of the Corporation that such holder would have owned or would have
been entitled to receive upon or by reason of any of the events described above,
had such share of Designated Stock been converted immediately prior to the
occurrence of such event. An adjustment made pursuant to this paragraph
6.3.7(d)(i) shall become effective retroactively (X) in the case of any such
dividend or distribution, to a date immediately following the close of business
on the record date for the determination of holders of Capital Stock entitled to
receive such dividend or distribution or (Y) in the case of any such
subdivision, combination or reclassification, to the close of business on the
day upon which such corporate action becomes effective.
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<PAGE>
(ii) In case the Corporation shall at any time or from time
to time distribute to all holders of Class A Shares (including any such
distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding dividends or distributions paid or made to holders of shares of
Designated Stock in the manner provided in paragraph 6.3.3, and dividends
payable in Class A Shares for which adjustment is made under paragraph
6.3.7(d)(i)) or rights or warrants to subscribe for or purchase securities of
the Corporation (excluding those distributions in respect of which an adjustment
in the Effective Purchase Price is made pursuant to paragraph 6.3.7(d)(i)),
then, and in each such case, the Effective Purchase Price then in effect for
each Series of Designated Stock shall be adjusted (and any other appropriate
actions shall be taken by the Corporation) by multiplying such Effective
Purchase Price in effect immediately prior to the date of such distribution for
each Series of Designated Stock by a fraction (X) the numerator of which shall
be the Current Market Price of one (1) Class A Share on the record date referred
to below less the then fair market value (as determined by the Board) of the
portion of the cash, evidences of indebtedness, securities or other assets so
distributed or of such subscription rights or warrants applicable to one (1)
Class A Share and (Y) the denominator of which shall be such Current Market
Price of one (1) Class A Share (but such denominator shall not be less than one
(1)); PROVIDED, HOWEVER, that no adjustment shall be made with respect to any
distribution of rights to purchase securities of the Corporation if the holder
of shares of Designated Stock would otherwise be entitled to receive such rights
upon conversion at any time of shares of Designated Stock into Class A Shares.
Such adjustment shall be made whenever any such distribution is made and shall
become effective retroactively to a date immediately following the close of
business on the record date for the determination of stockholders entitled to
receive such distribution.
(iii) In case the Corporation, at any time or from time to
time, shall take any action affecting its Class A Shares similar to or having an
effect similar to any of the actions described in any of paragraph 6.3.7(d)(i)
or paragraph 6.3.7(d)(ii), inclusive, or paragraph 6.3.7(g) (but not including
any action described in any such paragraph) and the Board in good faith
determines that it would be equitable in the circumstances to adjust the
Effective Purchase Price for any or all Series of Designated Stock as a result
of such action, then, and in each such case, the Effective Purchase Price for
such Series of Designated Stock shall be adjusted in such manner and at such
time as the Board in good faith determines would be equitable in the
circumstances (such determination to be evidenced in a resolution, a certified
copy of which shall be mailed to the holders of the shares of Designated Stock).
(iv) Notwithstanding anything herein to the contrary, no
adjustment under this paragraph 6.3.7(d) need be made to the Effective Purchase
Price of the shares of any Series of Designated Stock unless such adjustment
would require an increase or decrease of at least one percent (1%) of the
Effective Purchase Price of such shares of Series of Designated Stock then in
effect. Any lesser adjustment shall be carried forward and
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<PAGE>
shall be made at the time of and together with the next subsequent adjustment,
which, together with any adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least one percent (1%) of such
Conversion Price. Any adjustment to the Effective Purchase Price of the shares
of any Series of Designated Stock carried forward and not theretofore made shall
be made immediately prior to the conversion of any shares of Designated Stock
pursuant hereto.
(e) If the Corporation shall take a record of the holders of its
Capital Stock for the purpose of entitling them to receive a dividend or other
distribution in Class A Shares, and shall thereafter and before the distribution
to stockholders thereof legally abandon its plan to pay or deliver such dividend
or distribution, then thereafter no adjustment in the Effective Purchase Price
then in effect for any Series of Designated Stock shall be required by reason of
the taking of such record.
(f) Upon any increase or decrease in the Effective Purchase Price
of the shares of any Series of Designated Stock, then, and in each such case,
the Corporation promptly shall deliver to each registered holder of such shares
of Designated Stock at least ten (10) Business Days prior to effecting any of
the foregoing transactions a certificate, signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the increased or decreased Effective Purchase Price
then in effect following such adjustment.
(g) In case of any capital reorganization or reclassification or
other change to outstanding Class A Shares (other than a change in par value, or
from par value to no par value, or from no par value to par value), the
Corporation shall execute and deliver to each holder of Designated Stock at
least ten (10) Business Days prior to effecting such reorganization or
reclassification a certificate that the holder of each share of Designated Stock
then outstanding shall have the right thereafter to convert such share of
Designated Stock into the kind and amount of shares of stock or other
securities, property or cash receivable upon such reorganization or
reclassification by a holder of the number of Class A Shares into which such
share of Designated Stock could have been converted immediately prior to such
reorganization or reclassification, and provision shall be made therefor in any
agreement relating to such reorganization or reclassification. Such certificate
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this paragraph 6.3.7. The
provisions of this paragraph 6.3.7(g) and any equivalent thereof in any such
certificate similarly shall apply to successive transactions.
(i) In case at any time or from time to time:
(i) the Corporation shall declare a dividend (or any other
distribution) on, or payable in, its Class A Shares;
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<PAGE>
(ii) the Corporation shall authorize the granting to the
holders of its Class A Shares of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights or warrants;
(iii) there shall be any reorganization or reclassification
of the Class A Shares, or any Merger, or any Sale, or any Initial Public
Offering; or
(iv) there shall occur any voluntary or involuntary
Liquidation;
then the Corporation shall mail to each holder of shares of Designated Stock at
such holder's address as it appears on the transfer books of the Corporation, as
promptly as possible but in any event at least ten (10) days prior to the
applicable date hereinafter specified, a notice stating (X) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of which the holders
of Capital Stock of record to be entitled to such dividend, distribution or
rights are to be determined, or (Y) the date on which such reclassification,
reorganization, Merger, Sale, Initial Public Offering or Liquidation is expected
to become effective, PROVIDED that in the case of any Merger, Sale or any event
to which paragraph 6.3.7(g) also applies, the Corporation shall give at least
ten (10) days' prior written notice as aforesaid. Such notice also shall specify
the date as of which it is expected that holders of Class A Shares of record
shall be entitled to exchange their Class A Shares for shares of stock or other
securities or property or cash deliverable upon such reclassification,
reorganization, Merger, Sale or Liquidation.
(j) The Corporation shall at all times reserve and keep available
for issuance upon the conversion of shares of Designated Stock, such number of
its authorized but unissued Class A Shares as will from time to time be
sufficient to permit the conversion of all outstanding shares of Designated
Stock, and shall take all action required to increase the authorized number of
Class A Shares if at any time there shall be insufficient authorized but
unissued Class A Shares to permit such reservation or to permit the conversion
of all outstanding shares of Designated Stock.
(k) The issuance or delivery of certificates for Class A Shares
upon the conversion of shares of Designated Stock shall be made without charge
to the converting holder of shares of Designated Stock for such certificates or
for any tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or (subject to compliance with the
applicable provisions of federal and state securities laws) in such names as may
be directed by, the holders of the shares of Designated Stock converted;
PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the
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holder of the shares of Designated Stock converted, and the Corporation shall
not be required to issue or deliver such certificate unless or until the Person
or Persons requesting the issuance or delivery thereof shall have paid to the
Corporation the amount of such tax or shall have established to the reasonable
satisfaction of the Corporation that such tax has been paid.
(l) No fractional Class A Shares shall be issued upon the
conversion of shares of Designated Stock. Instead of any fractional Class A
Shares which would otherwise be issuable upon conversion of shares of Designated
Stock, the Corporation shall pay to the holder of the shares of Designated Stock
which were converted a cash adjustment in respect of such fractional shares in
an amount equal to the same fraction of the fair market value per share of the
Class A Shares (as determined in a reasonable manner prescribed by the Board)
immediately prior to the close of business on the date of conversion.
6.3.8 PARTICIPATION ADJUSTMENT. Solely upon closing of a Sale, Merger
or Initial Public Offering (each a "Trigger Event"), a "Participation
Adjustment" (calculated in accordance with paragraphs 6.3.8(a) and 6.3.8(b)
below) shall be determined with respect to each of the Series A Preferred Stock
and the Series D Preferred Stock as set forth below; PROVIDED, HOWEVER, that the
Participation Adjustment for the Series A Preferred Stock or the Series D
Preferred Stock, as the case may be, shall be equal to zero (0) if the
Corporation chooses to pay to such holders the Cash Participation Payment
referred to in paragraph 6.3.8(d) or if such holders waive their respective
rights to a Participation Adjustment pursuant to paragraph 6.3.8(e); and
PROVIDED FURTHER, HOWEVER, that once a Trigger Event occurs that causes a
Participation Adjustment to the Conversion Price of either the Series A
Preferred Stock or the Series D Preferred Stock, then thereafter there shall be
no further adjustments to the Conversion Price for such series by reason of this
paragraph 6.3.8.
(a) The Participation Adjustment with respect to each share of
the Series A Preferred Stock shall be equal to the quotient of (i) the product
of (A) the Series A Trigger Percentage, multiplied by (B) the Liquidation
Preference then in effect for the Series A Preferred Stock, divided by (ii) the
Trigger Price (as defined in paragraph 6.3.8(c) below), as illustrated in the
following formula:
<TABLE>
<S> <C>
Series A Participation Adjustment = Series A Trigger Percentage X Series A Liquidation Preference
---------------------------------------------------------------
Trigger Price
</TABLE>
The "Series A Trigger Percentage" shall equal:
(i) 100%, if the Trigger Price is equal to or less than the
Minimum Trigger Price (the "Minimum Trigger Price" initially shall be $9.00 per
share, subject to adjustment under the same circumstances as adjustments to the
Effective Purchase Price pursuant to paragraph 6.3.7(d)); or
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<PAGE>
(ii) 0%, if the Trigger Price is equal to or greater than
the Maximum Trigger Price (the "Maximum Trigger Price initially shall be $11.00
per share, subject to adjustment under the same circumstances as adjustments to
the Effective Purchase Price pursuant to paragraph 6.3.7(d)); or
(iii) a percentage equal to the quotient of (A) the
difference of the Maximum Trigger Price, minus the Trigger Price, divided by (B)
the difference of the Maximum Trigger Price, minus the Minimum Trigger Price, if
the Trigger Price is less than the Maximum Trigger Price and greater than the
Minimum Trigger Price, as illustrated in the following formula:
Max. Trigger Price - Trigger Price
Series A Trigger Percentage = ------------------------------------------
Max. Trigger Price - Min. Trigger Price
(b) The Participation Adjustment with respect to each share of
Series D Preferred Stock shall be equal to the quotient of (i) the product of
(A) the Series D Trigger Percentage, multiplied by (B) the Liquidation
Preference then in effect for the Series D Preferred Stock, divided by (ii) the
Trigger Price (as defined in paragraph 6.3.8(c) below), as illustrated in the
following formula:
<TABLE>
<S> <C>
Series D Trigger Percentage X Series D Liquidation Preference
Series D Participation Adjustment = ---------------------------------------------------------------
Trigger Price
</TABLE>
The "Series D Trigger Percentage" shall equal:
(i) 60%, if the Trigger Price is equal to or less than the
Minimum Trigger Price; or
(ii) 0%, if the Trigger Price is equal to or greater than
the Maximum Trigger Price; or
(iii) a percentage equal to product of (A) the quotient of
(X) the difference of the Maximum Trigger Price minus the Trigger Price, divided
by (Y) the difference of the Maximum Trigger Price minus the Minimum Trigger
Price, multiplied by (B) 60%, if the Trigger Price is less than the Maximum
Trigger Price and greater than the Minimum Trigger Price, as illustrated in the
following formula:
Max. Trigger Price - Trigger Price
Series D Trigger Percentage = ---------------------------------------- X .60
Max. Trigger Price - Min. Trigger Price
(c) The "Trigger Price" shall be computed without regard to any
participation payments, purchase price adjustments or conversion adjustments
that could become payable to any series or class of stock as a result of the
Trigger Event. For these purposes, in the case of an Initial Public Offering,
the "Trigger Price" shall equal the midpoint of
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<PAGE>
the price per share range of the shares of Common Stock offered for sale in such
Initial Public Offering, as stated on the cover of the Company's red herring
preliminary prospectus last distributed to potential investors. In the case of a
Merger or Sale, the "Trigger Price" shall be equal to the quotient of the "Gross
Proceeds" of such Merger or Sale divided by the total number of shares of Common
Stock outstanding on a fully diluted basis (other than Common Stock equivalents
that are not "in-the-money") prior to such Merger or Sale. For these purposes,
in the event such "Gross Proceeds" consists of consideration other than cash,
such Gross Proceeds shall be valued as follows:
(i) With respect to securities of the surviving Person of
such Sale or Merger that do not constitute "restricted securities," as such term
is defined in Rule 144(a)(3) promulgated under the Securities Act, Gross
Proceeds shall be deemed to be the aggregate Current Market Price of the
securities as of three (3) days prior to the closing of the Sale or Merger;
(ii) The method of valuation of securities acquired for
investment in a non-public transaction or otherwise restricted in their
marketability that are of the same class or series as securities that are
publicly traded shall be to make an appropriate discount from the market value
determined as set forth above in clause (i) to reflect the appropriate fair
market value thereof, as determined in good faith by the Board and consented to
by the holders of a majority of the shares each of the Series A Preferred Stock
and the Series D Preferred Stock, which consent shall not be unreasonably
withheld, or if there is no active public market with respect to such class or
series of securities, such securities shall be valued in accordance with clause
(i) above, giving appropriate weight, if any, to such restriction, as determined
in good faith by the Board and consented to by the holders of a majority of the
shares each of the Series A Preferred Stock and the Series D Preferred Stock,
which consent shall not be unreasonably withheld; and
(iii) Any other form of consideration shall be valued to
reflect the market value thereof, as determined in good faith by the Board and
consented to by the holders of a majority of the shares of each of the Series A
Preferred Stock and the Series D Preferred Stock then outstanding, which consent
shall not be unreasonably withheld.
(d) The Participation Adjustment with respect to the Series A
Preferred Stock and the Series D Preferred Stock may, at the Corporation's
option, be paid by the Corporation in cash in lieu of the Participation
Adjustment (a "Cash Participation Payment"). The amount of a Cash Participation
Payment for each share of Series A Preferred Stock shall be equal to the product
of the Series A Trigger Percentage multiplied by the Liquidation Preference then
in effect for the Series A Preferred Stock. The amount of a Cash Participation
Payment for each share of Series D Preferred Stock shall be equal to the product
of the Series D Trigger Percentage multiplied by the Liquidation Preference then
in effect for the
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<PAGE>
Series D Preferred Stock. The Cash Participation Payment shall be paid on the
date of the closing of the Trigger Event giving rise to such payment. Written
notice of the Corporation's intention to pay a Cash Participation Payment,
stating the payment date and the amount of the Cash Participation Payment and
the place where such amount shall be payable, shall be delivered in person,
mailed by certified or registered mail, return receipt requested, mailed by
overnight mail or sent by telecopier, not less than ten (10) days prior to the
payment date stated therein, to the holders of record of the shares of Series A
Preferred Stock and Series D Preferred Stock to whom such Cash Participation
Payment is to be paid, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation. If the Corporation elects to
make a Cash Participation Payment in lieu of all or any portion of a
Participation Adjustment for either the Series A Preferred Stock or the Series D
Preferred Stock, then the Corporation shall make a Cash Participation Payment
with respect to both the Series A Preferred Stock and the Series D Preferred
Stock in the same proportion.
(e) The Participation Adjustment with respect to the Series A
Preferred Stock may be waived at any time upon the written consent of the
holders of a majority of the outstanding shares of Series A Preferred Stock. The
Participation Adjustment with respect to the Series D Preferred Stock may be
waived at any time upon the written consent of the holders of a majority of the
outstanding shares of Series D Preferred Stock.
6.3.9 MANDATORY CONVERSION.
(a) Upon the closing of a Sale, each outstanding share of
Designated Stock shall be automatically converted into the kind and amount of
securities, assets or cash receivable upon such Sale by a holder of the number
of Class A Shares into which such one (1) share of Designated Stock could have
been converted immediately prior to the closing of such Sale based upon the
Conversion Price effective for such share of Designated Stock upon the closing
of such Sale, including, subject to paragraph 6.3.8(d) above, any Participation
Adjustment on account of such Sale.
(b) Upon the closing of a Merger, each outstanding share of
Designated Stock shall be automatically converted into the kind and amount of
securities of the surviving Person or other consideration receivable upon such
Merger by a holder of the number of Class A Shares into which such one (1) share
of Designated Stock could have been converted immediately prior to the closing
of such Merger, based upon the Conversion Price effective for such share of
Designated Stock upon the closing of such Merger, including, subject to
paragraph 6.3.8(d) above, any Participation Adjustment on account of such
Merger.
(c) Upon the closing of a Qualified Initial Public Offering, each
share of Designated Stock shall be automatically converted, effective
immediately prior to the closing of such Qualified Initial Public Offering, into
the number of Class A Shares into which such one (1) share of Designated Stock
could have been converted at such time, based upon the Conversion Price
effective for such share of Designated Stock upon the closing of such
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Qualified Initial Public Offering, including, subject to paragraph 6.3.8(d)
above, any Participation Adjustment on account of such Qualified Initial Public
Offering.
(d) Each of the events described in paragraphs 6.3.9(a), (b) and
(c) is referred to as a "Mandatory Conversion Event" and the kind and amount of
securities of the Corporation or another Person, assets of the Corporation or
another Person, cash or Class A Shares, as the case may be, including any
Participation Adjustment, determined by paragraphs 6.3.9(a), (b) or (c), as
applicable, is referred to as the "Pro Rata Share." On and after a Mandatory
Conversion Event, all rights in respect of the shares of Designated Stock so
converted shall cease and terminate, except that the holder(s) thereof shall
have the right to receive the Pro Rata Share as provided in this paragraph
6.3.9, and such shares of Designated Stock shall no longer be deemed to be
outstanding, whether or not the certificates representing such shares of
Designated Stock have been received by the Corporation.
(e) Written notice of a Mandatory Conversion Event, stating the
date of the Mandatory Conversion Event, the Pro Rata Share and the place where
such amount shall be payable, shall be delivered in person, mailed by certified
or registered mail, return receipt requested, mailed by overnight mail or sent
by telecopier, not less than ten (10) days prior to the payment date stated
therein, to the holders of record of any Series of Designated Stock to be
converted, such notice to be addressed to each such holder at its address as
shown by the records of the Corporation.
6.3.10 CERTAIN REMEDIES. Any registered holder of Designated Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section 6.3 and to enforce specifically the terms and
provisions of this Section 6.3 in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
such holder may be entitled at law or in equity.
6.3.11 REISSUANCE OF DESIGNATED STOCK. Shares of Designated Stock that
have been issued and reacquired by the Corporation in any manner, including
shares purchased or converted, shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized and unissued
shares of preferred stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock (other than Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock).
6.3.12 BUSINESS DAY. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, then such payment shall
be made on the immediately succeeding Business Day.
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6.3.13 DEFINITIONS. As used in this Section 6.3, the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and VICE VERSA), unless the context
otherwise requires:
"Business Day" means any day except a Saturday, a Sunday, or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
"Cash Participation Payment" shall have the meaning ascribed to it in
paragraph 6.3.8(d).
"Common Stock" means, collectively, the Class A Shares and the Class B
Shares.
"Conversion Price" shall have the meaning ascribed to it in paragraph
6.3.7(a).
"Current Market Price" per share shall mean, as of the date of
determination, (a) the average daily Market Price of the Class A Shares for
those days during the period of thirty (30) Trading Days, ending on such date,
and (b) if the Class A Shares are not then listed or admitted to trading on any
national securities exchange or quoted in the over-counter market, then the
Market Price on such date.
"Designated Stock" shall have the meaning ascribed to it in paragraph
6.3.1.
"Effective Purchase Price" means, with respect to each Series of Designated
Stock, the Purchase Price for such Series of Designated Stock, subject to
adjustment as set forth in paragraph 6.3.7(d).
"Exchange Act" means the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder.
"Filing Date" means (a) with respect to the Series A Preferred Stock and
the Series B Preferred Stock, September 14, 1997, (b) with respect to the Series
C Preferred Stock, July 10, 1998, and (c) with respect to the Series D Preferred
Stock, the date that this
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Amended and Restated Certificate of Incorporation is filed with the Secretary of
State for the State of Delaware.
"GAP Coinvestment" means GAP Coinvestment Partners, L.P., a New York
limited partnership.
"GAP LP" means General Atlantic Partners 41, L.P., a Delaware limited
partnership.
"Gross Proceeds" shall have the meaning ascribed to it in paragraph
6.3.8(c).
"Initial Public Offering" shall mean a firm commitment underwritten initial
public offering of the Corporation pursuant to an effective registration
statement under the Securities Act.
"Junior Stock" shall have the meaning ascribed to it in paragraph 6.3.2.
"Liquidation" shall have the meaning ascribed to it in paragraph 6.3.2.
"Liquidation Amount" shall have the meaning ascribed to it in paragraph
6.3.4(a).
"Liquidation Preference" shall have the meaning ascribed to it in paragraph
6.3.4(a).
"Mandatory Conversion Event" shall have the meaning ascribed to it in
paragraph 6.3.9(d).
"Market Price" shall mean, per share of Class A Common Stock, as of the
date of determination: (a) the closing price per share of Class A Common Stock
on such date published in THE WALL STREET JOURNAL or, if no such closing price
on such date is published in THE WALL STREET JOURNAL, then the average of the
closing bid and asked prices on such date, as officially reported on the
principal national securities exchange (including, without limitation, The
Nasdaq Stock Market, Inc.) on which the Class A Common Stock is then listed or
admitted to trading; (b) if the Class A Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, then the last trading price of the
Class A Common Stock on such date; (c) if there shall have been no trading on
such date or if the Class A Common Stock is not so designated, then the average
of the reported closing bid and asked prices of the Class A Common Stock, on
such date as shown by NASDAQ and reported by any member firm of the New York
Stock Exchange selected by the Corporation; or (d) if none of (a), (b) or (c) is
applicable, then a market price per share determined at the Corporation's
expense by an appraiser chosen by the holders of a majority of
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the shares of Designated Stock, or, if no such appraiser is so chosen more than
ten (10) Business Days after notice of the necessity of such calculation shall
have been delivered by the Corporation to the holders of Designated Stock, then
by an appraiser chosen by the Corporation and reasonably satisfactory to the
holders of a majority of the shares of Designated Stock. Any determination of
the Market Price by an appraiser shall be based on a valuation of the
Corporation as an entirety without regard to any discount for minority interests
or disparate voting rights among classes of Capital Stock.
"Maximum Trigger Price" shall have the meaning ascribed to it in paragraph
6.3.8(a)(ii).
"Merger" shall mean (a) the merger or consolidation of the Corporation with
one or more other Persons or (b) the merger or consolidation of one or more
Persons into or with the Corporation, if, in the case of (a) or (b), the
stockholders of the Corporation prior to such merger or consolidation do not
retain at least a majority of the voting power of the surviving Person.
"Minimum Trigger Price" shall have the meaning ascribed to it in paragraph
6.3.8(a)(i).
"Participation Adjustment" shall have the meaning ascribed to it in
paragraph 6.3.8.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"Pro Rata Share" shall have the meaning ascribed to it in paragraph
6.3.9(d).
"Purchase Price" means, with respect to each Series of Designated Stock:
(i) $2.217609, with respect to each share of Series A Preferred
Stock;
(ii) $2.1865, with respect to each share of Series B Preferred Stock;
(iii) $5.00, with respect to each share of Series C Preferred Stock;
and
(iv) $4.00, with respect to each share of Series D Preferred Stock.
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"Qualified Initial Public Offering" shall mean an Initial Public Offering
underwritten by a nationally recognized investment bank(s) resulting in gross
proceeds to the Corporation of at least $30,000,000.
"Sale" shall mean the sale, conveyance, exchange or transfer to another
Person of: (a) the voting Capital Stock of the Corporation, if after such sale,
conveyance, exchange or transfer, the stockholders of the Corporation prior to
such sale, conveyance, exchange or transfer do not retain at least a majority of
the voting power of the Corporation; or (b) all or substantially all of the
assets of the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Series A Preferred Stock" shall have the meaning ascribed to it in
paragraph 6.3.1.
"Series A Trigger Percentage" shall have the meaning ascribed to it in
paragraph 6.3.8(a).
"Series B Preferred Stock" shall have the meaning ascribed to it in
paragraph 6.3.1.
"Series C Preferred Stock" shall have the meaning ascribed to it in
paragraph 6.3.1.
"Series D Preferred Stock" shall have the meaning ascribed to it in
paragraph 6.3.1.
"Series D Trigger Percentage" shall have the meaning ascribed to it in
paragraph 6.3.8(b).
"Series of Designated Stock" shall have the meaning ascribed to it in
paragraph 6.3.1.
"Trading Day" means a day on which the national securities exchanges are
open for trading.
"Trigger Event" shall have the meaning ascribed to it in paragraph 6.3.8.
"Trigger Price" shall have the meaning ascribed to it in paragraph 6.3.8.
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7. ELECTION OF DIRECTORS. Members of the Board may be elected either by
written ballot or by voice vote.
8. LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under section 174 of the General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits. If the General Corporation Law is amended, or other Delaware law is
enacted, to permit further elimination or limitation of the personal liability
of directors, then the liability of directors of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law, as so amended, or by such other Delaware law, as so enacted. Any repeal or
modification of the foregoing provision shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
9. INDEMNIFICATION.
9.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation, or, at the request of the Corporation, is or was
serving as a director or officer of any other corporation or in a capacity with
comparable authority or responsibilities for any partnership, joint venture,
trust, employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees, disbursements and other
charges). Persons who are not directors or officers of the Corporation (or
otherwise entitled to indemnification pursuant to the preceding sentence) may be
similarly indemnified in respect of service to the Corporation or to an Other
Entity at the request of the Corporation to the extent the Board at any time
specifies that such persons are entitled to the benefits of this Section 9.
9.2 The Corporation shall, from time to time, reimburse or advance to
any director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the General Corporation Law, such expenses incurred by or on behalf of any
director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or
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officer (or other person indemnified hereunder), to repay any such amount so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right of appeal that such director, officer or other
person is not entitled to be indemnified for such expenses.
9.3 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 9 shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any statute, this Certificate of Incorporation, the Bylaws, any agreement, any
vote of stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office.
9.4 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 9 shall continue as
to a person who has ceased to be a director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
9.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 9, the Bylaws or under section 145 of the
General Corporation Law or any other provision of law.
9.6 The provisions of this Section 9 shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Section 9 is in effect and any other person
entitled to indemnification hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be, and
shall be, legally bound. No repeal or modification of this Section 9 shall
affect any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
9.7 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 9 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board, its independent legal counsel and its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or
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reimbursement or advancement of expenses is proper in the circumstances nor an
actual determination by the Corporation (including its Board, its independent
legal counsel and its stockholders) that such person is not entitled to such
indemnification or reimbursement or advancement of expenses shall constitute a
defense to the action or create a presumption that such person is not so
entitled. Such a person shall also be indemnified for any expenses incurred in
connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
9.8 Any director or officer of the Corporation serving in any capacity
of (a) another corporation of which a majority of the shares entitled to vote in
the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
9.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 9 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
10. ADOPTION, AMENDMENT AND/OR REPEAL OF BYLAWS. The Board may from
time to time adopt, amend or repeal the Bylaws of the Corporation; PROVIDED,
HOWEVER, that any Bylaws adopted or amended by the Board may be amended or
repealed, and any Bylaws may be adopted, by the stockholders of the
Corporation by vote of a majority of the holders of shares of stock of the
Corporation entitled to vote in the election of directors of the Corporation.
11. COMPROMISES WITH CREDITORS. Whenever a compromise or
arrangement is proposed between the Corporation and its creditors or any
class of them and/or between the Corporation and its stockholders or any
class of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of the Corporation or of
any creditor or stockholder thereof or on the application of any receiver or
receivers appointed for the Corporation under the provisions of Section 291
of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation
under the provisions Section 279 of Title 8 of the Delaware Code, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a
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majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, then the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, EXE Technologies, Inc. has caused the Amended and
Restated Certificate to be signed by its Chief Executive Officer and attested by
its Secretary this 29th day of September, 1999, which the undersigned certifies
has been duly adopted in accordance with Section 228 of the General Corporation
Law.
EXE TECHNOLOGIES, INC.
By: /S/ RAYMOND R. HOOD
----------------------------------
Raymond R. Hood
Chief Executive Officer
ATTEST:
By: /S/ CHRISTOPHER F. WRIGHT
-----------------------------
Christopher F. Wright
Secretary
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SECOND AMENDED AND RESTATED
CERTIFICATE OF INCOPORATION
OF
EXE TECHNOLOGIES, INC.
The following certificate has been duly adopted in accordance with
Section 245 of the General Corporation Law of the State of Delaware (the
"General Corporation Law"):
1. NAME. The name of the corporation is EXE Technologies, Inc.
(the "Corporation"). The date of filing of the Corporation's original
certificate of incorporation with the Secretary of State for the State of
Delaware was July 28, 1997, and it was amended on September 15, 1997, July 9,
1998 and August 31, 1998. An amended and restated certificate of incorporation
was filed with the Secretary of the State of Delaware on September 29, 1999.
2. ADDRESS OF REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office is 1201 Market Street, Suite 1600, Wilmington,
Delaware 19801, and its registered agent is PHS Corporate Services, Inc.
3. PURPOSES. The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that
the Corporation shall have authority to issue is: 170,000,000, consisting of
150,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 20,000,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock"). The Preferred Stock may be issued from time to time by the
Board of Directors as shares of one or more classes or series. Subject to the
provisions of this Second Amended and Restated Certificate of Incorporation and
the limitations prescribed by law, the Board of Directors is expressly
authorized by adopting resolutions to issue the shares, fix the number of shares
and change the number of shares constituting any series, and to provide for or
change the voting powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof, including dividend rights (and whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions), a
redemption price or prices, conversion rights and liquidation preferences of the
shares constituting any class or series of the Preferred Stock, without any
further action or vote by the stockholders.
5. BOARD OF DIRECTORS.
5.1. ELECTION OF DIRECTORS. Members of the Board may
be elected either by written ballot or by voice vote.
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5.2. CLASSIFICATION OF BOARD. The Directors shall be
classified with respect to the time for which they shall severally hold office
into three classes as nearly equal in number as possible. The Class I directors
shall be elected to hold office for an initial term expiring at the 2001 annual
meeting of the stockholders, the Class II directors shall be elected to hold
office for an initial term expiring at the 2002 annual meeting of the
stockholders and the Class III directors shall be elected to hold office for an
initial term expiring at the 2003 annual meeting of the stockholders, with the
members of each class of directors to hold office until their successors have
been duly elected and qualified. At each annual meeting of stockholders, the
successors to the class of directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting of stockholders
held in the third year following the year of their election and until their
successors have been duly elected and qualified. Notwithstanding the foregoing,
a director whose term shall expire at any annual meeting shall continue to serve
until such time as his successor shall have been duly elected and shall have
qualified unless his position on the Board shall have been abolished by action
taken to reduce the size of the Board prior to said meeting. At each annual
meeting of stockholders at which a quorum is present, the persons receiving a
plurality of the votes cast shall be directors. No director or class of
directors may be removed from office by a vote of the stockholders at any time
except for cause as provided in Section 5.4 below.
5.3. INCREASE OR DECREASE IN NUMBER. Should the number
of directors of the Corporation be reduced, the directorship(s) eliminated
shall be allocated among the classes as appropriate so that the number of
directors in each class is as specified in Section 5.2. The Board of
Directors shall designate, by the name of the incumbent(s), the position(s)
to be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, the
additional directorships shall be allocated among the classes as appropriate
so that the number of directors in each class is as specified in Section 5.2.
5.4. REMOVAL FROM OFFICE. No director may be removed
at any time unless for cause and by affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, considered for this purpose as
one class, except as otherwise required by law.
5.5. VACANCIES. Any vacancy on the Board of Directors
resulting from death, retirement, resignation, disqualification or removal from
office or other cause, as well as any vacancy resulting from an increase in the
number of directors which occurs between annual meetings of the stockholders at
which directors are elected, shall be filled only by a majority vote of the
remaining directors then in office, though less than a quorum, or by a sole
remaining director, or may be elected by a plurality of the votes cast by the
holders of shares of capital stock entitled to vote in the election at a special
meeting of stockholders called for that purpose. The directors chosen to fill
vacancies shall hold office for a term expiring at the end of the next annual
meeting of
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stockholders at which the term of the class to which they have been elected
expires. Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately,
as a class or series, to elect directors, the election, term of office,
filling of vacancies, removal and other features of such directorships shall
be governed by the terms of the resolution or resolutions adopted by the
Board of Directors applicable thereto, and each director so elected shall not
be subject to the provisions of this Section 5 unless otherwise provided
therein.
5.6. POWER TO MAKE, ALTER AND REPEAL BY-LAWS. The Board
may from time to time adopt, amend or repeal the By-laws of the Corporation;
PROVIDED, HOWEVER, that any by-laws adopted or amended by the Board may be
amended or repealed, and any by-laws may be adopted, by the stockholders of
the Corporation, by a vote of a majority of the holders of shares of stock of
the Corporation entitled to vote in the election of the directors of the
Corporation.
5.7. AMENDMENT AND REPEAL OF SECTION 5. Notwithstanding
any provision of this Second Amended and Restated Certificate of
Incorporation and of the By-laws, and notwithstanding the fact that a lesser
percentage may be specified by Delaware law, unless such action has been
approved by a majority vote of the full Board of Directors, the affirmative
vote of 66 2/3 percent of the votes which all stockholders of the then
outstanding shares of capital stock of the Corporation would be entitled to
cast thereon, voting together as a single class, shall be required to amend
or repeal any provisions of this Section 5 or to adopt any provision
inconsistent with this Section 5. In the event such action has been
previously approved by a majority vote of the full Board of Directors, the
affirmative vote of a majority of the outstanding stock entitled to vote
thereon shall be sufficient to amend or repeal any provision of this Section
5 or adopt any provision inconsistent with this Section 5.
6. STOCKHOLDER CONSENTS. Any action required or permitted to
be taken by the stockholders of the Corporation shall be taken only at an annual
or special meeting of stockholders, and specifically shall not be taken upon the
written consent of all or less than all of the stockholders.
7. AMEND, ALTER OR CHANGE CERTIFICATE OF INCORPORATION. The
Corporation reserves the right to amend, alter, change or repeal any provision
of this Second Amended and Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute.
8. LIMITATION OF LIABILITY. No director of the Corporation
shall be 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 intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law is amended, or other
Delaware law is enacted, to permit further elimination or limitation of the
personal
3
<PAGE>
liability of directors, then the liability of directors of the Corporation
shall be eliminated or limited to the fullest extent permitted under the
General Corporation Law, as so amended, or by such other Delaware law, as so
enacted. Any repeal or modification of the foregoing provision shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
9. INDEMNIFICATION. The Corporation shall, to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law, as the
same may be amended and supplemented, indemnify each director and officer of the
Corporation from and against any and all of the expenses, liabilities or other
matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any by-law, agreement, vote of
stockholders, vote of disinterested directors or otherwise, and shall continue
as to a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such persons. The
Corporation may purchase and maintain insurance on behalf of any director or
officer to the extent permitted by Section 145 of the Delaware General
Corporation Law.
10. COMPROMISES WITH CREDITORS. Whenever a compromise or
arrangement is proposed between the Corporation and its creditors or any class
of them and/or between the Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, then the said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on the Corporation.
11. APPROVAL. The foregoing amendment was duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law.
4
<PAGE>
IN WITNESS WHEREOF, EXE Technologies, Inc. has caused this
Second Amended and Restated Certificate of Incorporation to be signed by its
President and Chief Executive Officer and attested by its Secretary this ____
day of ______, 2000. The undersigned certifies that this Second Amended and
Restated Certificate of Incorporation has been duly adopted in accordance
with the General Corporation Law.
EXE TECHNOLOGIES, INC.
By:
--------------------------------------
Raymond R. Hood
President and Chief Executive
Officer
ATTEST:
By:
-----------------------------
Christopher F. Wright
Secretary
5
<PAGE>
BY-LAWS
of
EXE TECHNOLOGIES, INC.
(A Delaware Corporation)
________________________
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as amended from
time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Chairman" means the Chairman of the Board of Directors of the
Corporation.
1.7 "Corporation" means EXE Technologies, Inc.
1.8 "Directors" means directors of the Corporation.
1.9 "Entire Board" means all directors of the Corporation in office,
whether or not present at a meeting of the Board, but disregarding vacancies.
<PAGE>
2
1.10 "General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholders" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of Stockholders shall be held at the
office of the Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notice of such meeting or in the
waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of Stockholders shall be held annually for
the election of Directors and the transaction of other business at such hour and
on such business day in October or November or as may be determined by the Board
and designated in the notice of meeting.
<PAGE>
3
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual meeting
of Stockholders for the election of Directors and the transaction of other
business is not held within the months specified in Section 2.2 hereof, the
Board shall call a meeting of Stockholders for the election of Directors and the
transaction of other business as soon thereafter as convenient.
2.4 OTHER SPECIAL MEETINGS. A special meeting of Stockholders (other than a
special meeting for the election of Directors), unless otherwise prescribed by
statute, may be called at any time by the Board or by the President or by the
Secretary. At any special meeting of Stockholders only such business may be
transacted as is related to the purpose or purposes of such meeting set forth in
the notice thereof given pursuant to Section 2.6 hereof or in any waiver of
notice thereof given pursuant to Section 2.7 hereof.
2.5 FIXING RECORD DATE. For the purpose of (a) determining the Stockholders
entitled (i) to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, (ii) unless otherwise provided in the Certificate of
Incorporation, to express consent to corporate action in writing without a
meeting or (iii) 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 (b) any other lawful action, the
Board may fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date was adopted by the Board and which
record date shall not be (x) in the case of clause (a)(i) above, more than sixty
nor less than ten days before the date of such meeting, (y) in the case of
clause (a)(ii) above, more than 10 days after the date upon which the resolution
fixing the record date was
<PAGE>
4
adopted by the Board and (z) in the case of clause (a)(iii) or (b) above, more
than sixty days prior to such action. If no such record date is fixed:
2.5.1 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;
2.5.2 the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting (unless otherwise
provided in the Certificate of Incorporation), when no prior action by the
Board is required under the General Corporation Law, shall be the first day
on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded; and
when prior action by the Board is required under the General Corporation
Law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of
business on the date on which the Board adopts the resolution taking such
prior action; and
<PAGE>
5
2.5.3 the record date for determining stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of Stockholders entitled to notice of or to vote at any
meeting of Stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.5.2 shall be by hand or by
certified or registered mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise provided in
Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute, the
Certificate of Incorporation or these By-laws, Stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten nor more than sixty days before the date of the meeting, to each
Stockholder of the Corporation entitled to such notice or to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, with postage prepaid, directed to the Stockholder at his
or her address as it appears on the records of the Corporation. An affidavit of
the Secretary or an Assistant Secretary or of the transfer agent of the
Corporation that the notice required by this
<PAGE>
6
Section 2.6 has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken,
and at the adjourned meeting any business may be transacted that might have been
transacted at the meeting as originally called. If, however, the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each Stockholder of record entitled to vote at the meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the Stockholder or Stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by a Stockholder at a meeting shall
constitute a waiver of notice of such meeting except when the Stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Stockholders need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, or cause
to be prepared and made, at least ten days before every meeting of
Stockholders, a complete list of the Stockholders entitled to vote at the
meeting, arranged in alphabetical
<PAGE>
7
order, and showing the address of each Stockholder and the number of shares
registered in the name of each Stockholder. Such list shall be open to the
examination of any Stockholder, the Stockholder's agent, or attorney, at the
Stockholder's expense, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any Stockholder who is present. The Corporation shall maintain the
Stockholder list in written form or in another form capable of conversion into
written form within a reasonable time. Upon the willful neglect or refusal of
the Directors to produce such a list at any meeting for the election of
Directors, they shall be ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the Stockholders
entitled to examine the stock ledger, the list of Stockholders or the books of
the Corporation, or to vote in person or by proxy at any meeting of
Stockholders.
2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise provided by
any statute, the Certificate of Incorporation or these By-laws, the holders of
one-third of all outstanding shares of stock entitled to vote at any meeting of
Stockholders, present in person or represented by proxy, shall constitute a
quorum for the transaction of any business at such meeting. When a quorum is
once present to organize a meeting of Stockholders, it is not broken by the
subsequent withdrawal of any Stockholders. The holders of a majority of the
shares of stock present in person or repre-
<PAGE>
8
sented by proxy at any meeting of Stockholders, including an adjourned meeting,
whether or not a quorum is present, may adjourn such meeting to another time and
place. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; PROVIDED, HOWEVER, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
2.10 VOTING; PROXIES. Unless otherwise provided in the Certificate of
Incorporation, every Stockholder of record shall be entitled at every meeting of
Stockholders to one vote for each share of capital stock standing in his or her
name on the record of Stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in assuming
that the persons in whose names shares of capital stock stand on the stock
ledger of the Corporation are entitled to vote such shares. Holders of
redeemable shares of stock are not entitled to vote after the notice of
redemption is mailed to such holders and a sum sufficient to redeem the stocks
has been deposited with a bank, trust company, or other
<PAGE>
financial institution under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares of stock. At any meeting of
Stockholders (at which a quorum was present to organize the meeting), all
matters, except as otherwise provided by statute or by the Certificate of
Incorporation or by these By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of Directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
Stockholder entitled to vote, the voting shall be by ballot. Each ballot shall
be signed by the Stockholder voting or the Stockholder's proxy and shall state
the number of shares voted. On all other questions, the voting may be VIVA VOCE.
Each Stockholder entitled to vote at a meeting of Stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such Stockholder by proxy. The
validity and enforceability of any proxy shall be determined in accordance with
Section 212 of the General Corporation Law. A Stockholder may revoke any proxy
that is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by delivering a proxy in
accordance with applicable law bearing a later date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of Stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may
<PAGE>
10
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate has been appointed or is able to
act at a meeting, the person presiding at the meeting may appoint, and on the
request of any Stockholder entitled to vote thereat shall appoint, one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall (a) ascertain the number of
shares outstanding and the voting power of each, (b) determine the shares
represented at the meeting and the validity of proxies and ballots, (c) count
all votes and ballots, (d) determine and retain for a reasonable period a record
of the disposition of any challenges made to any determination by the
inspectors, and (e) certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of their duties. Unless otherwise provided by the
Board, the date and time of the opening and the closing of the polls for each
matter upon which the Stockholders will vote at a meeting shall be determined by
the person presiding at the meeting and shall be announced at the meeting. No
ballot, proxies or votes, or any revocation thereof or change thereto, shall be
accepted by the inspectors after the closing of the polls unless the Court of
Chancery of the State of Delaware upon application by a Stockholder shall
determine otherwise.
2.12 ORGANIZATION. At each meeting of Stockholders, the President, or in
the absence of the President, the Chairman, or if there is no Chairman or if
there be one
<PAGE>
11
and the Chairman is absent, a Vice President, and in case more than one Vice
President shall be present, that Vice President designated by the Board (or in
the absence of any such designation, the most senior Vice President, based on
age, present), shall act as chairman of the meeting. The Secretary, or in his or
her absence, one of the Assistant Secretaries, shall act as secretary of the
meeting. In case none of the officers above designated to act as chairman or
secretary of the meeting, respectively, shall be present, a chairman or a
secretary of the meeting, as the case may be, shall be chosen by a majority of
the votes cast at such meeting by the holders of shares of capital stock present
in person or represented by proxy and entitled to vote at the meeting.
2.13 ORDER OF BUSINESS. The order of business at all meetings of
Stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered (by hand or by certified or registered mail, return
<PAGE>
12
receipt requested) to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required by this
Section 2.14, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation as aforesaid. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those Stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the Stockholders.
<PAGE>
13
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist of one
or more members. The number of Directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or by action of the Board. Directors need not be stockholders. Each
Director shall hold office until a successor is elected and qualified or until
the Director's death, resignation or removal.
3.3 ELECTION. Directors shall, except as otherwise required by statute or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise provided in
the Certificate of Incorporation, newly created Directorships resulting from an
increase in the number of Directors and vacancies occurring in the Board for any
other reason, including the removal of Directors without cause, may be filled by
the affirmative votes of a majority of the entire Board, although less than a
quorum, or by a sole remaining Director, or may be elected by a plurality of the
votes cast by the holders of shares of capital stock entitled to vote in the
election at a special meeting of stockholders called for that purpose. A
Director elected to fill a vacancy shall be elected to hold office until a
successor is elected and qualified, or until the Director's earlier death,
resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written notice to
the Corporation. Such resignation shall take effect at the time therein
specified,
<PAGE>
14
and, unless otherwise specified in such resignation, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 REMOVAL. Subject to the provisions of Section 141(k) of the General
Corporation Law, any or all of the Directors may be removed with or without
cause by vote of the holders of a majority of the shares then entitled to vote
at an election of Directors.
3.7 COMPENSATION. Each Director, in consideration of his or her service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in connection with the
performance of his or her duties. Each Director who shall serve as a member of
any committee of Directors in consideration of serving as such shall be entitled
to such additional amount per annum or such fees for attendance at committee
meetings, or both, as the Board may from time to time determine, together with
reimbursement for the reasonable out-of-pocket expenses, if any, incurred by
such Director in the performance of his or her duties. Nothing contained in this
Section 3.7 shall preclude any Director from serving the Corporation or its
subsidiaries in any other capacity and receiving proper compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings, both regular
and special, either within or without the State of Delaware. The times and
places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
<PAGE>
3.9 ANNUAL MEETINGS. On the day when and at the place where the annual
meeting of stockholders for the election of Directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
hereof for special meetings of the Board or in a waiver of notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held without
notice at such times and at such places as shall from time to time be determined
by the Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be called by the
Chairman, the President or the Secretary or by any two or more Directors then
serving on at least one day's notice to each Director given by one of the means
specified in Section 3.14 hereof other than by mail, or on at least three days'
notice if given by mail. Special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of any two or more of the Directors then serving.
3.12 TELEPHONE MEETINGS. Directors or members of any committee designated
by the Board may participate in a meeting of the Board or of such 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
participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
<PAGE>
16
3.13 ADJOURNED MEETINGS. A majority of the Directors present at any meeting
of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least one day's
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.14 hereof other than by mail,
or at least three days' notice if by mail. Any business may be transacted at an
adjourned meeting that might have been transacted at the meeting as originally
called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof, whenever,
under the provisions of any statute, the Certificate of Incorporation or these
By-laws, notice is required to be given to any Director, such notice shall be
deemed given effectively if given in person or by telephone, by mail addressed
to such Director at such Director's address as it appears on the records of the
Corporation, with postage thereon prepaid, or by telegram, telex, telecopy or
similar means addressed as aforesaid.
3.15 WAIVER OF NOTICE. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the person or persons entitled to said notice, whether before
or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of,
<PAGE>
17
any regular or special meeting of the Directors or a committee of Directors
need be specified in any written waiver of notice unless so required by statute,
the Certificate of Incorporation or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman, or in the
absence of the Chairman, the President, or in the absence of the President, a
chairman chosen by a majority of the Directors present, shall preside. The
Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and all Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
3.17 QUORUM OF DIRECTORS. The presence in person of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board, but a majority of a
smaller number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly required by
statute, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board.
3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate
of Incorporation or these By-laws, any action required or permitted to be taken
at any meeting of the Board or of any committee thereof may be taken without a
meeting if all Directors or members of such committee, as the case may be,
consent thereto in
<PAGE>
18
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of a majority of the entire
Board, designate one or more committees, each committee to consist of one or
more of the Directors of the Corporation. The Board may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. If a member of a committee
shall be absent from any meeting, or disqualified from voting thereat, the
remaining member or members present and not disqualified from voting, whether or
not such member or members constitute a quorum, may, by a unanimous vote,
appoint another member of the Board to act at the meeting in the place of any
such absent or disqualified member. Any such committee, to the extent provided
in the resolution of the Board passed as aforesaid, shall have and may exercise
all the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
impressed on all papers that may require it, but no such committee shall have
the power or authority of the Board in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation under section
251 or section 252 of the General Corporation Law, recommending to the
stockholders (a) the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, or (b) a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws of the Corporation; and,
unless the resolution designating it expressly so provides, no such committee
shall have the power and authority to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger pursuant to
Section 253 of the General Corporation Law. Unless otherwise specified in the
resolution of the Board designating a
<PAGE>
19
committee, at all meetings of such committee a majority of the total number of
members of the committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the committee present at
any meeting at which there is a quorum shall be the act of the committee. Each
committee shall keep regular minutes of its meetings. Unless the Board otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board conducts
its business pursuant to Article 3 of these By-laws.
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a President, a
Secretary, a Treasurer and such other officers as the Board may appoint,
including a Chairman, one or more Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers, who shall exercise such powers and perform
such duties as shall be determined from time to time by the Board. The Board may
designate one or more Vice Presidents as Executive Vice Presidents and may use
descriptive words or phrases to designate the standing, seniority or areas of
special competence of the Vice Presidents elected or appointed by it. Any number
of offices may be held by the same person unless the Certificate of
Incorporation or these By-laws otherwise provide.
<PAGE>
20
5.2 APPOINTMENT. The officers of the Corporation shall be chosen by the
Board at its annual meeting or at such other time or times as the Board shall
determine.
5.3 COMPENSATION. The compensation of all officers of the Corporation shall
be fixed by the Board. No officer shall be prevented from receiving a salary or
other compensation by reason of the fact that the officer is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold office for
the term for which he or she is elected and until such officer's successor is
chosen and qualifies or until such officer's earlier death, resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation. Such resignation shall take effect at the date of receipt of such
notice or at such later time as is therein specified, and, unless otherwise
specified, the acceptance of such resignation shall not be necessary to make it
effective. The resignation of an officer shall be without prejudice to the
contract rights of the Corporation, if any. Any officer elected or appointed by
the Board may be removed at any time, with or without cause, by vote of a
majority of the entire Board. Any vacancy occurring in any office of the
Corporation shall be filled by the Board. The removal of an officer without
cause shall be without prejudice to the officer's contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of any or all
of its officers or agents by bond or otherwise.
<PAGE>
21
5.6 CHAIRMAN. The Chairman, if one shall have been appointed, shall preside
at all meetings of the Board and shall exercise such powers and perform such
other duties as shall be determined from time to time by the Board.
5.7 PRESIDENT. The President shall be the Chief Executive Officer of the
Corporation and shall have general supervision over the business of the
Corporation, subject, however, to the control of the Board and of any duly
authorized committee of Directors. The President shall preside at all meetings
of the Stockholders and at all meetings of the Board at which the Chairman (if
there be one) is not present. The President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts and other instruments except
in cases in which the signing and execution thereof shall be expressly delegated
by the Board or by these By-laws to some other officer or agent of the
Corporation or shall be required by statute otherwise to be signed or executed
and, in general, the President shall perform all duties incident to the office
of President of a corporation and such other duties as may from time to time be
assigned to the President by the Board.
5.8 VICE PRESIDENTS. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board, or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution
<PAGE>
22
thereof shall be expressly delegated by the Board or by these By-laws to some
other officer or agent of the Corporation, or shall be required by statute
otherwise to be signed or executed, and each Vice President shall perform such
other duties as from time to time may be assigned to such Vice President by the
Board or by the President.
5.9 SECRETARY. The Secretary shall attend all meetings of the Board and of
the Stockholders and shall record all the proceedings of the meetings of the
Board and of the stockholders in a book to be kept for that purpose, and shall
perform like duties for committees of the Board, when required. The Secretary
shall give, or cause to be given, notice of all special meetings of the Board
and of the stockholders and shall perform such other duties as may be prescribed
by the Board or by the President, under whose supervision the Secretary shall
be. The Secretary shall have custody of the corporate seal of the Corporation,
and the Secretary, or an Assistant Secretary, shall have authority to impress
the same on any instrument requiring it, and when so impressed the seal may be
attested by the signature of the Secretary or by the signature of such Assistant
Secretary. The Board may give general authority to any other officer to impress
the seal of the Corporation and to attest the same by such officer's signature.
The Secretary or an Assistant Secretary may also attest all instruments signed
by the President or any Vice President. The Secretary shall have charge of all
the books, records and papers of the Corporation relating to its organization
and management, shall see that the reports, statements and other documents
required by statute are properly kept and filed and, in general, shall perform
all duties incident to the office of Secretary of a corporation and
<PAGE>
23
such other duties as may from time to time be assigned to the Secretary by the
Board or by the President.
5.10 TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; render to the
President or the Board, whenever the President or the Board shall require the
Treasurer so to do, an account of the financial condition of the Corporation and
of all financial transactions of the Corporation; exhibit at all reasonable
times the records and books of account to any of the Directors upon application
at the office of the Corporation where such records and books are kept; disburse
the funds of the Corporation as ordered by the Board; and, in general, perform
all duties incident to the office of Treasurer of a
<PAGE>
24
corporation and such other duties as may from time to time be assigned to the
Treasurer by the Board or the President.
5.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries
and Assistant Treasurers shall perform such duties as shall be assigned to them
by the Secretary or by the Treasurer, respectively, or by the Board or by the
President.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise provided in
these By-laws, may prospectively or retroactively authorize any officer or
officers, employee or employees or agent or agents, in the name and on behalf of
the Corporation, to enter into any contract or execute and deliver any
instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize the
President or any other officer, employee or agent of the Corporation to effect
loans and advances at any time for the Corporation from any bank, trust company
or other institution, or from any firm, corporation or individual, and for such
loans and advances the person so authorized may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation, and, when authorized by the Board so to do, may pledge and
hypothecate or transfer any securities or other property of the Corporation as
security for any such loans or advances. Such authority conferred by the Board
may be general or confined to specific instances, or otherwise limited.
<PAGE>
25
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed shall be
deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
<PAGE>
26
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
President or a Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer, and may be impressed with the seal of
the Corporation or a facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles, if the certificate is countersigned by a transfer
agent or registrar other than the Corporation itself or its employee. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of
<PAGE>
27
the Corporation shall be deemed the owner thereof to receive dividends, to vote
as such owner and for all other purposes as respects the Corporation. No
transfer of shares of capital stock shall be valid as against the Corporation,
its stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
such transfer shall have been entered on the books of the Corporation by an
entry showing from and to whom transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder of any
shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his or her legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation and its transfer agents
and registrars against any claim that may be made against any of them on account
of the continued existence of any such certificate so alleged to have been
<PAGE>
28
lost, destroyed, stolen or mutilated and against any expense in connection with
such claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these By-laws or with the
Certificate of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
7.6 RESTRICTION ON TRANSFER OF STOCK. A written restriction on the transfer
or registration of transfer of capital stock of the Corporation, if permitted by
Section 202 of the General Corporation Law and noted conspicuously on the
certificate representing such capital stock, may be enforced against the holder
of the restricted capital stock or any successor or transferee of the holder,
including an executor, administrator, trustee, guardian or other fiduciary
entrusted with like responsibility for the person or estate of the holder.
Unless noted conspicuously on the certificate representing such capital stock, a
restriction, even though permitted by Section 202 of the General Corporation
Law, shall be ineffective except against a person with actual knowledge of the
restriction. A restriction on the transfer or registration of transfer of
capital stock of the Corporation may be imposed either by the Certificate of
Incorporation or by an agreement among any number of stockholders or among such
stockholders and the Corporation. No restriction so imposed shall be binding
with respect to capital stock issued prior to the adoption of the restriction
unless the holders of such capital stock are parties to an agreement or voted in
favor of the restriction.
<PAGE>
29
7.7 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the Certificate
of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other distributions on the
outstanding shares of capital stock in such amounts and at such time or
times as it, in its discretion, shall deem advisable giving due
consideration to the condition of the affairs of the Corporation;
7.7.2 may use and apply, in its discretion, any of the surplus of the
Corporation in purchasing or acquiring any shares of capital stock of the
Corporation, or purchase warrants therefor, in accordance with law, or any
of its bonds, debentures, notes, scrip or other securities or evidences of
indebtedness; and
7.7.3 may set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
<PAGE>
30
8.1 INDEMNITY UNDERTAKING. To the extent not prohibited by law, the
Corporation shall indemnify any person who is or was made, or threatened to be
made, a party to any threatened, pending or completed action, suit or proceeding
(a "Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or, at the request of the Corporation, is or was
serving as a director or officer of any other corporation or in a capacity with
comparable authority or responsibilities for any partnership, joint venture,
trust, employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees, disbursements and other
charges). Persons who are not directors or officers of the Corporation (or
otherwise entitled to indemnification pursuant to the preceding sentence) may be
similarly indemnified in respect of service to the Corporation or to an Other
Entity at the request of the Corporation to the extent the Board at any time
specifies that such persons are entitled to the benefits of this Article 8.
8.2 ADVANCEMENT OF EXPENSES. The Corporation shall, from time to time,
reimburse or advance to any Director or officer or other person entitled to
indemnification hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; PROVIDED, HOWEVER, that,
if required by the General Corporation Law, such expenses incurred by or on
behalf of any Director or
<PAGE>
31
officer or other person may be paid in advance of the final disposition of a
Proceeding only upon receipt by the Corporation of an undertaking, by or on
behalf of such Director or officer (or other person indemnified hereunder), to
repay any such amount so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right of appeal that such
Director, officer or other person is not entitled to be indemnified for such
expenses.
8.3 RIGHTS NOT EXCLUSIVE. The rights to indemnification and reimbursement
or advancement of expenses provided by, or granted pursuant to, this Article 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, the Certificate of Incorporation, these
By-laws, any agreement, any vote of stockholders or disinterested Directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.
8.4 CONTINUATION OF BENEFITS. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article 8 shall continue as to a person who has ceased to be a Director or
officer (or other person indemnified hereunder) and shall inure to the benefit
of the executors, administrators, legatees and distributees of such person.
8.5 INSURANCE. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted
<PAGE>
32
against such person and incurred by such person in any such capacity, or arising
out of such person's status as such, whether or not the Corporation would have
the power to indemnify such person against such liability under the provisions
of this Article 8, the Certificate of Incorporation or under section 145 of the
General Corporation Law or any other provision of law.
8.6 BINDING EFFECT. The provisions of this Article 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Article 8 is in effect and any
other person entitled to indemnification hereunder, on the other hand, pursuant
to which the Corporation and each such Director, officer or other person intend
to be, and shall be legally bound. No repeal or modification of this Article 8
shall affect any rights or obligations with respect to any state of facts then
or theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
8.7 PROCEDURAL RIGHTS. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that
<PAGE>
33
such indemnification or reimbursement or advancement of expenses is proper in
the circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 SERVICE DEEMED AT CORPORATION'S REQUEST. Any Director or officer of the
Corporation serving in any capacity (a) another corporation of which a majority
of the shares entitled to vote in the election of its directors is held,
directly or indirectly, by the Corporation or (b) any employee benefit plan of
the Corporation or any corporation referred to in clause (a) shall be deemed to
be doing so at the request of the Corporation.
8.9 ELECTION OF APPLICABLE LAW. Any person entitled to be indemnified or to
reimbursement or advancement of expenses as a matter of right pursuant to this
Article 8 may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in effect
at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification or reimbursement or
advancement of expenses is sought. Such election shall be made, by a notice in
writing to the Corporation, at the time indemnification or reimbursement or
advancement of expenses is sought; PROVIDED, HOWEVER, that if no such
<PAGE>
34
notice is given, the right to indemnification or reimbursement or advancement of
expenses shall be determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal office of the
Corporation correct and complete records and books of account recording the
financial transactions of the Corporation and minutes of the proceedings of the
stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
<PAGE>
35
9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by law,
the Board shall determine from time to time whether, and, if allowed, when and
under what conditions and regulations, the accounts, books, minutes and other
records of the Corporation, or any of them, shall be open to the stockholders
for inspection.
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be changed, by
resolution of the Board.
<PAGE>
36
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President, any
Vice President, the Secretary or the Treasurer, or any one of them, may execute
and deliver on behalf of the Corporation proxies respecting any and all shares
or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the same shall deem
proper to represent and vote the shares or other ownership interests so owned at
any and all meetings of holders of shares or other ownership interests, whether
general or special, and/or to execute and deliver consents respecting such
shares or other ownership interests; or any of the aforesaid officers may attend
any meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the Corporation
as the holder of such shares or other ownership interests.
ARTICLE 13
EMERGENCY BY-LAWS
Unless the Certificate of Incorporation provides otherwise, the following
provisions of this Article 13 shall be effective during an emergency, which is
defined as when a quorum of the Corporation's Directors cannot be readily
assembled because of some catastrophic event. During such emergency:
13.1 NOTICE TO BOARD MEMBERS. Any one member of the Board or any one of the
following officers: Chairman, President, any Vice President, Secretary, or
<PAGE>
37
Treasurer, may call a meeting of the Board. Notice of such meeting need be given
only to those Directors whom it is practicable to reach, and may be given in any
practical manner, including by publication and radio. Such notice shall be given
at least six hours prior to commencement of the meeting.
13.2 TEMPORARY DIRECTORS AND QUORUM. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order of rank, and within the same rank, in order of seniority. In the event
that less than a quorum of the Directors are present (including any officers who
are to serve as Directors for the meeting), those Directors present (including
the officers serving as Directors) shall constitute a quorum.
13.3 ACTIONS PERMITTED TO BE TAKEN. The Board as constituted in Section
13.2, and after notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the Corporation;
13.3.2 delegate to any officer or Director, any of the powers of the
Board;
13.3.3 designate lines of succession of officers and agents, in the
event that any of them are unable to discharge their duties;
13.3.4 relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
<PAGE>
38
13.3.5 take any other convenient, helpful or necessary action to carry
on the business of the Corporation.
ARTICLE 14
AMENDMENTS
These By-laws may be amended or repealed and new By-laws may be adopted by
a vote of the holders of shares entitled to vote in the election of Directors or
by the Board. Any By-laws adopted or amended by the Board may be amended or
repealed by the Stockholders entitled to vote thereon.
<PAGE>
AMENDMENT TO BYLAWS
Section 2.2 of the Bylaws of EXE Technologies, Inc. has been amended, effective
October 23, 1998, by Unanimous Consent of Directors of the Corporation, as
follows:
"2.2 ANNUAL MEETING. A meeting of Stockholders shall be held annually
for the election of Directors and the transaction of other business at such hour
and on such business day in May or June or as may be determined by the Board and
designated in the notice of meeting."
<PAGE>
EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
AS AMENDED AND RESTATED OCTOBER 1998
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. NAME AND PURPOSES..................................................1
Section 2. DEFINITIONS........................................................1
Section 3. ADMINISTRATION.....................................................4
Section 4. ELIGIBILITY........................................................6
Section 5. STOCK SUBJECT TO THE PLAN..........................................7
Section 6. TERMS AND CONDITIONS OF OPTIONS....................................7
Section 7. FAIR MARKET VALUE OF COMMON STOCK.................................10
Section 8. ADJUSTMENTS.......................................................10
Section 9. RIGHTS AS A STOCKHOLDER...........................................11
Section 10. FORFEITURE.......................................................11
Section 11. TIME OF GRANTING OPTIONS.........................................12
Section 12. MODIFICATION, EXTENSION, RENEWAL OF OPTION.......................12
Section 13. TRANSFERABILITY..................................................12
Section 14. POWER OF BOARD IF CHANGE OF CONTROL..............................12
Section 15. AMENDMENT OR TERMINATION OF THE PLAN.............................13
Section 16. APPLICATION OF FUNDS.............................................13
Section 17. NO OBLIGATION TO EXERCISE OPTION.................................13
Section 18. APPROVAL OF STOCKHOLDERS.........................................13
Section 19. CONDITIONS UPON ISSUANCE OF SHARES...............................13
Section 20. RESERVATION OF SHARES............................................14
Section 21. OTHER AGREEMENTS.................................................14
-i-
<PAGE>
Section 22. TAXES, FEES, EXPENSES AND WITHHOLDING............................14
Section 23. NOTICES..........................................................15
Section 24. NO ENLARGEMENT OF EMPLOYEE RIGHTS................................15
Section 25. INFORMATION TO OPTIONEES.........................................16
Section 26. AVAILABILITY OF PLAN.............................................16
Section 27. INVALID PROVISIONS...............................................16
Section 28. APPLICABLE LAW...................................................16
Section 29. BOARD ACTION.....................................................16
Section 30. MISCELLANEOUS....................................................16
INCENTIVE STOCK OPTION AGREEMENT...............................................1
NON-QUALIFIED STOCK OPTION AGREEMENT...........................................1
STOCK PURCHASE AND RESTRICTION AGREEMENT.......................................1
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EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
Section 1. NAME AND PURPOSES OF THE PLAN.
(a) NAME. The Plan will be known as the EXE Technologies, Inc. 1997
Incentive and Non-Qualified Stock Option Plan.
(b) PURPOSES. The purpose of the Plan is to provide key Employees and
Consultants with an opportunity to share in the capital appreciation of the
Common Stock of the Company. The Options granted pursuant to the Plan are
intended to constitute either Incentive Stock Options or Non-Qualified Stock
Options, as determined by the Administrator of the Plan at the time of grant.
Section 2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" shall be the Board or a Committee appointed by the
Board pursuant to Section 3 of the Plan, which shall administer the Plan.
(b) "AFFILIATE" shall mean, whether now or hereafter existing, a person
or entity that directly, or indirectly controls or is controlled by, or is
under common control with, the Company, except that when used in connection
with an Incentive Stock Option, "Affiliate" shall mean a Subsidiary.
(c) "BOARD" shall mean the Board of Directors of the Company, as
constituted from time to time.
(d) "CHANGE OF CONTROL" shall mean the happening of an event (excluding
a Public Offering) that shall be deemed to have occurred upon the earliest to
occur of the following events: (i) the date the stockholders of the Company
(or the Board, if stockholder action is not required) approve a plan or other
arrangement pursuant to which the Company will be dissolved or liquidated;
(ii) the date the stockholders of the Company (or the Board, if stockholder
action is not required) approve a definitive agreement to sell or otherwise
dispose of all or substantially all of the assets of the Company; (iii) the
date the stockholders of the Company (or the Board, if stockholder action is
not required) and the stockholders of the other constituent corporations (or
their respective boards of directors, if and to the extent that stockholder
action is not required) have approved a definitive agreement to merge or
consolidate the Company with or into another corporation, other than, in
either case, a merger or consolidation of the Company in which holders of
shares of the Company's voting capital stock immediately prior to the merger
or consolidation will have at least fifty percent (50%) of the ownership of
voting capital stock of the surviving corporation immediately after the
merger or consolidation (on a fully diluted basis),
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which voting capital stock is to be held by each such holder in the same or
substantially similar proportion (on a fully diluted basis) as such holder's
ownership of voting capital stock of the Company immediately before the merger
or consolidation; (iv) the date any entity, person or group (within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (A) the
Company, (B) any of its Subsidiaries, (C) any of the holders of the capital
stock of the Company, as determined on the date that this Plan is adopted by the
Board, (D) any employee benefit plan (or related trust) sponsored or maintained
by the Company or any of its Subsidiaries or (E) any Affiliate of any of the
foregoing, shall have acquired beneficial ownership of, or shall have acquired
voting control over more than fifty percent (50%) of the outstanding shares of
the Company's voting capital stock (on a fully diluted basis), unless the
transaction pursuant to which such person, entity or group acquired such
beneficial ownership or control resulted from the original issuance by the
Company of shares of its voting capital stock and was approved by at least a
majority of directors who shall have been members of the Board for at least
twelve (12) months prior to the date of such approval; (v) the first day after
the date of this Plan when directors are elected such that there shall have been
a change in the composition of the Board such that a majority of the Board shall
have been members of the Board for less than twelve (12) months, unless the
nomination for election of each new director who was not a director at the
beginning of such twelve (12) month period was approved by a vote of at least
sixty percent (60%) of the directors then still in office who were directors at
the beginning of such period; or (vi) the date upon which the Board determines
(in its sole discretion) that based on then current available information, the
events described in clause (iv) are reasonably likely to occur.
(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(f) "COMMITTEE" shall mean a Committee appointed by the Board in accordance
with Section 3(a) of the Plan, if one is appointed, in which event the Committee
or Committees, as the case may be, shall possess the power and authority of the
Board with respect to the Plan as set forth in Section 3(b) of the Plan.
(g) "COMMON STOCK" shall mean, as applicable, (i) the Class B Common Stock,
$.01 par value per share, of the Company, or in the event of the conversion of
the Class B Common Stock, any shares of the Class A Common Stock $.01, par value
per share, of the Company issued or issuable upon conversion of the Class B
Common Stock or (ii) the Class A Common Stock, $.01 par value per share, of the
Company.
(h) "COMPANY" shall mean EXE Technologies, Inc., a Delaware corporation,
and any successor in interest that agrees to assume and maintain the Plan.
(i) "CONSULTANT" shall mean any person associated with the Company who is
engaged by the Company to render services and is compensated by the Company for
such services, including but not limited to, an advisor or independent
contractor, but excluding any director who is not an Employee.
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(j) "DISABILITY" or "DISABLED" with respect to an Optionee shall mean (i)
when the Optionee is determined to be disabled within the meaning of any
long-term disability policy or program sponsored by the Company covering the
Optionee, as in effect as of the date of such determination, or (ii) if no such
policy or program shall be in effect, when the Optionee is unable to engage in
any substantial gainful activity by reason of a physical or mental impairment
that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than twelve (12) months. The
determination of whether an Optionee is Disabled pursuant to subparagraph (ii)
shall be determined by the Board of Directors, whose determination shall be
conclusive; provided that, (A) if an Optionee is bound by the terms of an
Executive Employment Agreement between the Optionee and the Company, then
whether the Optionee is "Disabled" for purposes of the Plan shall be determined
in accordance with the procedures set forth in said Employment Agreement, if
such procedures are therein provided; and (B) an Optionee bound by such an
Employment Agreement shall not be determined to be Disabled under the Plan any
earlier than he or she would be determined to be disabled under his or her
Employment Agreement.
(k) "EMPLOYEE" shall mean any person employed by the Company or any
Subsidiary of the Company.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" shall mean, as of any date, the fair market value
of a share of Common Stock as determined pursuant to Section 7 hereof.
(n) "INCENTIVE STOCK OPTION" shall mean any Option that is intended to be
and is designated as an incentive stock option within the meaning of Section 422
of the Code.
(o) "NON-EMPLOYEE DIRECTOR" shall have the meaning set forth in Rule
16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission; provided, however, that the Administrator may, to the extent the
Administrator deems it necessary or desirable to comply with Section 162(m) of
the Code and applicable regulations thereunder, ensure that each Non-Employee
Director also qualifies as an "outside director" as that term is defined in the
regulations under Section 162(m) of the Code.
(p) "NON-QUALIFIED STOCK OPTION" shall mean any Option that is not intended
to qualify as an Incentive Stock Option.
(q) "OPTION" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option, as the case may be, granted pursuant to the Plan.
(r) "OPTION AGREEMENT" shall mean the written agreement by and between the
Company and an Optionee under which Optionee may purchase the Shares pursuant to
the exercise of an Option.
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(s) "OPTIONEE" shall mean an Employee or Consultant to whom an Option is
granted.
(t) "PLAN" shall mean this EXE Technologies, Inc. 1997 Incentive and
Non-Qualified Stock Option Plan, as amended from time to time.
(u) "PUBLIC OFFERING" shall mean the consummation of a firm commitment
underwritten public offering of equity securities of the Company registered
under the Securities Act.
(v) "SALE OF THE COMPANY" shall mean the earliest of: (i) the closing of a
sale, transfer or other disposition of all or substantially all of the shares of
the capital stock then outstanding of the Company (except if such transferee is
then an Affiliate); (ii) the closing of a sale, transfer or other disposition of
all or substantially all of the assets of the Company (except if such transferee
is then an Affiliate); or (iii) the merger or consolidation of the Company with
or into another corporation (except an Affiliate), other than a merger or
consolidation of the Company in which the holders of shares of the Company's
voting capital stock outstanding immediately before such merger or consolidation
hold greater than fifty percent (50%) of the surviving entity's voting capital
stock after such consolidation or merger.
(w) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(x) "SHARE" or "SHARES" shall mean a share or shares of Common Stock, as
adjusted in accordance with Section 8 of the Plan, that is allocated to the
Plan.
(y) "STOCK PURCHASE AND RESTRICTION AGREEMENT" shall mean an agreement in
such form or forms as the Board (subject to the terms and conditions of this
Plan) may from time to time approve, which an Optionee shall be required to
execute as a condition of purchasing Shares upon the exercise of an Option.
(z) "SUBSIDIARY" shall mean, whether now or hereafter existing, a
subsidiary or parent corporation of the Company as such term is defined in
Sections 424(e), (f) and (g) of the Code.
(aa) "VESTED AMOUNT" shall mean, with respect to each Option, a percentage
of the shares for which the Option has become exercisable (subject to the
further terms of the Plan) by application of the schedule set forth in Section
4(b).
Section 3. ADMINISTRATION.
(a) PROCEDURE. The Plan shall be administered by the Board and/or by one or
more Committees, each of which shall consist of not less than two (2) persons
appointed by the Board. In the event the Company has a class of equity
securities registered under the Exchange Act, the Board shall administer the
Plan; provided that it may appoint one or more Committees in accordance with
Section 3(b).
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(b) COMMITTEES. If one or more Committees are appointed by the Board, then
the Committees shall possess the power and authority of the Board in
administering the Plan on behalf of the Board, subject to such terms and
conditions as the Board may prescribe, which conditions may state that the
Committee shall have administrative authority with respect to only a prescribed
group of individuals eligible for Options under the Plan.
Members of a Committee shall be members of the Board and shall serve for
such period of time as the Board may determine. From time to time, the Board may
increase the size of a Committee and appoint additional members thereto, remove
members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of a Committee
and thereafter directly administer the Plan. Notwithstanding the foregoing, in
the event the Company has a class of equity securities registered under the
Exchange Act, any Committee that grants Options to individuals who are covered
employees pursuant to section 162(m) of the Code and the regulations thereunder,
and/or to individuals who are directors, officers or principal stockholders as
determined pursuant to Section 16 of the Exchange Act, shall be composed solely
of two (2) or more Non-Employee Directors.
(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan
(and, in the case of the Committee, the specific duties delegated by the Board
to such Committee), the Administrator shall have the authority, in its sole
discretion:
(1) to determine whether and to what extent Options are granted
hereunder;
(2) to determine the Fair Market Value of the Common Stock based upon
review of relevant information and in accordance with Section 7 of the Plan;
(3) to determine the exercise price of the Options in accordance with
Section 6(b) of the Plan;
(4) to select the Optionees to whom Options may from time to time be
granted;
(5) to determine the number of Shares to be subject to each Option
granted hereunder;
(6) to prescribe, amend and rescind rules and regulations relating to
the Plan;
(7) to determine the terms and provisions of each Option granted under
the Plan, each Option Agreement and each other agreement that in the sole
discretion of the Administrator may be required (all of which agreements need
not be identical with the terms of other Options, Option Agreements or other
agreements);
(8) to determine the circumstances under which the vesting or exercise
date of an Option will be accelerated;
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(9) to interpret the Plan or any agreement entered into with respect
to the grant or exercise of Options;
(10) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted by
the Board or to take such other actions as may be necessary or appropriate with
respect to the Company's rights pursuant to Options or agreements relating to
the granting or exercise thereof;
(11) to determine whether and under what circumstances an Option may
be exercised without a payment of cash under Section 6(c) hereof;
(12) to terminate the Plan in the event of a Change of Control; and
(13) to make such other determinations and establish such other
procedures as it deems necessary or advisable for the administration of the
Plan.
(d) EFFECT OF THE ADMINISTRATOR'S DECISION. All decisions, determinations
and interpretations of the Administrator pursuant to the provisions of the Plan
shall be final and binding on all Optionees and any other holders of Options.
(e) LIMITATION OF LIABILITY. Notwithstanding anything herein to the
contrary, no member of the Board or the Committee shall be liable for any good
faith determination, act or failure to act in connection with the Plan or any
Option awarded hereunder.
Section 4. ELIGIBILITY.
(a) ELIGIBLE PERSONS. Options may be granted at any time and from time to
time to any Employee or Consultant who shall be selected by the Administrator.
Any grant of Options may include or exclude any Employee or Consultant as the
Administrator shall determine in its sole discretion. Consultants who are not
also Employees of the Company are eligible to be granted Non-Qualified Stock
Options under the Plan but are not eligible to be granted Incentive Stock
Options under the Plan.
(b) VESTING AND EXERCISABILITY OF OPTIONS. Subject to the provisions of
Section 6 hereof and except to the extent the Board provides otherwise, each
Option shall vest as follows: 25% of the Option shall vest on the first
anniversary of the date of grant, and an additional 25% shall vest on each of
the second, third, and fourth anniversaries of the date of grant.
The Administrator may, but need not, determine that the Vested Amount of
each Option shall be exercisable only upon the earlier to occur of: (i) the
consummation of a Public Offering; or (ii) the consummation of a Sale of the
Company. The unvested portion of each Option may not be exercised.
(c) EFFECT UPON ENGAGEMENT. The Plan will not confer upon any Optionee
any right with respect to the continuation of any employment, consulting or
any other relationship with the
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Company nor will it interfere in any way with such Optionee's right or the
Company's right to terminate that Optionee's employment, consulting or other
relationship with the Company at any time, whether with or without cause.
Section 5. STOCK SUBJECT TO THE PLAN.
(a) MAXIMUM NUMBER OF SHARES. Subject to the provisions of Section 8 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is Eight Million Five Hundred Thousand (8,500,000) Shares. The
Shares may be authorized, but unissued or reacquired, Common Stock. In the event
the Company has a class of equity securities registered under the Exchange Act,
the maximum number of Shares with respect to which Options may be granted under
the Plan to any Employee during any calendar year is One Million (1,000,000)
Shares.
(b) RETURN OF SHARES TO THE PLAN. If an Option expires, is terminated or
become unexercisable for any reason without having been exercised in full, then
the unpurchased Shares subject thereto shall, unless the Plan shall have been
terminated, return to the Plan and become available for future grant under the
Plan.
Section 6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under the Plan shall be authorized by the Board and
shall be evidenced by an Option Agreement, which shall state or incorporate by
reference all other terms and conditions of the Plan including, without
limitation, the following terms and conditions:
(a) NUMBER OF SHARES. The Option Agreement shall state the number of Shares
subject to the Option.
(b) OPTION EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to the exercise of an Incentive Stock Option shall be stated
in the Option Agreement and shall be no less than the Fair Market Value per
share of the Common Stock on the date such Option is granted, without regard to
any restriction other than a restriction that by its terms will never lapse;
provided, however, that any Incentive Stock Option granted under this Plan to an
Employee who, at the time such Option is granted, owns more than ten percent
(10%) of the current total combined voting power of all classes of the capital
stock of the Company, shall have an exercise price per Share of not less than
one hundred ten percent (110%) of the Fair Market Value of the Common Stock on
the date such Option is granted. The per Share exercise price for the Shares to
be issued pursuant to the exercise of a Non-Qualified Stock Option shall be
stated in the Option Agreement and shall be determined by the Administrator but
shall be at least $.01 per Share.
(c) CONSIDERATION. The consideration to be paid for the Shares to
be issued upon the exercise of an Option, including the method of payment, shall
be determined by the Administrator and may consist entirely of: (i) cash; (ii)
check; or (iii) such other consideration and method of payment as the
Administrator may from time to time determine. In making its
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determination as to the type of consideration to accept, the Administrator shall
consider if the acceptance of such consideration may be reasonably expected to
benefit the Company.
(d) FORM OF OPTION. The Option Agreement shall state whether the Option
granted thereunder is intended to be an Incentive Stock Option or a
Non-Qualified Stock Option and shall, subject to the terms of the Option
Agreement, constitute a binding determination as to the form of Option granted
thereunder.
(e) EXERCISE OF AN OPTION.
(1) Unless otherwise provided by the Board, the Vested Amount of any
Option granted hereunder shall be exercisable, in whole or in part, at such
times and under such further conditions as may be determined by the Board and as
set forth in the Option Agreement.
(2) An Option may not be exercised for a fraction of a Share.
(3) An Option may not be exercised after the date of expiration of its
term as shall be set forth in the Option Agreement.
(4) An Option shall be deemed to have been exercised when written
notice of such exercise has been received by the Company at its principal
executive office in accordance with the terms of the Option Agreement by the
person entitled to exercise the Option, and full payment for the Shares with
respect to which the Option is to be exercised has been received by the Company,
accompanied by an executed Stock Purchase and Restriction Agreement and any
other agreements required by the Administrator or the terms of the Plan and/or
Option Agreement. An Optionee shall have no right to vote or receive dividends
and shall have no other rights as a stockholder with respect to the Shares,
notwithstanding the exercise of the Option, until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock Certificate evidencing such Shares.
No adjustment shall be made for a dividend or other right for which the record
date is prior to the date a stock Certificate with respect to the Shares is
issued.
(5) As soon as practicable after the proper exercise of an Option in
accordance with the provisions of the Plan, the Company shall, without transfer
or issue tax to the Optionee, deliver to the Optionee at the principal executive
office of the Company or such other place as shall be mutually agreed upon
between the Company and the Optionee, a Certificate or Certificates representing
the Shares for which the Option shall have been exercised. The time of issuance
and delivery of the Certificate(s) representing the Shares for which the Option
shall have been exercised may be postponed by the Company for such period as may
be required by the Company, with reasonable diligence, to comply with any
applicable listing requirements of any national or regional securities exchange
or any law or regulation applicable to the issuance or delivery of such Shares.
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(6) The exercise of an Option in any manner shall result in a decrease
in the number of Shares that thereafter may be available both for purposes of
the Plan and for sale under the Option by the number of Shares as to which the
Option is exercised.
(f) TERMINATION OF OPTIONS.
(1) TERMINATION IN GENERAL. Unless sooner terminated as provided in
this Plan, each Option shall be exercisable for the period of time as shall be
determined by the Administrator and set forth in the Option Agreement and shall
be void and unexercisable thereafter.
(2) TERMINATION OF RELATIONSHIP WITH THE COMPANY. Unless sooner
terminated as provided in this Plan, in the event of the termination of an
Optionee's employment or consulting relationship with the Company (as the case
may be) for any reason other than the death or Disability of the Optionee, such
Optionee may, within three (3) months (or such other period of time as is
determined by the Board) from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option up to the Vested Amount as of the date of
termination, but only to the extent that the Optionee was entitled to exercise
the Option on the date of such termination. To the extent the Optionee was not
entitled to exercise the Option on the date of such termination, or if the
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option will terminate.
(3) DEATH OR DISABILITY. Unless sooner terminated as provided in this
Plan, in the event of the death or Disability of an Optionee while employed or
engaged by the Company (as the case may be), Options held by such Optionee that
are exercisable on the date of Disability or death shall be exercisable up to
the Vested Amount as of the date of Disability or death for a period of twelve
(12) months commencing on the date of the Optionee's Disability or death. Such
Options may be exercisable by the Optionee or his or her legal guardian or
representative or, in the case of death, by his or her executor(s) or
administrator(s); provided, however, if such disabled Optionee shall commence
any employment or engagement during such twelve (12) month period with or by a
competitor of the Company (including, but not limited to, full or part-time
employment or independent consulting work), as determined solely in the judgment
of the Administrator, then all Options held by such Optionee that have not yet
been exercised shall terminate immediately upon the commencement thereof.
(4) AGREEMENT TO TERMINATE. Options may be terminated at any time by
agreement between the Company and the Optionee.
(g) OTHER PROVISIONS.
(1) Notwithstanding any provision in this Plan or an Option Agreement
to the contrary, no Option granted to any Optionee under this Plan shall be
treated as an Incentive Stock Option to the extent that such Option would cause
the aggregate Fair Market Value of all Shares with respect to which Incentive
Stock Options are exercisable by such Optionee for the first time
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during any calendar year (determined as of the date of grant of each such
Option) to exceed $100,000. For purposes of determining whether an Incentive
Stock Option granted to an Optionee would cause the aggregate Fair Market Value
to exceed the $100,000 limitation, such Incentive Stock Options shall be taken
into account in the order granted. For purposes of this subsection, Incentive
Stock Options granted to an Optionee shall include all incentive stock options
under all plans of the Company that are incentive stock option plans within the
meaning of Section 422 of the Code. Options may be exercised in any order
elected by the Optionee, whether or not the Optionee holds any unexercised
Options under this Plan or any other plan of the Company.
(2) Notwithstanding any other provision of this Plan or an Option
Agreement to the contrary, no Option shall be (A) granted under this Plan after
ten (10) years from the date on which this Plan is adopted by the Board, or (B)
exercisable more than ten (10) years from the date of grant; provided that if an
Incentive Stock Option shall be granted under this Plan to any Employee who, at
the time of the grant of such Option, owns stock possessing more than ten
percent (10%) of the total combined voting power for all classes of the
Company's capital stock, the foregoing clause (B) shall be deemed modified by
substituting the term "five (5) years" for the term "ten (10) years" that
appears therein.
Section 7. FAIR MARKET VALUE OF COMMON STOCK.
The Fair Market Value of a Share of Common Stock, as of any date, shall be
determined as follows:
(a) If the Shares of Common Stock are listed on a national or regional
securities exchange or traded through NASDAQ/NMS, then the Fair Market Value of
a share of Common Stock shall be the closing price for a share of Common Stock
on the exchange or on NASDAQ/NMS, as reported in THE WALL STREET JOURNAL or such
other source as the Administrator deems reliable on the relevant valuation date,
or if there is no trading on that date, on the next trading date.
(b) If the Shares of Common Stock are traded in the over-the-counter
market, then the Fair Market Value of a share of Common Stock shall be the mean
of the bid and asked prices for a share of Common Stock on the relevant
valuation date as reported in THE WALL STREET JOURNAL or other source the
Administrator deems reliable (or, if not so reported, as otherwise reported by
the National Association of Securities Dealers Automated Quotations ("NASDAQ")
System or the NASD OTC Bulletin Board), or if there is no trading on such date,
on the next trading date.
(c) In the absence of an established market for the Common Stock, the Fair
Market Value of a share of Common Stock shall be determined by the Board in its
sole discretion.
Section 8. ADJUSTMENTS.
(a) ADJUSTMENTS. Subject to any required action by the stockholders of the
Company, the number of Shares covered by each outstanding Option, the number of
Shares that have been
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authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, and the price per Share of the Common Stock covered by an Option
will each be proportionately adjusted for any increase or decrease in the number
of outstanding shares of Common Stock resulting from stock splits, reverse stock
splits, stock dividends, reclassifications and recapitalizations or automatic
conversion of shares of one class of stock to those of another by operation of
the terms of such stock. Such adjustment shall be made by the Board whose
determination in that respect will be final, binding and conclusive. Except as
provided herein, no issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class, will affect, and no
adjustment by reason thereof will be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) NO FRACTIONAL SHARES. No fractional Shares shall be issuable on account
of any action aforesaid, and the aggregate number of Shares into which Shares
then covered by the Option, when changed as the result of such action, shall be
reduced to the number of whole Shares resulting from such action, unless the
Board, in its sole discretion, shall determine to issue scrip Certificates in
respect to any fractional Shares, which scrip Certificates shall be in a form
and have such terms and conditions as the Board in its discretion shall
prescribe.
Section 9. RIGHTS AS A STOCKHOLDER.
An Optionee shall have no rights as a stockholder of the Company and shall
not have the right to vote nor receive dividends with respect to any Shares
subject to an Option until such Option has been exercised and a stock
Certificate with respect to the Shares purchased upon such exercise of the
Option has been issued to Optionee as set forth in Section 6(e)(4) and (5)
hereof.
Section 10. FORFEITURE.
Notwithstanding any other provision of this Plan, (a) if an Optionee's
employment with the Company is terminated by the Company pursuant to the cause
termination provisions of an applicable employment agreement, or (b) if the
Optionee's employment or consulting relationship with the Company (as the case
may be) is terminated and the Board makes a determination that the Optionee (1)
has engaged in any type of disloyalty to the Company, including without
limitation, fraud, embezzlement, theft, or dishonesty in the course of
Optionee's employment or consulting relationship, (2) has been convicted of a
felony or other crime involving a breach of trust or fiduciary duty owed to the
Company, (3) has made an unauthorized disclosure of trade secrets or
confidential information of the Company, or (4) has breached any confidentiality
agreement or non-competition agreement with the Company in any material respect,
then, at the election of the Board, all unexercised Options held by the Optionee
(whether or not then exercisable) shall terminate. In the event of such an
election by the Board, in addition to immediate termination of all unexercised
Options, the Optionee shall forfeit all Shares for which the Company has not yet
delivered stock Certificates to the Optionee and the Company shall refund to the
Optionee the exercise price paid to it upon exercise of the Option with respect
to such Shares. Notwithstanding anything herein to the contrary, the Company may
withhold
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delivery of stock Certificates pending the resolution of any inquiry that could
lead to a finding resulting in forfeiture.
Section 11. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Administrator makes the determination to grant the Option or such
other date as is determined by the Administrator. Notice of the determination
shall be given to each Optionee to whom an Option is so granted within a
reasonable time after the date of such grant.
Section 12. MODIFICATION, EXTENSION, RENEWAL OF OPTION.
Subject to the terms and conditions of the Plan, the Board may modify,
extend or renew an Option, or accept the surrender of an Option (to the extent
not theretofore exercised); provided that no Incentive Stock Option may be
modified, extended or renewed if such action would cause such Option to cease to
be an incentive stock option within the meaning of Section 422 of the Code.
Section 13. TRANSFERABILITY.
No Option may be sold, pledged, assigned, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, his or her Options shall be exercisable only by the
Optionee, or, in the event of his or her legal incapacity or Disability, by the
legal guardian or representative of the Optionee.
Section 14. POWER OF BOARD IF CHANGE OF CONTROL.
Notwithstanding anything to the contrary set forth in this Plan, in the
event of a Change of Control, the Board shall have the right, in its sole
discretion, to accelerate the vesting of all Options that have not vested as of
the date of the Change of Control and/or to establish an earlier date for the
expiration of the exercise of an Option (notwithstanding a later expiration of
exercisability set forth in an Option Agreement). In addition, in the event of a
Change of Control of the Company, the Board shall have the right, in its sole
discretion, subject to and conditioned upon a Sale of the Company: (a) to
arrange for the successor company (or other entity) to assume all of the rights
and obligations of the Company under this Plan; or (b) to terminate this Plan
and (i) to pay to all Optionees cash with respect to those Options that are
vested as of the date of the Sale of the Company in an amount equal to the
difference between the Option Price and the Fair Market Value of a Share of
Common Stock (determined as of the date the Plan is terminated) multiplied by
the number of Options that are vested as of the date of the Sale of the Company
which are held by the Optionee as of the date of the Sale of the Company, or
(ii) to arrange for the exchange of all Options for options to purchase common
stock in the successor corporation, or (iii) to distribute to each Optionee
other property in an amount equal to and in the same form as the Optionee would
have received from the successor corporation if the Optionee had owned the
Shares subject to Options that are vested as of the date of the Sale of the
Company rather than the Option at the time of the Sale of the Company. The form
of payment or
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distribution to the Optionee pursuant to this Section shall be determined by the
Board in its sole discretion.
Section 15. AMENDMENT OR TERMINATION OF THE PLAN.
Insofar as permitted by law and the Plan, the Board may at any time
suspend, terminate, discontinue, alter or amend the Plan in any respect
whatsoever; provided, however, that without prior approval of at least a
majority of the stockholders entitled to vote thereon, no such revision or
amendment may increase the aggregate number of Shares for which Options may be
granted hereunder, change the designation of the class of Optionees eligible to
receive Options or decrease the price at which Options may be granted. Any other
provision of this Section notwithstanding, the Board specifically is authorized
to adopt any amendment to this Plan deemed by the Board to be necessary or
advisable to assure that the Incentive Stock Options or the Non-Qualified Stock
Options available under the Plan continue to be treated as such, respectively,
under all applicable laws.
Section 16. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options shall be used for general corporate purposes.
Section 17. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
Section 18. APPROVAL OF STOCKHOLDERS.
This Plan shall become effective on the date that it is adopted by the
Board; provided that it shall become limited to a non-qualified stock option
plan if it is not approved by the stockholders of a majority of the Company's
outstanding voting stock within one year (365 days) of its adoption by the
Board. The Board may grant Options hereunder prior to approval of the Plan, or
any material amendments thereto, by the holders of a majority of the Company's
outstanding voting stock; provided that any and all Options so granted shall be
converted into non-qualified stock options if the Plan, or a material amendment,
is not approved by such stockholders within 365 days of its adoption or material
amendment.
Section 19. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Options granted under the Plan are conditioned upon the Company
obtaining any required permit or order from appropriate governmental agencies,
authorizing the Company to issue such Options and Shares issuable upon the
exercise thereof.
(b) Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall
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comply with all relevant provisions of law, including, without limitation, the
Securities Act, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(c) As a condition to the exercise of an Option, the Board may
require the person exercising such Option to execute an agreement with, and/or
may require the person exercising such Option to make any representation and/or
warranty to, the Company as may be, in the judgment of counsel to the Company,
required under applicable law or regulation, including but not limited to, a
representation and warranty 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 and
warranty is appropriate under any of the aforementioned relevant provisions of
law.
Section 20. RESERVATION OF SHARES.
(a) The Company, during the term of this Plan, shall at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
(b) The Company, during the term of this Plan, shall use its best efforts
to seek to obtain from appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain from any such regulatory agency having jurisdiction the requisite
authorization(s) deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, or the inability of the Company to
confirm to its satisfaction that any issuance and sale of any Shares hereunder
will meet applicable legal requirements, shall relieve the Company of any
liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
Section 21. OTHER AGREEMENTS.
Options shall be evidenced by an Option Agreement in such form or forms as
the Board (subject to the terms and conditions of this Plan) may from time to
time approve, which Option Agreement shall evidence and reflect the terms and
conditions of an Option as set forth in Section 6 hereof. Upon exercise of an
Option, the Optionee shall execute and deliver to the Company a Stock Purchase
and Restriction Agreement in such form or forms as the Board shall approve from
time to time. The Administrator may, from time to time, require such other
agreements in connection with the Option as it, in its sole discretion, deems
advisable. The Option Agreement and the Stock Purchase and Restriction Agreement
and any other agreement required by the Plan or the Option Agreement, as
determined by the Board, may contain such other provisions as the Board in its
discretion deems advisable and that are not inconsistent with the provisions of
this Plan, including, without limitation, restrictions upon or conditions
precedent to the exercise of the Option.
Section 22. TAXES, FEES, EXPENSES AND WITHHOLDING.
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(a) The Company shall pay all original issue and transfer taxes (but not
income taxes, if any) with respect to the grant of an Option and/or the issue
and transfer of Shares pursuant to the exercise thereof, and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will,
from time to time, use its best efforts to comply with all laws and regulations
that, in the opinion of counsel for the Company, shall be applicable thereto.
(b) The granting of Options hereunder and the issuance of Shares pursuant
to the exercise thereof is conditioned upon the Company's reservation of the
right to withhold in accordance with any applicable law, from any compensation
or other amounts payable to the Optionee, any taxes required to be withheld
under federal, state or local law as a result of the grant or exercise of such
Option or the sale of the Shares issued upon exercise thereof. To the extent
that compensation or other amounts, if any, payable to the Optionee is
insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Optionee (or such other person entitled herein
to exercise the Option), as a condition to the exercise of an Option, to pay in
cash to the Company an amount sufficient to cover such tax liability or
otherwise to make adequate provision for the Company's satisfaction of its
withholding obligations under federal, state and local law.
Section 23. NOTICES.
Any notice to be given to the Company pursuant to the provisions of this
Plan shall be addressed to the Company in care of its Secretary (or such other
person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to an Optionee shall be delivered
personally or addressed to the Optionee at the address given beneath the
signature of the Optionee on his or her Option Agreement, or at such other
address as such Optionee or his or her permitted transferee (upon the transfer
of the Shares) may hereafter designate in writing to the Company. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited, postage
and registry or certification fee prepaid, in a post office or branch post
office regularly maintained by the United States Postal Service. It shall be the
obligation of each Optionee and each permitted transferee holding Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by
letter mailed as provided herein, with written notice of his or her direct
mailing address.
Section 24. NO ENLARGEMENT OF EMPLOYEE RIGHTS.
This Plan is purely voluntary on the part of the Company, and the
continuance of the Plan shall not be deemed to constitute a contract between the
Company and any Employee or Consultant, or to be consideration for or a
condition of the employment or service of any Employee or Consultant as the case
may be. Nothing contained in this Plan shall be deemed to give any Employee or
Consultant the right to be retained in the employ or service of the Company, or
to interfere with the right of the Company to discharge or retire any Employee
or Consultant thereof at any time. No Employee or Consultant shall have any
right to or interest in Options authorized hereunder prior to the grant thereof
to such Employee or Consultant, and
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upon such grant such Employee shall have only such rights and interests as are
expressly provided herein, subject, however, to all applicable provisions of the
Company's Certificate of Incorporation, as the same may be amended from time to
time.
Section 25. INFORMATION TO OPTIONEES.
The Company, upon request, shall provide without charge to each Optionee
copies of such annual and periodic reports as are provided by the Company to its
stockholders generally.
Section 26. AVAILABILITY OF PLAN.
A copy of this Plan shall be delivered to the Secretary of the Company and
shall be shown to any eligible person making reasonable inquiry concerning it.
Section 27. INVALID PROVISIONS.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 28. APPLICABLE LAW.
This Plan shall be governed by and construed in accordance with the laws of
the State of Delaware.
Section 29. BOARD ACTION.
Notwithstanding anything to the contrary set forth in this Plan, any and
all actions of the Board or Committee, as the case may be, taken under or in
connection with this Plan and any agreements, instruments, documents,
Certificates or other writings entered into, executed, granted, issued and/or
delivered pursuant to the terms hereof, shall be subject to and limited by any
and all votes, consents, approvals, waivers or other actions of all or certain
stockholders of the Company or other persons required pursuant to (a) the
Company's Certificate of Incorporation (as the same may be amended and/or
restated from time to time), (b) the Company's Bylaws (as the same may be
amended and/or restated from time to time), and (c) any other agreement,
instrument, document or writing now or hereafter existing, between or among the
Company and its stockholders or other persons (as the same may be amended from
time to time).
Section 30. MISCELLANEOUS.
This Plan is intended to comply with the conditions and requirements for
employee benefit plans under Rule 16b-3, as promulgated under Section 16 of the
Exchange Act such that
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Options granted pursuant to the Plan will be exempted from the provisions of
Section 16(b) thereof. To the extent that any provision of the Plan would cause
a conflict with such requirements, such provision shall be deemed null and void
to the extent permitted by applicable law. This section shall not be applicable
if no class of the Company's equity securities is then registered pursuant to
Section 12 of the Exchange Act.
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EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
EXE TECHNOLOGIES, INC. (the "Company") hereby grants to ______________
______________ (the "Optionee") an option (the "Option") purchase a total of
______________ (___) shares of [SPECIFY CLASS A OR CLASS B] Common Stock, $ .01
par value per share, of the Company ("Common Stock"), at the price and on the
terms set forth herein, and in all respects subject to the terms and provisions
of the EXE TECHNOLOGIES, INC. 1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
(the "Plan") applicable to incentive stock options, which terms and provisions
are incorporated herein by reference. Capitalized terms used but not otherwise
defined herein shall have the meanings given to them in the Plan.
1 NATURE OF THE OPTION. The Option is intended by the Company and the
Optionee to be an incentive stock option within the meaning of Section 422 of
the Code.
2 DATE OF GRANT; TERM OF OPTION. The Option is granted this ____ day of
____________, ____, and it may not be exercised later than 5:00 p.m. on the ____
day of _____________, ____.
3 OPTION EXERCISE PRICE. The Option exercise price is $_____ per Share,
which price is the Fair Market Value per share of the Common Stock on the date
hereof; or $________ per share if Optionee, at the time of grant, owns stock
possessing more than ten percent (10%) of the current total combined voting
power of all classes of the Company's capital stock, which price represents a
price per Share equal to no less than one hundred ten percent (110%) of the Fair
Market Value of the Common Stock on the date the Option is granted.
4 EXERCISE OF OPTION. Except as otherwise provided herein, the Option shall
be exercisable during its term only in accordance with the terms and provisions
of the Plan and this Option Agreement as follows:
(a) VESTING. Twenty-Five percent of the Option shall vest on the first
anniversary of the date of grant, and an additional 25% shall vest on each of
the second, third, and fourth anniversaries of the date of grant.
<PAGE>
(b) RIGHT TO EXERCISE. The Vested Amount of each Option may be
exercised at such times and subject to such procedures as the Company may
further provide.
(c) METHOD OF EXERCISE. The Option shall be exercisable by written
notice that shall state the election to exercise the Option, the number of
Shares in respect to which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the purchase price, an
executed Stock Purchase and Restriction Agreement and any other agreements
required by the Administrator, the terms of the Plan and/or this Option
Agreement. The Option will be deemed to be exercised upon the receipt by the
Company of such written notice, payment of the purchase price, and duly executed
copies of the Stock Purchase and Restriction Agreement and any other agreements
required by the Administrator, the terms of the Plan and/or this Option
Agreement. The Optionee will have no right to vote or receive dividends and will
have not other rights as a stockholder with respect to such Shares
notwithstanding the exercise of the Option, until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock Certificate evidencing the Shares
that are being issued upon exercise of the Option. The Company will issue (or
cause to be issued) such stock Certificates promptly following the exercise of
the Option. The Certificate or Certificates for the Shares as to which the
Option shall be exercised shall be registered in the name of the Optionee and
shall contain any legend as may be required under the Plan, the Stock Purchase
and Restriction Agreement, any other agreements required by the Administrator
and/or applicable law.
(d) METHOD OF PAYMENT. The method of payment of the purchase price
shall be determined by the Administrator and may consist entirely of cash,
check, or any combination of such methods of payment, or such other
consideration or method of payment as may be authorized by the Administrator and
permitted under the Plan.
(e) RESTRICTIONS ON EXERCISE. The Option may not be exercised if the
issuance of the Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representations and warranties to the Company as may be required by any
applicable law or regulation.
5 INVESTMENT REPRESENTATIONS. Unless the Shares have been registered under
the Securities Act, in connection with the grant of the Option, the Optionee
represents and warrants as follows:
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(a) The Optionee is acquiring the Option, and upon exercise of the
Option, the Optionee will be acquiring the Shares for investment for his or her
own account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof.
(b) The Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. The Optionee
has received all information as the Optionee deems necessary and appropriate to
enable him or her to evaluate the financial risk inherent in making an
investment in the Shares and has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
6 TERMINATION OF EMPLOYMENT WITH THE COMPANY. Subject to the provisions of
Section 8 hereof, upon termination of the Optionee's employment with the Company
for any reason other than death or Disability, the Optionee shall have the right
to exercise the Option at any time within the three (3) month period after the
date of such termination to the extent that the Optionee was entitled to
exercise the Option at the date of such termination.
7 DEATH OR DISABILITY OF OPTIONEE. Upon the death or Disability of the
Optionee while in the employ of the Company, the Option may be exercised at any
time within twelve (12) months after the date of death or termination due to
Disability, in the case of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, or, in the
case of Disability, by the Optionee or his legal guardian or representative, but
in any case only to the extent the Optionee was entitled to exercise the Option
at such date; provided, however, that if such disabled Optionee shall commence
any employment or engagement during such twelve (12) month period with or by a
competitor of the Company (including, but not limited to, full or part-time
employment or independent consulting work), as determined solely in the judgment
of the Board, then the Option shall terminate immediately upon the commencement
thereof. To the extent that the Optionee was not entitled to exercise the Option
at the date of termination, or to the extent the Option is not exercised within
the time specified herein, the Option shall terminate. Notwithstanding the
foregoing, the Option shall not be exercisable after the expiration of the term
set forth in Section 2 hereof.
8 FORFEITURE OF OPTION. Notwithstanding any other provision of the Option
Agreement, (a) if the Optionee's employment with the Company is terminated by
the Company pursuant to the cause termination provisions of an applicable
employment agreement, or (b) if the Optionee's employment with the Company is
terminated and the Board makes a determination that the Optionee (i) has engaged
in any type of disloyalty to the Company, including without limitation, fraud,
embezzlement, theft, or dishonesty in the course of his employment, (ii) has
3
<PAGE>
been convicted of a felony or other crime involving a breach of trust or other
fiduciary duty owed to the Company, (iii) has disclosed trade secrets or
confidential information of the Company, or (iv) has breached any agreement with
the Company in respect of confidentiality, non-disclosure, non-competition or
otherwise, then, at the election of the Board, all unexercised Options shall
terminate. In the event of such an election by the Board, in addition to
immediate termination of all unexercised Options, the Optionee shall forfeit all
Shares for which the Company has not yet delivered share Certificates to the
Optionee and the Company shall refund to the Optionee the Option price paid to
the Company with respect to those Shares. Notwithstanding anything herein to the
contrary, the Company may withhold delivery of share Certificates pending the
resolution of any inquiry that could lead to a determination resulting in
forfeiture.
9 NON-TRANSFERABILITY OF OPTION. The Option may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Subject to the foregoing and the terms of the
Plan, the terms of the Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
10 CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option Agreement
shall confer upon any Optionee any right to continue in the employment of the
Company or limit in any respect the right of the Company to discharge or release
the Optionee at any time, with or without cause and with or without notice.
11 WITHHOLDING. The Company reserves the right to withhold, in accordance
with any applicable laws, from any consideration payable to Optionee any taxes
required to be withheld by federal, state or local law as a result of the grant
or exercise of the Option or the sale or other disposition of the Shares issued
upon exercise of the Option. If the amount of any consideration payable to the
Optionee is insufficient to pay such taxes or if no consideration is payable to
the Optionee, then upon the request of the Company, the Optionee (or such other
person entitled to exercise the Option pursuant to Section 7 hereof) shall pay
to the Company an amount sufficient for the Company to satisfy any federal,
state or local tax withholding requirements the Company may incur, as a result
of the grant or exercise of the Option or the sale or other disposition of the
Shares issued upon the exercise of the Option.
12 THE PLAN. The Option is subject to, and the Company and the Optionee
agree to be bound by, all of the terms and conditions of the Plan as such Plan
may be amended from time to time in accordance with the terms thereof. Pursuant
to the Plan, the Board is authorized to adopt rules and regulations not
inconsistent with the Plan as it shall deem appropriate and proper. A copy of
the Plan in its present form is available for inspection during business hours
by the Optionee or the persons entitled to exercise the Option at the Company's
principal office.
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13 CONVERSION TO NON-QUALIFIED OPTION. Notwithstanding anything to the
contrary set forth herein, this Option is being granted subject to the condition
that in the event the Plan is not approved by the stockholders of the Company
within 365 days of the date that the Plan was adopted by the Board, this Option
shall automatically be converted into a non-qualified stock option.
14 EARLY DISPOSITION OF STOCK. Subject to the fulfillment by the Optionee
of any conditions upon the disposition of Shares received under the Option, the
Optionee hereby agrees that if he or she disposes of any Shares received under
the Option within two (2) years from date of grant or one (1) year after such
Shares were transferred to him or her upon exercise of the Option, he or she
will notify the Company in writing within thirty (30) days after the date of
such disposition. The Optionee acknowledges that disposition by him or her
within two (2) years from the date of grant and one (1) year from the date of
exercise of the Option would disqualify him or her from capital gain treatment
for any gain realized upon such disposition.
15 ENTIRE AGREEMENT. The Option, together with the Plan and the other
exhibits attached thereto or hereto, represents the entire agreement between the
parties.
16 GOVERNING LAW. This Option shall be construed in accordance with the
laws of the State of Delaware.
17 AMENDMENT. Subject to the provisions of the Plan, this Option Agreement
may only be amended by a writing signed by each of the parties hereto.
Date: ____________________ EXE TECHNOLOGIES, INC.
By: ___________________________
Title: ________________________
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<PAGE>
ACKNOWLEDGMENT
The Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she has read and is familiar with the
terms and provisions thereof, and hereby accepts the Option subject to all of
the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan.
Date: ____________________ _______________________________
Signature of Optionee
_______________________________
Name
_______________________________
Address
_______________________________
City, State, Zip
THE OPTION AND THE SECURITIES THAT MAY BE PURCHASED UPON EXERCISE OF THE
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THE OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AND
RESTRICTION AGREEMENT TO BE ENTERED INTO BETWEEN THE HOLDER OF THE OPTION AND
THE COMPANY UPON EXERCISE OF THIS OPTION, A COPY OF WHICH AGREEMENT IS ON FILE
WITH THE SECRETARY OF THE COMPANY.
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EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
EXE TECHNOLOGIES, INC. (the "Company") hereby grants to _____________
_______________ (the "Optionee") an option (the "Option") to purchase a total of
______________ (___) shares of [SPECIFY CLASS A OR CLASS B] Common Stock, $ .01
par value per share, of the Company ("Common Stock"), at the price and on the
terms set forth herein, and in all respects subject to the terms and provisions
of the EXE TECHNOLOGIES, INC. 1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
(the "Plan") applicable to non-qualified stock options, which terms and
provisions are incorporated by reference herein. Unless otherwise defined
herein, capitalized terms used but not defined herein shall have the meanings
given to them in the Plan.
1 NATURE OF THE OPTION. The Option is intended to be a nonstatutory stock
option and is NOT intended to be an incentive stock option within the meaning of
Section 422 of the Code, or to otherwise qualify for any special tax benefits to
the Optionee.
2 DATE OF GRANT; TERM OF OPTION. The Option is granted this ____ day of
____________, ____, and it may not be exercised later than 5:00 p.m. on the ____
day of _____________ , ____.
3 OPTION EXERCISE PRICE. The Option exercise price is _______________
($_____) per Share.
4 EXERCISE OF OPTION. Except as otherwise provided herein, the Option shall
be exercisable during its term only in accordance with the terms and provisions
of the Plan and this Option Agreement as follows:
(a) VESTING. Twenty-Five percent of the Option shall vest on the first
anniversary of the date of grant, and an additional 25% shall vest on each of
the second, third, and fourth anniversaries of the date of grant.
(b) RIGHT TO EXERCISE. The Vested Amount of each Option may be
exercised at such times and subject to such procedures as the Company may
further provide.
(c) METHOD OF EXERCISE. The Option shall be exercisable by written
notice that shall state the election to exercise the Option, the number of
Shares in respect to which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Administrator or pursuant to
the provisions of the Plan. Such written notice shall be signed by the Optionee
<PAGE>
and shall be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company. The written
notice shall be accompanied by payment of the purchase price, an executed Stock
Purchase and Restriction Agreement and any other agreements required by the
Administrator, the terms of the Plan and/or this Option Agreement. The Option
will be deemed to be exercised upon the receipt by the Company of such written
notice, payment of the purchase price, and duly executed copies of the Stock
Purchase and Restriction Agreement and any other agreements required by the
Administrator, the terms of the Plan and/or this Option Agreement. The Optionee
shall have no right to vote or receive dividends and shall have no other rights
as a stockholder with respect to such Shares, notwithstanding the exercise of
the Option, until the issuance by the Company (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock Certificate evidencing the Shares that are being issued
upon exercise of the Option. The Company will issue (or cause to be issued) such
stock Certificates promptly following the exercise of the Option. The
Certificate or Certificates for the Shares as to which the Option shall be
exercised shall be registered in the name of the Optionee and shall contain any
legend as may be required under the Plan, the Stock Purchase and Restriction
Agreement, any other agreements required by the Administrator and/or applicable
law.
(d) METHOD OF PAYMENT. The method of payment of the purchase price
shall be determined by the Administrator and may consist entirely of cash,
check, or any combination of such methods of payment, or such other
consideration or method of payment as may be authorized by the Administrator and
permitted under the Plan.
(e) RESTRICTIONS ON EXERCISE. The Option may not be exercised if the
issuance of the Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representations and warranties to the Company as may be required by any
applicable law or regulation.
5. INVESTMENT REPRESENTATIONS. Unless the Shares have been registered under
the Securities Act, in connection with the acquisition of the Option, the
Optionee represents and warrants as follows:
(a) The Optionee is acquiring the Option, and upon exercise of the
Option, Optionee will be acquiring the Shares for investment for his or her own
account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof.
(b) The Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. The Optionee
has received all such information as the Optionee deems necessary and
appropriate to enable him or her to evaluate the financial risk inherent in
making an investment in the Shares and has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
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6. TERMINATION OF RELATIONSHIP WITH THE COMPANY. Subject to the
provisions of Section 8 hereof, upon termination of the Optionee's employment,
consulting or other relationship with the Company (as the case may be) for any
reason other than death or Disability, the Optionee shall have the right to
exercise this Option up to the Vested Amount as of the date of termination for a
period of three (3) months from the date of such termination, provided that the
Optionee may only exercise the Option to the extent that the Optionee was
entitled to exercise the Option at the date of such termination.
7. DEATH OR DISABILITY OF OPTIONEE. Upon the death or Disability of
the Optionee while in the employ of or engagement by the Company (as the case
may be), the Option may be exercised up to the Vested Amount at any time within
twelve (12) months after the date of death or termination due to Disability
provided the Optionee was entitled to exercise the Option at the date of his or
her death or termination due to Disability. In the case of death, the Option may
be exercised by the Optionee's estate or by a person who acquired the right to
exercise this Option by bequest or inheritance. In the case of Disability, the
Option may be exercised by the Optionee or his or her legal guardian or
representative, but in any case, the Option may be exercised only to the extent
that the Optionee was entitled to exercise the Option at such date; provided,
however, that if such disabled Optionee shall commence any employment or
engagement during such twelve (12) month period with or by a competitor of the
Company (including, but not limited to, full or part-time employment or
independent consulting work), as determined solely in the judgment of the Board,
then the Option shall terminate immediately upon the commencement thereof. To
the extent that the Optionee was not entitled to exercise the Option at the date
of termination, or to the extent the Option is not exercised within the time
specified herein, the Option shall terminate. Notwithstanding the foregoing, the
Option shall not be exercisable after the expiration of the term set forth in
Section 2 hereof.
8. FORFEITURE OF OPTION. Notwithstanding any other provision of this
Option Agreement, (a) if an Optionee's employment with the Company is terminated
by the Company pursuant to the cause termination provisions of an applicable
employment agreement, or (b) if the Optionee's employment or consulting
relationship with the Company (as the case may be) is terminated and the Board
makes a determination that the Optionee (i) has engaged in any type of
disloyalty to the Company, including without limitation, fraud, embezzlement,
theft, or dishonesty in the course of his employment or engagement, (ii) has
been convicted of a felony or other crime involving a breach of trust or other
fiduciary duty owed to the Company, (iii) has disclosed trade secrets or
confidential information of the Company, or (iv) has breached any agreement with
the Company in respect of confidentiality, non-disclosure, non-competition or
otherwise, then, at the election of the Board, all unexercised Options shall
terminate. In the event of such an election by the Board, in addition to
immediate termination of all unexercised Options, the Optionee shall forfeit all
Shares for which the Company has not yet delivered share Certificates to the
Optionee and the Company shall refund to the Optionee the Option price paid to
the Company with respect to those Shares. Notwithstanding anything herein to the
contrary, the Company may withhold delivery of share Certificates pending the
resolution of any inquiry that could lead to a determination resulting in
forfeiture.
3
<PAGE>
9. NON-TRANSFERABILITY OF OPTION. The Option may not be sold, pledged,
assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law, other than by will or by the
laws of descent or distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Subject to the foregoing and the terms of the
Plan, the terms of this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
10. CONTINUATION OF EMPLOYMENT OR ENGAGEMENT. Neither the Plan nor
this Option Agreement shall confer upon any Optionee any right to continue in
the service of the Company or limit, in any respect, the right of the Company to
discharge or release the Optionee at any time, with or without cause and with or
without notice.
11. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any consideration payable to the
Optionee any taxes required to be withheld by federal, state or local law as a
result of the grant or exercise of the Option or the sale or other disposition
of the Shares issued upon exercise of the Option. If the amount of any
consideration payable to the Optionee is insufficient to pay such taxes or if no
consideration is payable to the Optionee, then upon the request of the Company,
the Optionee (or such other person entitled to exercise the Option pursuant to
Section 7 hereof) shall pay to the Company an amount sufficient for the Company
to satisfy any federal, state or local tax withholding requirements the Company
may incur as a result of the grant or exercise of the Option or the sale or
other disposition of the Shares issued upon the exercise of the Option.
12. THE PLAN. This Option Agreement is subject to, and the Company and
the Optionee agree to be bound by, all of the terms and conditions of the Plan
as such Plan may be amended from time to time in accordance with the terms
thereof. Pursuant to the Plan, the Board is authorized to adopt rules and
regulations not inconsistent with the Plan as it shall deem appropriate and
proper. A copy of the Plan in its present form is available for inspection
during business hours by the Optionee or the persons entitled to exercise the
Option at the Company's principal office.
13. ENTIRE AGREEMENT. This Option Agreement, together with the Plan,
and any other and the other exhibits attached thereto or hereto, represents the
entire agreement between the parties.
14. GOVERNING LAW. This Option Agreement shall be construed in
accordance with the laws of the State of Delaware.
15. AMENDMENT. Subject to the provisions of the Plan, this Option
Agreement may only be amended by a writing signed by each of the parties hereto.
Date: ____________________ EXE TECHNOLOGIES, INC.
By: ____________________________
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Title: _________________________
5
<PAGE>
ACKNOWLEDGMENT
The Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she has read and is familiar with the
terms and provisions thereof, and hereby accepts the Option subject to all of
the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan.
Date: ____________________ ___________________________
Signature of Optionee
___________________________
Name
___________________________
Address
___________________________
City, State, Zip
THE OPTION AND THE SECURITIES THAT MAY BE PURCHASED UPON EXERCISE OF THE
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THE OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AND
RESTRICTION AGREEMENT TO BE ENTERED INTO BETWEEN THE HOLDER OF THE OPTION AND
THE COMPANY UPON EXERCISE OF THE OPTION, A COPY OF WHICH AGREEMENT IS ON FILE
WITH THE SECRETARY OF THE COMPANY.
<PAGE>
EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN
STOCK PURCHASE AND RESTRICTION AGREEMENT
This STOCK PURCHASE AND RESTRICTION AGREEMENT is made this _____ day of
____________, 19__, by and between EXE TECHNOLOGIES, INC. (the "Company"), and
("Optionee"). For purposes of this Agreement, the Optionee shall include the
original grantee, as well as any person or entity who acquired the right to
exercise the Option pursuant to the terms of the EXE TECHNOLOGIES, INC. 1997
INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN (the "Plan").
R E C I T A L S:
1. Optionee was granted an Option (the "Option") on ________________, 19___
pursuant to the Plan, the terms and conditions of which are incorporated herein
by reference. In addition, capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the Plan.
2. Pursuant to the Option, Optionee was granted the right to purchase
_____________ (____) shares of the Company's Common Stock, as adjusted in
accordance with the Plan (the "Optioned Shares").
3. Optionee has elected to exercise the Option to purchase ________________
(_____) of such Optioned Shares (herein referred to as the "Shares") under the
Stock Option Agreement evidencing the Option (the "Option Agreement").
4. As required by the Plan and the Option Agreement, as a condition to
Optionee's exercise of the Option, Optionee is required to execute this
Agreement which gives the Company certain rights, including, but not limited to,
transfer restrictions with respect to the Shares, rights of repurchase and first
refusal upon a proposed sale or transfer of the Shares and other rights to
repurchase the Shares being issued pursuant to the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. EXERCISE OF OPTION. Subject to the terms and conditions hereof, Optionee
shall exercise his or her Option or a portion thereof to purchase
___________________ Shares at an exercise price of $_________ per Share, subject
to and in accordance with the terms set forth
<PAGE>
in this Agreement, payable in accordance with the terms and provisions of the
Option Agreement.
2. TRANSFER RESTRICTIONS.
(a The Optionee shall not sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of his or her Shares
except as otherwise expressly provided in this Agreement.
(b Notwithstanding anything to the contrary contained herein, the
Optionee may transfer all or any of his or her Shares (i) by way of gift to his
or her spouse, parents, siblings, or lineal descendants of the Optionee or to
any trust for the exclusive benefit of any such family member or the Optionee,
provided that any such transferee shall agree in writing with the Company, prior
to, and as a condition precedent to such transfer, to be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Optionee, or (ii) by will or the laws of descent and distribution, in which
event each such transferee shall be bound by all of the provisions of this
Agreement to the same extent as if such transferee were the Optionee.
(c Any purported transfer in violation of the provisions of this
Agreement shall be void AB INITIO.
3. TERMINATION OF EMPLOYMENT OR ENGAGEMENT.
(a In the event of the termination of the employment or engagement (or
other relationship) of the Optionee with the Company for any reason, the Company
(which term, for purposes of this Section 3, shall include the designees of the
Company) shall have the right to purchase from, and if the Company exercises its
option pursuant to subparagraphs (d), (e) and (f) below, the Optionee shall sell
to the Company upon the exercise of such right at a purchase price per Share
equal to the Fair Market Value per share as at the date of termination, all of
the Shares owned by the Optionee.
(b In the event the Optionee does not exercise the Option until after
the Optionee's termination of employment or engagement with the Company (or if
the Optionee is not the original grantee, then in the event the Option is
exercised after the original grantee's termination of employment or engagement
with the Company), the Company shall have the right to purchase from, and if the
Company exercises its option pursuant to subparagraphs (d), (e) and (f) below,
the Optionee shall sell to the Company upon the exercise of such right at a
purchase price per Share equal to the Fair Market Value per share as at the date
of exercise, all of the Shares owned by the Optionee.
(c The number of Shares subject to repurchase pursuant to Section 3(a)
shall be adjusted to give effect to any stock dividend, or other distribution of
stock made on or in respect of such Shares, or any subdivision, combination or
reclassification of the outstanding capital stock of the Company or received in
exchange for the Shares.
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<PAGE>
(d In order to exercise the option to purchase Optionee's Shares under
this Section 3, the Company shall deliver a written notice to the Stockholder
indicating its election to purchase the Shares and specifying the number of
Shares which the Company elects to purchase and the purchase price therefor.
(e If the Company elects not to exercise its rights pursuant to this
Section 3 or if the Company is legally prohibited from or unable to repurchase
the Shares during the period referred to below, then the Company shall notify
the Optionee and each designee of the Company, if any, within the 60-day period
following (i) with respect to a repurchase pursuant to Section 3(a), the
termination of employment or engagement of the Optionee or (ii) with respect to
a repurchase pursuant to Section 3(b), the date of exercise of the Option. In
such event, the designees shall have the right, during the 30-day period
following the Company's notice, to purchase such number of Shares as the Company
shall designate, on the same terms and conditions as were applicable to the
Company, which right shall be exercised by giving written notice of acceptance
to the Company specifying the number of Shares which such designee elects to
purchase and the purchase price therefor.
(f The repurchase of Shares hereunder shall be made on a date selected
by the Company, within ninety (90) days after (i) with respect to a repurchase
pursuant to Section 3(a), the termination of employment or engagement or (ii)
with respect to a repurchase pursuant to Section 3(b), the date of exercise of
the Option, by delivery of payment to the Optionee, by check or wire transfer,
against receipt of one or more Certificates, properly endorsed, evidencing the
Optionee's Shares to be so repurchased.
(g Anything contained herein to the contrary notwithstanding, at the
option of the Company, any purchaser of Shares pursuant to Section 3 which is
not the Company shall agree in writing, in advance, to be bound by and comply
with all applicable provisions of this Agreement.
4. RIGHT OF FIRST REFUSAL ON DISPOSITIONS.
(a If at any time the Optionee desires to sell all or any part of his
or her Shares pursuant to a bona fide offer from a third party (the "Proposed
Transferee"), then the Optionee shall submit a written offer (the "Offer") to
sell such Shares (the "Offered Shares") to the Company or any entity or person
designated by the Company ("designee"), on terms and conditions, including
price, not less favorable to the Company or its designee than those on which the
Optionee proposes to sell such Offered Shares to the Proposed Transferee. The
Offer shall disclose the identity of the Proposed Transferee, the number of
Offered Shares proposed to be sold, the total number of Shares owned by the
Optionee, the terms and conditions, including price, of the proposed sale, and
any other material facts relating to the proposed sale. The Offer shall further
state that the Company or its designee may acquire, in accordance with the
provisions of this Agreement, all or any portion of the Offered Shares for the
price and upon the other terms and conditions set forth therein.
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<PAGE>
(b If the Company (or its designee, if one exists) desires to purchase
all or any part of the Offered Shares, then the Company or its designee shall
communicate in writing its election to purchase (an "Acceptance") to the
Optionee, which Acceptance shall state the number of Offered Shares the Company
or its designee desires to purchase and shall be given to the Optionee within
thirty (30) days after the date the Offer was made to the Company. The
Acceptance shall, when taken in conjunction with the Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of such Offered Shares. Sales of the Offered Shares to be sold to the
Company or its designee pursuant to this Section 4 shall be made at the offices
of the Company on the 45th day following the date the Offer was made (or if such
45th day is not a business day, then on the next succeeding business day). Such
sales shall be effected by the Optionee's delivery to the Company a Certificate
or Certificates evidencing the Offered Shares to be purchased by the Company or
its designee, duly endorsed for transfer to the Company or its designee, as the
case may be, which Shares shall be delivered free and clear of all liens,
charges, claims, and encumbrances of any nature whatsoever, against payment to
the Optionee of the purchase price therefor by the Company or its designee, as
the case may be.
(c If the Company or its designee does not purchase all of the Offered
Shares, then the Offered Shares not so purchased may be sold by the Optionee at
any time within ninety (90) days after the date the Offer was made to the
Company. Any such sale shall be to the Proposed Transferee, at not less than the
price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those specified in the Offer. Any Offered Shares not
sold within such 90-day period shall continue to be subject to the requirements
of a prior offer pursuant to this Section 4.
5. FAILURE TO DELIVER SHARES. If the Optionee becomes obligated to sell any
Shares to the Company or its designee under this Agreement and fails to deliver
such Shares in accordance with the terms of this Agreement, then the Company or
its designee may, at its option, in addition to all other remedies it may have,
send to the Optionee the purchase price for such Shares as is herein specified.
Thereupon, the Company upon written notice to the Optionee, (a) shall cancel on
its books the Certificate or Certificates representing the Shares to be sold and
(b) in the case of a designee, shall issue, in lieu thereof, in the name of such
designee, a new Certificate or Certificates representing such Shares, and
thereupon all of the Optionee's rights in and to such Shares shall terminate.
6. FURTHER LIMITATION AS TO TRANSFERS BY THE STOCKHOLDER. In addition to
the other restrictions provided in this Agreement or otherwise, if requested by
the Company or its underwriters for a public offering of securities of the
Company, Optionee shall not sell or otherwise transfer or dispose of any Shares
or other securities of the Company held by such Optionee during the period of
fourteen (14) days before, and one hundred eighty (180) days following, the
effective date of a registration statement filed by the Company with the
Securities and Exchange Commission relating to such offering (other than a
registration statement on Form S-8 or Form S-4, or their successors, or any
other comparable form for similarly limited purposes promulgated after the date
hereof, or any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation).
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<PAGE>
7. REMEDIES.
(a The Optionee expressly agrees that the Company or its designee, as
the case may be, will be irreparably damaged if this Agreement is not
specifically enforced. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Optionee,
the Company or its designee (as the case may be) may proceed to protect and
enforce their rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach; and/or an action for specific performance of any such covenant or
agreement contained in this Agreement and/or a temporary or permanent
injunction, in any case without showing any actual damage. The rights, powers
and remedies of the parties under this Agreement are cumulative and not
exclusive of any other right, power or remedy which such parties may have under
any other agreement or law. No single or partial assertion or exercise of any
right, power or remedy of a party hereunder shall preclude any other or further
assertion or exercise thereof.
(b The Optionee agrees that, until a public market for the Shares
exists, the Shares cannot be readily purchased, sold, or evaluated in the open
market, that they have a unique and special value, and that the Company and its
stockholders would be irreparably damaged if the terms of this Agreement were
not capable of being specifically enforced, and for this reason, among others,
the Company shall be entitled to a decree of specific performance of the terms
hereof or an injunction restraining violation of this Agreement, said right to
be in addition to any other remedies of the Company.
8. ASSIGNMENT. The Company may assign its rights under this Agreement to
one or more persons or entities, who shall have the right to so exercise such
rights in his, her or its own name and for his, her or its own account. If the
exercise of any such right requires the consent of any state or other regulatory
authority, then the Optionee shall cooperate with the Company in requesting such
consent.
9. ADJUSTMENT. The number of Shares subject to the terms and provisions of
this Agreement during the term of this Agreement shall be adjusted to give
effect to any stock dividend or liquidating dividend of cash and/or property,
stock split, conversion or other change or reclassification of the outstanding
securities of the Company. In such event, any and all new, substituted or
additional securities or other property to which the Optionee is entitled by
reason of his or her ownership of Shares shall be immediately subject to the
terms of this Agreement, and be included in the term "Shares" for all purposes
with the same force and effect as the Shares presently subject to such rights
and restrictions.
10. LEGENDS. All Certificates representing any Shares of the Company
subject to the provisions of this Agreement shall have endorsed thereon the
following legend in substantially the following form unless in the opinion of
counsel such legend is no longer necessary:
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<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS. THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF, BY GIFT OR OTHERWISE,
OR IN ANY WAY ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO
EXE TECHNOLOGIES, INC. THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS. MOREOVER, THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED BY THE PROVISIONS OF A
CERTAIN STOCK PURCHASE AND RESTRICTION AGREEMENT BETWEEN EXE TECHNOLOGIES,
INC. AND THE STOCKHOLDER, A COPY OF WHICH AGREEMENT WILL BE FURNISHED BY
EXE TECHNOLOGIES, INC. UPON WRITTEN REQUEST AND WITHOUT CHARGE, AND ALL OF
THE PROVISIONS OF SUCH AGREEMENT ARE INCORPORATED BY REFERENCE IN THIS
CERTIFICATE.
11. INVESTMENT REPRESENTATIONS. Unless the Shares have been registered
under the Securities Act of 1933, as amended (the "Act"), in which event the
Company will so advise Optionee in writing, Optionee acknowledges, agrees,
represents and warrants, in connection with the proposed purchase of the Shares,
as follows:
(a The Optionee is purchasing the Shares solely for his or her own
account for investment and not with a view to, or for resale in connection with
any distribution thereof within the meaning of the Act. The Optionee further
represents that he or she does not have any present intention of selling,
offering to sell or otherwise disposing of or distributing the Shares or any
portion thereof; and that the entire legal and beneficial interest of the Shares
he or she is purchasing is being purchased for, and will be held for the account
of, the Optionee only and neither in whole nor in part for any other person.
(b The Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. The Optionee
has a preexisting personal or business relationship with the officers and
directors of the Company and that the Optionee has such knowledge and experience
in business and financial matters to enable him or
-6-
<PAGE>
her to evaluate the risks of the prospective investment and to make an informed
investment decision with respect thereto and that the Optionee has the capacity
to protect his or her own interests in connection with the purchase of the
Shares. The Optionee has discussed the Company and its plans, operations and
financial condition with its officers, has received all such information as the
Optionee deems necessary and appropriate to enable him or her to evaluate the
financial risk inherent in making an investment in the Shares and has received
satisfactory and complete information concerning the business and financial
condition of the Company in response to all inquiries in respect thereof.
(c The Optionee realizes that his or her purchase of the Shares will
be a speculative investment and that Optionee is able, without impairing his or
her financial condition, to hold the Shares for an indefinite period of time and
to suffer a complete loss on the investment.
(d The Company has disclosed in writing that: (i) the sale of the
Shares has not been registered under the Act, and the Shares must be held
indefinitely unless a transfer of them is subsequently registered under the Act
or an exemption from such registration is available, and the Company is under no
obligation to register the Shares; and (ii) the Company shall make a notation in
its records of the aforementioned restrictions on transfer and legends.
(e The Optionee is aware of the provisions of Rule 144, promulgated
under the Act, which, in substance, permits limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or an
affiliate of such issuer) in a non-public offering subject to the satisfaction
of certain conditions, including among other things: the resale occurring not
less than one (1) year from the date Optionee has purchased and paid for the
Shares; the availability of certain public information concerning the Company;
the sale being through a broker in an unsolicited "brokers' transaction" or in a
transaction directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934, as amended); and that any sale of the Shares
may be made by Optionee, if Optionee is an affiliate of the Company, only in
limited amounts during any three-month period not exceeding specified
limitations. The Optionee understands that at the time Optionee wishes to sell
the Shares there may be no public market upon which to make such a sale, and
that, even if such public market then exists, the Company may not be satisfying
the current public information requirements of Rule 144, and that, in such
event, Optionee would be precluded from selling the Shares under Rule 144 even
if the one-year minimum holding period had been satisfied. The Optionee
understands that in the event all of the requirements of Rule 144 are not
satisfied, registration under the Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and such persons and their respective
brokers who participate in such transactions do so at their own risk.
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<PAGE>
(f Without in any way limiting the Optionee's representations and
warranties set forth herein, the Optionee shall in no event make any disposition
of all or any portion of the Shares that he or she is purchasing unless and
until:
(i) there is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) the Optionee shall have (a) notified the Company of the
proposed disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (b) furnished the
Company with an opinion of Optionee's own counsel (satisfactory to the Company)
to the effect that such disposition will not require registration of such shares
under the Act, and such opinion of the Optionee's counsel shall have been
concurred in by counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
12. ESCROW. As security for the Optionee's faithful performance of the
terms of this Agreement and to insure the availability for delivery of the
Optionee's Shares upon exercise, under this Agreement, of the rights of the
Company and the rights of the other beneficiaries to this Agreement, the
Optionee shall, if requested in writing by the Company, deliver to and deposit
with the Secretary of the Company or his nominee (the "Escrow Agent"), as Escrow
Agent in this transaction, two Stock Assignments duly endorsed (with date and
number of shares blank) in the form attached hereto as ATTACHMENT A, together
with the Certificate or Certificates evidencing the Shares; such documents are
to be held by the Escrow Agent and delivered to said Escrow Agent pursuant to
the Joint Escrow Instructions of the Company and Optionee set forth in
ATTACHMENT B attached hereto and incorporated herein by this reference, which
instructions shall also be delivered to the Escrow Agent at the closing
hereunder.
13. RESTRICTION ON ALIENATION. The Optionee shall not sell, transfer, gift,
pledge, hypothecate, assign or otherwise dispose of any of the Shares or any
right or interest therein, whether voluntary, by operation of law or otherwise,
without the prior written consent of the Company, except a transfer which meets
the requirements of this Agreement. Any sale, transfer, gift, pledge,
hypothecation, assignment or disposition or purported sale, transfer or other
disposition of such Shares by Optionee shall be null and void AB INITIO unless
the terms, conditions and provisions of this Agreement are strictly observed.
14. TERM. Except for Sections 3, 4 and 5 hereof, which shall terminate upon
the consummation of a Public Offering of shares of the Company's equity capital,
this Agreement shall continue in full force and effect until such time as the
Optionee has transferred all of the Shares (other than pursuant to Section 2(b))
in accordance with the terms of this Agreement.
15. MISCELLANEOUS.
-8-
<PAGE>
(a The Company shall not be required (i) to transfer on its books any
Shares that shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such Shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
(b Subject to the provisions of this Agreement, Optionee shall, during
the term of this Agreement, exercise all rights and privileges of a stockholder
of the Company with respect to the Shares.
(c The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
(d Any notice, consent or other communication required or permitted
hereunder shall be given in writing and shall be deemed effectively given:
(a) upon personal delivery; (b) two (2) business days after day of deposit if
sent by regular mail; or (c) one (1) business day after the business day of
deposit with a carrier if sent by Federal Express, Express Mail or other
express service (receipt requested), in each case to the appropriate
addresses, telex numbers and telecopier numbers set forth below (or at such
other address or numbers as such party may designate by ten (10) days'
advance written notice to the other party hereto):
(i) To the Optionee:
_______________________
_______________________
_______________________
(ii) To the Company:
EXE Technologies, Inc.
_______________________
_______________________
Attn: _________________
(e This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to all compliance with the restrictions on
transfer herein set forth, be binding upon Optionee, his heirs, executors,
administrators, and permitted successors and assigns.
(f This Agreement shall be construed under the laws of the State of
Delaware and constitutes the entire Agreement of the parties with respect to the
subject matter hereof, superseding all prior written or oral agreements with
respect thereto, and no amendment or addition hereto shall be deemed effective
unless agreed to in writing by the parties hereto.
-9-
<PAGE>
(g If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way and shall be construed in accordance with the purposes
and tenor and effect of this Agreement.
(h Nothing in this Agreement shall be deemed to create any term of
employment or engagement or affect in any manner whatsoever the right or power
of the Company to terminate Optionee's employment or engagement.
(i Notwithstanding (i) the execution and delivery of this Agreement by
the parties hereto or (ii) anything to the contrary contained herein, (A) if the
Optionee's employment with the Company is terminated by the Company pursuant to
the cause termination provisions of an applicable employment agreement, or (B)
if the Optionee's employment or consulting relationship with the Company (as the
case may be) is terminated and the Board makes a determination that the Optionee
(1) has engaged in any type of disloyalty to the Company, including without
limitation, fraud, embezzlement, theft, or dishonesty in the course of his or
her employment or engagement, (2) has been convicted of a felony, (3) has
disclosed trade secrets or confidential information of the Company, or (4) has
breached any agreement with the Company in respect of confidentiality,
non-disclosure, non-competition or otherwise, then, at the election of the
Board, the Optionee shall forfeit all shares for which the Company has not yet
delivered share Certificates to the Optionee or Escrow Agent, as the case may
be, and the Company shall refund to the Optionee the Option purchase price paid
to the Company upon exercise of the Option with respect to those Shares. In
addition, the Company may withhold delivery of share Certificates pending the
resolution of any inquiry that could lead to a determination resulting in
forfeiture.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above-written.
EXE TECHNOLOGIES, INC.
By: ______________________________
Title: ___________________________
OPTIONEE:
__________________________________
-10-
<PAGE>
(Signature)
__________________________________
(Print Name)
Address: _________________________
_________________________
-11-
<PAGE>
SPOUSAL CONSENT
The undersigned spouse of the Optionee agrees that his or her interest, if
any, in the Shares subject to the foregoing Stock Purchase and Restriction
Agreement shall be irrevocably bound by the terms of the Stock Purchase and
Restriction Agreement and further understands and agrees that any community
property interest, if any, shall be similarly bound by the terms of the Stock
Purchase and Restriction Agreement.
Date: ________________ _______________________________
Name of Spouse of Optionee
_______________________________
Signature of Spouse of Optionee
-12-
<PAGE>
ATTACHMENT A
TO STOCK PURCHASE AND RESTRICTION AGREEMENT
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto ___________________________, _____ shares of the Common Stock
(the "Shares") of EXE TECHNOLOGIES, INC. (the "Company"), standing in the
undersigned's name on the books of the Company represented by Certificate No.
_____ herewith, and does hereby irrevocably constitute and appoint
__________________ attorney to transfer the said Shares on the books of the
Company with full power of substitution in the premises.
Dated: ________________ Signature: ________________________
<PAGE>
ATTACHMENT B
TO STOCK PURCHASE AND RESTRICTION AGREEMENT
JOINT ESCROW INSTRUCTIONS
EXE TECHNOLOGIES, INC.
____________ __, 1999
[ADDRESSEE]
Dear __________:
As Escrow Agent for both EXE TECHNOLOGIES, INC. (the "Company"), and the
undersigned grantee of an option to purchase stock of the Company ("Optionee"),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of that certain Stock Purchase and Restriction Agreement
dated ____________________, _____, to which a copy of these Joint Escrow
Instructions is attached as Attachment B (the "Agreement"), in accordance with
the following instructions:
1. In the event the Company and/or any designee or assignee of the Company
(referred to collectively for convenience herein as the "Company") and/or any
other signatory to the Stock Purchase and Restriction Agreement shall elect to
exercise any rights of first refusal, other rights of repurchase and/or other
rights set forth in the Agreement, the Company shall give to the Optionee and
you a written notice specifying the number of shares of stock to be purchased,
the purchase price, and the time for a closing hereunder at the principal
executive office of the Company. The Optionee and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the Certificate
evidencing the shares of stock to be transferred, to the Company or other
applicable purchaser against the simultaneous delivery to you of the purchase
price (by check, evidence of cancellation of indebtedness of Optionee to the
Company or a promissory note, or some combination thereof) for the number of
shares of stock being purchased pursuant to the exercise of the rights.
<PAGE>
_____________________
_____________, ______
Page ___
3. Optionee irrevocably authorizes the Company to deposit with you any
Certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as defined in the Agreement. Optionee
does hereby irrevocably constitute and appoint you as his attorney-in-fact and
agent for the term of this escrow to execute with respect to such securities all
stock certificates, stock assignments, or other documents necessary or
appropriate to make such securities negotiable and complete any transaction
contemplated herein or in the Plan or Agreement.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Rights.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Optionee,
then you shall deliver all of same to Optionee and you shall be discharged of
all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Optionee while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
<PAGE>
_____________________
_____________, ______
Page ___
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary or proper to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company shall
appoint any officer of the Company as successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, then the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right to possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by a mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
(10) days' advance written notice to each of the other parties hereto.
COMPANY: EXE Technologies, Inc.
<PAGE>
_____________________
_____________, ______
Page ___
_________________________
_________________________
OPTIONEE: _________________________
_________________________
_________________________
ESCROW AGENT: _________________________
_________________________
_________________________
By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions; you do not become a party to
the Agreement.
This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
Very truly yours,
_________________________
By: EXE TECHNOLOGIES, INC.
Title: __________________________
OPTIONEE:
_________________________________
<PAGE>
_____________________
_____________, ______
Page ___
Address: ________________________
________________________
Agreed to and accepted as of the
date set forth above.
ESCROW AGENT
By: _____________________________
[Secretary of]
______________________
Name: ___________________________
<PAGE>
EXE TECHNOLOGIES, INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Amended and Restated Effective February 8, 2000
EXE Technologies, Inc., a Delaware corporation (the
"COMPANY"), hereby formulates and adopts the following Stock Option Plan (the
"PLAN") for Non-Employee Directors of the Company.
1. PURPOSE. The purpose of the Plan is to secure for the
Company the benefits of the additional incentive inherent in the ownership of
Class B Common Stock, par value $.0l per share, of the Company, or in the event
of the conversion of the Class B Common Stock, shares of Class A Common Stock,
par value $.01 per share, of the Company issued or issuable upon the conversion
of the Class B Common Stock ("COMMON STOCK") by non-employee directors of the
Company and to help the Company secure and retain the services of such
non-employee directors.
2. ADMINISTRATION. The Plan is intended to be a largely
self-governing formula plan. To this end, except as provided in Section 4, the
Plan requires minimal discretionary action by any administrative body with
regard to any transaction under the Plan. To the extent that questions of
administration arise, these shall be resolved by the Board of Directors of the
Company (the "BOARD OF DIRECTORS").
Subject to the express provisions of the Plan, the Board of
Directors shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind the rules and regulations relating to it and to make all other
determinations deemed necessary and advisable for the administration of the
Plan. The determination of the Board of Directors shall be conclusive.
3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the
adjustment provisions of Section 15 below, a maximum of 300,000 shares of
Common Stock may be made subject to Options (as hereinafter defined) granted
under the Plan. If, and to the extent that, Options granted under the Plan
shall terminate, expire or be canceled for any reason without having been
exercised, new Options may be granted in respect of the shares covered by
such terminated, expired or canceled Options. The granting and terms of such
new Options shall comply in all respects with the provisions of the Plan.
Shares sold upon the exercise of any Option granted under the
Plan may be shares of authorized and unissued Common Stock, shares of issued
Common Stock held in the Company's treasury or both.
There shall be reserved at all times for sale under the Plan a
number of shares, of either authorized and unissued shares of Common Stock or
shares of Common Stock held in the Company's treasury, or both, equal to the
maximum number of shares that may be purchased pursuant to Options granted or
that may be granted under the Plan.
<PAGE>
4. GRANT OF OPTIONS.
(a) INITIAL AWARDS. Each person who is first elected,
appointed or otherwise first becomes an "ELIGIBLE DIRECTOR" (as defined in
Section 5) after the Effective Date (as defined in Section 19) shall receive
an Option to purchase 25,000 shares of Common Stock as of the date on which
such person first becomes an Eligible Director ("INITIAL OPTIONS").
(b) SPECIAL ONE-TIME AWARD. Each person who is an
Eligible Director as of the Effective Date shall receive an Option to
purchase 25,000 shares of Common Stock as of the Effective Date ("SPECIAL
OPTIONS").
(c) SUBSEQUENT AWARDS. Each Eligible Director who is
re-elected, shall, effective as of the first day of such Eligible Director's
new three-year term, receive an Option to purchase 25,000 shares of Common
Stock for service as a director of the Company ("SUBSEQUENT OPTIONS");
provided that, if a re-elected Eligible Director's term is for one year, such
Eligible Director shall receive Subsequent Options only on the third
anniversary of his initial election, and, if re-elected, every three years
thereafter; provided further, that if the Company institutes three-year terms
for directors and this causes an Eligible Director to be eligible for
Subsequent Options prior to the expiration of three years from a prior grant
of Initial Options or Subsequent Options, the Board of Directors shall make
equitable adjustments in the granting schedule of Subsequent Options as it
deems appropriate in its sole discretion.
(d) DISCRETIONARY AWARDS. In addition to Initial
Options, Special Options and Subsequent Options, the Board of Directors may,
in its sole discretion, award additional Options ("DISCRETIONARY OPTIONS") to
Eligible Directors, in amounts and subject to such vesting conditions as
shall be prescribed in an applicable Option Agreement.
Initial Options, Special Options, Subsequent Options and
Discretionary Options may, individually or collectively, be referred to as
"OPTIONS."
(e) TYPE OF OPTIONS. All Options granted under the
Plan shall be "nonqualified" stock options subject to the provisions of
section. 83 of the Internal Revenue Code of 1986, as amended (the "Code").
5. INDIVIDUALS ELIGIBLE. Only directors of the Company
who are not employees of the Company ("ELIGIBLE DIRECTORS") shall participate
in the Plan. A director receiving an Option pursuant to the Plan may
hereinafter be referred to as an "OPTIONEE."
<PAGE>
6. PRICE.
(a) The option price of each share of Common
Stock purchasable under any Option granted
pursuant to the Plan shall be no less than
the Fair Market Value (as defined below)
thereof at the time the Option is granted.
(b) For purposes of the Plan, "FAIR MARKET
VALUE" of a share of Common Stock shall
mean:
(i) If the shares of Common Stock are
listed on a national or regional securities exchange or traded through
NASDAQ/NMS, then the Fair Market Value of a share of Common Stock shall be
the closing price for a share of Common Stock on the exchange or on
NASDAQ/NMS, as reported in The WALL STREET JOURNAL or such other source as
the Board of Directors deems reliable on the relevant valuation date, or if
there is no trading on that date, on the next trading date.
(ii) If the shares of Common Stock are
traded in the over-the-counter market, then the Fair Market Value of a share
of Common Stock shall be the mean of the bid and asked prices for a share of
Common Stock on the relevant valuation date as reported in THE WALL STREET
JOURNAL or other source the Board of Directors deems reliable (or, if not so
reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotations ("NASDAQ") System or the NASD OTC Bulletin
Board), or if there is no trading on such date, on the next trading date.
(iii) In the absence of an established market
for the Common Stock, the Fair Market Value of a share of Common Stock shall
be determined by the Board of Directors in its sole discretion.
7. VESTING AND DURATION OF OPTIONS.
(a) VESTING.
Unless specified otherwise in an Option Agreement,
each Option granted hereunder shall vest and become exercisable in 1/4
increments on each of the first, second, third and fourth anniversaries of
the date such Option is granted; PROVIDED that the Optionee is in the service
of the Company as a director on such date. In the event of the termination of
the Optionee's service as a director of the Company prior to the fourth
anniversary of the date such Option is granted, such Option, to the extent
not yet vested, shall automatically and without notice terminate and become
null and void.
<PAGE>
(b) TERM OF OPTIONS.
Notwithstanding any provision of the Plan to the
contrary (other than Section 7(a)), the unexercised portion of any Option
granted under the Plan shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(i) The expiration of 10 years from the date on
which such Option was granted;
(ii) The expiration of three (3) months from the
date the Optionee's service with the Company shall terminate for any reason
other than death or Disability; and
(iii) The expiration of twelve (12) months from
the date the Optionee's service with the Company terminates due to death or
Disability.
For purposes of this Plan, "DISABILITY" or "DISABLED" shall
mean (i) when the Optionee is determined to be disabled within the meaning of
any long term disability policy or program sponsored by the Company covering
the Optionee, as in effect as of the date of such determination, or (ii) if
no such policy or program shall be in effect, when the Optionee is unable to
engage in any substantial gainful activity by reason of a physical or mental
impairment that can be expected to result in death or that has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months. The determination of whether an Optionee is Disabled pursuant to
subparagraph (ii) shall be determined by the Board of Directors, whose
determination shall be conclusive.
8. EXERCISE OF OPTIONS.
(a) An Option granted under the Plan shall be deemed
exercised when the person entitled to exercise the Option:
(i) delivers written notice to the Company at its
principal business office, directed to the attention of its Corporate
Secretary, of the decision to exercise; and
(ii) concurrently tenders to the Company full
payment for the shares to be purchased pursuant to such exercise, accompanied
by an executed Stock Purchase and Restriction Agreement and any other
agreements required by the Board of Directors or the terms of the Plan and
any Option Agreement.
(b) Payment for shares with respect to which an Option
is exercised may be made in any combination of the following: (i) by cash or
certified or official bank check
<PAGE>
payable to the Company (or the equivalent thereof acceptable to the Board of
Directors); (ii) with the consent of the Board of Directors in its sole
discretion, by personal check (subject to collection) and which may in the
Board of Directors' discretion be deemed conditional; and (iii) by delivery
of previously acquired shares of Common Stock owned by the grantee for at
least six months (or such longer or shorter period as the Board of Directors
may prescribe that will not result in variable accounting treatment) having a
fair market value (determined as of the option exercise date) equal to the
portion of the option exercise price being paid thereby. In addition, in the
event there is a public market for the shares and subject to such rules as
may be established by the Board of Directors, payment in accordance with
clause (a) of this Section 8 may be deemed to be satisfied by delivery to the
Company of an assignment of a sufficient amount of the proceeds from the sale
of Common Stock acquired upon exercise to pay for all of the Common Stock
acquired upon exercise and an authorization to the broker or selling agent to
pay that amount to the Company, which sale shall be made at the Optionee's
direction at the time of exercise; PROVIDED, HOWEVER, that the availability
of this payment method shall be available only if the Board of Directors
determines that the accounting treatment that may result does not adversely
impact the Company.
9. NONTRANSFERABILITY OF OPTIONS.
(a) Except as provided in Section 9(b), no Option or
any right evidenced thereby shall be transferable in any manner other than by
will or the laws of descent and distribution, and, during the lifetime of an
Optionee, only the Optionee (or the Optionee's court-appointed legal
representative) may exercise an Option.
(b) Options may be transferred to family members of
Optionees or to entities controlled by Optionees.
10. POWER OF BOARD IF CHANGE OF CONTROL. Notwithstanding
anything to the contrary set forth in this Plan, in the event of a Change of
Control (as defined below), the Board of Directors shall have the right, in
its sole discretion, to accelerate the vesting of all Options that have not
vested as of the date of the Change of Control and/or to establish an earlier
date for the expiration of the exercise of an Option (notwithstanding a later
expiration of exercisability set forth in an Option Agreement). In addition,
in the event of a Change of Control of the Company, the Board of Directors
shall have the right, in its sole discretion, subject to and conditioned upon
a Sale of the Company (as defined below): (a) to arrange for the successor
company (or other entity) to assume all of the rights and obligations of the
Company under this Plan; or (b) to terminate this Plan and (i) to pay to all
Optionees cash with respect to those Options that are vested as of the date
of the Sale of the Company in an amount equal to the difference between the
Option Price and the Fair Market Value of a Share of Common Stock (determined
as of the date the Plan is terminated) multiplied by the number of Options
that are vested as of the date of the Sale of the Company which are held by
the Optionee as of the date of the Sale of the Company, (ii) to arrange
for the exchange of all Options for options to purchase common stock in the
successor corporation, or (iii) to distribute to each Optionee other property
in an
<PAGE>
amount equal to and in the same form as the Optionee would have received from
the successor corporation if the Optionee had owned the Shares subject to
Options that are vested as of the date of the Sale of the Company rather than
the Option at the time of the Sale of the Company. The form of payment or
distribution to the Optionee pursuant to this Section shall be determined by
the Board of Directors in its sole discretion.
For purposes of this Plan, "CHANGE OF CONTROL" shall mean
the happening of an event (excluding a public offering) that shall be deemed
to have occurred upon the earliest to occur of the following events: (i) the
date the stockholders of the Company (or the Board, if stockholder action is
not required) approve a plan or other arrangement pursuant to which the
Company will be dissolved or liquidated; (ii) the date the stockholders of
the Company (or the Board, if stockholder action is not required) approve a
definitive agreement to sell or otherwise dispose of all or substantially all
of the assets of the Company; (iii) the date the stockholders of the Company
(or the Board, if stockholder action is not required) and the stockholders of
the other constituent corporations (or their respective boards of directors,
if and to the extent that stockholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or into another
corporation, other than, in either case, a merger or consolidation of the
Company in which holders of shares of the Company's voting capital stock
immediately prior to the merger or consolidation will have at least fifty
percent (50%) of the ownership of voting capital stock of the surviving
corporation immediately after the merger or consolidation (on a fully diluted
basis), which voting capital stock is to be held by each such holder in the
same or substantially similar proportion (on a fully diluted basis) as such
holder's ownership of voting capital stock of the Company immediately before
the merger or consolidation; (iv) the date any entity, person or group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")), other than (A) the
Company, (B) any of its subsidiaries, (C) any of the holders of the capital
stock of the Company, as determined on the date that this Plan is adopted by
the Board, (D) any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries or (E) any Affiliate of
any of the foregoing, shall have acquired beneficial ownership of, or shall
have acquired voting control over more than fifty percent (50%) of the
outstanding shares of the Company's voting capital stock (on a fully diluted
basis), unless the transaction pursuant to which such person, entity or group
acquired such beneficial ownership or control resulted from the original
issuance by the Company of shares of its voting capital stock and was
approved by at least a majority of directors who shall have been members of
the Board for at least twelve (12) months prior to the date of such approval;
(v) the first day after the date of this Plan when directors are elected such
that there shall have been a change in the composition of the Board such that
a majority of the Board shall have been members of the Board for less than
twelve (12) months, unless the nomination for election of each new director
who was not a director at the beginning of such twelve (12) month period was
approved by a vote of at least sixty percent (60%) of the directors then
still in office who were directors at the beginning of such period; or
(vi) the date upon which the Board determines (in its sole discretion) that
based on then current available information, the events described in
clause (iv) are reasonably likely to Occur.
<PAGE>
"SALE OF THE COMPANY" shall mean the earliest of: (i) the
closing of a sale, transfer or other disposition of all or substantially all
of the shares of the capital stock then outstanding of the Company (except if
such transferee is then an Affiliate); (ii) the closing of a sale, transfer
or other disposition of all or substantially all of the assets of the Company
(except if such transferee is then an Affiliate); or (iii) the merger or
consolidation of the Company with or into another corporation (except an
Affiliate), other than a merger or consolidation of the Company in which the
holders of shares of the Company's voting capital stock outstanding
immediately before such merger or consolidation hold greater than fifty
percent (50%) of the surviving entity's voting capital stock after such
consolidation or merger.
11. FORFEITURE. Notwithstanding any other provision of
this Plan, if an Optionee's service with the Company is terminated and the
Board of Directors makes a determination that the Optionee (a) has engaged in
any type of disloyalty to the Company, including without limitation, fraud,
embezzlement, theft, or dishonesty in the course of Optionee's service,
(b) has been convicted of a felony or other crime involving a breach of trust
or fiduciary duty owed to the Company, or (c) has made an unauthorized
disclosure of trade secrets or confidential information of the Company then,
at the election of the Board of Directors, all unexercised Options held by
the Optionee (whether or not then exercisable) shall terminate. In the event
of such an election by the Board of Directors, in addition to immediate
termination of all unexercised Options, the Optionee shall forfeit all shares
for which the Company has not yet delivered stock certificates to the
Optionee and the Company shall refund to the Optionee the exercise price paid
to it upon exercise of the Option with respect to such shares. Notwithstanding
anything herein to the contrary, the Company may withhold delivery of stock
certificates pending the resolution of any inquiry that could lead to a
finding resulting in forfeiture.
12. RIGHTS OF OPTIONEE. Neither the Optionee nor the
Optionee's executor or administrator shall have any of the rights of a
stockholder of the Company with respect to the shares subject to an Option
until certificates for such shares shall actually have been issued upon the
due exercise of such Option. Unless the Board of Directors otherwise
determines in accordance with Section 15 below, no adjustment shall be made
for any regular cash dividend for which the record date is prior to the date
of such due exercise and full payment for such shares has been made therefor.
13. RIGHT TO TERMINATE SERVICE. Nothing in the Plan or in
any Option shall confer upon any Optionee the right to continue in the
services of the Company or affect the right of the Company to terminate the
Optionee's service at any time, subject, however, to the provisions of any
agreement between the Company and the Optionee.
14. NONALIENATION OF BENEFITS. No right or benefit under
the Plan shall be subject to anticipation, alienation, sale, assignment,
hypothecation, pledge, exchange, transfer, encumbrance or charge, and any
attempt to anticipate, alienate, sell, assign, hypothecate, pledge,
<PAGE>
exchange, transfer, encumber or charge the same shall be void. To the extent
permitted by applicable law, no right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities or torts
of the person entitled to such benefits.
15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. In
the event that the Board of Directors determines that any dividend or other
distribution (whether in the form of cash, shares of Common Stock, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock such that
an adjustment is determined by the Board of Directors in its discretion to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Board of Directors shall, in such manner as it may deem equitable, adjust any
or all of (i) the number of shares of Common Stock or other securities of the
Company (or number and kind of other securities or property) with respect to
which Options may be granted, including the amounts specified in Section 4,
(ii) the number of shares of Common Stock or other securities of the Company
(or number and kind of other securities or property) subject to outstanding
Options and (iii) the grant or exercise price with respect to any Option or,
if deemed appropriate, make provision for a cash payment to the holder of an
outstanding Option in consideration for the cancellation of such Option.
16. FORM OF AGREEMENTS WITH OPTIONEES. Each Option
granted pursuant to the Plan shall be evidenced by an individual agreement
("OPTION AGREEMENT") in writing and shall have such form, terms and
provisions, not inconsistent with the provisions of the Plan, as the Board of
Directors shall provide for such Option. In the event that any provisions of
an Option Agreement differ from the terms of the Plan, the Plan provisions
shall govern. Upon exercise of an Option, the Optionee shall execute and
deliver to the Company a Stock Purchase and Restriction Agreement in such
form or forms as the Board shall approve from time to time. The Board of
Directors may, from time to time, require such other agreements in connection
with the Option as it, in its sole discretion, deems advisable. The Option
Agreement and the Stock Purchase and Restriction Agreement and any other
agreement required by the Plan or the Option Agreement, as determined by the
Board of Directors, may contain such other provisions of this Plan, including,
without limitation, restrictions upon or conditions precedent to the exercise
of the Option.
17. PURCHASE FOR INVESTMENT. Whether or not the Options
and shares covered by the Plan have been registered under the Securities Act
of 1933, as amended, each person exercising an Option under the Plan may be
required by the Company to give a representation in writing that such person
is acquiring such shares for investment and not with a view to, or in
connection with, the sale, transfer or distribution of any part thereof. The
Company will endorse any necessary legend referring to the foregoing
restriction upon the certificate or certificates
<PAGE>
representing any shares issued or transferred to the Optionee upon the
exercise of any Option granted under the Plan.
18. TERMINATION AND AMENDMENT OF PLAN AND OPTIONS.
(a) Unless the Plan shall theretofore have been
terminated as hereinafter provided, Options may be granted under the Plan, as
provided in Section 4 hereof, prior to the tenth anniversary of the Effective
Date on which date the Plan will expire, except as to Options then
outstanding under the Plan. Such Options shall remain in effect until they
have been exercised, have expired or have been canceled.
(b) The Plan may be terminated or amended at any time
by the Board of Directors; PROVIDED, HOWEVER, that (i) any such amendment
shall comply with all applicable laws and applicable stock exchange listing
requirements and (ii) any amendment for which stockholder approval is
necessary to comply with any tax or regulatory requirement shall not be
effective until such approval has been obtained.
(c) No termination, modification or amendment of the
Plan, without the consent of the Optionee, may adversely affect the rights of
such person with respect to any Option previously granted under the Plan.
19. EFFECTIVE DATE OF PLAN. The Plan shall become
effective upon approval of the Plan by the Board of Directors (the "EFFECTIVE
DATE").
20. GOVERNMENT AND OTHER REGULATIONS. The obligation of
the Company with respect to Options granted under the Plan shall be subject
to all applicable laws, rules and regulations and such approvals by any
governmental agency as may be required, including, without limitation, the
effectiveness of any registration statement required under the Securities Act
of 1933, as amended, and the rules and regulations of any securities exchange
on which the Common Stock may be listed.
21. WITHHOLDING. The Company's obligation to deliver
shares of Common Stock in respect of any Option granted under the Plan shall
be subject to any applicable federal, state and local tax withholding
requirements. Federal, state and local withholding tax, if any, due upon the
exercise of any Option, may be paid in shares of Common Stock (including the
withholding of shares subject to an Option).
22. SEPARABILITY. If any part of the Plan is declared by
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of the Plan not
declared to be unlawful or invalid. Any Section or part of a Section so
declared to be unlawful or invalid shall, if possible, be construed in a
manner which will give effect to the terms of such Section or part of a
Section to the fullest extent possible while remaining lawful and valid.
<PAGE>
23. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of
the Plan by the Board of Directors nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitation on the power of the Board of Directors to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options and the awarding of stock and cash
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
24. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION.
By acceptance of an Option, each Optionee shall be deemed to have agreed
that such grant is special incentive compensation that will not be taken into
account, in any manner, as salary, compensation or bonus in determining the
amount of any payment under any pension, retirement or other employee benefit
plan of the Company or any of its affiliates. In addition, such Option will
not affect the amount of any life insurance coverage, if any, provided by the
Company on the life of the Optionee.
25. GOVERNING LAW. The Plan shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
NEPTUNE SYSTEMS, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made as of the 18th day of
November, 1996 by and between David E. Alcala, a resident of Florida (the
"Employee"), and NEPTUNE SYSTEMS, INC., a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania (the "Company").
WHEREAS, the Company is engaged in the business of providing supply
chain management software and related services to the warehouse, distribution
and logistics industries worldwide ("the Business"); and
WHEREAS, the Company desires to employ the Employee and the Employee
desires to be employed by the Company for a period of time in the future upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties, subject to
the terms and conditions set forth herein, agree as follows:
1. EMPLOYMENT AND TERM.
(a) The Company hereby employs the Employee and the Employee
hereby accepts employment with the Company, as Senior Vice President and
Chief Operating Officer (the "Position"), for a period commencing as of the
date of letter of agreement between Raymond R. Hood ("President/CEO of the
Company") and the Employee dated November 18, 1996 ("the Commencement Date")
and commencing active employment as of January 1, 1997 and continuing until
December 31, 1999, subject to the provisions of Section 8 hereof (the
"Initial Term"). During the Initial Term, the Employee shall also be a member
of the Executive Committee appointed by the Board of Directors.
(b) At the end of the Initial Term, this Agreement shall
automatically renew for successive additional periods of one (1) year, unless
terminated by either party upon no less than one hundred eighty (180) days
prior written notice to the other party prior to the expiration of the
Initial Term or any such renewal period. The Initial Term of employment and
any renewal periods hereunder, subject to the provisions of Section 8 hereof,
are hereinafter referred to as the "Term."
2. DUTIES. During the Term, the Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for the Position. The Employee shall assume such duties and
responsibilities as may be customarily incident to such a position, and such
additional and other duties as may be assigned to the Employee from time to
time by the President or the Executive Committee of the Company, including,
without limitation, the duties and responsibilities set forth in SCHEDULE A
attached hereto. The Employee shall report to the President of the Company.
3. OTHER BUSINESS ACTIVITIES. During the Term, the Employee shall
not, without the prior written consent of the Company in its sole discretion,
directly or indirectly engage in any other business activities or pursuits
whatsoever, except activities in connection with charitable or civic
activities, personal investments and serving as an executor, trustee or in
other similar fiduciary capacity; provided that such activities do not
interfere with his performance of his responsibilities and obligations
pursuant to this Agreement.
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EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
4. COMPENSATION. The Company shall pay the Employee, and the Employee
hereby agrees to accept, as compensation for all services rendered hereunder
and for the Employee's intellectual property covenants and assignments and
covenant not to compete as provided for in Sections 6 and 7 hereof, the
compensation set forth in this Section 4.
4.1 SALARY. The Company shall pay the Employee an initial
base salary at the annual rate of One Hundred Sixty Thousand Dollars
($160,000) (as the same may hereafter be increased , the "Base Salary"). The
Base Salary shall be inclusive of all applicable income, social security and
other taxes and charges that are required by law to be withheld by the
Company, are requested to be withheld by the Employee, and shall be withheld
and paid in accordance with the Company's normal payroll practice for its
similarly situated employees from time to time in effect. The Base Salary may
be increased from time to time by the Board of Directors of the Company in
its discretion.
4.2 BONUS PROGRAM. During the term of this Agreement and
within thirty (30) calendar days of the end of each business quarter as
defined by the Company the Employee shall receive an amount equal to two
percent (2%) of the Gross Margin booked for all new business in the North
American operations of the company. In addition the Employee shall receive a
like amount for all new business booked outside the North American for which
the Employee was directly responsible and managed and directed the
activities. For the purposes of clarity the Employee and Company shall put in
place a margin booking form acceptable to the both parties to aid in this
calculation. For purposes of this Section 4.2 "Gross Margin" shall mean
GROSS MARGIN CALCULATION SIMILAR TO HIS SYSTEMS TO BE DEVELOPED AND ATTACHED
TO THIS AGREEMENT.
4.3 EQUITY PARTICIPATION.
(a) The Company shall grant to the Employee an incentive
stock option to purchase three percent (3%) of the total shares of the Class
B (restricted voting and transfer rights) common stock of the Company equal
to 300,000 shares of common stock at a par value $.01 per share. The
Company plans to offer an additional 2,345,679 shares in two offerings to
private investors in early 1997. This grant will be adjusted on a pro-rata
basis to maintain the 3% ratio on outstanding shares. If the offering is
fully subscribed this will result in an additional 70,370 options being issue
to the Employee. There will be no dilution protection after this supplemental
grant. The Option shall vest as follows: 1/3 of the shares shall vest on the
Commencement Date of this Agreement, 1/3 shares shall vest on the first
anniversary of the Commencement Date of this Agreement, and 1/3 shall vest on
the second anniversary of the Commencement Date of this Agreement. The
exercise price of the Option shall be fixed at 75 cents ($.75) per share.
The Option shall be subject to and in accordance with the provisions of the
1996 Stock Option Plan of the Company (the "Plan") substantially in the form
attached hereto as SCHEDULE B however where this Agreement is different then
the language and provisions in this Agreement shall govern.
(b) Notwithstanding the foregoing, the Option shall
become fully vested upon the occurrence of one of the following events: (a)
the sale of the Company to an unrelated third party by way of merger, sale of
assets or sale of capital stock of the Company, (b) the sale by the Company
of more than seventeen percent (17%) of its outstanding Common Stock on a
fully-diluted basis to an unrelated third party (excluding any sales to
venture funds currently under consideration by the Company with whom
discussions began prior to the Commencement Date of this Agreement), or (c)
the filing by the Company of a registration statement on Form S-1 in
connection with an underwritten initial public offering.
(c) In addition to the foregoing Option, if the Company
completes an underwritten initial public offering of its Common Stock within
three (3) years from the date of this Agreement with an enjoys a market cap
of $200 million or more during it's first day of trading as a public company,
then the
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EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
Employee shall be entitled to receive an additional option for 200,000
Qualified Contingent on Attorneys Opinion shares of the Class B Common Stock
of the Company calculated on a like basis with the Option granted above in
paragraph 4.3(a) (the "IPO Option"). These options shall be granted on the
day after the Initial Public Offering and are fix priced at 75 cents ($.75)
per share.
(d) All shares of Common Stock issued under the Option
or the IPO Option shall be subject to the terms and provisions of a Stock
Purchase and Restriction Agreement as required by the Plan.
4.4 FRINGE BENEFITS. The Employee shall be entitled to
participate in any health, dental programs, or other fringe benefits
available to employees of the Company as amended from time to time. During
the Term, the Employee shall receive term life insurance in the amount of
$300,000 and disability insurance in the amount of $12,000 per month, which
premiums are to be paid by the Company. The Employee shall be entitled to
participate in all vacation and other fringe benefit programs of the Company
to the extent and on the same terms and conditions as are accorded to other
officers and key employees of the Company. Not withstanding the above, the
Employee is entitled to three (3) weeks' paid vacation per calendar year.
4.5 REIMBURSEMENT OF EXPENSES. The Employee shall be
reimbursed for all normal items of travel and entertainment and miscellaneous
expenses reasonably incurred by him on behalf of the Company, provided that
such expenses are documented and submitted to the Company all in accordance
with the reimbursement policies of the Company as in effect from time to
time. The Company shall pay to the Employee a car allowance of Seven Hundred
Fifty Dollars ($750) per month (the "Allowance") during the Term to help
defray the cost of acquiring, insuring and maintaining a vehicle. The Company
shall not be responsible for any cost or other obligation in connection with
such vehicle.
5. CONFIDENTIALITY. The Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Company. As a result, both during the Term and for a
period of three (3) years thereafter, the Employee shall not, without the
prior written consent of the Company, for any reason either directly or
indirectly divulge to any third-party or use for his own benefit, or for any
purpose other than the exclusive benefit of the Company, any confidential,
proprietary, business and technical information or trade secrets of the
Company or of any subsidiary or affiliate of the Company (the "Proprietary
Information") revealed, obtained or developed in the course of his employment
with the Company. Proprietary Information shall include, but shall not be
limited to: the intangible personal property described in Section 6(b)
hereof; any information relating to methods of production, manufacture and
research; hardware and software configurations, computer codes or
instructions (including source and object code listings, program logic
algorithms, subroutines, modules or other subparts of computer programs and
related documentation, including program notation), computer inputs and
outputs (regardless of the media on which stored or located) and computer
processing systems, techniques, designs, architecture, and interfaces; the
identities of, the Company's relationship with, the terms of contracts and
agreements with, the needs and requirements of, and the Company's course of
dealing with, the Company's actual and prospective customers, contractors and
suppliers; and any other materials prepared by the Employee in the course of
his employment by the Company, or prepared by any other employee or
contractor of the Company for the Company or its customers, (including
concepts, layouts, flow charts, specifications, know-bow, user or service
manuals, plans, sketches, blueprints, costs, business studies, business
procedures, finances, marketing data, methods, plans, personnel information,
customer and vendor credit information and any other materials that have not
been made available to the general public). Nothing contained herein shall
restrict the Employee's ability to make such disclosures during the course of
his employment as may be necessary or appropriate to the effective and
efficient discharge of the duties required by or appropriate for the Position
or as such disclosures may be required by law. Furthermore, nothing contained
herein shall restrict the Employee from divulging or using for his own
benefit or for any other purpose any Proprietary Information that is readily
available to the general public so long as such information did not become
available to the general public as a direct or indirect result of the
Employee's breach of this Section 5. Failure by the Company to mark any of
the Proprietary Information as confidential or proprietary shall not affect
its status as Proprietary Information under the
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
terms of this Agreement.
6. PROPERTY.
(a) All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the
Company. During the Term, the Employee shall not remove from the Company's
offices or premises any documents, records, notebooks, files, correspondence,
reports, memoranda or similar materials of or containing Proprietary
Information, or other materials or property of any kind belonging to the
Company unless necessary or appropriate in accordance with the duties and
responsibilities required by or appropriate for the Position and, in the
event that such materials or property are removed, all of the foregoing shall
be returned to their proper files or places of safekeeping as promptly as
possible after the removal shall serve its specific purpose. The Employee
shall not make, retain, remove and/or distribute any copies of any of the
foregoing for any reason whatsoever, except as may be necessary in the
discharge of the assigned duties, and shall not divulge to any third person
the nature of and/or contents of any of the foregoing or of any other oral or
written information to which he may have access or with which for any reason
he may become familiar, except as disclosure shall be necessary in the
performance of the duties; and upon the termination of his employment with
the Company, he shall return to the Company all originals and copies of the
foregoing then in the possession, whether prepared by the Employee or by
others.
(b) (i) The Employee acknowledges that all right, title and
interest in and to any and all writings, documents, inventions, discoveries,
computer programs or instructions (whether in source code, object code, or
any other form), algorithms, formulae, plans, memoranda, tests, research,
designs, innovations, systems, analyses, specifications, models, data,
diagrams, flow charts, and/or techniques (whether reduced to written or
electronic form or otherwise) that the Employee creates, makes, conceives,
discovers or develops, either solely or jointly with any other person, at any
time during the Term, whether during working hours or at the Company's
facility or at any other time or location, and whether upon the request or
suggestion of the Company or otherwise, and that relate to or are useful in
any way in connection with the Business as it exists on the Commencement Date
of this Agreement or hereafter carried on by the Company (collectively, the
"Intellectual Work Product") shall be the sole and exclusive property of the
Company. The Employee shall promptly disclose to the Company all Intellectual
Work Product, and the Employee shall have no claim for additional
compensation for the Intellectual Work Product.
(ii) From the Commencement Date of this Agreement until it's
termination the Employee acknowledges that all the Intellectual Work Product
that is copyrightable shall be considered a work made for hire under United
States Copyright Law. To the extent that any copyrightable Intellectual Work
Product may not be considered a work made for hire under the applicable
provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest
in any Intellectual Work Product that is not copyrightable, the Employee
hereby irrevocably assigns and transfers to the Company any and all right,
title, or interest that the Employee may have in the Intellectual Work
Product under copyright, patent, trade secret, trademark and other
intellectual property laws, in perpetuity or for the longest period otherwise
permitted by law, without the necessity of further consideration. The Company
shall be entitled to obtain and hold tn its own name all copyrights, patents,
trade secrets, and trademarks with respect thereto.
(iii) The Employee shall reveal promptly all information
relating to the Intellectual Work Product to an appropriate officer of the
Company, cooperate with the Company and execute such documents as may be
necessary or appropriate (A) in the event that the Company desires to seek
copyright, patent, trademark or other analogous protection thereafter
relating to the Intellectual Work Product, and when such protection is
obtained, renew and restore the same, or (B) to defend any opposition
proceedings in respect of obtaining and maintaining such copyright, patent,
trademark or other analogous protection.
(iv) In the event that the Company is unable after reasonable
effort to secure the Employee's signature on any of the documents referenced
in Section 7(b)(iii) hereof, whether because of the
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
Employee's physical or mental incapacity or for any other reason whatsoever,
the Employee hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as the Employee's agent and
attorney-in-fact, to act for and in his behalf and stead to execute and file
any such documents and to do all other lawfully permitted acts to further the
prosecution and issuance of any such copyright, patent, trademark or other
analogous protection with the same legal force and effect as if executed by
the Employee.
(v) The Employee represents that the innovations,
designs, systems, analyses, ideas for marketing programs, and all copyrights,
patents, trademarks and trade names, or similar intangible personal property
identified on SCHEDULE C hereof comprises all of the innovations, designs,
systems, analyses, ideas for marketing programs, and all copyrights, patents,
trademarks and trade names, or similar intangible personal property that the
Employee has made or conceived of prior to the date hereof, and same are
excluded from the operation of the other provisions of this Section 6(b).
7. COVENANT NOT TO COMPETE.
(a) The Employee shall not, anywhere in the world, during the
Term and for a period of two (2) years thereafter (the "Restricted Period"),
do any of the following directly or indirectly without the prior written
consent of the Company in its sole discretion:
(i) engage or participate, directly or indirectly, in
any business activity competitive with the Business or the business of any of
the Company's subsidiaries or affiliates as conducted as of the Commencement
date of this Agreement ("the Neptune Business");
(ii) become interested (as owner, proprietor, promoter,
stockholder, lender, partner, co-venturer, director, officer, employee,
agent, consultant or otherwise) in any person, firm, corporation, association
or or other entity engaged in any business that is competitive with the
Neptune Business except as existed on the Commencement Date of this
Agreement, or become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
portion of the business of any person, firm, corporation, association or
other entity where such portion of such business is competitive with the
Neptune Business (notwithstanding the foregoing, the Employee may hold not
more than five percent (5%) of the outstanding securities of any class of any
publicly-traded securities of a company that is engaged in the Neptune
Business.
(iii) solicit or call on, either directly or
indirectly in a capacity competitive with the Neptune Business, any (A)
customer with whom the Company shall have dealt at any time during the three
(3) year period immediately preceding the termination of the Employee's
employment hereunder, or (B) supplier or distributor with whom the Company
shall have dealt at any time during the three (3) year period immediately
preceding the termination of the Employee's employment hereunder;
(iv) influence or attempt to influence any supplier,
distributor, customer or potential customer of the Company to terminate or
modify any written or oral agreement or course of dealing with the Company; or
(v) influence or attempt to influence any person either
(A) to terminate or modify the employment, consulting, agency,
distributorship or other arrangement with the Company, or (B) to employ or
retain, or arrange to have any other person or entity employ or retain, any
person who has been employed or retained by the Company as an employee of the
Company at any time during the twelve (12) month period immediately preceding
the termination of the Employee's employment hereunder.
(b) The Employee hereby acknowledges that the limitations as
to time, character or nature and geographic scope placed on his subsequent
employment by this Section 7 are reasonable and fair and will
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EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
not prevent or materially impair his ability to earn a livelihood.
8. EARLY TERMINATION. The Employee's employment hereunder may be
terminated during the Term upon the occurrence of any one of the events
described in this Section 8. Upon termination, the Employee shall be entitled
only to such compensation and benefits as described in this Section 8.
8.1 TERMINATION FOR DISABILITY.
(a) In the event of the disability of the Employee such
that the Employee is unable to perform the duties and responsibilities
hereunder to the full extent required by this Agreement by reasons of
illness, injury or incapacity for a period of more than one hundred twenty
(120) consecutive days ("Disability"), the Employee's employment hereunder
may be terminated by the Company provided that such disability is not the
direct result of the Employee performing his duties on behalf of the company
or occurring while performing duties and functions on behalf of the Company
("Work Related Activities"). Should such disability be the direct result of
Work Related Activities then the Employee shall be entitled to compensation
under this Agreement to the extent of continuing health and disability
benefits.
(b) In the event of a termination of the Employee's
employment hereunder pursuant to Section 8.1(a), the Employee will be
entitled to receive all accrued and unpaid (as of the date of such
termination) Base Salary and other forms of compensation and benefits payable
or provided in accordance with the terms of any then existing compensation or
benefit plan or arrangement, including payment prescribed under and
disability of life insurance plan or arrangement in which he is a participant
or to which he is a party as an employee of the Company; provided that the
Employee has complied with all of his obligations under this Agreement and
continues to comply with all of his surviving obligations hereunder listed in
Section 10. Except as specifically set forth in this Section 8.1(b), the
Company shall have no liability or obligation to the Employee for
compensation or benefits hereunder by reason of such termination.
8.2 TERMINATION BY DEATH. In the event that the Employee dies
during the Term, the Employee's employment hereunder shall be terminated
thereby and the Company shall pay to the Employee's executors, legal
representatives or administrators an amount equal to: the accrued and unpaid
portion of the Base Salary and other compensation for the month in which he
dies. Except as specifically set forth in this Section 8.2, the Company shall
have no liability or obligation hereunder to the Employee's executors, legal
representatives, administrators, heirs or assigns or any other person
claiming under or through him by reason of the Employee's death, except that
the Employee's executors, legal representatives or administrators will be
entitled to receive the payment prescribed under any death or disability
benefits plan in which he is a participant as an employee of the Company, and
to exercise any rights afforded under any compensation or benefit plan then
in effect.
8.3 TERMINATION FOR CAUSE.
(a) The Company may terminate the Employee's employment
hereunder at any time for "cause" upon ninety (90) days' written notice to the
Employee. For purposes of this Agreement, "cause" shall mean:
(i) any material breach by the Employee of any of
his obligations under this Agreement;
(ii) willful failure by the Employee to perform
satisfactorily the duties required by or appropriate for the Position, as
determined by the President of the Company or the Board of Directors of the
Company in his or its sole reasonable discretion after 90 days written notice
to the employee of the deficiency in performance and development of a
mutually agreed plan to correct such performance shortfalls.
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EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
(iii) conduct of the Employee involving any type of
disloyalty to the Company or willful misconduct with respect to the Company,
including without limitation fraud, embezzlement, theft or proven dishonesty
in the course of the employment;
(iv) conviction of a felony or other criminal act
punishable by more than one (l) year in prison;
(v) commission by the Employee of an intentional tort or
an act involving moral turpitude or constituting fraud; or
(vi) habitual alcohol or substance abuse or addiction.
(b) In the event of a termination of the Employee's
employment hereunder pursuant to Section 8.3(a), the Employee shall be
entitled to receive all accrued but unpaid (as of the effective date of such
termination) Base Salary, benefits and bonuses. All Base Salary, benefits and
bonuses shall cease at the time of such termination, subject to the terms of
any benefit or compensation plan then in force and applicable to the Employee
as well as a release by the Company of any non-compete covenants contained
anywhere in this Agreement except those restrictions contained in paragraphs
7(a)(iii) and 7(a)(iv) and 7(a)(v). Except as specifically set forth in
this Section 8.3, the Company shall have no liability or obligation hereunder
by reason of such termination.
8.4 TERMINATION WITHOUT CAUSE.
(a) The Company may terminate the Employee's employment
hereunder at any time, for any reason, without cause, upon ninety (90) days'
written notice to the Employee except that such termination may not be
performed under the condition of acquisition, merger or sale of the company
without the full salary, benefits and stock options available under this
Agreement being given to the employee.
(b) In the event of a termination of the Employee's
employment hereunder pursuant to Section 8.4(a), the Employee shall be
entitled to receive all accrued but unpaid (as of the effective date of such
termination) Base Salary, benefits and bonuses, plus a liquidated termination
fee (the "Termination Fee") equal to the Employee's normal monthly salary at
the time of the termination times the number of months remaining on this
Agreement or One Hundred Sixty Thousand Dollars ($160,000) whichever is
greater. The payments of the Termination Fee will be made on a monthly basis
until the full amount is paid to the Employee. At the discretion of the
Employee he may waive the payment of Termination Fee for the right to
terminate any and all non-compete provisions of this Agreement in their
entirety no matter where they appear in this Agreement. All Base Salary,
benefits and bonuses shall cease at the time of such termination, subject to
the terms of any benefit or compensation plan then in force and applicable to
the Employee. Except as specifically set forth in this Section 8.4, the
Company shall have no liability or obligation hereunder by reason of such
termination.
8.5 OPTIONS; REPURCHASE OF SHARES.
Upon the termination of the Employee's employment pursuant to
this Section 8 for any reason, all further vesting on all stock options
and/or restricted stock in the Company held by the Employee shall immediately
cease as of such date and thereafter such stock options shall be exercisable
within two (2) calendar years and any restricted stock or other equity
securities held by the Employee shall be subject to repurchase by the Company
at an amount mutually agreed to and determined by an independent appraisal of
the worth of the company done by an outside party acceptable to both parties
to this Agreement. Should the Company file to have an Initial Public
Offerings within fifteen (15) calendar months of early termination of this
Agreement then the Company shall pay an additional amount to the Employee
equal to the difference between the amount already paid under this paragraph
and the share price in the Initial Public Offering.
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EMPLOYEE.
(a) The Employee represents and warrants to the Company that:
(i) There are no restrictions, agreements or
understandings whatsoever to which the Employee is a party which would
prevent or make unlawful the Employee's execution of this Agreement or the
Employee's employment hereunder, or which is or would be inconsistent or in
conflict with this Agreement or the Employee's employment hereunder, or would
prevent, limit or impair in any way the performance by the Employee of the
obligations hereunder; and
(ii) The Employee has disclosed to the Company all
restraints, confidentiality commitments or other employment restrictions that
he has with any other employer, person or entity.
(b) Upon and after his termination or cessation of employment
with the Company and until such time as no obligations of the Employee to the
Company hereunder exist, the Employee (i) shall provide a complete copy of
this Agreement to any prospective employer or other person, entity or
association in the Business, with whom or which the Employee proposes to be
employed, affiliated, engaged, associated or to establish any business or
remunerative relationship prior to the commencement thereof and (ii) shall
notify the Company of the name and address of any such person, entity or
association prior to his employment, affiliation, engagement, association or
the establishment of any business or remunerative relationship.
10. SURVIVAL OF PROVISIONS. The provisions of this Agreement set
forth in Sections 5, 6, 7(a)(iii), 7(a)(iv), 7(a)(v), 8 and 9 through
20 hereof shall survive the termination of the Employee's employment
hereunder.
11. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Company and the Employee and their
respective successors, executors, administrators, heirs and/or permitted
assigns; provided that neither the Employee nor the Company may make any
assignments of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other parties hereto,
except that, without such consent, the Company may assign this Agreement to
any successor to all or substantially all of its assets and business by means
of liquidation, dissolution, merger, consolidation, transfer of assets, or
otherwise, provided that such successor assumes in writing all of the
obligations of the Company under this Agreement.
12. NOTICE. Any notice hereunder by either party shall be given by
personal delivery or by sending such notice by certified mail, return-receipt
requested, or by overnight delivery with a reputable courier service, or
telecopied, addressed or telecopied, as the case may be, to the other party
at its address set forth below or at such other address designated by notice
in the manner provided in this section. Such notice shall be deemed to have
been received upon the date of actual delivery if personally delivered or, in
the case of mailing, two (2) days after deposit with the U.S. mail, or if by
overnight delivery, the date of delivery or, in the case of facsimile
transmission, when confirmed by the facsimile machine report.
If to the Employee:
David E. Alcala
841 Waterside Drive #203
Venice, Florida 34292
If to the Company:
-8-
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
Neptune Systems, Inc.
640 Baldwin Tower Boulevard
Eddystone, PA 19022-1392
Attention: Raymond R. Hood
with a copy to:
Pepper, Hamilton & Scheetz
1235 Westlakes Drive
Suite 400
Berwyn,PA 19312
Attention: Christopher F. Wright, Esquire
13. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement and understanding of the parties hereto relating to the
subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature
between the parties hereto relating to the employment of the Employee with
the Company. This Agreement may not be changed or modified, except by an
agreement in writing signed by each of the parties hereto.
14. WAIVER. The waiver of the breach of any term or provision of
this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.
15. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania, without
regard to the principles of conflicts of laws of any jurisdiction.
16. INVALIDITY. If any provision of this Agreement shall be
determined to be void, invalid, unenforceable or illegal for any reason, then
the validity and enforceability of all of the remaining provisions hereof
shall not be affected thereby. If any particular provision of this Agreement
shall be adjudicated to be invalid or unenforceable, then such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to
be invalid or unenforceable, such amendment to apply only to the operation of
such provision in the particular jurisdiction in which such adjudication is
made; provided that, if any provision contained in this Agreement shall be
adjudicated to be invalid or unenforceable because such provision is held to
be excessively broad as to duration, geographic scope, activity or subject,
then such provision shall be deemed amended by limiting and reducing it so as
to be valid and enforceable to the maximum extent compatible with the
applicable laws of such jurisdiction, such amendment only to apply with
respect to the operation of such provision in the applicable jurisdiction in
which the adjudication is made.
17. SECTION HEADINGS. The section headings in this Agreement are
for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
18. NUMBER OF DAYS. In computing the number of days for purposes
of this Agreement, all days shall be counted, including Saturdays, Sundays
and legal holidays; provided that, if the final day of any time period falls
on a Saturday, Sunday or day which is a legal holiday in Pennsylvania, then
such final day shall be deemed to be the next day which is not a Saturday,
Sunday or legal holiday.
19. SPECIFIC ENFORCEMENT; EXTENSION OF PERIOD.
(a) The Employee acknowledges that the restrictions contained
in Sections 5, 6, and 7 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such
restrictions. The Employee also acknowledges that any breach by him of
Sections 5, 6, or 7 hereof will cause continuing and irreparable injury to
the Company for which monetary damages would not be an adequate remedy. The
Employee shall not, in any
-9-
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
action or proceeding to enforce any of the provisions of this Agreement,
assert the claim or defense that an adequate remedy at law exists. In the
event of such breach by the Employee, the Company shall have the right to
enforce the provisions of Sections 5, 6, and 7 of this Agreement by seeking
injunctive or other relief in any court, and this Agreement shall not in any
way limit remedies of law or in equity otherwise available to the Company.
(b) The periods of time set forth in Sections 5, 6 and 7
hereof shall not include, and shall be deemed extended by, any time required
for litigation to enforce the relevant covenant periods, provided that the
Company is successful on the merits in any such litigation. The "time
required for litigation" is herein defined to mean the period of time
commencing on the earlier of the Employee's first breach of such covenants or
the service of process upon the Employee ending on the expiration of all
appeals related to such litigation.
20. CONSENT TO SUIT. In the case of any dispute under or in
connection with this Agreement, the Employee may only bring suit against the
Company in the Courts of the Commonwealth of Pennsylvania in and for the
County of Philadelphia or in the Federal District Court for such geographic
location. The Employee hereby consents to the jurisdiction and venue of the
courts of the Commonwealth of Pennsylvania in and for the County of
Philadelphia or the Federal District Court for such geographic location,
provided that such Federal Court has subject matter jurisdiction over such
dispute, and the Employee hereby waives any claim he may have at any time as
to FORUM NON CONVENIENS with respect to such venue. The Company shall have
the right to institute any legal action arising out of or relating to this
Agreement in any appropriate court and in any jurisdiction. Any judgment
entered against either of the parties in any proceeding hereunder may be
entered and enforced by any court of competent jurisdiction. If an action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to recover, in addition to
any other relief, reasonable attorneys' fees, costs and disbursements.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
NEPTUNE SYSTEMS, INC.
By: /s/ Raymond Hood
----------------------------------
Title: PRESIDENT & CEO
/s/ David E. Alcala
----------------------------------
DAVID E. ALCALA
-10-
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
SCHEDULE A
DUTIES
The duties of the Employee shall include but not be limited to:
1. Directing the strategic sales and marketing operations of the Company;
2. Participating in the Executive Committee to formulate and execute
company policy
3. Providing direction to the Executive Committee on product direction.
4. Seeking out companies and products which are viable candidates for
acquisition or merger by the Company
5. Working with the President/CEO on day-to-day operations of the Company
6. Setting pricing policies for Company products and services
7. Reviewing, negotiating, and binding the Company in contracts and
agreement with customers
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
SCHEDULE B
NEPTUNE SYSTEMS, INC.
1996 INCENTIVE AND QUALIFIED STOCK OPTION PLAN
[TO BE ATTACHED]
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT - DAVID ALCALA
SCHEDULE C
PRIOR INVENTIONS OF DAVID E. ALCALA
1. It is hereby disclosed that David E. Alcala and Kristine A. Alcala are
officers and owners of a corporate entity known as Manufacturing Technology
Associates, a State of Wisconsin corporation, and that further that company
owns and has marketed a MRPII Manufacturing Requirements Planning
System/Financial System known under the trade name PACS/FACS (Planning and
Control System/Financial Accounting Control System), and further that under a
previous corporate entity know as Manufacturing Resource Management the PACS
product was sold to Arthur Andersen and Company who sold the product to the
general public under the operations of Andersen Consulting with the trade
name MACPAC, and further that PACS/FACS is a copyrighted work containing
substantial amounts of inventory control, stock location, and distribution
logic which can operate on the IBM AS/400, HP/9000 and IBM RS/6000 family of
computers David E. Alcala is a key designer and architect of the logic
contained in this system.
<PAGE>
NEPTUNE SYSTEMS, INC.
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
This First Amendment (this "Amendment") is dated September 11, 1997 by
and between David E. Alcala (the "Employee") and Neptune Systems, Inc. (the
"Company") and amends the Executive Employment Agreement dated as of November
18, 1996 between the Employee and the Company (the "Agreement").
WHEREAS, the Employee and the Company entered into the Agreement
pursuant to which the Employee was granted and was to be granted certain
incentive stock options in the Company;
WHEREAS, the Company is currently in negotiations with Dallas Systems
Corporation, General Atlantic Partners and EXE Technologies, Inc. with
respect to the merger of both the Company and Dallas with and into EXE
Technologies (the "Merger"); and
WHEREAS, the parties desire to amend the Agreement regarding the option
grants and to clarify the Agreement regarding the impact of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment shall
have the same meaning as those contained in the Agreement unless otherwise
defined herein.
2. RECEIPT OF INITIAL OPTION. The Employee acknowledges that as stated
in Section 4.3(a) of the Agreement the employee was granted an Incentive
Stock Option (the "Initial Option") dated November 18, 1996, to purchase
300,000 shares of the Class B Common Stock, $.001 par value per share, of the
Company at the fair market value of 75 cents ($.75) per share.
3. ACCELERATION OF VESTING. The Company acknowledges that upon the
consummation of the Merger, the Initial Option will become fully vested
pursuant to Section 4.3(b) of the Agreement and that as of the date on which
the Merger is effective the Employee may upon demand execute any or all of
the options at anytime time the Employee desires.
4. THE SECOND OPTION GRANT. Promptly after the consummation of the
Merger, the successor in interest to the Company as a result of the Merger
(the "Surviving Corporation") shall grant to the Employee an incentive stock
option (the "Second Option") to purchase 39,583 total shares of the Class B
Common Stock, $.01 par value per share, of the Surviving Corporation. The
exercise price of the Second Option shall be fixed at a fare market price of
<PAGE>
Two Dollars ($2.00) per share. The Second Option shall be fully vested on the
date of issuance of the Second Option. The Second Option shall be subject to
and in accordance with provisions of the 1996 Stock Option Plan of the
Company or any successor Plan adopted by the Surviving Corporation (the
"Plan"), provided that if this Amendment or the Agreement conflicts with the
language and provisions in the Plan, then the Agreement as amended shall
govern. The Employee acknowledges that upon the issuance of the Second
Option, the Company has no further obligation to issue any additional options
to the Employee pursuant to Section 4.3(a) of the Agreement.
5. TERMINATION OF 4.3(c). The parties acknowledge that notwithstanding
anything to the contrary contained in the Agreement, Section 4.3(c) of the
Agreement is hereby terminated in its entirety.
6. THE THIRD OPTION GRANT. Promptly after the consummation of the
Merger, the Surviving Corporation shall grant to the Employee an incentive
stock option (the "Third Option") to purchase 200,000 shares of the Class B
Common Stock, $.01 par value per share, of the Surviving Corporation. The
exercise price of the Third Option shall be at the fair market value of Two
Dollars ($2.00) per share. The Third Option shall vest as follows: 10,417 of
the shares shall vest on [January 1], 1999; 66,667 of the shares shall vest
on [January 1], 2000; 66,667 of the shares shall vest on [January 1], 2001;
and 58,250 of the shares shall vest on [January 1], 2002. The Third Option
shall be subject to and in accordance with the provisions of the Plan,
provided that if this Amendment or the Agreement conflicts with the language
and provisions in the Plan, then the Agreement as amended shall govern.
7. EFFECT OF MERGER. The parties acknowledge that upon the
consummation of the Merger, the Agreement shall be binding upon each of the
Employee and the Surviving Corporation as a result of the Merger.
8. MISCELLANEOUS.
(a) The Agreement shall remain in full force and effect, subject
only to the changes herein specified.
(b) The Agreement, as modified by this Amendment, constitutes the
entire understanding between the parties with respect to the subject matter
hereof and supersedes any prior understandings and/or written or oral
agreements between them.
(c) All references to the Agreement in any other documents, shall
mean the Agreement as amended hereby and from time to time hereafter in
writing.
-2-
<PAGE>
(d) This Amendment shall be governed by the laws of the
Commonwealth of Pennsylvania, without regard to the principles of conflicts
of laws of any jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
NEPTUNE SYSTEMS, INC.
/s/ David E. Alcala
- -------------------------- By: /s/ Raymond Hood
DAVID E. ALCALA ---------------------------------
Title: President
---------------------------
-3-
<PAGE>
To: Dave Alcala
From: Michael Burstein
Date: January 5, 2000
Re: Obligations Met
This memo is to confirm that by accepting and depositing the enclosed check,
David Alcala hereby agrees that EXE Technologies, Inc. has met all of its
financial obligations and commitments to Mr. Alcala from the date of employment
through December 31, 1999.
EXE also hereby confirms that Mr. Alcala does not have any outstanding
obligations to EXE for the same period.
Dave, please sign in the space provided below and return one copy to me for our
files.
By: /s/ David Alcala By: /s/ Michael Burstein
------------------------------ ------------------------------
David Alcala Michael Burstein
Chief Financial Officer
*Signed subject to pending life insurance policy to be issued. All base
compensation, commission, and bonus issues have been met through 12/31/99.
DEA 1/7/2000
<PAGE>
Triton SystemHouse Employment Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is hereby entered into between Triton
SystemHouse Pte. Ltd. ("Employer") and Mark R. Weaser ("Employee").
WHEREAS, the Employer is presently engaged in a business that requires the
assistance of individuals with Employee's executive qualifications, skills and
experience, and
WHEREAS, the Employer desires to procure the services of Employee and
Employee is willing to enter into the employ of the Employer upon the terms and
subject to the conditions set forth herein, and
WHEREAS, the parties believe it is in their mutual interest to address in
this Agreement certain of their rights and responsibilities arising out of such
employment relationship, including matters pertaining to compensation,
ownership and protection of valuable confidential and proprietary information
of Employer, certain restrictions on business practices of Employee reasonably
needed to protect the Employer's legitimate business interests and other
important considerations addressed herein.
NOW THEREFORE, for adequate consideration and intending to be legally
bound, the Employer hereby employs Employee, and the Employee hereby accepts
such employment with the Employer, upon the following terms and conditions:
1. EMPLOYMENT POSITION.
(a) INITIAL DUTIES. Employer hereby employs Employee to render services
to the Employer in the capacity of a General Manager and, in connection with
those services, Employee agrees to devote its full-time attention and efforts
to perform such duties and any incidental or further services as would normally
be expected of an employee working in Employee's capacity, as reasonably
determined by the Employer (see attached Job Description).
(b) CHANGES IN DUTIES. Employee hereby accepts employment with
Employer in the capacity described in the attached Job Description referenced
in 1(a). Employer may from time to time change Employee's duties or re-assign
Employee to another position or location, according to Employer's business
needs.
(c) OUTSIDE BUSINESS ACTIVITIES. As a full-time employee, the Employee
is expected to devote full-time attention and effort to the furtherance of
Employer's business interests and not to engage in any outside business
activities that would interfere with such work. Employee shall provide
Employer advance written notice and full disclosure of any outside business
activity that Employee desires to pursue ("Outside Business") to permit
Employer to determine whether the Outside Business relates to the Employer's
own business or to the actual or demonstrably anticipated research or
development of Employer's business. If approved by Employer, the Employee may
conduct such Outside Business, but entirely on Employee's own time and without
using any of Employer's equipment, supplies, facilities or Confidential or
Proprietary Information. Employer shall maintain in confidence any trade
secrets disclosed by Employee with respect to an Outside Business approved by
Employer. The Employee's pursuit of any Outside Business in no way waives or
otherwise relaxes the requirements of Section 4 ("Confidential & Proprietary
Information"), Section 5 ("Restrictions on Certain Business Practices") or
Section 8 ("No Conflicts").
2. TERM. The term of this Agreement ("Term") shall commence July 31, 1996
and shall continue in full force and effect until terminated in accordance with
Section 9 ("Termination").
3. COMPENSATION. Employee shall be compensated for its services as follows:
(a) BASE COMPENSATION. During the Term hereof, Employee shall receive a
salary in the amount of (see attached Compensation Schedule) per annum ("Base
Compensation"), payable monthly. The Base Compensation shall from time to time
be increased (i) automatically, by such cost of living adjustments as the
Employer may grant other employees in comparable positions and (ii) at the sole
discretion of the Employer in accordance with Subsection (c)("Compensation
Review").
(b) INCENTIVE COMPENSATION. Any incentive compensation payable to the
Employee beyond Base Compensation shall be determined from time to time by
Employer in its sole judgment.
1
<PAGE>
Triton SystemHouse Employment Agreement
(c) EMPLOYEE BENEFITS. During the Term hereof, Employee shall be covered
by such major medical, health benefit, pension and vacation plans or allowances
as are generally made available by Employer to other employees of similar status
and service and shall be eligible to participate in any stock option, stock
bonus or profit sharing or similar plans of the Employer under the terms of
any such plans.
(d) CERTAIN OUT-OF-POCKET COSTS. Employee shall be reimbursed for
pre-authorized costs of travel and other expenses incurred by Employee while
performing the services contemplated hereunder to the extent reimbursable under
Employer's travel policies from time to time in effect, Employee agrees to
comply with all reasonable authorization, recordkeeping and substantiation
requirements of Employer.
(e) COMPENSATION REVIEW. The Employee's job performance and
compensation shall be reviewed by the Employer after each anniversary date of
the Agreement.
4. CONFIDENTIAL & PROPRIETARY INFORMATION.
(a) "CONFIDENTIAL & PROPRIETARY INFORMATION" DEFINED. Employee hereby
acknowledges that during the period of employment and in rendering the services
contemplated herein, Employee may be exposed to confidential and proprietary
information belonging to the Employer or relating to its affairs. Such
information may include, without limitation, technical information (including
functional and technical specifications, designs, drawings, analysis,
research, processes, computer programs, algorithms, methods, ideas, "know-how"
and the like), business information (sales and marketing research, materials,
plans, accounting and financial information, personnel records and the like),
Employee Work Product described in Subsection (b)("Employee Work Product") and
other information designated as confidential or proprietary expressly or by the
circumstances in which it is provided or created ("Confidential & Proprietary
Information"). Confidential & Proprietary Information does not include (i)
information already known or independently developed by the Employee after the
effective date hereof in compliance with Section 1(c)("Outside Business
Activities"); (ii) information in the public domain through no wrongful act of
the Employee or (iii) information received by the Employee outside the scope of
employment hereunder from a third party who was free to disclose it.
(b) "EMPLOYEE WORK PRODUCT" DEFINED. Employee hereby acknowledges that
during the period of employment, Employee may conceive, discover, reduce to
practice, create, author or develop certain works, inventions, ideas,
discoveries or improvements ("Work") that (i) result from services performed
by the Employee under or in anticipation of this Agreement or (ii) relate at
such time to the Employer's business or to the actual or demonstrably
anticipated research or development of the Employer's business (collectively,
"Employee Work Product"), Employee Work Product does not include any Work of
Employee authorized by Employer in accordance with Section 1(c)("Outside
Business Activities").
(c) OWNERSHIP ASSIGNMENT. Employee hereby acknowledges and agrees that
(i) Employer is the exclusive owner of all Confidential & Proprietary
Information and (ii) all Employee Work Product constitutes "work made for
hire" owned exclusively by Employer and, alternatively, Employee hereby
irrevocably assigns all patent, copyright, trade secret, ownership or other
rights it might have in Employee Work Product to the Employer. Employee
shall, during the Term hereof or at any time thereafter upon request, execute
any domestic or foreign applications assignments or other documents needed to
vest or confirm ownership of Employee Work Product exclusively in Employer.
(d) COVENANT NOT TO DISCLOSE. With respect to all Confidential &
Proprietary Information (including Employee Work Product), the Employee
hereby agrees that during the Term of this Agreement and at all times
thereafter it shall not use, commercialize or disclose such Confidential &
Proprietary Information to any person or entity unless specifically
authorized by Employer. Employee shall use at least the same degree of care
in safeguarding the Confidential & Proprietary Information as it uses in
safeguarding its own confidential information, but in no event shall Employee
exercise less that due diligence and care. Employee shall not alter or
remove from any Confidential & Proprietary Information any proprietary,
patent, copyright, trademark or trade secret legend, nor may it attempt to
decompile or reverse engineer such Confidential & Proprietary Information.
Upon termination of employment, or at any time upon the request of the
Employer, the Employee shall promptly return to the Employer or account for
all Confidential & Proprietary Information in its possession or control and
shall cease all further use thereof. The provisions of this Section 4
("Confidential & Proprietary Information") shall survive termination of this
Agreement.
5. RESTRICTION ON CERTAIN BUSINESS PRACTICES.
2
<PAGE>
Triton SystemHouse Employment Agreement
(a) NONSOLICITATION. During the Term hereof and for a period of six (6)
months thereafter, the Employee agrees (i) not to solicit the trade of, or
trade with, any customer or supplier of the Employer for any business purpose
other than for the benefit of the Employer, and (ii) not to hire, solicit,
nor attempt to solicit, the services of any employee or contractor of the
Employer without the prior written consent of the Employer.
(b) NONCOMPETITION. In addition to other restrictions imposed by this
Agreement, Employee covenants and agrees during the period of employment and
for six (6) months thereafter, not to engage, directly or indirectly, whether
as principal, agent, owner, employee, contractor or otherwise, individually or
in combination with any other individual, corporation or entity, in any
business which competes directly with, an actively operated business of
Employer selling the same or substantially similar products or services sold
by Employee on behalf of Employer within 6 months prior to termination
hereunder.
(c) SEVERANCE. If Employer terminates Employee without cause, Employer
will pay total compensations for six (6) months after the termination date.
6. REMEDIES. Employee acknowledges and agrees that the Employer would be
irreparably harmed and that remedies at law would be inadequate to redress
the actual or threatened violations of Section 4 ("Confidential & Proprietary
Information") or Section 5 ("Restrictions on Certain Business Practices") and
that, in addition to other relief, the foregoing restrictions may be enforced
by temporary and permanent injunctive relief. The time periods referenced in
the foregoing restrictions shall be extended by any period in which Employee
is in breach thereof. The Employer's breach of any provision of this
Agreement shall not constitute a defense for any violation by Employee of the
foregoing restrictions. Remedies referenced in this Agreement shall be
considered cumulative and not exclusive. Employee agrees to pay all costs
and expenses (including reasonable attorneys' fees) incurred by Employer in
enforcing the foregoing restrictions.
7. MINIMUM REQUIREMENTS OF LAW. The Employee acknowledges that the
provisions of Section 4 ("Confidential & Proprietary Information"), Section 5
("Restrictions on Certain Business Practices") and Section 6 ("Remedies") are
agreed to on the basis of adequate and substantial consideration, are
reasonably designed to protect legitimate and essential business interests
of Employer and that such provisions should be given full force and effect.
If, however, any such provision is found by a tribunal of competent
jurisdiction to be illegal or unenforceable in whole or in part then, to such
extent, the parties desire that the offending provision shall automatically
be deemed modified and conformed to the minimum requirements of law and
thereupon, together with all other provisions hereof (whether in their
original form or as modified hereunder), be given full force and effect.
8. NO CONFLICTS. Except to the extent made known to Employer by Employee
prior to the effective date hereof, Employee represents and warrants that (i)
it possesses the knowledge and skill reasonably required to render the
services contemplated hereunder in a professional and workmanlike manner,
(ii) it is not restricted by any other contract or other limitation of any
kind that would prevent or otherwise inhibit Employee from rendering the
services contemplated hereunder, (iii) in rendering the services hereunder,
Employee will not use any pre-existing work or divulge any information of any
previous employer or third party that would violate or infringe any patent,
copyright, trade secret or other proprietary rights of such employer or third
party and agrees at its own expense to defend, indemnify and hold Employer
harmless from any claim to the contrary, (iv) if the services contemplated
herein require Employee to obtain or maintain security or other background
clearance, then the employment contemplated herein is expressly conditioned
upon Employee's timely obtaining and maintaining such clearance during the
Term hereof, (v) Employee shall abide by Employer's generally applicable
rules and regulations from time to time in effect.
9. TERMINATION. Either party may terminate this Agreement if the other
party breaches any material provision hereof and fails within ten (10) days
after receipt of notice of default to correct such default or to commence
corrective action reasonably acceptable to the aggrieved party and proceed
with due diligence to completion. IN ADDITION, IT IS AGREED THAT THIS
RELATIONSHIP CONSTITUTES "EMPLOYMENT AT WILL" AND THAT EITHER PARTY MAY AT
ANY TIME TERMINATE THIS AGREEMENT WITH OR WITHOUT CAUSE UPON TWO (2) WEEKS'
ADVANCE WRITTEN NOTICE OR EQUIVALENT COMPENSATION IN LIEU OF SUCH NOTICE.
Termination of this Agreement, whether for cause, without cause, upon
expiration of the Term or otherwise, shall have no effect on the parties'
rights and obligations with respect to Section 4 ("Confidential & Proprietary
Information"), Section 5 ("Restrictions on Certain Business Practices") or
Section 8 ("No Conflicts").
10. DISPUTES, CHOICE OF LAW. Except for certain emergency judicial relief
authorized under Section 6 ("Remedies") which may be brought at any time, the
parties agree that all disputes between them shall first be subject to the
notice procedures in Section 9 ("Termination"), Employee shall initiate any
action to enforce this Agreement within one (1) year after the occurrence of
the alleged breach. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE REPUBLIC OF SINGAPORE AND ANY
ACTION OR OTHER PROCEEDING SHALL BE INITIATED AND MAINTAINED IN A FORUM OF
COMPETENT JURISDICTION IN SUCH COUNTRY.
3
<PAGE>
Triton SystemHouse Employment Agreement
11. MISCELLANEOUS. This document constitutes the entire agreement between
the parties with respect to the subject matter hereof, supersedes all other
communications, whether written or oral and is binding upon Employee and
Employee's successors, heirs, executors, legal representatives and
permitted assigns. This Agreement may be modified or amended only by a
writing signed by the party against whom enforcement is sought. Except as
specifically permitted herein, neither this Agreement nor any rights or
obligations hereunder may be transferred or assigned without the other
party's prior written consent and any attempt to the contrary shall be void;
provided, however, that Employer may assign this Agreement to any corporate
successor-in-interest or to any affiliate of Employer upon the reassignment
of Employee to such entity in accordance with Section 1(b) ("Changes in
Duties"). Any provision hereof found by a tribunal of competent jurisdiction
to be illegal or unenforceable shall be automatically conformed to the
minimum requirements of law and all other provisions shall remain in full
force and effect. Waiver of any provision hereof in one instance shall not
preclude enforcement thereof on future occasions. Headings are for reference
purposes only and have no substantive effect.
EMPLOYEE ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT IN ITS ENTIRETY AND
HEREBY AGREES TO BE BOUND BY ITS TERMS.
IN WITNESS WHEREOF, for consideration the adequacy of which is hereby
acknowledged and intending to be legally bound, the parties hereto have
caused this Agreement to be executed on the date last below written.
TRITON SYSTEMHOUSE PTE. LTD.
By: /s/ Raymond R. Hood
Name: Raymond R. Hood
Title: Managing Director
Dated: 12/7/96
EMPLOYEE:
By: /s/ Mark Weaser
Name: MARK WEASER
Date: 12/7/96
4
<PAGE>
COMPENSATION WORKSHEET-MARK WEASER
(FIGURES IN SINGAPORE DOLLARS)
<TABLE>
<S> <C> <C>
BASE:
Salary $ 181,399.70
Payable Monthly
Per month $ 13,449.98
BONUS:
Guarantee One Month Salary 13th month
Additional Discretion of Management
--
BENEFITS:
Medical Company standard medical policy
Car Allowance pick up current lease or sign new ones
Housing Allowance 7,000 month
COLA 4,550 month
Total Monthly Compensation 25,000
Total Annual Compensation 300,000
FIGURES BELOW IN U.S. DOLLARS
OTHER: 0.375%
Stock Option Program 37,500 Shares of Neptune stock (restricted common)
Current Value Per Share $ 2.66 Current Neptune VC Valuation
Current Value of Options $ 99,750
Projected Min per Share in 24 months $ 10.00 Minimum value to go public
Projected Min Options Value in 24 months $ 375,000
Projected Min per Share in 36 months $ 16.00 Minimum value to go public
Projected Min Options Value in 36 months $ 562,500
Vesting 36 Months, cliff vesting
Dilution Protection Piggyback deal protects you
Fuji SystemHouse to create equivalent option offer as above.
</TABLE>
AGREED:
TRITON SYSTEMHOUSE PTE. LTD
By: /s/ Raymond R. Hood
Name: Raymond R. Hood
Date: 12/7/96
EMPLOYEE:
By: /s/ Mark Weaser
Name: MARK WEASER
Date: 12/7/96
Page 1
<PAGE>
Triton SystemHouse
EXECUTIVE EMPLOYMENT AGREEMENT
AMENDMENT I
THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT BETWEEN Triton SystemHouse
("Employer") and Mark R. Weaser ("Employee") dated December 7, 1996 is made
as of the 5th day of March, 1997.
WHEREAS, the Employer's corporate parent desires to grant stock options
("The Option") to its key employees and the key employees of its
subsidiaries; and
WHEREAS, the Employer desires to pay incentive compensation to the
Employee according to a performance based formula derived from the Employer's
financial results; and
WHEREAS, the Employee desires to hold such stock options and to receive
incentive compensation;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties, subject to
the terms and conditions set forth herein, agree as follows:
1.0 EQUITY PARTICIPATION.
(a) The Company shall grant to the Employee an incentive stock
option to purchase THREE PERCENT (.0075%) OF THE TOTAL SHARES OF THE CLASS B
(RESTRICTED VOTING AND TRANSFER RIGHTS) COMMON STOCK OF THE COMPANY EQUAL TO
75,000 SHARES OF COMMON STOCK) at a par value $ .001 per share. The Company
plans to offer an additional 2,345,679 shares in two offerings to private
investors in early 1997. This grant will be adjusted on a pro-rata basis to
maintain the .0075% ratio on outstanding shares. If the offering is fully
subscribed this will result in an additional 17,593 options being issue to
the Employee. There will be no dilution protection after this supplemental
grant. The Option shall vest as follows: 1/3 of the shares shall vest on the
Commencement Date of this Agreement, AND ADDITIONAL 1/3 shares shall vest on
the first anniversary of the Commencement Date of this Agreement and AN
ADDITIONAL 1/3 shall vest on the second anniversary of the Commencement Date
of this Agreement. The exercise price of the Option shall be fixed at
seventy-five (75) cents per share. The Option shall be subject to and in
accordance with the provisions of the 1997 Stock Option Plan of the Company
(the "Plan") substantially in the form attached hereto as SCHEDULE B however
where this Agreement is different then the language and provisions in this
Agreement shall govern.
(b) Notwithstanding the foregoing, the Option shall become
fully vested upon the occurrence of one of the following events: (a) the sale
of the Company to
<PAGE>
an unrelated third party by way of merger, sale of assets or sale of capital
stock of the Company, (b) the sale by the Company of more than seventeen
percent (17%) of its outstanding Common Stock on a fully-diluted basis to an
unrelated third party (excluding any sales to venture funds currently under
consideration by the Company with whom discussions began prior to the
Commencement Date of this Agreement), or (c) the filing by the Company of a
registration statement on Form S-1 in connection with an underwritten initial
public offering.
(c) In addition to the foregoing Option, if the Company
completes an underwritten initial public offering of its Common Stock within
three (3) years from the date of this Agreement with an enjoys a market cap
of $200 million or more during it's first day of trading as a public company,
then the Employee shall be entitled to receive an additional option for
50,000 shares of the Class B Common Stock of the Company calculated on a like
basis with the Option granted above in paragraph 1.0 (a) ("the IPO Option").
These options shall be granted on the day after the Initial Public Offering
and are fix priced at seventy-five cents (75) per share.
(d) All shares of Common Stock issued under the Option or the
IPO Option shall be subject to the terms and provisions of a Stock Purchase and
Restriction Agreement as required by the Plan.
2.0 INCENTIVE COMPENSATION
During the term of this Agreement and within thirty (30) calendar days of the
end of each business quarter as defined by the Company the Employee shall
receive an amount equal to two percent (2%) of the Gross Margin booked for
all new business in the ASEAN operations of the company. In addition the
Employee shall receive a like amount for all new business booked outside
ASEAN operations for which the Employee was directly responsible and managed
and directed the activities. For the purposes of clarity the Employee and
Company shall put in place a margin booking form acceptable to the both
parties to aid in this calculation. For purposes of this Section 2.0 "Gross
Margin" shall mean OPERATING REVENUE LESS DIRECT MARKETING COSTS (INCLUDING
ALL SALARIES, COMMISSIONS, AND OTHER COMPENSATION OF SALES PEOPLE),
ADVERTISING, TRADE SHOW EXPENSES AND OTHER EXPENSES DEEMED BY THE EXECUTIVE
COMMITTEE TO BE REASONABLY ATTRIBUTABLE TO ONGOING SALES EFFORT. (SEE
ATTACHED SCHEDULE FOR LIST OF ACCOUNTS).
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first written above.
<PAGE>
Triton SystemHouse Pte. Ltd.
By:
-------------------------------------
Title: Director (date)
-------------------------------------
Mark R. Weaser (date)
<PAGE>
SCHEDULE A
NEPTUNE SYSTEMS, INC.
1996 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
[TO BE ATTACHED]
<PAGE>
ADDENDUM - EXECUTIVE EMPLOYMENT AGREEMENT
This Addendum sets forth certain changes to the Executive
Employment Agreement between Mark Weaser, a resident of Singapore (the
"Employee") and Neptune Systems, Inc. a corporation organized and existing under
the laws of the Commonwealth of Pennsylvania (the "Company"). This Addendum
shall become valid and binding upon signature by the Employee and authorized
officers of the Company. In the event that any of the terms of this Addendum
shall conflict with the Agreement, this Addendum shall control.
1. EQUITY PARTICIPATION.
--------------------
(a) The Company shall grant to the Employee a stock option
to purchase an additional 9,896 total shares of the Class B (restricted
voting and transfer rights) common stock of the Company with a par value
$.01 per share. This grant compensates Employee for the anti-dilution
protection afforded in Paragraph 4.3(a) of the Executive Employment
Agreement and represents the pro-rata amount based on the subscription by
private investors of 1,111,111 shares of the Company. The Option shall vest
as follows: 100% of the shares shall vest on the Commencement Date of this
Agreement. The exercise price of the Option shall be fixed at two dollars
($2.00) per share. The Option shall be subject to and in accordance with
the provisions of the 1996 Stock Option Plan of the Company (the "Plan")
substantially in the form attached hereto as SCHEDULE B however where this
Addendum is different then the language and provisions in this Addendum
shall govern.
(b) In addition to the foregoing Option, the Company shall
grant an additional Option (Option #2) to supercede the terms of Paragraph
4.3(c) of the Executive Employment Agreement. Option #2 grants Employee a
stock option to purchase an additional 50,000 total shares of the Class B
(restricted voting and transfer rights) common stock of the Company with a
par value of $.01 per share. The Option shall vest as follows: 25,000 of
the shares shall vest on the Commencement Date of this Addendum, 12,500
shares shall vest on the first anniversary of the Commencement Date of this
Addendum, and 12,500 shall vest on the second anniversary of the
Commencement Date of this Addendum. The exercise price of the Option shall
be fixed at two dollars ($2.00) per share. The Option shall be subject to
and in accordance with the provisions of the 1996 Stock Option Plan of the
Company (the "Plan") substantially in the form attached hereto as SCHEDULE
B however where this Addendum is different then the language and provisions
in this Addendum shall govern.
(c) All shares of Common Stock issued under this Addendum
shall be subject to the terms and provisions of a Stock Purchase and
Restriction Agreement as required by the Plan.
IN WITNESS WHEREOF, for adequate consideration and intending
to be legally bound, the parties hereto have caused this Addendum to be executed
(and thereby incorporated by reference into the Executive Employment Agreement)
by their duly authorized representatives.
EMPLOYEE COMPANY
By: /s/ Mark Weaser By: /s/ AC Belsky
Name: Mark Weaser Name: A.C. Belsky
Title: CFO
Date: 25 JULY `97 Date: 31 JULY 1997
<PAGE>
TRITON SYSTEMHOUSE PTE. LTD.
RESTATED AMENDMENT TO EXECUTIVE EMPLOYMENT
AGREEMENT
This Restated Amendment (this "Restated Amendment") is dated September 12,
1997 by and between Mark R. Weaser (the "Employee") and Triton SystemHouse
Pte. Ltd. (the "Employer") and amends that certain Executive Employment
Agreement dated as of July 12, 1996 between the Employee and the Company (the
"Agreement").
WHEREAS, the Employee and the Employer entered into an Amendment I to the
Agreement dated September 14th 1997 ("Amendment I"), pursuant to which the
Employee was granted and was to be granted certain incentive stock options in
the Neptune Systems, Inc., the parent company of the Employer ("Neptune");
WHEREAS, the Employee and the Employer entered into an Addendum to the
Agreement dated July 25, 1997, pursuant to which the Employee was granted and
was to be granted certain additional incentive stock options in the Neptune
(the "Addendum");
WHEREAS, Neptune is currently in negotiations with Dallas Systems
Corporation, General Atlantic Partners and EXE Technologies, Inc. with
respect to the merger of both the Company and Dallas with and into EXE
Technologies (the "Merger"); and
WHEREAS, the parties desire to amend the Agreement regarding the option
grants and to clarify the Agreement regarding the impact of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment shall
have the same meaning as those contained in the Agreement unless
otherwise defined herein.
2. RECEIPT OF INITIAL OPTION. The Employee acknowledges the receipt of
an Incentive Stock Option (the "Initial Option") dated March 1,
1997, to purchase 75,000 shares of the Class B Common Stock, $.001
par value per share, of the Company.
3. ACCELERATION OF VESTING. The Company acknowledges that upon the
consummation of the Merger, the Initial Option will become fully
vested.
4. TERMINATION OF AMENDMENT I AND THE ADDENDUM. The parties
acknowledge that notwithstanding anything to the contrary contained
in the Agreement, Amendment I or the Addendum, Amendment I and the
Addendum are hereby terminated in their entirety, provided that
paragraph 2.0 of Amendment I shall survive such termination.
5. THE SECOND OPTION GRANT. Promptly after the consummation of the
Merger, the Employer shall cause the successor in interest to
Neptune as a result of the Merger (the "Surviving Corporation") to
grant to the Employee an incentive stock option (the "Second
Option") to purchase 9,896 total shares of the Class B Common
Stock, $.01 par value per share, of
<PAGE>
the Surviving Corporation. The exercise price of the Second Option
shall be fixed at Two Dollars ($2.00) per share. The Second Option
shall vest on the date of issuance of the Second Option. The Second
Option shall be subject to and in accordance with provisions of the
1996 Stock Option Plan of Neptune or any successor Plan adopted by
the Surviving Corporation (the "Plan"), provided that if this
Amendment conflicts with the language and provisions in the Plan,
then this Amendment shall govern.
6. THE THIRD OPTION GRANT. Promptly after the consummation of the
Merger, the Employer shall cause the Surviving Corporation to grant
to the Employee an incentive stock option (the "Third Option") to
purchase 50,000 shares of the Class B Common Stock, $.01 par value
per share, of the Surviving Corporation. The exercise price of the
Third Option shall be Two Dollars ($2.00) per share. The Third
Option shall vest as follows: 25,000 of the shares shall vest on
the date of issuance of the Third Option, 12,500 of the shares
shall vest on the first anniversary of this Restated Amendment, and
12,500 of the shares shall vest on the second anniversary of this
Restated Amendment. The Third Option shall be subject to and in
accordance with the provisions of the Plan, provided that if this
Amendment conflicts with the language and provisions of the Plan,
then this Amendment shall govern.
7. EFFECT OF MERGER. The parties acknowledge that upon the
consummation of the Merger, the Agreement shall be binding upon
each of the Employee and the Surviving Corporation as a result of
the Merger.
8. Miscellaneous.
(a) The Agreement shall remain in full force and effect, subject
only to the changes herein specified.
(b) The Agreement, as modified by this Amendment, constitutes
the entire understanding between the parties with respect to the
subject matter hereof and supersedes any prior understandings
and/or written or oral agreements between them.
(c) All references to the Agreement in any other documents,
shall mean the Agreement as amended hereby and from time to time
hereafter in writing.
(d) This Amendment shall be governed by the laws of the
Commonwealth of Pennsylvania, U.S.A. without regard to the
principles of conflicts of laws of any jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date first
above written.
TRITON SYSTEMHOUSE PTE. LTD.
SEPT. 14, 1997
/s/ Mark R. Weaser By: /s/ AC Belsky
- ------------------------ -----------------------------
MARK R. WEASER
Title: AC BELSKY
---------------------------
-2-
<PAGE>
EXE TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 13th day of July,
1998 by and between Christopher F. Wright, a resident of the Commonwealth of
Pennsylvania (the "Employee"), and EXE Technologies, Inc., a corporation
organized and existing under the laws of the State of Delaware (the
"Company").
WHEREAS, the Company is engaged in the business of providing
supply chain execution software and related services to the warehouse,
distribution and logistics industries worldwide (the "Business"); and
WHEREAS, the Company desires to employ the Employee and the
Employee desires to be employed by the Company for a period of time in the
future upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:
1. EMPLOYMENT AND TERM.
(a) The Company hereby employs the Employee, and
the Employee hereby accepts employment with the Company, for the position
detailed in Schedule A attached hereto (the "Position"), for a period of
three (3) years from the date of the commencement of employment (the "Start
Date") specified in SCHEDULE A attached hereto (the "Initial Term"). The
Employee shall also be a member of the Executive Committee appointed by the
Board of Directors and shall serve as Secretary of the meetings. The
Employee shall also serve as the Corporate Secretary of the Company and
attend all Board Meetings of the Company as an observer and as Secretary of
the meetings.
(b) At the end of the Initial Term, this
Agreement shall automatically renew for successive additional periods of one
(1) year, unless either party provides written notice to the other party at
least ninety (90) days prior to the expiration of the Initial Term or any
such renewal period indicating the notifying party's election not to renew
this Agreement. The
1
<PAGE>
Initial Term of employment and any renewal periods hereunder, subject to the
provisions of Section 8 hereof, are hereinafter referred to as the "Term."
(c) The Employee's principal office shall be
located at the Company's offices for the Philadelphia region, currently
Eddystone, PA. The Company shall not relocate the Employee's principal office
outside the Philadelphia Metropolitan area. The Company and the Employee
expect that the Employee's travel time will be limited to three (3) to four
(4) days per month, principally from Philadelphia to the Company's
headquarters in Dallas, TX.
2. DUTIES. During the Term, the Employee shall serve
the Company faithfully and to the best of his ability and, subject to Section
3, shall devote his full time, attention, skill and efforts to the
performance of the duties required by or appropriate for the Position. The
Employee shall assume such duties and responsibilities as may be customarily
incident to such a position, and such additional and other duties as may be
determined jointly from time to time by the Employee and the Reporting
Manager designated in SCHEDULE A attached hereto or the Board of Directors of
the Company (the "Board"), including, without limitation, the duties and
responsibilities set forth in SCHEDULE A. The Employee shall report to the
Reporting Manager.
3. OTHER BUSINESS ACTIVITIES. During the Term, the
Employee shall not directly or indirectly engage in any other business
activities or pursuits whatsoever, without the prior consent of the Reporting
Manager in his sole discretion, except: (a) serving on Boards of Directors or
Advisory Boards in connection with non-profit or for profit organizations,
which are not competitors of the Company; (b) managing personal investments;
(c) participating in charitable or civic activities; (d) winding down his
private law practice at Pepper Hamilton LLP; and (e) serving as an executor,
trustee or in other similar fiduciary capacity; provided that such activities
do not interfere materially with his performance of his responsibilities and
obligations pursuant to this Agreement; and provided further that the
Employee may retain personally any fees, expense reimbursements, equity or
other compensation received by the Employee from such activities, including
without limitation any transition payments from Pepper Hamilton LLP, executor
fees or referral fees.
4. COMPENSATION. The Company shall pay the Employee,
and the Employee hereby agrees to accept, as compensation for all services
rendered hereunder and for the Employee's intellectual property covenants and
assignments and covenant not to compete as provided for in Sections 6 and 7
hereof, the compensation set forth in this Section 4.
4.1 SALARY. The Company shall pay the Employee
an initial base salary at the annual rate detailed in SCHEDULE A attached
hereto (the "Base Salary"). The Base
2
<PAGE>
Salary shall be inclusive of all applicable income, social security and other
taxes and charges that are required by law to be withheld by the Company, or
are requested to be withheld by the Employee. The Base Salary shall be
withheld and paid in accordance with the Company's normal payroll practice
for its similarly situated employees from time to time in effect. The Base
Salary may be increased from time to time by the Compensation Committee of
the Board in its sole discretion.
4.2 INCENTIVE COMPENSATION PROGRAM.
(a) The Employee shall be entitled to
participate in the Incentive Compensation Plan that has been established by
the Company (the "Incentive Program") pursuant to which the Board may award
bonuses to executive employees, based upon the achievement of written
individual and corporate objectives determined jointly by the Employee and
the Chief Executive Officer or the Board annually. The Employee shall be
eligible to receive under the Incentive Compensation Program a minimum of
fifty percent (50%) and a maximum of seventy-five percent (75%) of the
Employee's Base Salary or more annually as determined by the Board. Bonuses
under the Incentive Program will be payable quarterly in accordance with the
Company's normal practices.
(b) The Employee shall receive in
addition to the Base Salary, a signing bonus of Forty Thousand Dollars
($40,000), payable upon execution of the Employment Agreement and fully
credited against the amounts payable to the Employee pursuant to the
Incentive Program, which credits will accrue in equal amounts of Ten Thousand
Dollars ($10,000) each quarter for four (4) quarters or until the signing
bonus has been fully credited.
4.3 EQUITY PARTICIPATION.
(a) The Company shall grant to the
Employee an initial stock option (the "Initial Option") to purchase Eighty
Thousand (80,000) shares of the Class B Common Stock, par value $.01 per
share, of the Company ("Class B Common Stock"). The Initial Option shall
vest in accordance with the schedule set forth on SCHEDULE B and shall be an
incentive stock option. The exercise price of the Initial Option shall be
the fair market value of the Class B Common Stock on the date of this
Agreement. The parties expect that such fair market value will be Five
Dollars ($5.00) per share. The actual dollar amount of such fair market
value, however, shall be determined by the Board. The Initial Option shall
be subject to and in accordance with the provisions of the 1997 Stock Option
Plan of the Company, as amended (the "Plan"), substantially in the form
attached hereto as part of SCHEDULE C.
-3-
<PAGE>
(b) The Company may grant to the Employee
additional stock options under the Plan as determined by the Option Committee
of the Board from time to time in its sole discretion.
(c) All shares of Class B Common Stock
issued under the Initial Option shall be subject to the terms and provisions
of a Stock Purchase and Restriction Agreement as required by the Plan.
(d) Notwithstanding the foregoing, all of
the Employee's then remaining unvested options shall automatically become
vested upon the termination of this Agreement pursuant to Sections 8.1(a),
8.2 or 8.4(a) or immediately prior to the occurrence of a Change of Control
of the Company. For the purposes of this Agreement, a "Change of Control"
shall mean: (i) the sale, transfer, assignment or other disposition
(including by merger or consolidation) by stockholders of the Company, in one
transaction or a series of related transactions, of more than a majority of
the voting power represented by the then outstanding capital stock of the
Company to one or more stockholders or other third parties, other than any
such sales, transfers, assignments or other dispositions by such stockholders
to their respective heirs or affiliates; or (ii) a sale, transfer, assignment
or other disposition (including by merger or consolidation), of all of the
outstanding stock of the Company, or of all or substantially all of the
assets of the Company or a liquidation or dissolution of the Company.
4.4 FRINGE BENEFITS. The Employee shall be
entitled to participate in any health or dental programs or other non-salary
consideration (such as disability, sick leave) as are Company standard. Such
programs are described in SCHEDULE D attached hereto.
4.5 CAR ALLOWANCE. The Company shall pay to the
Employee a monthly car allowance to compensate the Employee for the cost of
leasing, insuring and purchasing fuel for a vehicle of similar quality as the
Company's other executive employees. The car allowance is payable monthly,
commencing on the date of this Agreement, in accordance with the Company's
normal payroll practices.
4.6 REIMBURSEMENT OF EXPENSES. The Employee
shall be reimbursed for all normal items of travel and entertainment and
miscellaneous expenses reasonably incurred by the Employee on behalf of the
Company, provided that such expenses are documented and submitted to the
Company all in accordance with the reimbursement policies of the Company as
in effect from time to time.
4.7 PROFESSIONAL FEES. In addition to the
general reimbursement of expenses pursuant to Section 4.6 and the Tuition
Assistance plan referenced in SCHEDULE D, the Company shall reimburse the
Employee in full for: tuition and related travel expenses for
-4-
<PAGE>
Continuing Legal Education courses; Bar Association dues; bar exam fees and
related expenses incident to the Employee obtaining and maintaining a license
or licenses to practice law; dues, sponsorship fees and related expenses for
other professional organizations, such as the Information Technology Business
Center, the Computer Law Association, the Licensing Executive Society and
DelVaCCA, related to the Position or the Employee's responsibilities; and
such other tuition, fees and travel and other expenses in connection with
speaking engagements, professional seminars and related activities, as may be
approved in advance from time to time by the Reporting Manager.
5. CONFIDENTIALITY. The Employee recognizes and
acknowledges that the Proprietary Information (as hereinafter defined) is a
valuable, proprietary and unique asset of the Company. As a result, both
during the Term and for a period of five (5) years thereafter, the Employee
shall not, without the prior written consent of the Company, for any reason
either directly or indirectly divulge to any third-party or use for the
Employee's own benefit, or for any purpose other than the exclusive benefit
of the Company, any confidential, proprietary, business and technical
information or trade secrets of the Company or of any subsidiary or affiliate
of the Company (the "Proprietary Information") revealed, obtained or
developed in the course of the Employee's employment with the Company.
Proprietary Information shall include, but shall not be limited to: the
intangible personal property described in Section 6(b) hereof; any
information relating to methods of production, manufacture and research;
hardware and software configurations, computer codes or instructions
(including source and object code listings, program logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation), computer inputs and outputs
(regardless of the media on which stored or located) and computer processing
systems, techniques, designs, architecture, and interfaces; the identities
of, the Company's relationship with, the terms of contracts and agreements
with, the needs and requirements of, and the Company's course of dealing
with, the Company's actual and prospective customers, contractors and
suppliers; and any other materials prepared by the Employee in the course of
the Employee's employment by the Company, or prepared by any other employee
or contractor of the Company for the Company or its customers, (including
concepts, layouts, flow charts, specifications, know-how, user or service
manuals, plans, sketches, blueprints, costs, business studies, business
procedures, finances, marketing data, methods, plans, personnel information,
customer and vendor credit information and any other materials that have not
been made available to the general public). Nothing contained herein shall
restrict the Employee's ability to make such disclosures during the course of
the Employee's employment as may be necessary or appropriate to the effective
and efficient discharge of the duties required by or appropriate for the
Position or as such disclosures may be required by law. Furthermore, nothing
contained herein shall restrict the Employee from divulging or using for the
Employee's own benefit or for any other purpose any Proprietary Information
that is readily available to the general public so long as such information
did not become available to the general public as a direct or indirect result
of the Employee's
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breach of this Section 5. Failure by the Company to mark any of the
Proprietary Information as confidential or proprietary shall not affect its
status as Proprietary Information under the terms of this Agreement. The
Employee acknowledges that this Section 5 shall not limit any other duties of
the Employee to protect client's confidences under the applicable rules of
legal ethics regarding confidentiality.
6. PROPERTY.
(a) All right, title and interest in and to
Proprietary Information shall be and remain the sole and exclusive property
of the Company. During the Term, the Employee shall not remove from the
Company's offices or premises any documents, records, notebooks, files,
correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging
to the Company unless necessary or appropriate in accordance with the duties
and responsibilities required by or appropriate for the Position and, in the
event that such materials or property are removed, all of the foregoing shall
be returned to their proper files or places of safekeeping as promptly as
possible after the removal shall serve its specific purpose. The Employee
shall not make, retain, remove and/or distribute any copies of any of the
foregoing for any reason whatsoever, except as may be necessary in the
discharge of the assigned duties, and shall not divulge to any third person
the nature of and/or contents of any of the foregoing or of any other oral or
written information to which the Employee may have access or with which for
any reason the Employee may become familiar, except as disclosure shall be
necessary in the performance of the duties; and upon the termination of the
Employee's employment with the Company, the Employee shall return to the
Company all originals and copies of the foregoing then in his possession,
whether prepared by the Employee or by others.
(b) (i) The Employee acknowledges that all right,
title and interest in and to any and all writings, documents, inventions,
discoveries, computer programs or instructions (whether in source code,
object code or any other form), algorithms, formulae, plans, memoranda,
tests, research, designs, innovations, systems, analyses, specifications,
models, data, diagrams, flow charts and/or techniques (whether reduced to
written or electronic form or otherwise) that the Employee creates, makes,
conceives, discovers or develops, either solely or jointly with any other
person, at any time during the Term, whether during working hours or at the
Company's facility or at any other time or location, and whether upon the
request or suggestion of the Company or otherwise, and that relate to or are
useful in any way in connection with the Business now or hereafter carried on
by the Company (collectively, the "Intellectual Work Product") shall be the
sole and exclusive property of the Company. The Employee shall promptly
disclose to the Company all Intellectual Work Product, and the Employee shall
have no claim for additional compensation for the Intellectual Work Product.
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(ii) The Employee acknowledges that all the
Intellectual Work Product that is copyrightable shall be considered a work
made for hire under United States Copyright Law. To the extent that any
copyrightable Intellectual Work Product may not be considered a work made for
hire under the applicable provisions of the United States Copyright Law, or
to the extent that, notwithstanding the foregoing provisions, the Employee
may retain an interest in any Intellectual Work Product that is not
copyrightable, the Employee hereby irrevocably assigns and transfers to the
Company any and all right, title, or interest that the Employee may have in
the Intellectual Work Product under copyright, patent, trade secret,
trademark and other intellectual property laws, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own
name all copyrights, patents, trade secrets, and trademarks with respect
thereto.
(iii) The Employee shall reveal promptly all
information relating to the Intellectual Work Product to an appropriate
officer of the Company, cooperate with the Company and execute such documents
as may be necessary or appropriate (A) in the event that the Company desires
to seek copyright, patent, trademark or other analogous protection thereafter
relating to the Intellectual Work Product, and when such protection is
obtained, to renew and restore the same, or (B) to defend any opposition
proceedings in respect of obtaining and maintaining such copyright, patent,
trademark or other analogous protection.
(iv) In the event that the Company is unable
after reasonable effort to secure the Employee's signature on any of the
documents referenced in Section 6(b)(iii) hereof, whether because of the
Employee's physical or mental incapacity or for any other reason whatsoever,
the Employee hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as the Employee's agent and
attorney-in-fact, to act for and in the Employee's behalf and stead to
execute and file any such documents and to do all other lawfully permitted
acts to further the prosecution and issuance of any such copyright, patent,
trademark or other analogous protection with the same legal force and effect
as if executed by the Employee.
(v) The Employee represents that the
innovations, designs, systems, analyses, ideas for marketing programs, and
all copyrights, patents, trademarks and trade names, or similar intangible
personal property identified on SCHEDULE E hereof comprises all of the
innovations, designs, systems, analyses, ideas for marketing programs, and
all copyrights, patents, trademarks and trade names, or similar intangible
personal property that the Employee has made or conceived of prior to the
date hereof, and same are excluded from the operation of the other provisions
of this Section 6(b).
7. COVENANT NOT TO COMPETE.
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(a) The Employee shall not, anywhere in the
world, during the Term and for a period of two (2) years thereafter (the
"Restricted Period"), do any of the following directly or indirectly without
the prior written consent of the Company in its sole discretion:
(i) engage or participate in business of
developing and/or selling supply chain execution software, other than with
the Company;
(ii) become interested (as owner,
proprietor, promoter, stockholder, lender, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) in any person, firm,
corporation, association or other entity engaged in any business that is
competitive with the Business or of the business of any subsidiary or
affiliate of the Company as conducted during the Term, or become interested
in (as owner, stockholder, lender, partner, co-venturer, director, officer,
employee, agent, consultant or otherwise) any portion of the business of any
person, firm, corporation, association or other entity where such portion of
such business is competitive with the Business of the Company or the business
of any subsidiary or affiliate of the Company as conducted during the Term
(notwithstanding the foregoing, the Employee may hold not more than one
percent (1%) of the outstanding securities of any class of any
publicly-traded securities of a company that is engaged in business activity
competitive with the Business or the business of any of the Company's
subsidiaries or affiliates as conducted during the Term);
(iii) solicit or call on for a purpose
competitive with the Business, either directly or indirectly, any (A)
customer with whom the Company shall have dealt at any time during the two
(2) year period immediately preceding the termination of the Employee's
employment hereunder, or (B) supplier or distributor with whom the Company
shall have dealt at any time during the two (2) year period immediately
preceding the termination of the Employee's employment hereunder;
(iv) influence or attempt to influence any
supplier, distributor, customer or potential customer of the Company to
terminate or modify any written or oral agreement or course of dealing with
the Company; or
(v) influence or attempt to influence any
person (other than the Employee's Administrative Assistant) either (A) to
terminate or modify the employment, consulting, agency, distributorship or
other arrangement with the Company, or (B) to employ or retain, or arrange to
have any other person or entity employ or retain, any person who has been
employed or retained by the Company as an employee, consultant, agent or
distributor of the Company at any time during the twelve (12) month period
immediately preceding the termination of the Employee's employment hereunder.
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(b) The Company acknowledges that,
notwithstanding anything to the contrary contained in Section 7(a), after the
termination or expiration of this Agreement for any reason, the Employee may
engage in performing legal services as outside counsel (but not in-house
counsel) on behalf of companies developing and/or selling supply chain
execution software. The Employee acknowledges that, notwithstanding anything
to the contrary in the first sentence of this Section 7(b), the Employee will
be bound by the applicable rules of legal ethics regarding conflicts of
interest in performing any such legal services as outside counsel.
(c) The Employee hereby acknowledges that the
limitations as to time, character or nature and geographic scope placed on
the Employee's subsequent employment by this Section 7 are reasonable and
fair and will not prevent or materially impair the Employee's ability to earn
a livelihood.
8. TERMINATION OF EMPLOYMENT. The Employee's employment
hereunder may be terminated upon the occurrence of any one of the events
described in this Section 8 or pursuant to a non-renewal of the Agreement
under Section 1(b) hereof. Upon termination of the Employee's employment,
the Employee shall be entitled only to such compensation and benefits as
described in this Section 8.
8.1 TERMINATION FOR DISABILITY.
(a) In the event of the disability of the
Employee such that the Employee is unable to perform the duties and
responsibilities hereunder to the full extent required by this Agreement by
reasons of illness, injury or incapacity for a period of more than sixty (60)
consecutive days or more than forty-five (45) days, in the aggregate, during
any ninety (90) day period ("Disability"), the Employee's employment
hereunder may be terminated by the Company.
(b) In the event of a termination of the
Employee's employment hereunder pursuant to Section 8.1(a), the Employee will
be entitled to receive: all accrued and unpaid (as of the date of such
termination) Base Salary, benefits, bonuses and other compensation payable or
provided in accordance with the terms of any then existing compensation or
benefit plan or arrangement, including payment prescribed under and
disability of life insurance plan or arrangement in which he is a participant
or to which he is a party as an employee of the Company; and Severance (as
hereinafter defined); provided that the Employee has complied with all of his
material obligations under this Agreement and continues to comply with all of
his surviving material obligations hereunder listed in Section 11. The
amounts to be paid to the Employee hereunder shall be paid in accordance with
the Company's normal payroll and incentive compensation distribution cycle
then in effect. Except as specifically set forth in
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this Section 8, the Company shall have no liability or obligation to the
Employee for compensation or benefits hereunder by reason of such termination.
8.2 TERMINATION BY DEATH. In the event that the
Employee dies during the Term, the Employee's employment hereunder shall be
terminated thereby and the Company shall pay to the Employee's executors,
legal representatives or administrators an amount equal to: the accrued and
unpaid portion of the Base Salary, benefits, bonuses and other compensation
for the month in which he dies. The amounts to be paid to the Employee
hereunder shall be paid in accordance with the Company's normal payroll and
incentive compensation distribution cycle then in effect. Except as
specifically set forth in this Section 8, the Company shall have no liability
or obligation hereunder to the Employee's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or
through him by reason of the Employee's death, except that the Employee's
executors, legal representatives or administrators will be entitled to
receive the payment prescribed under any death or disability benefits plan in
which he is a participant as an employee of the Company, and to exercise any
rights afforded under any compensation or benefit plan then in effect.
8.3 TERMINATION FOR CAUSE.
(a) The Company may elect to terminate
the Employee's employment hereunder at any time for "cause" upon written
notice to the Employee. For purposes of this Agreement, "cause" shall mean:
(i) repeated material breach by
the Employee of any of his material obligations under this Agreement
following written notice to the Employee specifying the nature of the prior
material breach and the Employee's failure to cure such prior material
breach;
(ii) repeated failure by the
Employee to perform satisfactorily the duties required by or appropriate for
the Position, as determined by the President of the Company or the Board in
his or its reasonable discretion, following written notice to the Employee
specifying the nature of the prior failure to perform and the Employee's
failure to cure such prior failure to perform;
(iii) conduct of the Employee
involving any type of disloyalty to the Company or willful misconduct with
respect to the Company, including without limitation fraud, embezzlement,
theft or proven dishonesty in the course of the employment, or any attempt by
the Employee to secure any personal profit related to the Business and the
business opportunities of the Company without the informed prior approval of
the Board of Directors;
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(iv) conviction of a felony
related to the Company or its business;
(v) commission by the Employee of
an intentional tort (i.e., assault, battery, false imprisonment, intentional
infliction of emotional distress, trespass to real or personal property or
conversion) related to the Company or its business or an act involving moral
turpitude or constituting fraud; or
(vi) habitual alcohol or substance
abuse or addiction.
(b) In the event of a termination of the
Employee's employment hereunder pursuant to Section 8.3(a), the Employee
shall be entitled to receive: all accrued but unpaid (as of the effective
date of such termination) Base Salary, benefits and bonuses; and Severance.
The amounts to be paid to Employee hereunder shall be paid in accordance with
the Company's normal payroll and incentive compensation distribution cycle
then in effect. All Base Salary, Severance, benefits, bonuses and other
compensation shall cease at the time of such termination, subject to the
terms of any benefit or compensation plan then in force and applicable to the
Employee. In the event of a termination of the Employee's employment
hereunder pursuant to Sections 8.3(a)(iii), (iv), (v) or (vi), any options
to purchase the Company's common stock issued to Employee, including any
vested or unvested portion thereof, shall be canceled at the time of such
termination, and the Employee shall not be entitled to exercise any such
options. Except as specifically set forth in this Section 8, the Company
shall have no liability or obligation hereunder by reason of such termination.
8.4 TERMINATION BY THE COMPANY WITHOUT CAUSE.
(a) The Company may terminate the
Employee's employment hereunder at any time during the Term, for any reason,
without cause, effective upon the date designated by the Company upon ninety
(90) days' written notice to the Employee.
(b) In the event of a termination of the
Employee's employment hereunder pursuant to Section 8.4(a), the Employee
shall be entitled to receive: (i) all accrued but unpaid Base Salary,
benefits, bonuses and other compensation; and (ii) Severance (or the
remaining amount of Base Salary that would otherwise be payable through the
remainder of the Initial Term absent such termination, if greater). All Base
Salary, benefits and bonuses shall cease at the time of such termination,
subject to the terms of any benefit or compensation plan then in force and
applicable to the Employee. Except as specifically set forth in this Section
8, the Company shall have no liability or obligation hereunder by reason of
such termination.
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<PAGE>
8.5 NON-RENEWAL BY EITHER PARTY.
In the event of a non-renewal of the Agreement by
either party pursuant to Section 1(b) hereof, the Employee shall be eligible
to receive an amount equal to: all accrued but unpaid Base Salary, benefits,
bonuses, and other compensation; and Severance. The amounts to be paid to
the Employee hereunder shall be paid in accordance with the Company's normal
payroll and incentive compensation distribution cycle then in effect. All
Base Salary, benefits and bonuses shall cease at the time of such
termination, subject to the terms of any benefit or compensation plan then in
force and applicable to the Employee. Except as specifically set forth in
this Section 8, the Company shall have no liability or obligation hereunder
by reason of such termination.
8.6 TERMINATION BY THE EMPLOYEE.
(a) The Employee may terminate the
Employee's employment hereunder at any time during the Term, for any reason,
effective upon the date designated by the Employee upon ninety (90) days'
written notice to the Company.
(b) In the event of a termination of the
Employee's employment hereunder pursuant to Section 8.6(a), the Employee
shall be entitled to receive: (i) all accrued but unpaid Base Salary,
benefits, bonuses and other compensation; and (ii) Severance. The amounts to
be paid to the Employee hereunder shall be paid in accordance with the
Company's normal payroll and incentive compensation distribution cycle then
in effect. All Base Salary, benefits and bonuses shall cease at the time of
such termination, subject to the terms of any benefit or compensation plan
then in force and applicable to the Employee. Except as specifically set
forth in this Section 8, the Company shall have no liability or obligation
hereunder by reason of such termination.
8.7 SEVERANCE. In the event of the termination
or expiration of this Agreement for any reason, the Company shall pay to the
Employee, in addition to any other compensation that may be under this
Agreement, severance equal to one (1) year's Base Salary ("Severance"). The
amounts to be paid to the Employee hereunder shall be payable in twelve (12)
equal monthly installments in accordance with the Company's severance plan
then in effect at the time of the Employee's termination. Employee
acknowledges that, as a condition to participation in such severance plan,
Employee must complete in good faith such employee exit forms then in use by
the Company at the time Employee's employment is terminated and acknowledge
in writing on such forms then in use by the Company, Employee's obligations
to the Company including, but not limited to, Employee's obligations with
respect to confidentiality and Company property set forth in Sections 5 and 6
hereof and Employee's obligations with respect to the Covenant not to Compete
set forth in Section 7 hereof.
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<PAGE>
8.8 CHANGE OF CONTROL. In the event of a Change
of Control of the Company during the Term, the Employee may elect to treat
such Change of Control as constructive termination of this Agreement without
Cause by the Company. Such election may be made by the Employee by sending
written notice to the Reporting Manager within sixty (60) days after the
occurrence of the Change in Control. Upon such election, in addition to the
Employee's rights pursuant to Section 4.3(c), the Employee shall be entitled
to all of the rights and benefits under this Agreement as if the Company had
terminated this Agreement without Cause pursuant to Section 8.4(a) as of the
date specified in such notice.
8.9 OPTIONS; REPURCHASE OF SHARES. Upon the
termination of the Employee's employment pursuant to Sections 8.3(a)(i) or
(ii), 8.5 or 8.6, all further vesting on all stock options and/or restricted
stock in the Company held by the Employee shall immediately cease as of such
date and thereafter any vested stock options shall be exercisable and any
restricted stock or other equity securities held by the Employee shall be
subject to repurchase by the Company in accordance with their respective
terms and the terms of any related agreements between the Company and the
Employee.
8.10 CONTINUING LEGAL REFERRALS. In the event
that this Agreement is terminated or expires for any reason and the Employee
elects to return to the private practice of law at any time during the one
(1) year period following such termination or expiration, then, at the option
of the Employee, the Company shall engage the Employee's firm to perform
legal services on behalf of the Company, the billable value of which legal
services is reasonably estimated to be at least Three Hundred Thousand
Dollars ($300,000) each year for at least two (2) years following the
commencement of such engagement; provided that such law firm is reasonably
capable of performing such legal services in a prompt and efficient manner;
and provided further that such firm continues to perform such legal services
to the Company's reasonable satisfaction. The Employee acknowledges that
such law firm will be subject to the rules of legal ethics regarding
conflicts of interest with respect to any such engagement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
EMPLOYEE.
(a) The Employee represents and warrants to the
Company that:
(i) There are no restrictions, agreements
or understandings whatsoever to which the Employee is a party which would
prevent or make unlawful the Employee's execution of this Agreement or the
Employee's employment hereunder, or which is or would be inconsistent or in
conflict with this Agreement or the Employee's employment hereunder, or would
prevent, limit or impair in any way the performance by the Employee of the
obligations hereunder; and
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(ii) The Employee has disclosed to the
Company all restraints, confidentiality commitments or other employment
restrictions that the Employee has with any other employer, person or entity.
The Company acknowledges, however, that the Employee is subject to certain
restrictions regarding, among other things, conflicts of interest and
confidentiality, pursuant to the applicable rules of legal ethics arising
from the Employee's prior representations of clients in the private practice
of law.
(b) Upon and after the Employee's termination or
cessation of employment with the Company and until such time as no
obligations of the Employee to the Company hereunder exist, the Employee:
(i) shall provide a complete copy of the relevant portions of this Agreement
to any prospective employer or other person, entity or association in the
Business, with whom or which the Employee proposes to be employed,
affiliated, engaged, associated or to establish any business or remunerative
relationship prior to the commencement thereof; and (ii) shall notify the
Company of the name and address of any such employer, person, entity or
association prior to the Employee's employment, affiliation, engagement,
association or the establishment of any business or remunerative relationship.
10. LIABILITY. Promptly after the execution of this
Agreement, the Company will: (a) use its best efforts to amend the
Certificate of Incorporation of the Company and the Bylaws of the Company to
provide for the maximum indemnification and reimbursement of expenses of
directors and officers of the Company as are permitted by Delaware law; and
(b) obtain and maintain directors & officers liability insurance coverage in
reasonable policy limits from a reputable insurance carrier.
11. SURVIVAL OF PROVISIONS. The provisions of this
Agreement set forth in Sections 5 through 21 hereof shall survive the
termination of the Employee's employment hereunder in accordance with their
respective terms.
12. SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the Company and the Employee and their
respective successors, executors, administrators, heirs and/or permitted
assigns; provided that neither the Employee nor the Company may make any
assignments of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party hereto,
except that, without such consent but subject to Section 4.3(d) and 8.8, the
Company may assign this Agreement to any successor to all or substantially
all of its assets and business by means of liquidation, dissolution, merger,
consolidation, transfer of assets, or otherwise, provided that such successor
assumes in writing all of the obligations of the Company under this Agreement.
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13. NOTICE. Any notice hereunder by either party shall
be given by personal delivery or by sending such notice by regular mail,
return-receipt requested, or by overnight delivery with a reputable courier
service, addressed to the other party at its address set forth below or at
such other address designated by notice in the manner provided in this
section. Such notice shall be deemed to have been received upon the date of
actual delivery if personally delivered or, in the case of mailing, two (2)
days after deposit with the U.S. mail, or if by overnight delivery, the date
of delivery.
If to the Employee:
Christopher F. Wright
795 Bass Cove
Malvern, PA 19355
If to the Company:
EXE Technologies, Inc.
12740 Hillcrest Road
Dallas, TX 75230
Attention: President
with a copy to:
Pepper Hamilton LLP
1235 Westlakes Drive
Suite 400
Berwyn, PA 19312
Attention: Michael P. Gallagher, Esquire
14. ENTIRE AGREEMENT; AMENDMENTS. This Agreement
contains the entire agreement and understanding of the parties hereto
relating to the subject matter hereof, and merges and supersedes all prior
and contemporaneous discussions, agreements and understandings of every
nature between the parties hereto relating to the employment of the Employee
with the Company, including without limitation that Summary of Terms dated
June 29, 1998 between the Employee and the Company. This Agreement may not
be changed or modified, except by an agreement in writing signed by each of
the parties hereto.
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<PAGE>
15. WAIVER. The waiver of the breach of any term or
provision of this Agreement shall not operate as or be construed to be a
waiver of any other or subsequent breach of this Agreement.
16. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the principles of conflicts of laws of any jurisdiction.
17. INVALIDITY. If any provision of this Agreement shall
be determined to be void, invalid, unenforceable or illegal for any reason,
then the validity and enforceability of all of the remaining provisions
hereof shall not be affected thereby. If any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, then such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such amendment to apply only to
the operation of such provision in the particular jurisdiction in which such
adjudication is made; provided that, if any provision contained in this
Agreement shall be adjudicated to be invalid or unenforceable because such
provision is held to be excessively broad as to duration, geographic scope,
activity or subject, then such provision shall be deemed amended by limiting
and reducing it so as to be valid and enforceable to the maximum extent
compatible with the applicable laws of such jurisdiction, such amendment only
to apply with respect to the operation of such provision in the applicable
jurisdiction in which the adjudication is made.
18. SECTION HEADINGS. The section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
19. NUMBER OF DAYS. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and legal holidays; provided that, if the final day of any time
period falls on a Saturday, Sunday or day which is a legal holiday in
Pennsylvania, then such final day shall be deemed to be the next day which is
not a Saturday, Sunday or legal holiday.
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20. SPECIFIC ENFORCEMENT; EXTENSION OF PERIOD.
(a) The Employee acknowledges that the
restrictions contained in Sections 5, 6, and 7 hereof are reasonable and
necessary to protect the legitimate interests of the Company and its
affiliates and that the Company would not have entered into this Agreement in
the absence of such restrictions. The Employee also acknowledges that any
breach by the Employee of Sections 5, 6, or 7 hereof will cause continuing
and irreparable injury to the Company for which monetary damages would not be
an adequate remedy. The Employee shall not, in any action or proceeding to
enforce any of the provisions of this Agreement, assert the claim or defense
that an adequate remedy at law exists. In the event of such breach by the
Employee, the Company shall have the right to enforce the provisions of
Sections 5, 6, and 7 of this Agreement by seeking injunctive or other relief
in any court, and this Agreement shall not in any way limit remedies of law
or in equity otherwise available to the Company.
(b) The periods of time set forth in Sections 5,
6 and 7 hereof shall not include, and shall be deemed extended by, any time
required for litigation to enforce the relevant covenant periods, provided
that the Company is successful on the merits in any such litigation. The
"time required for litigation" is herein defined to mean the period of time
commencing on the earlier of the Employee's first breach of such covenants or
the service of process upon the Employee and ending on the expiration of all
appeals related to such litigation.
21. CONSENT TO SUIT. In the case of any dispute under or
in connection with this Agreement, the Employee may only bring suit against
the Company in the Courts of the Commonwealth of Pennsylvania in and for the
County of Philadelphia or in the Federal District Court for such geographic
location. The Employee hereby consents to the jurisdiction and venue of the
courts of the Commonwealth of Pennsylvania in and for the County of
Philadelphia or the Federal District Court for such geographic location,
provided that such Federal Court has subject matter jurisdiction over such
dispute, and the Employee hereby waives any claim the Employee may have at
any time as to FORUM NON CONVENIENS with respect to such venue. The Company
shall have the right to institute any legal action arising out of or relating
to this Agreement in any court of competent jurisdiction. Any judgment
entered against either of the parties in any proceeding hereunder may be
entered and enforced by any court of competent jurisdiction. If an action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement, then the prevailing party shall be entitled to recover, in
addition to any other relief, reasonable attorneys' fees, costs and
disbursements.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and all of
which together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first written above.
EXE TECHNOLOGIES, INC.
By: /s/ Raymond R. Hood
----------------------------
Name: Raymond R. Hood
--------------------------
Title: President/CEO
-------------------------
EMPLOYEE:
/s/ Christopher F. Wright
-------------------------------
Name: Christopher F. Wright
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SCHEDULE A
EMPLOYMENT AND COMPENSATION
POSITION: Senior Vice President & General Counsel
DUTIES: (1) Responsible for worldwide legal services for the
Company, including management and budgeting of
in-house legal staff;
(2) Responsible for management and budgeting of
worldwide outside legal services for the Company,
including selection of outside counsel and
negotiation of fee arrangements;
(3) Perform as Corporate Secretary of the Company (and
its subsidiaries where appropriate);
(4) Serve as a member, and perform as Secretary, of
the Executive Committee of the Company;
(5) Perform other executive management activities
(such as finance, mergers & acquisitions and human
resources) as may be determined jointly by the
Reporting Manager and the Employee from time to
time; and
(6) Enhance the visibility and reputation of the
Company in the venture and software communities at
the regional, national and international levels.
REPORTING MANAGER: Chief Executive Officer & Chief Financial Officer
ANNUAL BASE SALARY: One Hundred Seventy-five Thousand Dollars ($175,000.00)
SIGNING BONUS: Forty Thousand Dollars ($40,000.00)
START DATE: Friday, July 13, 1998
VACATION: 20 paid vacation days per calendar year.
INITIAL LEGAL STAFF: (1) One (1) full-time Associate General Counsel
(probably Neil Cooper);
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(2) Two (2) full-time Paralegals (Lisa Todd and a new
hire); and
(3) One (1) full-time Administrative Assistant with
legal experience (probably Karen McKay).
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SCHEDULE B
OPTION VESTING SCHEDULE
INITIAL OPTION:
(a) 20,000 shares on the date of this Agreement;
(b) 20,000 shares on the last day prior to the first anniversary of the Start
Date;
(c) 20,000 shares on the last day prior to the second anniversary of the
Start Date; and
(d) 20,000 shares on the last day prior to third anniversary of the Start
Date.
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SCHEDULE C
EXE TECHNOLOGIES, INC.
1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
[A COPY OF THE PLAN WITH EXHIBITS HAS ALREADY BEEN SUPPLIED TO THE EMPLOYEE
AND HAS THEREFORE NOT BEEN ATTACHED TO THIS AGREEMENT.]
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SCHEDULE D
NON-SALARY CONSIDERATION
1. 7 paid holidays.
2. Vacation - 20 days.
3. Medical Plan - Employer/Employee paid.
4. Dental Plan - Employer/Employee paid.
5. Life Insurance/AD&D - equal to $50,000 - Employer paid.
6. Vision plan - Employer paid - provides 20% to 60% discount on all vision
services.
7. Flexible Benefit Plan - enables employees to set aside pre-tax dollars for
the reimbursement of certain qualified expenses.
8. Short-term Disability - Employer paid - provides potential salary
continuation to regular, full-time employees who are unavoidably absent
from work due to personal illness injury or pregnancy.
9. Long-term Disability - Employer paid - provides income protection in the
event of a long-term disability, equal to 60% of basic monthly earnings.
10. 401(k) Plan - permits deferral of pre-tax dollars up to 15% of salary.
Company matches 100% of first 5% contribution.
11. Employee Assistance Plan - provides counseling or referral benefits to
eligible employees and their families.
12. Tuition Assistance - provides educational reimbursement benefits to
eligible employees.
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SCHEDULE E
PRIOR INVENTIONS
1. The collection of sample and form contracts, letters and checklists
developed or assembled by the Employee during the private practice of law.
2. The list of clients, referral sources and contacts developed or assembled
by the Employee during the private practice of law.
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OFFICE LEASE
THIS LEASE, dated effective as of the 18th day of May, 1999, by and
between BLI-8787, LTD., a Texas limited partnership ("Lessor"), and EXE
TECHNOLOGIES, INC., a Delaware corporation ("Lessee").
WITNESSETH:
That Lessor, in consideration of the rents and covenants hereinafter
set forth, does hereby lease and let unto Lessee, and Lessee does hereby hire
and take from Lessor, that certain space designated as Floors 1-8 of Tower I of
the office tower ("Office Tower I") known and described as Regal Stemmons
Corporate Center, located at 8787 Stemmons Freeway, Dallas, Texas, and that
certain space designated as Floors 1-5 of Tower II of the office tower ("Office
Tower II") located at 8777 Stemmons Freeway, Dallas, Texas. The aforesaid space
leased and let unto Lessee is hereinafter referred to as the "Premises"; the
land (including all easement areas appurtenant thereto) upon which the building
or buildings of which the Premises are a part is hereinafter referred to as the
"Property"; and the Property and all buildings and improvements (including
Office Tower I and Office Tower II) and personal property of Lessor used in
connection with the operation or maintenance thereof located therein and thereon
and the appurtenant parking facilities, if any, are hereinafter called the
"Office Complex." Lessor represents and warrants to Lessee, to Lessor's actual
knowledge, that Office Tower I contains approximately 98,957 square feet of
rentable area, Office Tower II contains approximately 96,333 square feet of
rentable area, and the Office Complex contains approximately 195,290 square feet
of rentable area (excluding the 480 square feet of office space on the first
floor of Office Tower II occupied by Lessor, or its management company, as a
management office).
Lessee hereby accepts this Lease and the Premises upon the covenants
and conditions set forth herein and subject to any covenants, conditions,
restrictions and other matters (other than liens) of record and all applicable
zoning, municipal, county, state and federal laws, ordinances and regulations
governing and regulating the use of the Premises (collectively, the "Applicable
Requirements"). Lessor represents and warrants to Lessee that use of the
Premises for office purposes is permitted, or will be permitted on or prior to
the Commencement Date (hereinafter defined), under all Applicable Requirements,
subject to Lessee Finish (defined in Section 16.27 hereof) and obtaining a
certificate of occupancy.
TO HAVE AND TO HOLD THE SAME, without any liability or obligation on
the part of Lessor to make any alterations, improvements or repairs of any kind
on or about the Premises, except as expressly provided herein, for a term of
fifteen (15) years, commencing May 19, 1999, unless sooner terminated in the
manner provided hereinafter, to be occupied and used by Lessee for office
purposes and for any other lawful purpose consistent with a first class office
complex, subject to the covenants and agreements hereinafter contained.
ARTICLE 1
BASE RENT
SECTION 1.1 BASE RENT. In consideration of the leasing aforesaid,
Lessee agrees to pay to Lessor, at 8235 Douglas Avenue, Suite 200, Dallas, Texas
75225, or at such other place as Lessor from time to time may designate in
writing, rent in an amount equal to $20.50 per square foot of rentable area
contained within the Premises per year for years 1 through 5, and $20.75 per
square foot of rentable area contained within the Premises per year for years 6
through 10, and $21.00 per square foot of rentable area contained within the
Premises per year for years 11 through 15, sometimes hereinafter referred to as
the "Base Rent," payable monthly, in advance, in equal installments of
$333,620.42 per month for years 1 through 5, $337,688.96 per month for years 6
through 10, and $341,757.50 per month for years 11 through 15, commencing on the
first day of the first month of the term and continuing on the first day of each
and every month thereafter for the next succeeding months during the balance of
the term. If the term commences on a date other than the first day of a calendar
month or ends on a date other than the last day of a calendar month, monthly
rent for the first month of the term or the last month of the term, as the case
may be, shall be prorated based upon the ratio that the number of days in the
term within such month bears to the total number of days in such month.
ARTICLE 2
ADDITIONAL RENT
SECTION 2.1 ADDITIONAL RENT. In addition to the Base Rent payable by
Lessee under the provisions of Article 1 hereof, Lessee shall pay to Lessor
"Additional Rent" as hereinafter provided for in this Article 2. All sums under
this Article and all other sums and charges required to be paid by Lessee under
the Lease (except Base Rent), however denoted, shall be deemed to be "Additional
Rent." If any
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such amounts or charges are not paid at the time provided in the
Lease, they shall nevertheless be collectible as Additional Rent with the next
installment of Base Rent falling due.
SECTION 2.2 DEFINITIONS. For the purposes of this Article 2, the
parties hereto agree upon the following definitions:
(a) "Lease Year" shall mean each of those calendar years
commencing with and including the year during which the term
of this Lease commences, and ending with the calendar year
during which the term of this Lease (including any extensions
or renewals) terminates.
(b) "Real Estate Taxes" shall mean and include all personal
property taxes of Lessor relating to Lessor's personal
property located in the Office Complex and used or useful in
connection with the operation and maintenance thereof, real
estate taxes and installments of special assessments,
including interest thereon, relating to the Office Complex,
and all other governmental charges, general and special,
ordinary and extraordinary, foreseen as well as unforeseen, of
any kind and nature whatsoever, or other tax, however
described, which is levied or assessed by the United States of
America or the state in which the Office Complex is located or
any political subdivision thereof, against Lessor or all or
any part of the Office Complex as a result of Lessor's
ownership of the Office Complex, and payable during the
respective Lease Year. It shall not include any gross or net
income tax, estate tax, or inheritance tax, franchise taxes or
taxes imposed as a result of any transfer by Lessor of its
interest in this Lease, the Office Complex or any portion
thereof.
(c) "Excess Real Estate Taxes" for an applicable Lease Year shall
mean the amount of Real Estate Taxes incurred for such
applicable Lease Year in excess of the sum of Real Estate
Taxes incurred for 1998.
(d) "Operating Expenses" shall mean and include all expenses
incurred with respect to the maintenance and operation of the
Property and Office Complex as determined by Lessor's
accountant in accordance with generally accepted accounting
principles consistently followed, including, but not limited
to, insurance premiums, maintenance and repair costs, steam,
electricity, water, sewer, gas and other utility charges,
fuel, lighting, window washing, janitorial services, trash and
rubbish removal, wages payable to employees of Lessor whose
duties are connected with the operation and maintenance of the
Property and Office Complex (but only for the portion of their
time allocable to work related to the Office Complex), amounts
paid to contractors or subcontractors for work or services
performed in connection with the operation and maintenance of
the Property and Office Complex, all costs of uniforms,
supplies and materials used in connection with the operation
and maintenance of the Property and Office Complex, all
payroll taxes, unemployment insurance costs, vacation
allowances, and the cost of providing disability insurance or
benefits, pensions, profit sharing benefits, hospitalization,
retirement or other so-called fringe benefits, and any other
expense imposed on Lessor, its contractors or subcontractors,
pursuant to law or pursuant to any collective bargaining
agreement covering such employees (pro-rated according to the
portion of their time allocated to work related to the Office
Complex), all services, supplies, repairs, replacements or
other expenses for maintaining and operating the Office
Complex, reasonable attorneys' fees and costs in connection
with appeal or contest of real estate or other taxes or
levies, and such other expenses as may be ordinarily incurred
in the operation and maintenance of an office complex and not
specifically set forth herein, including reasonable management
fees and the costs of a building office at the Office Complex,
including the compensation of an on-site building manager. The
term "Operating Expenses" shall not include any capital
improvement to the Office Complex other than replacements
required for normal maintenance and repair, nor shall it
include repairs, restoration or other work occasioned by fire,
windstorm or other insured casualty, expenses incurred in
leasing or procuring tenants, leasing commissions, advertising
expenses, expenses for renovating space for new tenants, legal
expenses incident to enforcement by Lessor of the terms of any
lease, interest or principal payments on any mortgage or other
indebtedness of Lessor, compensation paid to any employee of
Lessor above the grade of the on-site building manager or
building superintendent, depreciation allowance or expense;
costs occasioned by the exercise of eminent domain; overhead
and profit increment paid to subsidiaries or other affiliates
of Lessor for services on or to the Office Complex and/or
Premises to the extent that the costs of such services exceed
the competitive cost for such services rendered by persons or
entities of similar skill, competence and experience; fines,
penalties, legal fees or costs of litigation incurred due to
the late payment of taxes, utility bills and other costs; any
penalties or liquidated damages that Lessor pays to Lessee
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under this Lease or to any other tenants under their
respective leases; costs associated with correcting any
violation of any law existing as of the date hereof; rental or
lease charges on any equipment or property the acquisition of
which would normally be capitalized under generally accepted
accounting principals; and all items (including repairs) and
services for which Lessee or other tenants pay directly to
third parties or for which Lessee or other tenants reimburse
Lessor (other than as a reimbursement of Operating Expenses).
Notwithstanding the foregoing, in the event Lessor installs
equipment in or makes improvements or alterations to the
Office Complex which are for the purpose of reducing energy
costs, maintenance costs or other Operating Expenses or which
are required under any governmental laws, regulations, or
ordinances which were not required at the date of commencement
of the term of this Lease, Lessor may include in Operating
Expenses reasonable charges for interest on such investment
and reasonable charges for depreciation on the same so as to
amortize such investment over the reasonable life of such
equipment, improvement or alteration on a straight line basis
but only to the extent of the savings resulting therefrom.
Operating Expenses shall also be deemed to include expenses
incurred by Lessor in connection with city sidewalks adjacent
to the Property and any pedestrian walkway system (either
above or below ground) or other public facility to which
Lessor of the Office Complex is from time to time subject in
connection with operations of the Property and Office Complex.
Notwithstanding any provision contained herein to the
contrary, commencing January 1, 1999, in no event shall the
amount of Operating Expenses used for purposes of calculating
Lessee's Proportionate Share of Operating Expenses exceed in
any year the amount of Operating Expenses used for purposes of
making such calculation for the prior year by more than six
percent (6%).
(e) "Excess Operating Expenses" shall mean the amount of Operating
Expenses incurred for any applicable Lease Year in excess of
the sum of Operating Expenses incurred during the first twelve
(12) months after the Commencement Date.
(f) "Lessee's Pro Rata Share of Excess Real Estate Taxes" shall
mean a fraction, the numerator of which is the number of
rentable square feet contained within the Premises and the
denominator of which is the number of rentable square feet
contained within Office Tower I and Office Tower II, and,
represented as a percentage, is hereby stipulated to be 99.75%
of the Excess Real Estate Taxes for the applicable Lease Year.
Said percentage has been agreed upon by the parties hereto
after due consideration of the rentable area of the Premises
compared to the rentable area of Office Tower I and Office
Tower II.
(g) "Lessee's Pro Rata Share of Excess Operating Expenses" shall
mean a fraction, the numerator of which is the number of
rentable square feet contained within the Premises and the
denominator of which is the number of rentable square feet
contained within Office Tower I and Office Tower II, and,
represented as a percentage, is hereby stipulated to be 99.75%
of the Excess Operating Expenses for the applicable Lease
Year. Said percentage has been agreed upon by the parties
hereto after due consideration of the rentable area of the
Premises compared to the rentable area of Office Tower I and
Office Tower II.
SECTION 2.3 NOT APPLICABLE.
SECTION 2.4 NOT APPLICABLE.
SECTION 2.5 ESTIMATED EXCESS TAXES AND EXPENSES. As to each Lease Year
commencing January 1, 1999, Lessor shall estimate for each such Lease Year (a)
the total amount of Excess Real Estate Taxes; (b) the total amount of Excess
Operating Expenses; (c) Lessee's Pro Rata Share of Excess Real Estate Taxes; (d)
Lessee's Pro Rata Share of Excess Operating Expenses; and (e) the computation of
the annual and monthly rental payable during such Lease Year as a result of
increases or decreases in Lessee's Pro Rata Share of Excess Real Estate Taxes
and Lessee's Pro Rata Share of Excess Operating Expenses. Said estimate shall be
in writing and shall be delivered or mailed to Lessee at the Premises.
SECTION 2.6 PAYMENT OF ADDITIONAL RENT. Lessee shall pay, as Additional
Rent, the amount of Lessee's Pro Rata Share of Excess Real Estate Taxes for each
Lease Year and Excess Operating Expenses for each Lease Year, so estimated, in
equal monthly installments, in advance, on the first day of each month during
each applicable Lease Year. In the event that said estimate is delivered to
Lessee after the first day of January of the applicable Lease Year, said amount,
so estimated shall be payable as Additional Rent, in equal monthly installments,
in advance, on the first day of each month over the
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balance of such Lease Year, with the number of installments being equal to the
number of full calendar months remaining in such Lease Year.
SECTION 2.7 RE-ESTIMATES OF EXCESS TAXES AND EXPENSE. From time to time
during any applicable Lease Year, Lessor may re-estimate the amount of Excess
Real Estate Taxes and Excess Operating Expenses and Lessee's Pro Rata Share
thereof, and in such event Lessor shall notify Lessee, in writing, of such
re-estimate in the manner above set forth and fix monthly installments for the
then remaining balance of such Lease Year in an amount sufficient to pay the
re-estimated amount over the balance of such Lease Year after giving credit for
payments made by Lessee on the previous estimate.
SECTION 2.8 ADJUSTMENT OF ACTUAL TAXES AND EXPENSE. Upon completion of
each Lease Year, Lessor shall cause its accountants to determine the actual
amount of Excess Real Estate Taxes and Excess Operating Expenses for such Lease
Year and Lessee's Pro Rata Share thereof and deliver a written certification of
the amounts thereof to Lessee within ninety (90) days after the end of each
Lease Year. If Lessee has paid less than its Pro Rata Share of Excess Real
Estate Taxes or its Pro Rata Share of Excess Operating Expenses for any Lease
Year, Lessee shall pay the balance of its Pro Rata Share of the same within
thirty (30) days after receipt of such statement. If Lessee has paid more than
its Pro Rata Share of Excess Real Estate Taxes or its Pro Rata Share of Excess
Operating Expenses for any Lease Year, Lessor shall, at Lessee's option, either
(a) refund such excess, or (b) credit such excess against the most current
monthly installment or installments due Lessor for its estimate of Lessee's Pro
Rata Share of Excess Real Estate Taxes and Lessee's Pro Rata Share of Excess
Operating Expenses for the next following Lease Year. A pro rata adjustment
shall be made for a fractional Lease Year occurring during the term of this
Lease or any renewal or extension thereof based upon the number of days of the
term of this Lease during said Lease Year as compared to three hundred
sixty-five (365) days and all additional sums payable by Lessee or credits due
Lessee as a result of the provisions of this Article 2 shall be adjusted
accordingly. Notwithstanding anything contained herein to the contrary, Lessee
shall be entitled to inspect Lessor's books and records relating to Operating
Expenses at any time during the term of this Lease by delivering fifteen (15)
days prior written notice thereof to Lessor. In the event Lessee's inspection
reflects that Lessor's determination of Operating Expenses is in error, Lessor
and Lessee shall promptly make any necessary adjustments, and if Lessor's
determination is in error by more than five percent (5%), Lessor shall reimburse
Lessee for the reasonable cost of such inspection.
SECTION 2.9 OTHER ADDITIONAL RENT. Further, Lessee shall pay, also as
Additional Rent, all other sums and charges required to be paid by Lessee under
this lease, and any tax or excise on rents, gross receipts tax, or other tax,
however described, which is levied or assessed by the United States of America
or the state in which the Office Complex is located or any political subdivision
thereof, against Lessor in respect to the Base Rent, Additional Rent, or other
charges reserved under this Lease or as a result of Lessor's receipt of such
rents or other charges accruing under this Lease; provided, however, Lessee
shall have no obligation to pay gross or net income or franchise taxes of
Lessor.
ARTICLE 3
BASE AND ADDITIONAL RENT
SECTION 3.1 INTEREST ON PAST DUE OBLIGATIONS. Any installment of Base
Rent, Additional Rent, or other charges to be paid by Lessee accruing under the
provisions of this Lease which shall not be paid when due shall bear interest at
the rate of fifteen percent (15%) per annum from the date which is ten (10) days
after written notice from Lessor that same is due until the same shall be paid,
but if such rate exceeds the maximum interest rate permitted by law, such rate
shall be reduced to the highest rate allowed by law under the circumstances.
SECTION 3.2 RENT INDEPENDENT. Lessee's covenants to pay the Base Rent
and the Additional Rent are independent of any other covenant, condition,
provision or agreement herein contained, except as otherwise provided herein.
Nothing herein contained shall be deemed to suspend or delay the payment of any
amount of money or charge at the time the same becomes due and payable
hereunder, or limit any other remedy of Lessor, except as otherwise provided
herein. Base Rent and Additional Rent are sometimes collectively referred to as
"Rent." Rent shall be payable without deduction, offset, prior notice or demand,
in lawful money of the United States, except as otherwise provided herein.
SECTION 3.3 LETTER OF CREDIT. As security for its obligations under
this Lease, Lessee shall deliver to Landlord an irrevocable standby letter of
credit (the "Letter of Credit") issued by a bank with at least One Billion
Dollars in assets by June 30, 1998. The Letter of Credit shall be in such amount
and shall be released as provided in EXHIBIT "C" attached hereto and made a part
hereof for all purposes. Lessor shall be permitted to draw the full amount of
the Letter of Credit in the event of a monetary default by Lessee hereunder
which is not cured within thirty (30) days after written notice from Lessor or
if the Letter of Credit is not renewed at least thirty (30) days prior to its
expiration date for so long as it is required to
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be maintained hereunder. Any amount drawn by Lessor shall be held by Lessor in a
separate account or certificate of deposit with a federally insured financial
institution and shall serve as security for the obligations of Lessee, and may
be applied by Lessor to any damages incurred by Lessor as a result of the breach
of Lessee's obligations.
ARTICLE 4
POSSESSION OF PREMISES
SECTION 4.1 NOT APPLICABLE.
SECTION 4.2 EFFECT OF POSSESSION. Lessee acknowledges that neither
Lessor nor any agent of Lessor has made any representation or warranty with
respect to the Premises or the Office Complex or with respect to the suitability
or fitness of either for the conduct of Lessee's business or for any other
purpose other than that the Premises may be used lawfully for office purposes
and that, to Lessor's actual knowledge, the Premises, the Property and the
Office Complex are in substantial compliance with all applicable laws, including
environmental laws, building and fire codes, and the Americans with Disabilities
Act. Nothing contained in this Article shall affect the commencement of the
lease term or the obligation of Lessee to pay any Rent due under this Lease
except as otherwise provided herein.
SECTION 4.3 PERMITTED USE. Lessee shall use and occupy the Premises for
the purpose described on page 1 of this Lease and shall not use or permit the
Premises to be used for any other purpose without the prior written consent of
Lessor, which consent Lessee agrees may be withheld by Lessor in its sole and
absolute discretion.
SECTION 4.4 COMPLIANCE WITH ENVIRONMENTAL LAWS. Lessee shall not
(either with or without negligence) cause or permit the escape, disposal or
release of any biologically or chemically active or other hazardous substances
or materials in violation of any applicable law, including any environmental
law. Lessee shall not allow the storage or use of such substances or materials
in any manner not permitted by all applicable laws, including environmental laws
and by the standards prevailing in the industry for the storage and use of such
substances or materials, nor allow to be brought into the Office Complex any
such materials or substances except to use in the ordinary course of Lessee's
business, and then only after written notice is given to Lessor of the identity
of such substances or materials. Without limitation, hazardous substances and
material shall include those described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901 et seq., any applicable state or local laws and the regulations
adopted under these acts. If any lender or governmental agency shall ever
require testing to ascertain whether or not there has been any release of
hazardous materials by Lessee, then the reasonable costs thereof shall be
reimbursed by Lessee to Lessor upon demand as additional charges if such
requirement applies to the Premises. In addition, Lessee shall execute
affidavits, representations and the like from time to time at Lessor's request
concerning Lessee's best knowledge and belief regarding the presence of
hazardous substances or materials on the Premises. In all events, Lessee shall
indemnify Lessor in the manner elsewhere provided in this Lease from any release
of hazardous materials on the Premises occurring while Lessee is in possession,
or elsewhere if caused by Lessee or persons acting under Lessee. The within
covenants shall survive the expiration or earlier termination of the term of
this Lease. Lessor represents and warrants to Lessee that, to Lessor's actual
knowledge, the Premises and the Office Complex are in compliance with all
environmental laws and that, to Lessor's actual knowledge, except as otherwise
disclosed in an environmental report dated December 8, 1997, from Spectrum
Assessment and Engineering, Inc., no hazardous materials have been stored, used
or released on the Office Complex as of the date of execution of this Lease.
Lessor shall indemnify Lessee from any release of hazardous materials on the
Premises occurring prior to Lessee's possession of the Premises.
ARTICLE 5
SERVICES
SECTION 5.1 SERVICES PROVIDED BY LESSOR. Subject to the provisions of
Article 2 hereof, Lessor shall provide the following services on all days
excepting Saturdays, Sundays, holidays, and as otherwise stated:
(a) JANITORIAL SERVICE. Nightly janitorial services Monday through
Friday in and about the Premises. The janitorial services
furnished to the Premises shall include normal cleaning and
upkeep services, normal removal of trash and rubbish,
vacuuming and spot cleaning of carpeting, maintenance of
towels, tissue and other restroom supplies and such other work
as is customarily performed in connection with such nightly
janitorial services in an office complex similar in
construction, general location, use and occupancy to the
Office
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Complex. Lessor shall also provide periodic interior and
exterior window washing and cleaning and waxing of
uncarpeted floors in accordance with Lessor's reasonable
schedule.
(b) ELECTRICAL ENERGY. Electrical energy will be provided for
lighting and operation of office machines, air conditioning,
and heating as required for normal office usage during the
normal working hours set forth in subparagraph (c) of this
Article. The cost for such electrical energy shall be directly
metered and be payable by Lessee. Office machines will include
computers, printers, copy machines, scanners, fax machines,
electronic and electric typewriters and other office
equipment. Lessee shall pay the cost of all equipment and of
the installation of all facilities provided and installed by
Lessor to provide such electrical capacity in excess of the
above normal office standards. Lessee shall not make any
installation requiring excess electrical energy without first
receiving Lessor's written consent thereto, which shall not be
unreasonably withheld; and provided further that Lessee shall
pay all costs of installation of facilities necessary to
furnish such excess capacity and for such increased electrical
usage. All electric lighting bulbs and tubes and all ballasts
and starters within the Premises shall be replaced by Lessor
at the expense of Lessor. The electrical service required of
Lessor by this subparagraph (b), and electricity for other
uses consented to by Lessor, shall be available at all times
subject to the requirement that Lessee pay for usage in excess
of the electrical service to be provided pursuant to the terms
of this subparagraph (b).
(c) HEATING AND AIR CONDITIONING. Heat and air conditioning for
normal comfort from 8:00 a.m. to 5:30 p.m., and on Saturdays
which are not holidays, from 8:00 a.m. to 1:00 p.m. The cost
for such heat and air conditioning shall be directly metered
and be payable by Lessee. Air conditioning to the Premises is
to be provided based on standard lighting and normal
incidental office use only. During other hours, Lessor shall
provide such amounts of heating and air conditioning upon a
reasonable advance notice from Lessee to Lessor, which advance
notice shall not be less than twenty-four (24) hours.
(d) WATER. Hot and cold water from the regular building outlets
and/or as installed by Lessee at Lessee's cost, for lavatory
and restrooms and for drinking purposes.
(e) PASSENGER ELEVATOR SERVICE. Passenger elevator service in
common with other tenants to be provided by automatic
elevators twenty-four (24) hours per day. Lessor shall have
the right to restrict the use of elevators for freight
purposes to the freight elevator and to hours to be determined
by Lessor. Lessor shall have the right to limit the number of
elevators to be in operation on Saturdays, Sundays and
holidays.
(f) PARKING FACILITIES, LANDSCAPED AREAS AND COMMON AREAS.
Maintenance in good order, condition and repair of the parking
facilities and all driveways leading thereto and keeping the
same free from any unreasonable accumulation of snow. Lessor
shall keep and maintain the Office Complex and landscaped area
and parking facilities and all common areas in a neat and
orderly condition, and in first class condition and repair.
Lessor shall promptly remove or cause to be removed any
unauthorized vehicles from the parking facilities. Lessor
reserves the right to designate areas of the appurtenant
parking facilities where Lessee, its agents, employees and
invitees shall park and may exclude Lessee, its agents,
employees and invitees from parking in other areas as
designated by Lessor, provided, however, Lessor shall not be
liable to Lessee for the failure of any tenant, its invitees,
employees, agents, and customers to abide by Lessor's
designations or restrictions.
(g) SECURITY. Security service for the Office Complex 24 hours per
day, which shall include, without limitation, at least one (1)
uniformed security guard on patrol and existing lighting of
the common areas, parking facilities and all other portions of
the Office Complex. Lessor shall restrict access to the Office
Complex to tenants and other authorized individuals after
normal business hours and on weekends and holidays.
Notwithstanding the foregoing, Lessor agrees that Lessee shall
have access to the Premises twenty-four (24) hours per day,
seven (7) days per week. Lessee shall be entitled to provide
additional security guard service to the Office Complex and/or
the Premises at Lessee's option and expense subject to
Lessor's approval, which approval shall not be unreasonably
withheld, conditioned or delayed.
(h) ACCESS. Access to the Office Complex and Premises at all
times.
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SECTION 5.2 LESSEE'S UTILITY SERVICES. Lessee shall be solely
responsible for the direct payment of all utilities which are separately metered
or separately charged (electric, natural gas, telephone, cable television and
any other special utility requirements of Lessee), if any, to the Premises or to
the Lessee and shall make such payments to the respective utility companies
prior to delinquency. Such amounts shall not be included as Operating Expenses.
SECTION 5.3 OTHER PROVISIONS RELATING TO SERVICES. No interruption in,
or temporary stoppage of, any of the aforesaid services caused by repairs,
renewals, improvements, alterations, strikes, lockouts, labor controversy,
accidents, inability to obtain fuel or supplies, or other causes beyond Lessor's
control shall be deemed an eviction or disturbance of Lessee's use and
possession, or render Lessor liable for damages, by abatement of rent or
otherwise or relieve Lessee from any obligation herein set forth; provided,
however, notwithstanding the foregoing, if such interruption or temporary
stoppage substantially interferes with Lessee's use of the Premises, and if same
continues for a period in excess of thirty (30) days following written notice
from Lessee to Lessor, Lessee shall be entitled to correct the same at Lessor's
expense and, if Lessor fails to reimburse Lessee within thirty (30) days after
written notice of the cost (and accompanying invoices), to deduct the cost
thereof from the Rent next becoming due under the Lease; provided, in no event
shall Lessee be entitled to offset more than twenty percent (20%) of monthly
Base Rent in any month. In no event shall Lessor be required to provide any
heat, air conditioning, electricity or other service in excess of that permitted
by voluntary or involuntary guidelines or laws, ordinances or regulations of
governmental authority. Lessor reserves the right, from time to time, to make
reasonable and non-discriminatory modifications to the above standards for
utilities and services.
SECTION 5.4 EFFECTS ON UTILITIES. Lessee shall not, without the prior
written consent of Lessor, which consent shall not be unreasonably withheld,
conditioned or delayed, use any apparatus or device in or about the Premises
which shall cause any substantial noise or vibration or which will increase the
amount of electricity or water, if any, usually furnished or supplied for use of
the Premises as general office space. Lessee shall not connect with electric
current or water pipes, except through existing electrical or water outlets
already in the Premises, any apparatus or device for the purposes of using
electric current or water.
ARTICLE 6
INSURANCE
SECTION 6.1 LESSOR'S CASUALTY INSURANCE OBLIGATIONS. Lessor shall keep
the Office Complex insured for the benefit of Lessor in an amount equivalent to
the full replacement value thereof (excluding foundation, grading and excavation
costs) against:
(a) loss or damage by fire; and
(b) such other risk or risks of a similar or dissimilar nature as
are now or may be customarily covered with respect to
buildings and improvements similar in construction, general
location, use, occupancy and design to the Office Complex,
including, but without limiting the generality of the
foregoing, windstorms, hail, explosion, vandalism, malicious
mischief, civil commotion, and such other coverage as may be
deemed necessary by Lessor, providing such additional coverage
is obtainable and providing such additional coverage is such
as is customarily carried with respect to buildings and
improvements similar in construction, general location, use,
occupancy and design to the Office Complex.
These insurance provisions shall in no way limit or modify any of the
obligations of Lessee under any provision of this Lease Agreement. Lessor agrees
that such policy or policies of insurance shall permit releases of liability as
provided herein and/or waiver of subrogation clause as to Lessee and Lessor
waives, releases and discharges Lessee from all claims or demands whatsoever
which Lessor may have or acquire arising out of damage to or destruction of the
Office Complex or loss of use thereof occasioned by fire or other casualty,
WHETHER SUCH CLAIM OR DEMAND MAY ARISE BECAUSE OF THE NEGLIGENCE OR FAULT OF
LESSEE, ITS AGENTS, EMPLOYEES, CUSTOMERS, CONTRACTORS OR BUSINESS INVITEES, OR
OTHERWISE, and Lessor agrees to look to the insurance coverage only in the event
of such loss. Insurance premiums paid for insurance coverage required under this
Article 6 by Lessor shall be a portion of the "Operating Expenses" described in
Article 2 hereof.
SECTION 6.2 LESSEE'S CASUALTY INSURANCE OBLIGATIONS. Lessee shall keep
all of its machinery, equipment, furniture, fixtures and personal property
(including also property under the care, custody, or control of Lessee) which
may be located in, upon, or about the Premises insured for the benefit of Lessee
in an amount equivalent to the full insurable value thereof against:
(a) loss or damage by fire; and
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(b) such other risk or risks of a similar or dissimilar nature as
are now, or may in the future be customarily covered with
respect to a tenant's machinery, equipment, furniture,
fixtures, personal property and business located in a building
similar in construction, general location, use, occupancy and
design to the Office Complex, including, but without limiting
the generality of the foregoing, windstorms, hail, explosions,
vandalism, theft, malicious mischief, civil commotion, and
such other coverage as Lessee may deem appropriate or
necessary.
Lessee agrees that such policy or policies of insurance shall permit
release of liability as provided herein and/or waiver of subrogation clause as
to Lessor and Lessee waives, releases and discharges Lessor, its agents,
employees, and contractors from all claims or demands whatsoever which Lessee
may have or acquire arising out of damage to or destruction of the machinery,
equipment, furniture, fixtures, personal property, and loss of use thereof
occasioned by fire or other casualty, whether such claim or demand may arise
because of the negligence or fault of Lessor, its agents, employees, contractors
or otherwise, and Lessee agrees to look to the insurance coverage only in the
event of such loss.
SECTION 6.3 LESSOR'S LIABILITY INSURANCE OBLIGATIONS. Lessor shall, as
a portion of the Operating Expenses defined in Article 2, maintain, for its
benefit and the benefit of its managing agent and Lessee, general public
liability insurance against claims for personal injury, death or property damage
occurring upon, in or about the Office Complex, such insurance to afford
protection to Lessor and its managing agent to the limit of not less than Two
Million and No/100 Dollars ($2,000,000.00) in respect to injury or death to a
single person, and to the limit of not less than Five Million and No/100 Dollars
($5,000,000.00) in respect to any one accident, and to the limit of not less
than Two Million and No/100 Dollars ($2,000,000.00) in respect to any property
damage. Lessor shall provide Lessee with evidence that it has satisfied its
insurance obligations hereunder upon request therefor.
SECTION 6.4 LESSEE'S LIABILITY INSURANCE OBLIGATIONS. Lessee shall, at
Lessee's sole cost and expense but for the mutual benefit of Lessor, its
managing agent and Lessee, maintain general public liability insurance against
claims for personal injury, death or property damage occurring upon, in or about
the Premises, such insurance to afford protection to Lessor, its managing agent
and Lessee to the limit of not less than Two Million and No/100 Dollars
($2,000,000.00) in respect to the injury or death to a single person, and to the
limit of not less than Five Million and No/100 Dollars ($5,000,000.00) in
respect to any one accident, and to the limit of not less than Two Million and
No/100 Dollars ($2,000,000.00) in respect to any property damage. Such policies
of insurance shall be written in companies reasonably satisfactory to Lessor,
naming Lessor and its managing agent as additional insureds thereunder, and such
policies, or a memorandum or certificate of such insurance, shall be delivered
to Lessor endorsed "Premium Paid" by the company or agency issuing the same or
accompanied by other evidence satisfactory to Lessor that the premium thereon
has been paid. Any such coverage shall be deemed primary to any liability
coverage secured by Lessor. Such insurance shall also afford coverage for all
claims based upon acts, omissions, injury or damage, which claims occurred or
arose (or the onset of which occurred or arose) in whole or in part during the
policy period.
SECTION 6.5 INDEMNIFICATION. Lessor agrees to indemnify, protect,
defend and hold Lessee and Lessee's shareholders, employees, lender and agents
harmless from and against any and all uninsured claims, costs, liabilities,
actions and damages, including without limitation, reasonable attorneys' fees
and costs on behalf of any person or persons, firm or firms, corporation or
corporations, arising from any accident, injury or damage to the extent that
same occurred prior to the Commencement Date or was caused by Lessor, its
agents, and employees to any person, firm or corporation occurring during the
term of this Lease or any extension or renewal hereof, in or about the Office
Complex, and from and against all costs, reasonable counsel fees, expenses and
liabilities in or about any such uninsured claim or action or proceeding brought
thereon; and in case any action or proceeding be brought against Lessee or its
agents by reason of any such uninsured claim, Lessor, upon notice from Lessee,
covenants to resist or defend such action or proceeding by counsel reasonably
satisfactory to Lessee.
Lessee agrees to indemnify, protect, defend and hold Lessor and
Lessor's shareholders, employees, lender and managing agent harmless from and
against any and all uninsured claims, costs, liabilities, actions, and damages,
including, without limitation, reasonable attorneys' fees and costs on behalf of
any person or persons, firm or firms, corporation or corporations, arising from
any act or negligence on the part of Lessee or its agents, contractors,
servants, employees or licensees, or arising from any accident, injury or damage
to the extent caused by Lessee, its agents, and employees to any person, firm or
corporation occurring during the term of this Lease or any renewal thereof, in
or about the Premises and Office Complex, and from and against all costs,
reasonable counsel fees, expenses and liabilities incurred in or about any such
claim or action or proceeding brought thereon; and in case any action or
proceeding be brought against Lessor or its managing agent by reason of any such
claim,
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Lessee, upon notice from Lessor, covenants to resist or defend such action or
proceeding by counsel reasonably satisfactory to Lessor.
SECTION 6.6 LESSEE'S WAIVER. Lessee agrees, to the extent not expressly
prohibited by law, that Lessor, its agents, employees and servants shall not be
liable, and Lessee waives all claims for damage to property and business
sustained during the term of this Lease by Lessee occurring in or about the
Office Complex, resulting directly or indirectly from any existing or future
condition, defect, matter or thing in the Premises, the Office Complex, or any
part thereof, or from equipment or appurtenances becoming out of repair or from
accident, or from any occurrence or act or omission of Lessor, its agents,
employees or servants, or any tenant or occupant of the Office Complex or any
other person, other than damage resulting from the intentional misconduct or
gross negligence of Lessor, its agents, employees or servants, or the breach by
Lessor of its obligations under this Lease. This paragraph shall apply
especially but not exclusively, to damage caused by aforesaid or by the flooding
of basements or other subsurface areas, or by refrigerators, sprinkling devices,
air conditioning apparatus, water, snow, frost, steam, excessive heat or cold,
falling plaster, broken glass, sewage, gas, odors or noise, or the bursting or
leaking of pipes or plumbing fixtures, and shall apply equally, whether any such
damage results from the act or omission of other tenants or occupants in the
Office Complex or any other persons, and whether such damage be caused by or
result from any of the aforesaid, or shall be caused by or result from other
circumstances of a similar or dissimilar nature.
SECTION 6.7 LESSOR'S DEDUCTIBLE AND LESSEE'S PROPERTY. Provisions
herein to the contrary notwithstanding, in the event any damage to the Office
Complex results solely from the gross negligence or willful misconduct of
Lessee, its agents, employees or invitees, and all or any portion of Lessor's
loss is "deductible," Lessee shall pay to Lessor the amount of such deductible
loss (not to exceed $1,000 per event).
SECTION 6.8 LESSEE'S PROPERTY. All property in the Office Complex or on
the Premises belonging to Lessee, its agents, employees, invitees or otherwise
located at the Premises, shall be at the risk of Lessee only, and Lessor shall
not be liable for damage thereto or theft, misappropriation or loss thereof
unless caused solely by the gross negligence or willful misconduct of Lessor and
Lessee agrees to defend and hold Lessor, its agents, employees and servants
harmless and indemnify them against claims and liability for injuries to such
property.
SECTION 6.9 INCREASE IN INSURANCE. Lessee shall not do or permit
anything to be done in or about the Premises nor bring or keep anything therein
which will in any way increase the existing rate of or affect in any other way
any fire or other insurance upon the Office Complex or any of its contents, or
cause a cancellation of any insurance policy covering the Office Complex or any
of its contents. Notwithstanding anything to the contrary contained herein,
Lessee shall, within thirty (30) days following its receipt of written demand,
reimburse Lessor for the full amount of any additional premium charged for such
policy by reason of Lessee's failure to comply with the provisions of the
paragraph, it being understood that such demand for reimbursement shall not be
Lessor's exclusive remedy. Lessee shall , within thirty (30) days following its
receipt of written demand, reimburse Lessor for any additional premium charged
for any such policy by reason of Lessee's failure to comply with the provisions
of this Article.
SECTION 6.10 LESSEE'S FAILURE TO INSURE. In the event Lessee fails to
provide Lessor with evidence of insurance required under this Article 6, Lessor
may, but shall not be obligated to, without further demand upon Lessee, and
without waiving or releasing Lessee from any obligation contained in this Lease,
effect such insurance and Lessee agrees to repay, upon demand, all such sums
incurred by Lessor in effecting such insurance. All such sums shall become a
part of the Additional Rent payable hereunder, but no such payment by Lessor
shall relieve Lessee from any default under this Lease.
ARTICLE 7
CERTAIN RIGHTS RESERVED BY LESSOR
SECTION 7.1 RIGHTS RESERVED BY LESSOR. Lessor reserves the following
rights exercisable without notice and without liability to Lessee and without
effecting an eviction, constructive or actual, or disturbance of Lessee's use or
possession, or giving rise to any claim for setoff or abatement of rent:
(a) CONTROL SIGNAGE. To control, install, affix and maintain any
and all signs on the Property, or on the exterior of the
Office Complex and in the corridors, entrances and other
common areas thereof, except those signs within the Premises
not visible from outside the Premises, subject to applicable
law. Notwithstanding anything to the contrary contained
herein, subject to Article 8, the Building Rules and
Regulations (attached hereto as EXHIBIT "A") and compliance
with applicable laws and ordinances, Lessee may, at its sole
expense, install one (1) sign on each office tower of the
Office Complex in a location and
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or a design that is mutually acceptable to Lessor and Lessee,
such signage to be substantially similar to the design
attached hereto as EXHIBIT "B".
(b) RETAIN KEYS. To retain at all times and to use in appropriate
instances keys to all doors within and into the Premises. No
locks shall be changed without the prior written consent of
Lessor. This provision shall not apply to Lessee's safes, or
other areas maintained by Lessee for the safety and security
of monies, securities, negotiable instruments or similar
items, or proprietary or confidential information.
(c) MAKE REPAIRS. To make repairs, alterations, additions, or
improvements, whether structural or otherwise, in and about
the Office Complex, or any part thereof, and for such purposes
to enter upon the Premises, and during the continuation of any
of said work, to temporarily close doors, entryways, public
spaces, and corridors in the Office Complex and to interrupt
or temporarily suspend services and facilities.
(d) REGULATE HEAVY EQUIPMENT. To approve the weight, size and
location of safes and other heavy equipment and articles in
and about the Premises and the Office Complex, such approval
not to be unreasonably withheld, conditioned or delayed, and
to require all such items to be moved into and out of the
Office Complex and the Premises only at such times and in such
manner as Lessor shall reasonably direct in writing.
(e) EXCLUSIVE BUSINESSES. To grant to anyone the exclusive right
to conduct any particular business or undertaking in the
Office Complex other than general office use, including but
not limited to the following businesses: banks, savings and
loan associations, restaurants, cafeterias, candy and/or
tobacco shops, and other stores selling retail products.
SECTION 7.2 EMERGENCY ENTRY. Lessor and its agents may enter the
Premises at any time in case of emergency and shall have the right to use any
and all means which Lessor may deem proper to open such doors during an
emergency in order to obtain entry to the Premises. Any entry to the Premises
obtained by Lessor in the event of an emergency shall not, under any
circumstances, be construed or deemed to be a forcible or unlawful entry into,
or detainer of, the Premises, or to be an eviction of Lessee from the Premises
or any portion thereof.
SECTION 7.3 EXHIBITION OF PREMISES. Lessee shall permit Lessor and its
agents, upon at least twenty-four (24) hours prior notice, to enter and pass
through the Premises or any part thereof at reasonable times during normal
business hours to: (a) post notices of nonresponsibility; (b) exhibit the
Premises to holders of encumbrances on the interest of Lessor under the Lease
and to prospective purchasers, mortgagees or lessees of the Office Complex; and
(c) during the period of six (6) months prior to the expiration of the Lease
Term, exhibit the Premises to prospective lessees thereof, provided, in each
case, that Lessor shall not unreasonably interfere with Tenant's use and
occupancy of the Premises. If during the last month of the Lease Term, Lessee
shall have removed substantially all of Lessee's property and personnel from the
Premises, Lessor may, with the prior written consent of Lessee, which consent
may not be unreasonably withheld or delayed, enter the Premises and repair,
alter, and redecorate the same, without abatement of Rent and without liability
to Lessee; and such acts shall have no effect on this Lease.
SECTION 7.4 RIGHT OF LESSOR TO PERFORM. All covenants and agreements to
be performed by Lessee under any of the terms of this Lease shall be performed
by Lessee at Lessee's sole cost and expense and without any abatement of Rent,
except as otherwise provided herein. If Lessee shall fail to pay any sum of
money (other than Rent due Lessor) required to be paid by it hereunder or shall
fail to perform any other act on its part to be performed hereunder, including,
but not limited to, the failure to commence and complete repairs promptly and
adequately, and the failure to remove any liens or otherwise to perform any act
or fulfill any obligation required of Lessee under this Lease within any
applicable notice and cure periods provided herein, Lessor may, but shall not be
obligated to do so, and without waiving or releasing Lessee from any obligations
of Lessee, make any such payment or perform any such act on Lessee's part to be
made or performed as in this Lease provided. All sums so paid by Lessor and all
necessary incidental costs, together with an administrative charge in the amount
of five percent (5%) of any costs incurred by Lessor, and interest thereon at
the maximum rate per annum then permitted by law accruing from the date which is
ten (10) days following Lessee's receipt of written notice that same has been
paid or incurred by Lessor until reimbursed to Lessor by Lessee, shall be
payable to Lessor by Lessee as Rent within thirty (30) days following Lessee's
receipt of written demand and Lessee covenants to pay all such sums. Lessor
shall have (in addition to any other right or remedy of Lessor) the same rights
and remedies in the event of Lessee's nonpayment of such sums, as in the case of
default by Lessee in the payment of Rent to Lessor.
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ARTICLE 8
ALTERATIONS AND IMPROVEMENTS
SECTION 8.1 PROCEDURES FOR LESSEE'S IMPROVEMENTS. Except as provided in
SECTION 16.27 hereof, Lessee shall not make any improvements, alterations,
additions or installations in or to the Premises (hereinafter referred to as the
"Work") without Lessor's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, Lessor may withhold its
consent, in its sole discretion, to any structural alterations, exterior
alterations or other alterations that are visible within the common areas of the
Office Complex ("Major Alterations"). Before commencement of the Work or
delivery of any materials to be used in the Work to the Premises or into the
Office Complex, Lessee shall furnish Lessor with plans and specifications, names
and addresses of contractors, copies of contracts, necessary permits and
licenses, and an indemnification in such form and amount as may be reasonably
satisfactory to Lessor. Lessee agrees to defend and hold Lessor forever harmless
from any and all claims and liabilities of any kind and description which may
arise out of or be connected in any way with said improvements, alterations,
additions or installations. All Work shall be done only by contractors or
mechanics reasonably approved by Lessor and at such time and in such manner as
Lessor may from time to time reasonably designate. All work done by Lessee, its
agents, employees, or contractors shall be done in such a manner as to avoid
labor disputes. Lessee shall pay the cost of all such improvements, alterations,
additions or installations (including a reasonable charge for Lessor's services
and for Lessor's inspection and engineering time), and also the cost of
painting, restoring, or repairing the Premises and the Office Complex occasioned
by such improvements, alterations, additions or installations. Upon completion
of the Work, Lessee shall furnish Lessor with contractor's affidavits or
unconditional lien releases and full and final waivers of liens, and receipted
bills covering all labor and materials expended and used. The Work shall comply
with all insurance requirements and all laws, ordinances, rules and regulations
of all governmental authorities and shall be constructed in a good and
workmanlike manner. Lessee shall permit Lessor to inspect construction
operations in connection with the Work. Lessee shall not be allowed to make any
alterations, modifications, improvements, additions, or installations if such
action results or would result in a labor dispute or otherwise would materially
interfere with Lessor's operation of the Office Complex. Lessor, by written
notice to Lessee given at or prior to termination of this Lease, may require
Lessee to remove any improvements, additions or installation installed by Lessee
in the Premises at Lessee's sole cost and expense, and repair or restore any
damage caused by the installation and removal of such improvements, additions,
or installations; provided, however, the only improvements, additions or
installations which Lessee shall remove shall be those specified in such notice.
With respect to approval rights granted to Lessor in this Article 8 for other
than Major Alterations, Lessor's approval shall be deemed given following the
expiration of thirty (30) days after Lessee delivers to Lessor in writing plans
and specifications for the item or items for which Lessor's approval is sought
if Lessor has not sooner disapproved same.
SECTION 8.2 FREEDOM FROM LIENS. Lessee shall keep the Premises and the
Office Complex free from any liens arising out of any work performed, material
furnished or obligations incurred by Lessee, and shall indemnify, protect,
defend and hold Lessor harmless from any liens and encumbrances arising out of
any work performed or material furnished by or at the direction of Lessee. In
the event that Lessee shall not, within thirty (30) days following the
imposition of any such lien, cause such lien to be released of record by payment
or posting of a proper bond, Lessor shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to cause
the same to be released by such means as it shall deem proper, including payment
of and/or defense against the claim giving rise to such lien. All such sums paid
by Lessor and all expenses incurred by it in connection therewith, including
attorneys' fees and costs, shall be payable as Additional Rent to Lessor by
Lessee on demand with interest at the maximum rate per annum then permitted by
law accruing from the date which is five (5) days following Lessee's receipt of
written notice that same has been paid or incurred by Lessor until reimbursed to
Lessor by Lessee.
SECTION 8.3 ALTERATIONS A PART OF THE PREMISES. Any permanent additions
to, or alterations of, the Premises, except as specified in Lessor's notice to
Lessee, shall become at once a part of the Premises and belong to Lessor without
compensation to Lessee. The foregoing shall not be applicable to removable
equipment, trade fixtures, shelving, attached modular furniture or Lessee's
personal property, which Lessee shall remove, and upon removal shall repair any
damage to the Premises due to such removal.
ARTICLE 9
REPAIRS
SECTION 9.1 LESSEE'S REPAIR OBLIGATIONS. Subject to Article 6 hereof,
Lessee shall, during the term of this Lease, at Lessee's expense, keep the
Premises in as good order, condition and repair as they were at the time Lessee
took possession of the same, reasonable wear and tear and damage from fire
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and other casualties and/or which is the responsibility of Lessor excepted.
Lessee shall keep the Premises in a neat and sanitary condition and shall not
commit any nuisance or waste on the Premises or in, on, or about the Office
Complex, throw improper substances in the plumbing facilities, or waste any of
the utilities furnished by the Lessor. All uninsured damage or injury to the
Premises, or to the Office Complex caused by Lessee moving furniture, fixtures,
equipment, or other devices in or out of the Premises or Office Complex or by
installation or removal of furniture, fixtures, equipment, devices or other
property of Lessee, its agents, contractors, servants or employees, due to
carelessness, omission, neglect, improper conduct, or other cause of Lessee, its
servants, employees, agents, visitors, or licensees, shall be repaired, restored
and replaced promptly by Lessee at its sole cost and expense. All repairs,
restorations and replacements shall be in quality and class equal to the
original work and shall comply with all requirements of the Lease.
SECTION 9.2 LESSOR'S INSPECTION. Lessor or its employees, or agents,
shall have the right to enter the Premises following at least twelve (12) hours
prior notice thereof to Lessee (except that no prior notice to Lessee shall be
required in the event of an emergency or for the performance of cleaning,
janitorial and any other service required to be performed by Lessor under this
Lease) at any reasonable time or times for the purpose of inspection, cleaning,
repairs, altering, or improving the same but nothing contained herein shall be
construed as imposing any obligation on Lessor to make any repairs, alterations
or improvements which are the obligation of Lessee; provided, however, that
Lessor shall not unreasonably interfere with Lessee's use and occupancy of the
Premises.
SECTION 9.3 JOINT INSPECTION UPON VACATION. Lessee shall give written
notice to Lessor at least thirty (30) days prior to vacating the Premises for
the express purpose of arranging a meeting with Lessor for a joint inspection of
the Premises. In the event of Lessee's failure to give such notice and arrange
such joint inspection, Lessor's inspection at or after Lessee's vacation of the
Premises shall be conclusively deemed correct for purposes of determining
Lessee's responsibility for repairs and restoration hereunder.
SECTION 9.4 LESSOR'S REPAIR OBLIGATIONS. Lessor shall, during the term
of this Lease, at Lessor's expense, keep the common areas, landscaping, parking
facilities and the roof, foundation, slab, floors, exterior walls and load
bearing columns and all other structural, mechanical, electrical and plumbing
portions of the Office Complex in first class condition and repair and in a
neat, clean and healthful manner. All repairs, restorations and replacements
shall be performed in good and workmanlike manner and in quality and class equal
to the original work and shall comply with all requirements of the Lease. If
Lessor fails to perform any of Lessor's obligations under this paragraph, and if
such failure continues for thirty (30) days after written notice thereof is
delivered to Lessor (provided, that, in the event of an emergency or situation
where damage to person or property is at risk, no notice shall be required),
Lessee may perform such obligation, in which event, Lessor shall pay to Lessee
the reasonable cost incurred by Lessee in performing such obligation within
thirty (30) days after demand therefor (with accompanying paid invoices),
failing which Lessee shall be entitled to offset such sums against the Rent
becoming due under this Lease, provided any offset shall not exceed twenty
percent (20%) of monthly Base Rent until such offset has been fully made. In the
event the expenditure cannot be fully recouped from the next monthly payment of
Base Rent as a result of such limitation, Lessee shall be entitled to recover
interest with respect to each subsequent monthly offset from the date of the
expenditure to the date of offset at a per annum rate equal to the bank prime
rate publicized in the WALL STREET JOURNAL, as the same may change from time to
time.
ARTICLE 10
ASSIGNMENT AND SUBLETTING
SECTION 10.1 PROCEDURE FOR OBTAINING LESSOR'S CONSENT. Lessee shall
not, without the prior written consent of Lessor, (a) transfer, pledge, mortgage
or assign this Lease or any interest hereunder; (b) permit any assignment of
this Lease by voluntary act, operation of law or otherwise; (c) sublet the
Premises or any part thereof; or (d) permit the use of the Premises by any
parties other than Lessee, its agents and employees. Lessee shall seek such
written consent of Lessor by a written request therefor, setting forth such
information as Lessor may deem reasonably necessary. Lessee shall, by notice in
writing, advise Lessor of its intention from, on and after a stated date (which
shall not be less than thirty (30) days after date of Lessee's notice), to
assign this Lease or to sublet any part or all of the Premises for the balance
or any part of the term. Lessee's notice shall include all of the terms of the
proposed assignment or sublease and shall state the consideration therefor. In
such event, Lessor shall have the right to be exercised by giving written notice
to Lessee within thirty (30) days after receipt of Lessee's notice, to recapture
the space described in Lessee's notice and such recapture notice shall, if
given, cancel and terminate this Lease with respect to the space therein
described as of the date stated in Lessee's notice; provided, however, that
Lessor shall not have such right to recapture if the proposed assignment is a
transfer of the stock of Lessee as described in SECTION 10.5 hereof. Lessee's
notice shall
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state the name and address of the proposed assignee or subtenant and a true and
complete copy of the proposed assignment or sublease shall be delivered to
Lessor with Lessee's notice. If Lessee's notice shall cover all of the Premises,
and Lessor shall have exercised its foregoing recapture right, the term of this
Lease shall expire and end on the date stated in Lessee's notice as fully and
completely as if that date had been herein definitely fixed for the expiration
of the term. If, however this Lease be canceled with respect to less than the
entire Premises, the Base Rent and Additional Rent shall be equitably adjusted
by Lessor with due consideration of the size, location, type and quality of the
portion of the Premises so remaining after the "recapture" and such rent shall
be reduced accordingly from and after the termination date for said portion, and
this Lease as so amended shall continue thereafter in full force and effect. The
rent adjustments provided for herein shall be evidenced by an amendment to Lease
executed by Lessor and Lessee. If this Lease shall be terminated in the manner
aforesaid, either as to the entire Premises or only a portion thereof, to such
extent the term of this Lease shall end upon the appropriate effective date of
the proposed sublease or assignment as if that date had been originally fixed in
this Lease for such expiration, and in the event of a termination affecting less
than the entire Premises, Lessee shall comply with Article 13 ("Surrender of
Premises") of this Lease with respect to such portion of the Premises affected
thereby.
SECTION 10.2 DISCHARGE OF COMMISSION. Lessee shall, at its sole cost
and expense, discharge in full (a) any outstanding commission obligation on the
part of Lessor with respect to this Lease in the event that all or any portion
of this Lease is recaptured pursuant to this ARTICLE 10, and (b) any commission
which may be due and owing as a result of any proposed assignment or subletting,
whether or not the subject portion of the Premises is "recaptured" pursuant
thereto and rented by Lessor to the proposed tenant or any other tenant.
SECTION 10.3 RIGHT TO RECAPTURE NOT EXERCISED. If Lessor, upon
receiving Lessee's notice with respect to any such space, shall not exercise its
right to recapture as aforesaid, Lessor will not unreasonably withhold its
consent to Lessee's assignment of the Lease or subletting such space to the
party identified in Lessee's notice, provided, however, that in the event Lessor
consents to any such assignment or subletting, and as a condition thereto,
Lessee shall pay to Lessor ninety percent (90%) of all profit derived by Lessee
from such assignment or subletting. For purposes of the foregoing, profit shall
be deemed to include, but shall not be limited to, the amount of all rent
payable by such assignee or sublessee in excess of the Base Rent, and rent
adjustments, payable by Lessee under this Lease. If a part of the consideration
for such assignment or subletting shall be payable other than in cash, the
payment to Lessor shall be in cash for its share of any non-cash consideration
based upon the fair market value thereof.
SECTION 10.4 LESSEE'S PROFIT STATEMENT. Lessee shall and hereby agrees
that it will furnish to Lessor upon request from Lessor a complete statement,
certified by an independent certified public accountant, setting forth in detail
the computation of all profit derived and to be derived from such assignment or
subletting, such computation to be made in accordance with generally accepted
accounting principles. Lessee agrees that Lessor or its authorized
representatives shall be given access at all reasonable times to the books,
records and papers of Lessee relating to any such assignment or subletting, and
Lessor shall have the right to make copies thereof. The percentage of Lessee's
profit due Lessor hereunder shall be paid to Lessor within five (5) days of
receipt by Lessee of all payments made from time to time by such assignee or
sublessee to Lessee.
SECTION 10.5 LESSEE'S CHANGES DEEMED AN ASSIGNMENT. For purposes of the
foregoing, any change in the partners of Lessee, if Lessee is a partnership
which results in a transfer of at least fifty percent (50%) or more of the
interests in the partnership, or, if Lessee is a corporation, any transfer of at
least fifty percent (50%) of the shares of stock of Lessee by sale, assignment,
operation of law or otherwise, shall be deemed to be an assignment within the
meaning of this Article 10; provided, however, that the sale of stock in a
public offering for an aggregate price of at least Twenty Million Dollars
($20,000,000.00) shall not be deemed to be an assignment within the meaning of
this ARTICLE 10.
SECTION 10.6 CONTINUING LESSEE LIABILITY. Any subletting or assignment
hereunder shall not release or discharge Lessee of or from any liability,
whether past, present or future, under this Lease, and Lessee shall continue
fully liable thereunder. The subtenant or subtenants or assignee shall agree in
a form satisfactory to Lessor to comply with and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease to the extent of
the space sublet or assigned, and Lessee shall deliver to Lessor promptly after
execution an executed copy of each such sublease or assignment and an agreement
of compliance by each such subtenant or assignee. Consent by Lessor to any
assignment of this Lease or to any subletting of the Premises shall not be a
waiver of Lessor's rights under this Article 10 as to any subsequent assignment
or subletting.
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SECTION 10.7 VOID TRANSFERS. Any sale, assignment, mortgage, transfer,
or subletting of this Lease which is not in compliance with the provisions of
this Article 10 shall be of no effect and void. Lessor's right to assign its
interest in this Lease shall remain unqualified. Lessor may make a reasonable
charge to Lessee for any reasonable attorneys' fees or expenses incident to a
review of any documentation related to any proposed assignment or subletting by
Lessee. Notwithstanding anything contained herein to the contrary, Lessee shall
be entitled, without otherwise complying with the provisions of this Article 10,
to assign this Lease or sublet the Premises to any parent, affiliate or
subsidiary of Lessee, without first obtaining Lessor's consent; provided, Lessee
shall remain fully liable for the obligations of this Lease, and the assignee or
sublessee shall assume all obligations of Lessee hereunder.
SECTION 10.8 PROHIBITED TRANSFEREES. Notwithstanding anything to the
contrary in this Lease, Lessee shall not assign its rights under this Lease or
sublet all or any part of the Premises to a person, firm or corporation which is
(or, immediately prior to such subletting or assignment, was) a tenant or
occupant of the Office Complex or the building located at 7701 Stemmons Freeway,
Dallas, Texas, or any office building on property contiguous to the Office
Complex owned by Lessor under the Lease.
SECTION 10.9 CRITERIA FOR WITHHOLDING CONSENT. The consent of Lessor to
a transfer may not be unreasonably withheld, conditioned or delayed, provided
that should Lessor withhold its consent for any of the following reasons, which
list is not exclusive, such withholding shall be deemed to be reasonable:
(a) Financial strength of the proposed transferee is not at least
equal to that of Lessee at the time of execution of this Lease
or of lessees occupying comparable premises in the Office
Complex or in other buildings owned or operated by Lessor
located in the same metropolitan area as the Office Complex;
(b) A proposed transferee whose occupation of the Premises would
cause a diminution in the reputation of the Office Complex or
the other businesses located therein;
(c) A proposed transferee whose occupancy will require any
material variation in the terms and conditions of this Lease.
Lessee agrees that its personal business skills and philosophy were an
important inducement to Lessor for entering into this Lease and that Lessor may
reasonably object to the transfer of the Premises to another whose proposed use,
while permitted by this Lease, would involve a different, quality, manner or
type of business skills than that of Lessee.
ARTICLE 11
DAMAGE BY FIRE OR OTHER CASUALTY
SECTION 11.1 TENANTABLE WITHIN 240 DAYS. If fire or other casualty
shall render the whole or any material portion of the Premises untenantable, and
the Premises can reasonably be expected to be made tenantable within two hundred
forty (240) days from the date of such event, then Lessor shall repair and
restore the Premises and the Office Complex to as near their condition prior to
the fire or other casualty as is reasonably possible within such two hundred
forty (240) day period (subject to delays for causes beyond Lessor's reasonable
control) and notify Lessee that it will be doing so, such notice to be mailed
within thirty (30) days from the date of such damage or destruction, and this
Lease shall remain in full force and effect, but the Rent for the period during
which the Premises are untenantable shall be abated pro rata (based upon the
portion of the Premises which is untenantable). If Lessor is required to repair
the Office Complex and/or the Premises as aforesaid, said work shall be
undertaken and prosecuted with all due diligence and speed, and shall be
completed within two hundred forty (240) days following the date of such fire or
other casualty (subject to force majeure) failing which, Lessee shall be
entitled to terminate this Lease in the event that such repairs are not
completed within sixty (60) days after written notice from Lessee that Lessee
desires to terminate this Lease because such repairs have not been completed
within such two hundred forty (240) day period.
SECTION 11.2 NOT TENANTABLE WITHIN 240 DAYS. If fire or other casualty
shall render the whole or any material part of the Premises untenantable and the
Premises cannot reasonably be expected to be made tenantable within two hundred
forty (240) days from the date of such event, then either party, by notice in
writing to the other mailed within thirty (30) days from the date of such damage
or destruction, may terminate this Lease effective upon a date within thirty
(30) days from the date of such notice.
SECTION 11.3 OFFICE COMPLEX SUBSTANTIALLY DAMAGED. In the event that
more than fifty percent (50%) of the value of the Office Complex is damaged or
destroyed by fire or other casualty, and irrespective of whether damage or
destruction can be made tenantable within two hundred forty (240)
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days thereafter, then at Lessor's or Lessee's option, by written notice to the
other, mailed within forty-five (45) days from the date of such damage or
destruction, either party may terminate this Lease effective upon the date
ninety (90) days after such notice.
SECTION 11.4 DEDUCTIBLE PAYMENTS. If the Premises or the Office Complex
is damaged, and such damage is of the type insured against under the fire and
special form property damage insurance maintained by Lessor hereunder, the cost
of repairing said damage up to the amount of the deductible under said insurance
policy shall be included as a part of the Operating Expenses.
SECTION 11.5 LESSOR'S REPAIR OBLIGATIONS. If fire or other casualty
shall render the whole or any material part of the Premises untenantable and the
Premises cannot reasonably be expected to be made tenantable within two hundred
forty (240) days from the date of such event and neither party hereto terminates
this Lease pursuant to its rights herein or in the event that more than fifty
percent (50%) of the value of the Office Complex is damaged or destroyed by fire
or other casualty, and neither party terminates this Lease pursuant to its
option granted herein, or in the event that fifty percent (50%) or less of the
value of the Office Complex is damaged or destroyed by fire or other casualty
and neither the whole nor any material portion of the Premises is rendered
untenantable, then Lessor shall repair and restore the Premises and the Office
Complex to as near their condition prior to the fire or other casualty as is
reasonably possible with all due diligence and speed (subject to delays for
causes beyond Lessor's reasonable control) and shall be completed within two
hundred forty (240) days following the date of such fire or other casualty
(subject to force majeure) failing which, Lessee shall be entitled to terminate
this Lease in the event that such repairs are not completed within sixty (60)
days after written notice from Lessee that Lessee desires to terminate this
Lease because such repairs have not been completed within such 240 day period.
Rent for the period during which the Premises are untenantable shall be abated
pro rata (based upon the portion of the Premises which is untenantable). In no
event shall Lessor be obligated to repair or restore any special equipment or
improvements installed by Lessee at Lessee's expense.
SECTION 11.6 RENT APPORTIONMENT. In the event of a termination of this
Lease pursuant to this Article 11, Rent shall be apportioned on a per diem basis
and paid to the date of the fire or other casualty.
ARTICLE 12
EMINENT DOMAIN
SECTION 12.1 LESSEE'S TERMINATION. If the whole of or any substantial
part of the Premises is taken by any public authority under the power of eminent
domain, or taken in any manner for any public or quasi-public use, so as to
render (in Lessee's reasonable judgment) the remaining portion of the Premises
unsuitable for the purposes intended hereunder, then the term of this Lease
shall cease as of the day possession shall be taken by such public authority and
Lessor shall make a pro rata refund of any prepaid rent. All damages awarded for
such taking under the power of eminent domain or any like proceedings shall
belong to and be the property of Lessor, Lessee hereby assigning to Lessor its
interest, if any, in said award; provided, however, Lessor shall have no
interest in any award made to Lessee for loss of business or goodwill. In the
event that fifty percent (50%) or more of the building area or fifty percent
(50%) or more of the value of the Office Complex is taken by public authority
under the power of eminent domain, then either party may terminate this Lease by
delivering, within sixty (60) days after possession is taken, written notice
thereof to the other party, which termination shall be effective as of the date
ninety (90) days after such termination notice is given.
SECTION 12.2 LESSEE'S PARTICIPATION. Provisions in this Article 12 to
the contrary notwithstanding, Lessee shall have the right to prove in any
condemnation proceedings and to receive any separate award which may be made for
damages to or condemnation of Lessee's movable trade fixtures and equipment and
for moving expenses; provided, however, Lessee shall in no event have any right
to receive any award for its interest in this Lease or for loss of leasehold.
Provisions in this Article 12 to the contrary notwithstanding, in the event of a
partial condemnation of the Office Complex or the Premises and this Lease is not
terminated, Lessor shall, at its sole cost and expense, restore the Premises and
Office Complex to a complete architectural unit and the Base Rent provided for
herein during the period from and after the date of delivery of possession
pursuant to such proceedings to the termination of this Lease shall be reduced
to a sum equal to the product of the Base Rent provided for herein multiplied by
a fraction, the numerator of which is the fair market rent of the Premises after
such taking and after same has been restored to a complete architectural unit,
and the denominator of which is the fair market rent of the Premises prior to
such taking.
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ARTICLE 13
SURRENDER OF PREMISES
SECTION 13.1 SURRENDER OF POSSESSION. On the last day of the term of
this Lease, or on the sooner termination thereof, Lessee shall peaceably
surrender the Premises in good condition and repair consistent with Lessee's
duty to make repairs as herein provided. On or before the last day of the term
of this Lease, or the date of sooner termination thereof, Lessee shall, at its
sole cost and expense, remove all of its property and trade fixtures and
equipment from the Premises, and all property not removed shall be deemed
abandoned. Lessee hereby appoints Lessor its agent to remove all abandoned
property of Lessee from the Premises upon termination of this Lease and to cause
its transportation and storage for Lessee's benefit, all at the sole cost and
risk of Lessee and Lessor shall not be liable for damage, theft,
misappropriation or loss thereof and Lessor shall not be liable in any manner in
respect thereto. Lessee shall pay all reasonable costs and expenses of such
removal, transportation and storage. Lessee shall leave the Premises in good
order, condition and repair, reasonable wear and tear and damage from fire and
other casualty or which is the responsibility of Lessor excepted. Lessee shall
reimburse Lessor within thirty (30) days following its receipt of written demand
for any expenses incurred by Lessor with respect to removal, transportation, or
storage of abandoned property and with respect to restoring said Premises to the
condition required by this Lease. All alterations, additions and fixtures, other
than Lessee's furniture, personal property, trade fixtures and equipment which
have been made or installed by either Lessor or Lessee upon the Premises, shall
remain the property of Lessor and shall be surrendered with the Premises as a
part thereof. If the Premises are not surrendered at the end of the term or
sooner termination thereof, Lessee shall indemnify Lessor against loss or
liability resulting from delay by Lessee in so surrendering the Premises,
including, without limitation, claims made by any succeeding tenants founded on
such delay and any attorneys' fees resulting therefrom. Lessee shall promptly
surrender all keys for the Premises to Lessor at the place then fixed for the
payment of rent and shall inform Lessor of combinations on any vaults, locks and
safes left on the Premises.
SECTION 13.2 LESSEE RETAINING POSSESSION. In the event Lessee remains
in possession of the Premises after expiration of this Lease, and without the
execution of a new lease, but with Lessor's written consent, it shall be deemed
to be occupying the Premises as a tenant from month to month, subject to all the
provisions, conditions and obligations of this Lease insofar as the same can be
applicable to a month-to-month tenancy, except that the Base Rent shall be
escalated to Lessor's then current base rent for the Premises according to
Lessor's then current rental rate schedule for prospective tenants, but not in
excess of 150% of the Base Rent otherwise payable under the Lease. In the event
Lessee remains in possession of the Premises after expiration of this Lease and
without the execution of a new lease and without Lessor's written consent,
Lessee shall be deemed to be occupying the Premises without claim of right and
Lessee shall pay Lessor for all costs arising out of loss or liability resulting
from delay by Lessee in so surrendering the Premises as above provided and shall
pay a charge for each day of occupancy an amount equal to one hundred fifty
percent (150%) of the Base Rent and Additional Rent (on a daily basis) payable
under this Lease upon expiration.
ARTICLE 14
DEFAULT OF LESSEE
SECTION 14.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events (in this Article sometimes called "Event of Default") shall
constitute a default and breach of this Lease by Lessee:
(a) If Lessee fails to pay any Base Rent or Additional Rent
payable under this Lease or fails to pay any obligation
required to be paid by Lessee when and as the same shall
become due and payable, and such default continues for a
period of ten (10) days after written notice thereof given by
Lessor to Lessee.
(b) If Lessee fails to perform any of Lessee's nonmonetary
obligations under this Lease for a period of thirty (30) days
after written notice from Lessor; provided that if more time
is required to complete such performance, Lessee shall not be
in default if Lessee commences such performance within the
thirty (30)-day period and thereafter diligently pursues its
completion. The notice required by this subsection is intended
to satisfy any and all notice requirements imposed by law on
Lessor and is not in addition to any such requirement.
(c) If Lessee, by operation of law or otherwise, violates the
provisions of Article 10 hereof relating to assignment,
sublease, mortgage or other transfer of Lessee's interest in
this Lease or in the Premises or in the income arising
therefrom.
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(d) If Lessor discovers that any financial statement, warranty,
representation or other information given to Lessor by Lessee,
any assignee of Lessee, any subtenant of Lessee, any successor
in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, in connection with this Lease, was
materially false or misleading when made or furnished.
(e) Lessee, by operation of law or otherwise, violates the
provisions of Section 4.4 relating to compliance with
environmental laws.
(f) If (i) Lessee makes a general assignment or general
arrangement for the benefit of creditors; (ii) a petition for
adjudication of bankruptcy or for reorganization or
rearrangement is filed by or against Lessee and is not
dismissed within sixty (60) days; (iii) if a trustee or
receiver is appointed to take possession of substantially all
of Lessee's assets located at the Premises or of Lessee's
interest in the Lease and possession is not restored to Lessee
within sixty (60) days; or (iv) if substantially all of
Lessee's assets located at the Premises or of Lessee's
interest in this Lease is subjected to attachment, execution
or other judicial seizure which is not discharged within sixty
(60) days. If a court of competent jurisdiction determines
that any of the acts described in this subsection does not
constitute an Event of Default and a trustee is appointed to
take possession (or if Lessee remains a debtor in possession)
and such trustee or Lessee transfers Lessee's interest
hereunder, then Lessor shall receive, as Additional Rent, the
difference between the Rent (or any other consideration) paid
in connection with such assignment or sublease and the Rent
payable by Lessee hereunder. As used in this subsection, the
term "Lessee" shall also mean any guarantor of Lessee's
obligations under this Lease. If any such Event of Default
shall occur, Lessor, at any time during the continuance of any
such Event of Default, may give written notice to Lessee
stating that this Lease shall expire and terminate on the date
specified in such notice, and upon the date specified in such
notice this Lease, and all rights of Lessee under this Lease,
including all rights of renewal whether exercised or not,
shall expire and terminate, or in the alternative or in
addition to the foregoing remedy, Lessor may assert and have
the benefit of any other remedy allowed herein, at law, or in
equity.
SECTION 14.2 LESSOR'S REMEDIES. Upon the occurrence and during the
continuance of an Event of Default by Lessee, with or without notice or demand
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have, Lessor shall be entitled to the rights and remedies set forth below.
(a) TERMINATION OF POSSESSION. Terminate Lessee's right to
possession of the Premises by any lawful means, in which case
the Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event,
Lessor shall have the immediate right to reenter and remove
all persons and property, and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and
for the account of Lessee, all without service of notice or
resort to legal process and without being deemed guilty of
trespass, or becoming liable for any loss or damage which may
be occasioned thereby. Lessor shall have the right to change
the locks on any door of the Premises without notifying Lessee
of the name, address or telephone number of an individual or
company from whom a new key may be obtained, nor shall Lessor
have any obligation to provide a new key to Lessee until such
time as all Events of Default have been cured and Lessee has
provided to Lessor additional security for or further
assurances of Lessee's future performance of all Lessee's
obligations arising under this Lease, such security and
assurances to be satisfactory to Lessor in the exercise of
Lessor's sole and absolute discretion. In the event that
Lessor shall elect to so terminate this Lease, then Lessor
shall be entitled to recover from Lessee all damages incurred
by Lessor by reason of Lessee's default, including:
(i) The equivalent of the amount of the Base Rent and
Additional Rent which would be payable under this
Lease by Lessee if this Lease were still in effect,
less
(ii) The net proceeds of any reletting affected pursuant
to the provisions of Section 14.2 hereof after
deducting all of Lessor's reasonable expenses in
connection with such reletting, including, without
limitation, all repossession costs, brokerage
commissions, legal expenses, reasonable attorneys'
fees, alteration costs, and expenses of preparation
of the Premises, or any portion thereof, for such
reletting.
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Lessee shall pay such current damages in the amount determined
in accordance with the terms of this Section 14.2 as set forth
in a written statement thereof from Lessor to Lessee
(hereinafter called the "Deficiency"), to Landlord in monthly
installments on the days on which the Rent would have been
payable under this Lease if this Lease were still in effect,
and Landlord shall be entitled to recover from Tenant each
monthly installment of the Deficiency as the same shall arise.
(b) DAMAGES. In lieu of recovering the monthly Deficiency as set
forth in Section 14.2, Lessor shall be entitled to recover
from Lessee, and Lessee shall pay to Lessor, within thirty
(30) days after its receipt of written demand, as and for
final damages for Lessee's default, an amount equal to the
difference between the then present worth of the aggregate of
the Base Rent and Additional Rent and any other charges to be
paid by Lessee hereunder for the unexpired portion of the term
of this Lease (assuming this Lease had not been so
terminated), and the then present worth of the then aggregate
fair and reasonable fair market rent of the Premises for the
same period. In the computation of present worth, a discount
at the rate of 6% per annum shall be employed. If the
Premises, or any portion thereof, shall be relet by Lessor for
the unexpired term of this Lease, or any part thereof, before
presentation of proof of such damages to any court, commission
or tribunal, the amount of Rent reserved upon such reletting
shall, prima facie, be the fair and reasonable fair market
rent for the part or the whole of the Premises so relet during
the term of the reletting. Nothing herein contained or
contained in Section 14.2 shall limit or prejudice the right
of Lessor to prove for and obtain, as damages by reason of
such expiration or termination, an amount equal to the maximum
allowed by any statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are
to be proved, whether or not such amount be greater, equal to
or less than the amount of the difference referred to above.
(c) REENTRY AND REMOVAL. Upon the occurrence and during the
continuance of an Event of Default by Lessee, Lessor shall
also have the right, with or without terminating this Lease,
to reenter the Premises to remove all persons and property
from the Premises. Such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the
account of Lessee. If Lessor shall elect to reenter the
Premises, Lessor shall not be liable for damages by reason of
such reentry.
(d) NO TERMINATION; RECOVERY OF RENT. If Lessor does not elect to
terminate this Lease as provided in this Section 14.2, then
Lessor may, from time to time, recover all Rent as it becomes
due under this Lease. At any time thereafter before the
default is cured, Lessor may elect to terminate this Lease and
to recover damages to which Lessor is entitled.
(e) RELETTING THE PREMISES. In the event that Lessor should elect
to terminate this Lease and to relet the Premises, it may
execute any new lease in its own name. Lessee hereunder shall
have no right or authority whatsoever to collect any Rent from
such Lessee. The proceeds of any such reletting shall be
applied as follows:
(i) First, to the payment of any indebtedness other than
Rent due hereunder from Lessee to Lessor, including
but not limited to storage charges or brokerage
commissions owing from Lessee to Lessor as the result
of such reletting;
(ii) Second, to the payment of the costs and expenses of
reletting the Premises, including alterations and
repairs which Lessor deems reasonably necessary and
advisable and reasonable attorneys' fees incurred by
Lessor in connection with the retaking of the said
Premises and such reletting;
(iii) Third, to the payment of Rent and other charges due
and unpaid hereunder; and
(iv) Fourth, to the payment of future Rent and other
damages payable by Lessee under this Lease.
The parties hereto shall, and they hereby do, waive trial by jury in
any action, proceeding, or counterclaim brought by either of the
parties hereto against the other on any matters whatsoever arising out
of, or in any way connected with, this Lease, the relationship of
Lessor and Lessee, Lessee's use or occupancy of the Premises and/or
Office Complex, and/or claim or injury or damage.
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SECTION 14.3 WRITTEN NOTICE OF TERMINATION REQUIRED. Lessor shall not
be deemed to have terminated this Lease and the Lessee's right to possession of
the leasehold or the liability of Lessee to pay Rent thereafter to accrue or its
liability for damages under any of the provisions hereof, unless Lessor shall
have notified Lessee in writing that it has so elected to terminate this Lease.
Lessee covenants that the service by Lessor of any notice pursuant to the
applicable unlawful detainer statutes of the state in which the Office Complex
is located and the Lessee's surrender of possession pursuant to such notice
shall not (unless Lessor elects to the contrary at the time of, or at any time
subsequent to the service of, such notice, and such election be evidenced by a
written notice to Lessee) be deemed to be a termination of this Lease or of
Lessee's right to possession thereof.
SECTION 14.4 REMEDIES CUMULATIVE; NO WAIVER. All rights, options and
remedies of Lessor contained in this Lease shall be construed and held to be
cumulative, and no one of them shall be exclusive of the other, and Lessor shall
have the right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law whether or not stated in this Lease, except
as otherwise expressly set forth herein. No waiver by Lessor of a breach of any
of the terms, covenants or conditions of this Lease by Lessee shall be construed
or held to be a waiver of any succeeding or preceding breach of the same or any
other term, covenant or condition therein contained. No waiver of any default of
Lessee hereunder shall be implied from any omission by Lessor to take any action
on account of such default if such default persists or is repeated, and no
express waiver shall affect default other than as specified in said waiver. The
consent or approval by Lessor to or of any act by Lessee requiring Lessor's
consent or approval shall not be deemed to waive or render unnecessary Lessor's
consent to or approval of any subsequent similar acts by Lessee.
SECTION 14.5 LEGAL COSTS. The prevailing party in any dispute hereunder
shall be entitled to recover, upon demand, for any reasonable costs or expenses
incurred in connection with any breach or default under this Lease, whether or
not suit is commenced or judgment entered. Such costs shall include reasonable
legal fees and costs incurred for the negotiation of a settlement, enforcement
of rights or otherwise. Furthermore, if any action for breach of or to enforce
the provisions of this Lease is commenced, the court in such action shall award
to the party in whose favor a judgment is entered a reasonable sum as attorneys'
fees and costs. Such attorneys' fees and costs shall be paid by the losing party
in such action. Lessee shall also indemnify Lessor against and hold Lessor
harmless from all costs, expenses, demands and liability incurred by Lessor if
Lessor becomes or is made a party to any claim or action (a) instituted by
Lessee, or by any third party against Lessee; (b) for foreclosure of any lien
for labor or material furnished to or for Lessee or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Lessee or
such other person; or (d) necessary to protect Lessor's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended. Lessee shall defend Lessor against any such
claim or action at Lessee's expense with counsel reasonably acceptable to Lessor
or, at Lessor's election, Lessee shall reimburse Lessor for any legal fees or
costs incurred by Lessor in any such claim or action.
In addition, Lessee shall pay Lessor's reasonable attorneys' fees
incurred in connection with Lessee's request for Lessor's consent in connection
with any act which Lessee proposed to do and which requires Lessor's consent.
SECTION 14.6 WAIVER OF DAMAGES FOR REENTRY. Lessee hereby waives all
claims by Lessor's reentering and taking possession of the Premises or removing
and storing the property of Lessee as permitted under this Lease and will save
Lessor harmless from all losses, costs or damages occasioned Lessor thereby. No
such reentry shall be considered or construed to be a forcible entry by Lessor.
ARTICLE 15
SUBORDINATION/ESTOPPEL
SECTION 15.1 LEASE SUBORDINATE. This Lease shall be subject and
subordinate to any mortgage, deed of trust or ground lease now or hereafter
placed upon the Premises, the Office Complex, the Property, or any portion
thereof by Lessor, its successors or assigns, and to amendments, replacements,
renewals and extensions thereof. Lessee agrees at any time hereafter, within ten
(10) days following Lessee's receipt of written demand, to execute and deliver
any instruments, releases, or other documents that may be reasonably required
for the purpose of subjecting and subordinating this Lease, as above provided,
to the lien of any such mortgage, deed of trust or ground lease. It is agreed,
nevertheless, that as long as Lessee is not in default beyond any applicable
curative periods in the payment of Base Rent, Additional Rent, and the payment
of other charges to be paid by Lessee under this Lease, and the performance of
all covenants, agreements and conditions to be performed by Lessee under this
Lease, then neither Lessee's right to quiet enjoyment under this Lease, nor the
right of Lessee to continue to occupy the Premises and to conduct its business
thereon, in accordance with the terms of this Lease as against any lessor,
lessee, mortgagee, trustee, or their successors or assigns shall be interfered
with.
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SECTION 15.2 ATTORNMENT. The above subordination shall be effective
without the necessity of the execution and delivery of any further instruments
on the part of Lessee to effectuate such subordination. Notwithstanding anything
hereinabove contained in this Article 15, in the event the holder of any
mortgage, deed of trust or ground lease shall at any time elect to have this
Lease constitute a prior and superior lien to its mortgage, deed of trust or
ground lease, then, and in such event, upon any such holder or landlord
notifying Lessee to that effect in writing, this Lease shall be deemed prior and
superior in lien to such mortgage, deed of trust, ground lease, whether this
Lease is dated prior or subsequent to the date of such mortgage, deed of trust
or ground lease and Lessee shall execute such attornment agreement as may be
reasonably requested by said holder or landlord.
SECTION 15.3 LESSEE'S NOTICE OF DEFAULT. Lessee agrees, provided the
mortgagee, ground lessor or trust deed holder under any mortgage, ground lease,
deed of trust or other security instrument shall have notified Lessee in writing
(by the way of a notice of assignment of lease or otherwise) of its address,
Lessee shall give such mortgagee, ground lessor or trust deed holder or other
secured party ("Mortgagee"), simultaneously with delivery of notice to Lessor,
by registered or certified mail, a copy of any such notice of default served
upon Lessor. Lessee further agrees that said Mortgagee shall have the right to
cure any alleged default during the same period that Lessor has to cure such
default.
SECTION 15.4 ESTOPPEL CERTIFICATES. Lessee agrees from time to time
upon not less than twenty (20) days prior written request by Lessor to deliver
to Lessor a statement in writing certifying (a) that this Lease is unmodified
and in full force and effect (or if there have been modifications that the Lease
as modified is in full force and effect and stating the modifications); (b) the
dates to which the rent and other charges have been paid; (c) Lessor is not in
default in any provision of this Lease or, if in default, the nature thereof
specified in detail; (d) the amount of monthly rental currently payable by
Lessee; (e) the amount of any prepaid rent, and (f) such other matters as may be
reasonably requested by Lessor or any mortgagee or prospective purchaser of the
Office Complex.
If Lessee does not deliver such statement to Lessor within such twenty
(20) day period, Lessor and any prospective purchaser or encumbrancer of the
Premises or the Office Complex may conclusively presume and rely upon the
following facts: (i) that the terms and provisions of this Lease have not been
changed except as otherwise represented by Lessor; (ii) that this Lease has not
been canceled or terminated and is in full force and effect, except as otherwise
represented by Lessor; (iii) that the current amounts of the Base Rent and
Security Deposit are as represented by Lessor and that any changes made against
the Security Deposit are uncontested and valid; (iv) that there have been no
subleases or assignments of the Lease; (v) that not more than one month's Base
Rent or other charges have been paid in advance; and (vi) that Lessor is not in
default under the Lease. In such event, Lessee shall be estopped from denying
the truth of such facts.
SECTION 15.5 NON-DISTURBANCE AGREEMENT. Notwithstanding anything
contained herein to the contrary: prior to the Commencement Date hereof, Lessor
shall deliver to Lessee an agreement executed by the holder of any mortgage lien
against the Office Complex confirming its agreement not to disturb Lessee's
possession of the Premises or to terminate this Lease so long as Lessee is not
in default of this Lease, except as specifically set forth in this Lease (a
"Non-Disturbance Agreement").
ARTICLE 16
MISCELLANEOUS
SECTION 16.1 TIME IS OF THE ESSENCE. Time is of the essence with
respect to the performance of every provision of this Lease in which time of
performance is a factor.
SECTION 16.2 MEMORANDUM OF LEASE. No Memorandum of this Lease may be
recorded by Lessee without the prior written consent of Lessor.
SECTION 16.3 JOINT AND SEVERAL LIABILITY. All parties signing this
Lease as Lessee shall be jointly and severally liable for all obligations of
Lessee.
SECTION 16.4 BROKER. Lessee represents that Lessee has dealt directly
with and only with Bradford Realty Services of Dallas, Inc. and Jackson &
Cooksey, as broker, in connection with this Lease and that insofar as Lessee
knows, no other broker negotiated or participated in negotiations of this Lease
or submitted or showed the Premises or is entitled to any commission in
connection therewith. Each party shall indemnify and hold the other party
harmless from any claim by a broker or finder claiming a right to a fee or
commission under or through it.
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SECTION 16.5 NOTICES. All notices, demands and requests shall be in
writing, and shall be effectively served by forwarding such notice, demand or
request by certified or registered mail, postage prepaid, or by commercial
overnight courier service addressed as follows:
(a) IF ADDRESSED TO LESSEE:
EXE Technologies, Inc.
300 Baldwin Tower Boulevard
Eddystone, Pennsylvania 19022
Attn: Joanie Hadick
with a copy to:
EXE Technologies, Inc.
8787 Stemmons Freeway, Suite ______
Dallas, Texas 75247
Attn: Raymond Hood
(b) IF ADDRESSED TO LESSOR:
BLI-8787, Ltd.
8235 Douglas Avenue, Suite 200
Dallas, Texas 75225
Attn: David A. Lane
with a copy to:
Andrews & Barth, P.C.
8235 Douglas Avenue, Suite 1120
Dallas, Texas 75225
Attn: Jeffrey W. Harrison
or at such other address as Lessor and Lessee may hereafter designate by written
notice. The effective date of all notices shall be the time of mailing such
notice or the date of delivery to a commercial overnight courier service.
SECTION 16.6 LESSOR'S AGENT. All rights and remedies of Lessor under
this Lease or that may be provided by law may be executed by Lessor in its own
name individually, or in the name of its agent, and all legal proceedings for
the enforcement of any such rights or remedies, including those set forth in
Article 14, may be commenced and prosecuted to final judgment and execution by
Lessor in its own name or in the name of its agent.
SECTION 16.7 QUIET POSSESSION. Lessor covenants and agrees that Lessee,
upon paying the Base Rent, Additional Rent and other charges herein provided for
and observing and keeping the covenants, agreements and conditions of this Lease
on its part to be kept and performed, shall lawfully and quietly hold, occupy
and enjoy the Premises during the term of this Lease. If Lessor fails to perform
any of its obligations hereunder within thirty (30) days after written notice
thereof from Lessee or such longer period of time if such default is not capable
of cure within thirty (30) days but Lessor is pursuing a cure, Lessee shall be
entitled, as its sole remedy, in the event that such default is not cured within
the applicable cure period, to take such action as may be required to have been
taken by Lessor under the Lease, in which event Lessor agrees to pay to Lessee
within thirty (30) days after receipt of written notice from Lessee (with
accompanying paid invoices) all reasonable cost and expenses incurred by Lessee
in connection therewith, failing which Lessee shall be entitled to offset such
sums against the Rent next becoming due under the Lease; provided, such offset
shall not exceed more than twenty percent (20%) of monthly Base Rent payable
each month until such offset has been fully recouped. In the event the
expenditure cannot be fully recouped from the next monthly payment of Base Rent
as a result of such limitation, Lessee shall be entitled to recover interest
with respect to each subsequent monthly offset from the date of the expenditure
to the date of offset at a per annum rate equal to the bank prime rate
publicized in the WALL STREET JOURNAL, as the same may change from time to time.
SECTION 16.8 SUCCESSORS AND ASSIGNS. The covenants and agreements
herein contained shall bind and inure to the benefit of the Lessor, its
successors and assigns, and Lessee and its permitted successors and assigns.
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SECTION 16.9 SEVERABILITY. If any term or provision of this Lease shall
to any extent be held invalid or unenforceable, the remaining terms and
provisions of this Lease shall not be affected thereby, but each term and
provision of this Lease shall be valid and enforced to the fullest extent
permitted by law. This Lease shall be construed and enforced in accordance with
the laws of the state in which the Premises are located.
SECTION 16.10 NO ABANDONMENT OR WASTE. Lessee covenants not to do or
suffer any waste or damage or disfigurement or injury to the Premises or Office
Complex and Lessee further covenants that it will not vacate or abandon the
Premises during the term of
this Lease.
SECTION 16.11 TRANSFERS BY LESSOR. The term "Lessor" as used in this
Lease so far as covenants or obligations on the part of Lessor are concerned
shall be limited to mean and include only the owner or owners of the Office
Complex at the time in question, and in the event of any transfer or transfers
or conveyances the then grantor, provided that the grantee expressly assumes the
obligations of Lessor hereunder, shall be automatically freed and released from
all personal liability accruing from and after the date of such transfer or
conveyance as respects the performance of any covenant or obligation on the part
of Lessor contained in this Lease to be performed, it being intended hereby that
the covenants and obligations contained in this Lease on the part of Lessor
shall be binding on the Lessor, its successors and assigns, only during and in
respect to their respective successive periods of ownership.
In the event of a sale or conveyance by Lessor of the Office Complex or
any part of the Office Complex, the same shall operate to release Lessor from
any future liability upon any of the covenants or conditions herein contained,
provided that the grantee expressly assumes the obligations of Lessor hereunder,
and in such event Lessee agrees to look solely to the responsibility of the
successor in interest of Lessor in and to this Lease. This Lease shall not be
affected by any such sale or conveyance, and Lessee agrees to attorn to the
purchaser or grantee, which shall be personally obligated on this Lease only so
long as it is the owner of Lessor's interest in and to this Lease.
SECTION 16.12 HEADINGS. The marginal or topical headings of the several
articles and sections are for convenience only and do not define, limit or
construe the contents of said articles and sections.
SECTION 16.13 WRITTEN AGREEMENT. All preliminary negotiations are
merged into and incorporated in this Lease, except for written collateral
agreements executed contemporaneously herewith.
SECTION 16.14 MODIFICATIONS OR AMENDMENTS. This Lease can only be
modified or amended by an agreement in writing signed by the parties hereto. No
receipt of money by Lessor from Lessee or any other person after termination of
this Lease or after the service of any notice or after the commencement of any
suit, or after final judgment for possession of the Premises shall reinstate,
continue or extend the term of this Lease or affect any such notice, demand or
suit, or imply consent for any action for which Lessor's consent is required,
unless specifically agreed to in writing by Lessor. Any amounts received by
Lessor after a default may be allocated to any specific amounts due from Lessee
to Lessor as Lessor determines.
SECTION 16.15 LESSOR CONTROL. Lessor shall have the right to close any
portion of the building area or land area to the extent as may, in Lessor's
reasonable opinion, be necessary to prevent a dedication thereof or the accrual
of any rights to any person or the public therein; provided, however,
notwithstanding anything contained herein to the contrary, if any activity by
Lessor under this Section 16.15 prevents Lessee's access to the Premises or if
same otherwise substantially interferes with Lessee's use of the Premises for a
period of at least thirty (30) days, Lessee shall be entitled to receive an
equitable and proportionate abatement of Base Rent until same has been
corrected. Lessor shall at all times have full control management and direction
of the Office Complex, subject to the rights of Lessee in the Premises, and
Lessor reserves the right at any time and from time to time to reduce, increase,
enclose or otherwise change the size, number and location of buildings, layout
and nature of the Office Complex, to construct additional buildings and
additions to any building, and to create additional rentable areas through use
and/or enclosure of common areas, or otherwise, and to place signs on the Office
Complex, and to change the name, address, number or designation by which the
Office Complex is commonly known. In the event Lessor changes the name or
address of the Office Complex, Lessor shall reimburse to Lessee the reasonable
cost incurred by Lessee for replacing its stationery, letterhead, employees'
business cards and other related items. No implied easements are granted by this
Lease.
SECTION 16.16 UTILITY EASEMENT. Lessee shall permit Lessor (or its
designees) to erect, use, maintain, replace and repair pipes, cables, conduits,
plumbing, vents, and telephone, electric and other wires or other items, in, to
and through the Premises, as and to the extent that Lessor may now or
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hereafter deem necessary or appropriate for the proper operation and maintenance
of the Office Complex, provided that Lessor shall not unreasonably interfere
with Lessee's use and occupancy of the Premises.
SECTION 16.17 NOT BINDING UNTIL PROPERLY EXECUTED. Employees or agents
of Lessor have no authority to make or agree to make a lease or other agreement
or undertaking in connection herewith. The submission of this document for
examination does not constitute an offer to lease, or a reservation of, or
option for, the Premises. This document becomes effective and binding only upon
the execution and delivery hereof by the proper officers of Lessor and by
Lessee. Lessee confirms that Lessor and its agents have made no representations
or promises with respect to the Premises or the making of or entry into this
Lease except as in this Lease expressly set forth, and agrees that no claim or
liability shall be asserted by Lessee against Lessor for, and Lessor shall not
be liable by reason of, breach of any representations or promises not expressly
stated in this Lease. This Lease, except for the Building Rules and Regulations,
in respect to which Section 16.18 of this Article shall prevail, can be modified
or altered only by agreement in writing between Lessor and Lessee, and no act or
omission of any employee or agent of Lessor shall alter, change or modify any of
the provisions hereof.
SECTION 16.18 BUILDING RULES AND REGULATIONS. Lessee shall perform,
observe and comply with the Building Rules and Regulations of the Office Complex
as set forth below, with respect to the safety, care and cleanliness of the
Premises and the Office Complex, and the preservation of good order thereon,
and, upon written notice thereof to Lessee, Lessee shall perform, observe, and
comply with any reasonable changes, amendments or additions thereto as from time
to time shall be established and deemed advisable by Lessor for tenants of the
Office Complex. Lessor shall not be liable to Lessee for any failure of any
other tenant or tenants of the Office Complex to comply with such Building Rules
and Regulations; provided, however, Lessor agrees to apply the Building Rules
and Regulations equally to all tenants of the Office Complex.
SECTION 16.19 COMPLIANCE WITH LAWS AND RECORDED COVENANTS. Lessee shall
not use the Premises or permit anything to be done in or about the Premises
which will, in any way, conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Lessee shall, at its sole cost and expense, promptly comply with
all laws, statutes, ordinances and governmental rules and regulations now in
force or which may hereafter be in force, and with the requirements of any fire
insurance underwriters or other similar body now or hereafter constituted
relating to or affecting the condition, use or occupancy of the Premises. Lessee
shall use the Premises and comply with any recorded covenants, conditions, and
restrictions affecting the Premises and the Office Complex as of the
commencement of the Lease or which are recorded during the lease term, provided
same do not prevent Lessee from occupying the Premises in accordance with the
permitted use. Lessor shall deliver the Premises to Lessee in compliance with,
and shall, at its sole cost and expense (but subject to Article 2 hereof), cause
the Office Complex to comply with any and all such laws, statutes, ordinances
and governmental rules and regulations, all such requirements of fire insurance
underwriters, and all such recorded covenants, conditions and restrictions
relating to the structural components, exterior components, common areas and
rentable space (other than the Premises) of the Office Complex; provided,
however, that Lessor shall be responsible for compliance of the exterior and
common areas of the Office Complex and the "core" areas of the Premises,
consisting of elevators, lobbies and restrooms, with the Americans with
Disabilities Act, and Lessee shall be responsible for compliance of the
remainder of the Premises with the Americans with Disabilities Act. In no event
shall Lessee be responsible for making any structural alterations to the
Premises which may be required pursuant to such legal requirements.
SECTION 16.20 LESSEE OBLIGATIONS SURVIVE TERMINATION. All obligations
of Lessee hereunder not fully performed as of the expiration or earlier
termination of the term of this Lease shall survive the expiration or earlier
termination of the term hereof, including, without limitation, all payment
obligations with respect to Operating Expenses and Real Estate Taxes and all
obligations concerning the condition of the Premises.
SECTION 16.21 LESSEE'S WAIVER. Lessee agrees to look solely to Lessor's
interest in the Office Complex for the recovery of any judgment from Lessor, it
being agreed that Lessor, or if Lessor is a partnership, its partners whether
general or limited, or if Lessor is a corporation, its directors, officers or
shareholders, shall never be personally liable for any such judgment.
SECTION 16.22 LESSEE AUTHORIZATION. Lessee shall furnish to Lessor
promptly upon demand, a corporate resolution, proof of due authorization of
partners, or other appropriate documentation reasonably requested by Lessor
evidencing the due authorization of Lessee to enter into this Lease.
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SECTION 16.23 NO PARTNERSHIP OR JOINT VENTURE. This Lease shall not be
deemed or construed to create or establish any relationship or partnership or
joint venture or similar relationship or arrangement between Lessor and Lessee
hereunder.
SECTION 16.24 LESSEE'S OBLIGATION TO PAY MISCELLANEOUS TAXES. Lessee
shall pay, prior to delinquency, all taxes assessed or levied upon its occupancy
of the Premises, or upon the trade fixtures, furnishings, equipment and all
other personal property of Lessee located in the Premises, and when possible,
Lessee shall cause such trade fixtures, furnishings, equipment and other
personal property to be assessed and billed separately from the property of
Lessor. In the event any or all of Lessee's trade fixtures, furnishings,
equipment or other personal property, or Lessee's occupancy of the Premises,
shall be assessed and taxed with the property of Lessor, Lessee shall pay to
Lessor its share of such taxes within thirty (30) days after delivery to Lessee
by Lessor of a statement in writing setting forth the amount of such taxes
applicable to Lessee's personal property.
SECTION 16.25 PROHIBITED SIGNS. Subject to SECTION 7.1 hereof, Lessee
shall not place, or permit to be placed or maintained, on any exterior door,
wall or window of the Premises any sign, awning or canopy, or advertising matter
or other thing of any kind, and will not place or maintain any decoration,
lettering or advertising matter on the glass of any window or door, or that can
be seen through the glass, of the Premises except as specifically approved in
writing by Lessor. Lessee further agrees to maintain such sign, awning, canopy,
decoration, lettering, advertising matter or thing as may be approved, in good
condition and repair at all times, reasonable wear and tear and fire excepted.
Lessee agrees at Lessee's sole cost, that any Lessee sign will be maintained in
strict conformance with Lessor's sign criteria, if any, as to design, material,
color, location, size, letter style, and method of installation.
SECTION 16.26 RENEWAL OPTION. Lessor hereby grants Lessee (but no
assignee or subtenant) two (2) options to renew this Lease, each option to be
for a period of sixty(60) months, for a total of one hundred twenty (120) months
in the event both renewal options are exercised. Each said renewal option shall
be exercised by Lessee notifying Lessor thereof in writing not more than two
hundred seventy (270) and at least two hundred ten (210) days prior to the
expiration of the then current lease or renewal term, as the case may be. In the
event a renewal agreement has not been executed at least one hundred twenty
(120) days prior to the expiration date of the current lease or renewal term,
the option shall automatically become null and void. Each such renewal shall be
subject to all of the terms and conditions of this Lease except that (i) the
rentals payable during each renewal term shall be as set forth below and (ii) no
further renewal option shall exist during the second renewal term. It shall be a
condition to Lessee's exercising any renewal option herein granted that (y)
Lessee not be then in default under this Lease and (z) Lessee shall have
previously exercised the immediately preceding renewal option, if any, so that
the second renewal option may not be exercised if Lessee has failed to exercise
the first renewal option.
The Base Rent for each renewal term shall be based on not less than 95%
of the then prevailing rental rates for properties of equivalent quality, size,
utility and location in the Dallas/Forth Worth market, with the length of the
lease term and the creditworthiness of the Lessee taken into account; provided,
however, that in no event shall the Base Rent in any renewal period be less than
the Base Rent for the last month immediately preceding said renewal period.
Upon notification from Lessee of its intent to exercise each renewal
option, Lessor shall, within fifteen (15) days thereafter, notify Lessee in
writing of the Base Rent for the applicable renewal term; Lessee shall, within
fifteen (15) days following receipt of same, notify Lessor in writing of the
acceptance or rejection of the proposed Base Rent. In the event of rejection by
Lessee, Lessee may rescind the exercise of such renewal option by written notice
to Lessor within such fifteen (15) day period for acceptance or rejection. If
Lessee does not so rescind such exercise, the Base Rent for the applicable
renewal term shall be determined as follows:
(a) Within fifteen (15) days following notification of rejection,
Lessor and Lessee shall each select an arbitrator who shall be
a Licensed Texas real estate broker having a minimum of five
(5) years experience in leasing office space and being a
member of the North Chapter of the Texas Society of Office and
Industrial Realtors (or its successor organization). Notice
shall be given to the other party of the name of the
arbitrator selected. If either Lessor or Lessee fails to
appoint such an arbitrator within the allocated time, the
arbitrator appointed by the other party shall make the
determination of the Base Rent and this determination shall be
final and binding on both parties.
(b) If both Lessor and Lessee appoint an arbitrator in accordance
with the provisions above and the two arbitrators cannot agree
upon a Base Rent for the renewal term within thirty (30) days
following their appointment, the two arbitrators shall
forthwith select a third disinterested and qualified
arbitrator having like qualifications and each of the original
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arbitrators will immediately submit his or her judgment as to
the appropriate Base Rent in writing to the third arbitrator.
Within ten (10) days after such submittal, the third
arbitrator shall make the determination of the Base Rent for
such renewal period and the determination of the third
arbitrator shall be final and binding on both parties. In the
event the two arbitrators appointed by the Lessee and Lessor
cannot agree upon a third arbitrator, then the third
arbitrator shall be appointed by the then President of the
North Chapter of the Texas Society of Office and Industrial
Realtors (or its successor organization). The Base Rent agreed
to by the two appointed arbitrators or, if applicable, the
Base Rent determined by the third arbitrator shall be final
and binding upon the parties hereto. Lessor and Lessee shall
each bear the expense of their arbitrator and the expense of a
third arbitrator, if needed, shall be shared equally by both
parties.
SECTION 16.27 LEASEHOLD IMPROVEMENTS. Lessor and Lessee have agreed to
plans for tenant improvements to the Premises, which plans are attached hereto
as EXHIBIT "D." Subject to completion of such improvements, Lessee accepts the
Premises in the current, "as is" condition. Subject to the terms and conditions
of this SECTION 16.27, the Lessor has provided to Lessee a refurbishment
allowance (the "Allowance") of up to $33.84 per square foot of the Premises
(including $29.84 for tenant improvements, $2.00 for relocation costs, $1.90 for
full construction drawings and $.10 for preliminary drawings) to be utilized
toward the design, construction, refurbishment and remodeling of the Premises
(herein called the "Lessee Finish"). The Allowance has been provided upon of the
following conditions:
(a) Lessor must approve all changes to Lessee's plans and
specifications respecting the Lessee Finish to be undertaken,
which approval shall not be unreasonably withheld, conditioned
or delayed and shall be deemed given unless Lessor has
disapproved same within twenty (20) days after Lessee delivers
same to Lessor.
(b) Lessee shall obtain bids from at least three (3) competent
contractors for the construction. The Lessor may select one
(1) of the contractors to submit bids and shall be allowed to
participate in the review of the bids. Following the review of
the bids, Lessee shall select the contractor to perform the
Lessee Finish based on Lessee's determination as to the most
qualified contractor offering the lowest bid, subject to
Lessor's approval, which shall not be unreasonably withheld,
conditioned or delayed. Lessee shall promptly inform Lessor of
the final construction costs for the Lessee Finish. Lessee
shall be responsible for the management of the construction
and the contractor.
(c) The Allowance shall be delivered by Lessor to Lessee
incrementally as construction progresses on a percentage
completion basis within ten (10) days following receipt of a
draw request, invoices and lien waivers therefor (and if
required by Lessor, a certificate from the contractor that all
work has been completed in accordance with the plans and
specifications). The portion of the Allowance attributable to
relocation expenses, if not expended for improvements, shall
be paid by Lessor to Lessee within the later of (i) thirty
(30) days after the Commencement Date; or (ii) thirty (30)
days after written notice to Lessor with accompanying invoices
substantiating such relocation expenses. If the total cost of
the Lessee Finish (including design, demolition and
construction costs) exceeds the Allowance, Lessee shall
deposit with Lessor the balance of the funds required to
complete the Lessee Finish within ten (10) days following
Lessor's notice to Lessee of the amount due. Lessee shall not
commence any Lessee Finish until Lessee deposits all amounts
due. In no event will Lessor be required to expend funds in
excess of the Allowance or in excess of the amount allocated
to a particular item, and Lessee shall be and remain liable
and responsible for the prompt payment of all costs, fees and
expenses in excess of the Allowance. Any amounts expended by
Lessor in excess of the Allowance shall be payable to Lessor
by Lessee upon demand.
(d) The costs and fees for the design and space planning relating
to the Lessee Finish shall be charged against the Allowance.
(e) Prior to beginning any such work, Lessee shall provide Lessor
with evidence of builder's "all risk" insurance covering both
Lessee and all of Lessee's contractors against third party
liability or workers' compensation claims arising out of all
construction and associated activities. All policies of
insurance shall be subject to Lessor's prior approval, which
approval shall not be unreasonably withheld, conditioned or
delayed, and shall be endorsed showing Lessor and such agent
or agents as Lessor may designate as additional named
insureds. The provisions of this paragraph (as well as all
rights and remedies available to Landlord as provided in the
Lease should Tenant fail to meet its
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obligations hereunder) shall expressly survive the expiration
or earlier termination of the Lease.
(f) The Lessee Finish shall be completed in accordance with the
plans and specifications approved by Lessor, and Lessee shall
provide to Lessor lien waivers and releases, in recordable
form, from all contractors, subcontractors and materialmen
involved in such construction.
SECTION 16.28 EXHIBITS. The following are made a part hereof, with the
same force and effect as if specifically set forth herein:
(a) Building Rules and Regulations - Exhibit "A."
(b) Signage - Exhibit "B."
(c) Specifications for Letter of Credit - Exhibit "C."
(d) Plans for Lessee Finish - Exhibit "D."
SECTION 16.29 LANDLORD'S LIEN. Lessor hereby agrees to subordinate any
and all statutory, constitutional and other landlord liens against the assets or
property of Lessee to the lien of Lessee's primary lender financing Lessee's
business operations, and agrees to execute and deliver upon request of Lessee's
lender such reasonable subordination agreement as may be requested to evidence
and/or confirm such subordination.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
LESSOR:
BLI-8787, LTD.,
a Texas limited partnership
By: Barnett Lane Investments, Inc.,
a Texas corporation, general partner
By: /s/ David A. Lane
-------------------------------------
David A. Lane, President
LESSEE:
EXE TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ A.C. Belsky
-------------------------------------
Name: Adam C. Belsky
------------------------------------
Its: SVP & CFO
------------------------------------
Page 26
<PAGE>
EXHIBIT "A"
BUILDING RULES AND REGULATIONS
1. Any sign, lettering, picture, notice or advertisement installed on
or in any part of the Premises and visible from the exterior of the Premises,
shall be installed at Lessee's sole cost and expense, and in such manner,
character and style as Lessor may approve in writing, which consent shall not be
unreasonably withheld, conditioned or delayed. In the event of a violation of
the foregoing by Lessee, Lessor may remove the same without any liability and
may charge the expense incurred by such removal to Lessee.
2. No awning or other projection shall be attached to the outside walls
of the Office Complex. No curtains, blinds, shades or screens visible from the
exterior of the Office Complex or visible from the exterior of the Premises,
shall be attached to or hung in, or used in connection with any window or door
of the Premises without the prior written consent of Lessor. Such curtains,
blinds, shades, screens or other fixtures must be of a quality, type, design and
color, and attached in the manner approved by Lessor.
3. Lessee, its servants, employees, customers, invitees and guests
shall not obstruct sidewalks, entrances, passages, corridors, vestibules, halls,
elevators, or stairways in and about the Office Complex which are used in common
with other tenants and their servants, employees, customers, guests and
invitees, and which are not a part of the Premises of Lessee. Lessee shall not
place objects against glass partitions or doors or windows which would be
unsightly from the Office Complex corridors or from the exterior of the Office
Complex, or that would interfere with the operation of any device, equipment,
radio, television broadcasting or reception from or within the Office Complex or
elsewhere and shall not place or install any projections, antennas, aerials or
similar devices outside of the Premises or on the Office Complex.
4. Lessee shall not waste electricity, water or air conditioning and
shall, at no cost to Lessee, cooperate fully with Lessor to insure the most
effective operation of the Office Complex's heating and air conditioning systems
and shall refrain from attempting to adjust any controls other than unlocked
room thermostats, if any, installed for Lessee's use. Lessee shall keep corridor
doors closed.
5. Lessee assumes full responsibility for protecting its space from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed and secured after normal business hours,
subject to Lessor's security obligations hereunder.
6. No person or contractor not employed by Lessor shall be used to
perform janitorial work, window washing cleaning, maintenance, repair or similar
work in the Premises without the written consent of Lessor, which consent shall
not be unreasonably withheld, conditioned or delayed.
7. In no event shall Lessee bring into the Office Complex inflammables,
such as gasoline, kerosene, naphtha and benzine, or explosives or any other
article of intrinsically dangerous nature. If, by reason of the failure of
Lessee to comply with the provisions of this paragraph, any insurance premium
for all or any part of the Office Complex shall at any time be increased, Lessee
shall make immediate payment of the whole of the increased insurance premium,
without waiver of any of Lessor's other rights at law or in equity for Lessee's
breach of this Lease.
8. Lessee shall comply with all applicable federal, state and municipal
laws, ordinances and regulations, and building rules and shall not directly or
indirectly make any use of the Premises which may be prohibited by any of the
foregoing or which may be dangerous to persons or property or may increase the
cost of insurance or require additional insurance coverage.
9. Lessor shall have the right to prohibit any advertising by Lessee
which in Lessor's reasonable opinion tends to impair the reputation of the
Office Complex or its desirability as an office complex for office use, and upon
written notice from Lessor, Lessee shall refrain from or discontinue such
advertising.
10. The Premises shall not be used for cooking (except for the use of
ordinary office coffee makers and microwave ovens in kitchen areas), lodging,
sleeping or for any immoral or illegal purpose.
11. Lessee and Lessee's servants, employees, agents, visitors and
licensees shall observe faithfully and comply strictly with the foregoing rules
and regulations and such other and further appropriate rules and regulations as
Lessor or Lessor's agent may from time to time adopt. Reasonable notice of any
additional rules and regulations shall be given in such manner as Lessor may
reasonably elect.
<PAGE>
12. Unless expressly permitted by the Lessor, no additional locks or
similar devices shall be attached to any door or window and no keys other than
those provided by the Lessor shall be made for any door. If more than two keys
for one lock are desired by the Lessee, the Lessor may provide the same upon
payment by the Lessee. Upon termination of this Lease or of the Lessee's
possession, the Lessee shall surrender all keys of the Premises and shall
explain to the Lessor all combination locks on safes, cabinets and vaults.
13. Any carpeting cemented down by Lessee shall be installed with a
releasable adhesive. In the event of a violation of the foregoing by Lessee,
Lessor may charge the expense incurred by such removal to Lessee.
14. The water and wash closets, drinking fountains and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, coffee grounds or other substances
shall be thrown therein. All damages resulting from any misuse of the fixtures
shall be borne by the Lessee who, or those servants, employees, agents, visitors
or licensees, shall have caused the same. No person shall waste water by
interfering or tampering with the faucets or otherwise.
15. No electrical circuits for any purpose shall be brought into the
leased premises without Lessor's written permission, which permission shall not
be unreasonably withheld, conditioned or delayed, specifying the manner in which
same may be done.
16. No bicycle or other vehicle, and no dog or other animal shall be
allowed in offices, halls, corridors, or elsewhere in the building.
17. Lessee shall not throw anything out of the door or windows, or down
any passageways or elevator shafts.
18. All loading, unloading, receiving or delivery of goods, supplies or
disposal of garbage or refuse shall be made only through entryways and freight
elevators provided for such purposes and indicated by Lessor. Lessee shall be
responsible for any damage to the building or property of its employees or
others and injuries sustained by any person whomsoever resulting from the use or
moving of such articles in or out of the leased premises, and shall make all
repairs and improvements required by governmental authorities in connection with
the use or moving of such articles.
19. All safes, equipment or other heavy articles shall be carried in or
out of the Premises only at such time and in such manner as shall be prescribed
in writing by Lessor, and Lessor shall in all cases have the right to specify
the proper position of any such safe, equipment or other heavy article, which
shall only be used by Lessee in a manner which will not interfere with or cause
damage to the leased premises or the building in which they are located, or to
the other tenants or occupants of said building. Lessee shall be responsible for
any damage to the building or the property of its employees or others and
injuries sustained by any person whomsoever resulting from the use or moving of
such articles in or out of the leased premises, and shall make all repairs and
improvements required by governmental authorities in connection with the use or
moving of such articles.
20. Canvassing, soliciting, and peddling in the building is prohibited
and each Lessee shall cooperate to prevent the same.
21. Vending machines shall not be installed without permission of the
Lessor, which permission shall not be unreasonably withheld, conditioned or
delayed.
22. Wherever in these Building Rules and Regulations the word "Lessee"
occurs, it is understood and agreed that it shall mean Lessee's associates,
agents, clerks, servants and visitors. Wherever the word "Lessor" occurs, it is
understood and agreed that it shall mean Lessor's assigns, agents, clerks,
servants and visitors.
23. Lessor shall have the right to enter upon the leased premises at
all reasonable hours for the purpose of inspecting the same following notice
thereof to Lessee as provided in the Lease (except that in the case of
emergencies no notice shall be required), provided that Lessor shall not
unreasonably interfere with Lessee's use and occupancy of the Leased Premises.
24. Lessor shall have the right to enter the leased premises at hours
convenient to the Lessee for the purpose of exhibiting the same to prospective
tenants within the 60-day period prior to the expiration of this Lease following
notice thereof to Lessee as provided in the Lease, and may place signs
advertising the leased premises for rent on the windows and doors of said
Premises at any time within said 60-day period, provided that Lessor shall not
unreasonably interfere with Lessee's use and occupancy of the Leased Premises.
<PAGE>
25. Lessees, its servants, employees, customers, invitees and guests
shall, when using the common parking facilities, if any, in and around the
building, observe and obey all signs regarding fire lanes and no parking zones,
and when parking always park between the designated lines. Lessor reserves the
right to tow away, at the expense of the owner, any vehicle which is improperly
parked in a no parking zone. All vehicles shall be parked at the sole risk of
the owner, and Lessor assumes no responsibility for any damage to or loss of
vehicles.
26. At all times the Office Complex shall be in charge of Lessor's
employee in charge and (a) persons may enter the Office Complex only in
accordance with Lessor's regulations, (b) persons entering or departing from the
Office Complex may be questioned as to their business in the Office Complex, and
the right is reserved to require the use of an identification card or other
access device and the registering of such persons as to the hour of entry and
departure, nature of visit, and other information deemed necessary for the
protection of the Office Complex, and (c) all entries into and departures from
the Office Complex will take place through such one or more entrances as Lessor
shall from time to time designate. Lessor will normally not enforce clauses (a),
(b) and (c) above from 7:00 a.m. to 6:00 p.m., Monday through Friday, and from
8:00 a.m. to 1:00 p.m. on Saturdays, but it reserves the right to do so or not
to do so at any time at its sole discretion. In case of invasion, mob, riot,
public excitement, or other commotion, Lessor reserves the right to prevent
access to the Office Complex during the continuance of the same by closing the
doors or otherwise, for the safety of the tenants or the protection of the
Office Complex and the property therein. Lessor shall in no case be liable for
damages for any error or other action taken with regard to the admission to or
exclusion from the Office Complex of any person.
27. All entrance doors to the Premises shall be locked when the
Premises are not in use. All corridor doors shall also be closed during times
when the air conditioning equipment in the Office Complex is operating so as not
to dissipate the effectiveness of the system or place an overload thereon.
28. Lessor reserves the right at any time and from time to time to
rescind, alter or waive, in whole or in part, any of these Rules and Regulations
when it is deemed necessary, desirable, or proper, in Lessor's judgment, for its
best interest or for the best interest of the tenants of the Office Complex,
provided that such change shall affect all leases of the Office Complex.
<PAGE>
EXHIBIT "B"
SIGNAGE
Exterior Building Signage:
Option One - Fiber-optic outline illuminated Cube EXE Cube to be fabricated from
1/8" stainless steel with .090" returns. Color/Finish to be determined. Height
to be approximately 9', and width to be approximately 9'. Cube to be
outline-illuminated with 5/8" diameter sideglow fiber-optic cable with
remote/accessible metal halide HID light source. Sign to be pin-mounted from
building facade with 4" steel standoffs and approved fasteners.
Option Two - Illuminated channel letter Cube EXE Cube to be fabricated as
channel letter from 1/8" stainless steel with .090" returns. Height to be
approximately 9', and width to be approximately 9'. Illuminated 1/4" thick white
lexan letterfaces to be internally lit with either neon or fiber-optic source as
described above. Sign to be pin mounted from building facade with 4" steel
standoff and approved fasteners.
Option Three- Backlit stainless steel EXE Cube EXE Cube to be fabricated as
channel letters from 1/8" stainless steel with .090 returns. Height to be
approximately 9', and width to be approximately 9'. Gold finish to match window
color. Cube to be silhouette-illuminated with 60Ma/15mm white neon with
remote/accessible ballast. Sign to be pin-mounted from building facade with 4"
steel standoffs and approved fasteners.
Building Entrance Signage:
EXE Technologies signage (at front and back Tower building entries) EXE Cube and
EXE Technologies letterforms to be fabricated as channel letters (Cube
approximately 3' by 3'. Letterforms approximately 10" high x 1-1/2" thick) from
1/8" stainless steel with .090" returns. Color/finish to be determined. Cube and
Letterforms to be silhouette-illuminated with 60Ma/15mm white neon with
remote/accessible ballasts. Sign to be pin-mounted from building facade with
steel standoffs an approved fasteners.
Attachment: Logo
<PAGE>
EXHIBIT "C"
SPECIFICATIONS FOR LETTER OF CREDIT
AMOUNT: $580,505.96
EXPIRATION: The earlier of one of the following:
- 5 Years after the commencement date
or
- Initial public offering of securities by
Lessee
or
- Lessee's net worth, determined in
accordance with GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES consistently
applied, increases by an amount equal to
or greater than ten million dollars form
that shown on Lessee's audited financial
statements dated December 31, 1997 and for
the year then ended.
<PAGE>
AMENDMENT NO. 1
TO
OFFICE LEASE
THIS AMENDMENT dated this 22nd day of February 2000, between BLI-8787, LTD, a
Texas limited partnership with offices at 8235 Douglas Avenue, Suite 770,
Dallas, Texas 75225 ("Lessor"), and EXE Technologies, Inc., a Delaware
corporation with offices at 8787 Stemmons Freeway, Dallas, Texas 75247 ("Lessee"
and, together with Lessor, the "Parties").
WITNESSETH, that the Parties have entered into an Office Lease dated May 18,
1999 (the "Lease"), relating to certain office space in the buildings located at
8787 and 8777 Stemmons Freeway, Dallas, Texas (the "Premises"). The Parties
desire to amend the Lease.
NOW THEREFORE, intending to be legally bound, the parties agree as follows:
1. Capitalized terms not defined herein shall have the meanings ascribed to
them in the Lease.
2. Section 3.3 and Exhibit "C" of the Lease are hereby deleted from the Lease
in their entirety.
3. Section 2.2(d) of the Lease is hereby amended as follows (deletions
strikeout, additions UNDERLINE):
"...and such other expenses as may be ordinarily incurred in
the operation and maintenance of an office complex and not
specifically set forth herein, including reasonable management
fees FOR OFF-SITE MANAGEMENT SERVICES, and EXCLUDING, HOWEVER,
costs of a building office at the Office Complex, including
AND the compensation of an on-site building manager...."
4. A new Section 5.1(i) is hereby added to the Lease as follows:
"(i) OTHER. Lessor shall not be responsible for the matters
for which Lessee is responsible under Section 5.5. Lessor
shall, however, without limiting the generality of the other
provisions of this Section 5.1, be responsible for the
following: (1) service contract for HVAC equipment; (2)
landscaping contract for the Premises; (3) replacement (with
aluminum, if available at a cost not greater than brass) of
brass door frame covers on elevator cabs in Office Tower I
(8787); (4) immediate investigation of, determination of the
causes of, and implementation of corrective measures for
elevator malfunctions that have occurred at or before the date
of this Amendment, continuing vigilance to ensure proper
<PAGE>
function of elevators as provided herein, and prompt response
to incidents of elevator malfunction; (5) immediate
investigation of, determination of the causes of, and
implementation of corrective measures for elevator and
security card system malfunctions that have occurred at or
before the date of this Amendment, continuing vigilance to
ensure proper function of elevator and security card systems
as provided herein, and prompt response to incidents of
elevator or security card system malfunction; (6) contribution
of $2,500 per month (in the form of a deduction from Base
Rent) toward the cost of Lessee's administrative assistant as
set forth in Section 5.5; and (7) on-site direction and
supervision of all persons other than Lessee that have access
to or facilities mounted on the roofs of the buildings. If
Lessor shall fail to provide any of the services set forth in
this Section 5.1 and such failure shall continue for a period
of thirty (30) days, or such shorter period as may be
reasonable in emergency situations, after written notice from
Lessee, then Lessee may provide such services and deduct the
actual and reasonable cost thereof from Base Rent (provided,
Lessor shall, except in the case of emergency, have the prior
right to approve, in its reasonable discretion, a vendor or
contractor hired by Lessee, and the actual cost of such
service shall constitute an Operating Expense under the Lease,
except to the extent that such cost duplicates another
Operating Expense or is increased due to the emergency nature
of the service).
5. A new Section 5.5 is hereby added to the Lease as follows:
SECTION 5.5 SERVICES PROVIDED BY LESSEE. Lessee shall provide
the following supervisory services:
(a) ON-SITE MAINTENANCE SUPERVISOR AND ASSISTANT. Lessee shall
employ (at Lessee's expense, subject to Lessor's contribution
pursuant to Section 5.1(i)(6)) a full-time on-site maintenance
supervisor and administrative assistant, who shall occupy the
building management office on the Premises at no cost or
additional rent to Lessee. Said management office shall not
constitute part of the Premises, but the contents thereof
(excluding office furniture, telephone, facsimile, stand-alone
personal computer and proprietary property files, but
including, without limitation, all of Lessee's documents,
files and other information) shall be the property of Lessee,
subject to inspection by Lessor at reasonable times and in a
reasonable manner, upon reasonable notice.
<PAGE>
(b) WEEKLY MEETINGS. Lessee's maintenance supervisor and his
or her administrative assistant shall conduct a meeting with
all maintenance employees for the Premises, at 9:00 a.m.
prevailing time, every Monday (or the next business day, if
Monday is not a business day), for the purpose of discussing
all activity for the previous week and activity for the
upcoming week. Lessor's off-site building manager shall
attend, and representatives of the managements of Lessor and
Lessee may attend, such meetings. Lessee's maintenance
supervisor's administrative assistant shall keep minutes of
such meetings and distribute such minutes to all attendees by
hand or facsimile on the business day preceding the next
meeting.
(c) CLEANING. Lessee's maintenance supervisor shall (1) be
responsible for the daily supervision of the cleaning company
engaged by Lessor, (2) have authority to call the cleaning
company and report tasks that have not been completed
according to the cleaning contract, and (3) have authority to
direct and demand performance by the cleaning company.
Complaints regarding cleaning will be discussed at the weekly
meetings.
(d) GROUNDS MAINTENANCE. Lessee's maintenance supervisor shall
(1) be responsible for the daily supervision of Lessor's
on-site employees and contractors that perform daily upkeep
and maintenance of the outside common areas including, without
limitation, trash pickup and blowing, (2) have authority to
direct and demand performance of such upkeep and maintenance.
Complaints regarding grounds maintenance will be discussed at
the weekly meetings.
(e) BUILDING MAINTENANCE. Lessee's maintenance supervisor
shall (1) be responsible for the daily supervision of Lessor's
on-site employees and contractors that perform minor daily
maintenance of the buildings including, without limitation,
cleaning, light bulb placement and replacement, and
replacement of broken electrical outlets; (2) have authority
to direct and demand performance of such maintenance.
Complaints regarding building maintenance will be discussed at
the weekly meetings.
(f) HVAC. Lessee's maintenance supervisor shall have authority
to direct and demand performance by Lessor's on-site employees
and independent contractors to remedy "hot and cold" calls for
HVAC adjustments and service. Complaints regarding HVAC will
be discussed at the weekly meetings.
<PAGE>
(g) VENDORS. Lessee's maintenance supervisor shall have
authority to call each of Lessor's vendors that provides
on-site goods or services (including, without limitation, the
elevator company) and report malfunctions and tasks that have
not been completed according to the vendor's contract. Lessor
shall provide Lessee with true, correct and complete copies of
all such vendor's contracts, and all amendments thereto. If
Lessee is not satisfied, in its reasonable discretion, with
the charges or quality of service of any such vendor, or if
any such vendor's service is not consistent with the standard
of quality of the Premises and other office buildings of
similar size, use and location (the "Standard of Quality"),
then Lessor shall, within a reasonable time, subject to the
terms of the applicable contract, terminate such vendor's
contract and procure a substitute vendor by competitive
bidding. Lessor shall consult with Lessee throughout the
competitive bidding process and shall comply with all
reasonable requests of Lessee regarding such process, and
shall ensure that such substitute vendor can satisfy the
Standard of Quality.
The cost of the supervisory services provided by Lessee and
its on-site maintenance supervisor and administrative
assistant in subsections (a)-(g) of this Section 5.5 shall not
be recoverable by Lessor as operating expenses, additional
rent or otherwise; provided any costs incurred under or in
connection with any vendor's contracts procured pursuant to
this subsection (g) of Section 5.5 shall be an Operating
Expense pursuant to the terms of the Lease, except to the
extent that any such cost duplicates another Operating
Expense, is increased due to the emergency nature of the
service provided by the substitute vendor, or is a termination
fee for the terminated vendor's contract).
6. Except as expressly modified hereby, all terms and conditions of the Lease
are ratified and confirmed.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment the day and year
first above written.
BLI-8787, LTD.
By: Stemmons Tower GP, Inc.
a Texas Corporation, general partner
By: /S/ DAVID A. LANE
-------------------------------
Name:
Title:
EXE TECHNOLOGIES, INC.
By: /S/ MICHAEL BURSTEIN
------------------------------
Name: MICHAEL BURSTEIN
Title: CFO
<PAGE>
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Sublease") is entered into as of the 7th
day of July, 1999, by and between EXE Technologies, Inc., a Delaware Corporation
("Sublessor") and Cook Inlet\Voicestream PCS, L.L.C., a Delaware Limited
Liability Company ("Subtenant").
W I T N E S S E T H:
WHEREAS, BLI-8787, LTD, as landlord/lessor ("Landlord"), and
Sublessor, as tenant/lessee, entered into a lease (herein the "Lease") dated May
18, 1999, a copy of which is set forth on EXHIBIT "A" attached hereto and
incorporated herein by reference for all purposes, pursuant to which Landlord
leased to Sublessor certain improved premises known and designated as Floors 1-8
of Tower I of Regal Stemmons Corporate Center, located at 8787 Stemmons Freeway,
Dallas, Texas and floors 1-5 of Tower II, located at 8777 Stemmons Freeway,
Dallas, Texas (the Premises"), as more fully set forth in the Lease; and
WHEREAS, Sublessor desires to sublet to Subtenant a portion of the
Premises (the "Subleased Premises"), comprising approximately 13,262 net
rentable square feet on the second floor in Tower II further described and
outlined on EXHIBIT "B", attached hereto and incorporated herein by reference
for all purposes; The rentable square footage may be adjusted to reflect any
variance once the demising wall is actually installed.
NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in further consideration of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. SUBLEASE. Sublessor hereby rents and sublets the Subleased Premises
to Subtenant, to have and to hold the same unto Subtenant, from the date hereof
for the term of this Sublease, subject to the terms and provisions hereof.
Notwithstanding anything herein to the contrary, Subtenant shall hold the
Subleased Premises pursuant and subject to the same terms, conditions, covenants
and agreements contained in the Lease and shall perform all such functions as
are required to be performed by Sublessor, as tenant/lessee therein, as to the
Subleased Premises, provided, however, Subtenant shall only be responsible for
the payment of "Base Rent" and "Additional Rent" as those terms are defined in
the Lease, as set forth in this Sublease. Notwithstanding anything herein to the
contrary, Subtenant hereby expressly assumes and agrees to keep, observe,
perform and be bound by all of the conditions, covenants, and agreements
contained in the Lease on the part of Sublessor to be kept, observed and
performed pertaining to the Subleased Premises and the Premises; provided,
however, Subtenant shall only be responsible for the payment of "Base Rent" and
"Additional Rent" as those terms are defined in the Lease, as set forth in this
Sublease. Except as otherwise provided herein, all of the terms and provisions
of the Lease which are applicable to or binding upon Sublessor, as tenant/lessee
thereunder, shall also be applicable to or binding upon Subtenant in the same
manner as if such terms and provisions had been set forth in full herein. All
provisions of the Lease which inure to the benefit of the Landlord therein,
shall inure to the benefit of and be enforceable by Sublessor herein as against
Subtenant. Except as otherwise set forth herein and provided no event of default
has occurred
SUBLEASE AGREEMENT - Page 1
<PAGE>
hereunder, Sublessor shall enforce on behalf of Subtenant and shall permit
Subtenant to enforce, as against the Landlord, all obligations of Landlord under
the Lease. All terms having their initial letters capitalized and not defined
herein shall have the meanings set forth in the Lease. Notwithstanding any
provision contained in the Lease to the contrary, the following shall apply with
respect to the Subleased Premises:
(a) Term: The term (the "Initial Term") of this Sublease shall
commence on July ___, 1999 (the "Commencement Date") and shall expire
July 30, 2000, unless earlier terminated by operation of law, the
terms of the Lease or this Sublease. The Term of this Sublease shall
not be extended by, nor shall Subtenant be entitled to the benefit of,
any extension or renewal of the Lease pursuant to the terms thereof.
(b) Rent: Subtenant shall pay to Sublessor as base rent under
this Sublease the sum of $19.00 per rentable square foot annually,
payable in monthly installments. Subtenant shall pay to Sublessor on
the date of execution hereof a payment of base rent in the amount of
$20,998.17, representing the installment of base rent for the month of
July and any additional rent to be pro rated for occupancy during the
month of June of this Sublease. The Rent shall be inclusive of, but
not limited to Electricity, Common Area Maintenance, Real Estate Taxes
and Insurance. Subtenant shall pay all such amounts to Sublessor at
Sublessor's address noted in Paragraph 12 hereof on a monthly basis in
advance of the first day of each month, which amounts shall be
prorated in the event of a partial month.
(c) Renewal Options: Subtenant shall have the right to renew this
Sublease for two (2) successive six (6) month periods, at the same
Rent as defined hereinabove. The renewal options must be exercised no
later than sixty (60) days prior to the expiration of the initial (or
first renewal) lease term. Notwithstanding the above, during a renewal
term, subtenant shall pay to Sublessor Subtenant's Percentage of all
other sums payable by Sublessor under the Lease regarding increase in
common area maintenance charges, expense pass throughs and other
operating expenses above the costs associated with the Subleased
Premises for the preceding twelve (12) months.
(d) Right of First Refusal. Subtenant shall have an ongoing Right
of First Refusal on the remaining space on the floor throughout the
term of the Lease or any Renewal Period.
(e) Security Deposit: Equal to one month's rent.
(f) Provisions Excluded: Article 1, Base Rent shall not apply and
is hereby specifically excluded from the operation of this Sublease.
Article 2, Additional Rent, shall not apply to and is hereby
specifically excluded from the operation of this Sublease during the
Initial Term.
SUBLEASE AGREEMENT - Page 2
<PAGE>
(g) Parking: Subtenant shall be entitled to use one surface
parking space per every 250 rentable square feet of the Subleased
Premises and shall have access to, up to ten (10) covered spaces at a
charge of $15.00 per space per month.
2. POSSESSION OF SUBLEASED PREMISES. Subtenant acknowledges that
Sublessor has delivered possession of the Subleased Premises to Subtenant, and
that, notwithstanding any provision contained in the Lease to the contrary,
Subtenant hereby accepts the Subleased Premises "as is" and in its current
condition as of the date hereof. Notwithstanding the foregoing, Sublessor shall
be responsible for timely demising the floor to create the Subleased Premises.
3. USE. Subtenant shall use the Subleased Premises only for general
office purposes. Subtenant shall not do or suffer anything to be done upon the
Subleased Premises which shall cause an injury to the Subleased Premises, or
violate any zoning, building, health, safety or other code or ordinance of any
federal, state or local unit of government which has jurisdiction over the
Subleased Premises and Subtenant shall hold Sublessor harmless against any and
all costs, expenses, losses or damages incurred, suffered, or imposed on
Sublessor as a result of any use of the Subleased Premises by Subtenant in
violation of any such laws or the terms of the Lease.
4. MAINTENANCE. Subtenant shall maintain and keep the Subleased
Premises in good repair and in a clean and orderly condition and shall assume
all obligations of Sublessor under the Lease related to the maintenance and
repair of the Subleased Premises. Upon expiration of the Term hereof, Subtenant
shall deliver the Subleased Premises to Sublessor, broom clean and in the same
condition as at the Commencement Date, ordinary wear and tear expected.
5. TAXES. Subtenant shall pay to the appropriate taxing authority all
taxes of any kind whatsoever becoming due with respect to Subtenant's personal
property located in or about the Subleased Premises.
6. INSURANCE. Subtenant will insure the Subleased Premises to the same
extent that, and will procure and maintain such other insurance in connection
therewith as, Sublessor is required to maintain under the Lease. Any proceeds
received under such insurance shall be applied as provided in the Lease, except
that Subtenant shall be considered in the place of Sublessor as to the Subleased
Premises.
7. ASSIGNMENT AND SUBLETTING. Subtenant shall not assign or sublease
all or a portion of the Subleased Premises to any other party without obtaining
the prior written consent of the Landlord and Sublessor; provided, however,
Sublessor's consent shall not be unreasonably withheld. In the event that
Subtenant attempts or purports to assign or sublease all or a part of the
Subleased Premises to any other party in violation of the terms of this
paragraph, such action shall constitute a default under the terms of this
Sublease, entitling Sublessor to exercise all remedies provided at law, in
equity or under the Lease. Notwithstanding any assignment or subletting,
Subtenant shall not be relieved of its obligations hereunder and a consent to
one assignment or subletting shall not constitute a further waiver of the
provisions of this Section.
8. ALTERATIONS. Subtenant shall not make any alterations, additions or
improvements to the Subleased Premises without the prior written consent of
Sublessor, which consent shall not be unreasonably withheld. All alterations now
or hereafter proposed to be made by Subtenant
SUBLEASE AGREEMENT - Page 3
<PAGE>
shall be made in accordance with and shall be subject to the provisions of the
Lease. In the event Sublessor leases any portion of the remaining vacant space
on the 2nd Floor, which makes the aforementioned floor a multi-tenant floor,
Sublessor shall have the right to enter Subtenant's space with twenty-four (24)
hours' written notice and construct a multi-tenant hallway, (see Exhibit "B"
attached).
9. DEFAULT. The occurrence of any of the following events, as a
result of Subtenant's acts or omissions and after written notice and opportunity
to cure as set forth hereinafter, shall constitute an event of default entitling
Sublessor to exercise those rights specified in the Lease as available to the
Landlord thereunder and any rights provided by law:
(a) failure to pay any installment of rent or any other
payments due hereunder as and when the same shall become due and
payable;
(b) breach of any term, condition or covenant of this
Sublease;
(c) breach of any term, condition or covenant of the Lease
imposed therein on Sublessor and imposed under this Sublease on
Subtenant; or
(d) the occurrence of any event of default specified in the
Lease;
provided, however, that with respect to any default described in subparagraph
(a) above, Sublessor shall not exercise any of its remedies for default unless
and until Subtenant shall fail to cure such default within five (5) business
days after receipt of notice of default from Sublessor, and with respect to any
default described in subparagraphs (b) and (c) above, Sublessor shall not
exercise any of its remedies for default unless and until Subtenant shall fail
to cure any default within thirty (30) days of receipt of notice of default from
Sublessor (or such shorter period as may be provided in the Lease).
Notwithstanding the foregoing, in no event shall Sublessor be required to give
notice of any default described in subparagraph (a) above more than two (2)
times during any twelve (12) month period. Furthermore, no failure by Sublessor
to send notice of default shall be deemed or construed to operate as a waiver of
such default or in any way relieve or release Subtenant of any of its
obligations under this Sublease.
10. SUBLESSOR'S RIGHT TO CURE DEFAULTS OF SUBTENANT. If Subtenant shall
fail to fulfill any of its obligations under the Lease or this Sublease,
Sublessor may, but shall not be obligated to, fulfill any obligations of
Subtenant hereunder and if Sublessor shall incur any costs in doing so, such
costs shall be additional rent due from Subtenant on the first to occur of
demand, or the date of the next rent payment, together with interest at the
highest rate allowed by law from the date expended until the date repaid.
11. INDEMNITY. Notwithstanding any provision of the Lease to the
contrary, Sublessor shall not be liable to Subtenant, or any of its agents,
employees, servants, or invitees for any damage to persons or property due to
the condition, design, or any defect in the building or its mechanical systems
that may exist or subsequently occur. Subtenant, with respect to itself or its
agents, employees, servants, and invitees, expressly assumes all risk and
damages to persons and property, either proximate or remote, by reason of the
present or future condition of the Subleased Premises or the Premises. Subtenant
agrees that it will indemnify and hold Sublessor harmless
SUBLEASE AGREEMENT - Page 4
<PAGE>
from and against all suits, claims and actions of every kind by reason of any
breach, violation, or non-performance of any term or condition on the part of
the Subtenant under this Sublease. Additionally, Subtenant agrees to indemnify
and hold Sublessor harmless from all claims, actions, damages, liabilities and
expenses asserted against the Sublessor on account of injuries to person or
damage to property to the extent that any such damage or injury may be caused,
either approximately or remotely, by any act or omission, whether negligent or
not, of Subtenant or any of its agents, servants, employees, contractors,
patrons, or invitees (while such invitees are on the Subleased Premises) or any
other person entering upon the Subleased Premises under or with the expressed or
implied invitation of Subtenant, or if any such injury or damage made any other
way arise from or out of the occupancy or use of Subtenant, its agents,
employees and invitees or the Subleased Premises.
12. NOTICES.
(a) Any notices required or permitted to be delivered hereunder
shall be in writing and shall be deemed to have been received upon the first to
occur of: actual receipt; or three (3) days after deposit in an official
depository of the United States postal service, postage prepaid, registered or
certified mail, return receipt requested, addressed to the parties as follows:
If to Sublessor: EXE Technologies, Inc.
300 Baldwin Tower Boulevard
Eddystone, Pennsylvania 19022
Attn: Joanie Hadick
with a copy to:
EXE Technologies, Inc.
8787 Stemmons Freeway, Suite _____
Dallas, Texas 75247
Attn: Raymond Hood
If to Subtenant: Voicestream PCS BTA I Corporation
3650 131st Avenue, SE, Suite 400
Bellevue, WA 98006
Attention: David Miller, Esquire
Either party may change the address for notices by notice in writing
given to the other party in the manner hereinabove described.
(b) Each party hereto shall promptly give the other party a copy of
each notice received from, or sent to, the Landlord and relating to the
Subleased Premises.
13. REAL ESTATE BROKER. Except for Jackson & Cooksey, Inc., a Texas
corporation ("Sublessor's Broker"), and FULTSONCOR, a Texas corporation
("Subtenant's Broker"), whose
SUBLEASE AGREEMENT - Page 5
<PAGE>
commissions shall be paid pursuant to a separate agreement with Sublessor, the
parties represent and warrant to each other that no brokers or agents have been
involved on behalf of such party in connection with the consummation of the
transactions contemplated by this Sublease. Sublessor agrees to pay the
commissions to Sublessor's Broker and Subtenant's Broker pursuant to such
separate agreement. SUBLESSOR AND SUBTENANT AUTHORIZE BROKER TO ACT AS AN
INTERMEDIARY IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS SUBLEASE
AND ACKNOWLEDGE RECEIPT FROM BROKER OF THE DOCUMENT ENTITLED "RULES REGARDING
INTERMEDIARY REPRESENTATION" WITH RESPECT TO SUCH INTERMEDIARY RELATIONSHIP, A
COPY OF WHICH IS ATTACHED HERETO. BROKER SHALL BE ENTITLED TO RECEIVE A
COMMISSION IN CONNECTION WITH THIS TRANSACTION FROM ONE OR BOTH OF THE PARTIES
HERETO.
14. CONSENT OF LANDLORD. This Sublease is conditioned upon Sublessor
obtaining the consent of Landlord, within three (3) business days, to the
subletting provided for hereunder. In this regard, Subtenant agrees to execute
and deliver to Sublessor within three (3) business days of notice by Sublessor
such documents and information as are required to obtain Landlord's consent to
such subletting.
15. FACSIMILE AUTHORIZATION. Sublessor and Subtenant agree that this
Sublease may be transmitted by facsimile machine, and the parties intend that
facsimile signatures shall constitute original signatures. A facsimile copy of
this Sublease with signatures, original or faxed, shall be binding on the
parties.
16. CARD KEY ACCESS. Sublessor agrees to provide Subtenant with one
Card Key per employee of Subtenant. In the event of a lost, stolen or destroyed
Card Key, Subtenant agrees to pay $20.00 per replacement.
SUBLEASE AGREEMENT - Page 6
<PAGE>
EXECUTED as of the day and year first above written.
SUBLESSOR:
By: /s/ A C Belsky
----------------------------------------
Name: A C Belsky
-------------------------------------
Title: Senior Vice President
Chief Financial Officer
-----------------------------------
SUBTENANT:
Cook Inlet/VoiceStream PCS, L.L.C.
By: VoiceStream PCS BTA I Corporation,
its agent
By: /s/ Paul E. Cole
---------------------------------------
Name: Paul E. Cole
------------------------------------
Title: Executive Director
-----------------------------------
SUBLEASE AGREEMENT - Page 7
<PAGE>
CONSENT OF LANDLORD
Landlord consents to the subletting of the Subleased Premises from
Sublessor to Subtenant in accordance with the terms and conditions of the
Sublease, however, Sublessor shall continue to remain primarily liable for the
payment of all rent and other sums and the performance of all covenants required
of Tenant under the Lease in accordance with the terms of the Lease.
LANDLORD:
BLI 8787, LTD.
BY: BARNETT LANE INVESTMENTS, INC.
GENERAL PARTNER
By: /S/ MIKE MCCAIN
-----------------------------------
Name: MIKE MCCAIN
---------------------------------
Title: VICE PRES.
--------------------------------
Date: 7-7-99
---------------------------------
SUBLEASE AGREEMENT - Page 8
<PAGE>
EXHIBIT B
[PREMISES MAP]
SUBLEASE AGREEMENT - Page 9
<PAGE>
SUBLEASE AND CONSENT TO SUBLEASE
This Sublease and Consent to Sublease (the "Sublease") is made and
entered into this Eleventh day of November 1999 by and between, EXE
TECHNOLOGIES, INC., a Delaware corporation with offices located at 8787 Stemmons
Freeway, Dallas, Texas 75247, herein referred to as "Sublessor", and FRITZ
COMPANIES, INC., a Delaware corporation, with headquarters located at 706
Mission Street, San Francisco, California 94103, herein referred to as
"Sublessee" (Sublessor and Sublessee each a "Party" and collectively the
"Parties").
WHEREAS, Sublessor is the lessee of the real estate located at 8777
Stemmons Freeway, Dallas, Texas (the "Demised Premises") by virtue of a lease
agreement dated May 18, 1999 (the "Master Lease") by and between Sublessor, as
Tenant or Lessee, and BLI-8787, LTD., as Lessor or Landlord (the "Master
Lessor").
WHEREAS, Sublessee desires to obtain space on or in the Demised Premises,
and Sublessor desires to sublease space to Sublessee, all on the terms and
conditions herein set forth,
NOW THEREFORE, the Parties, intending to be legally bound, hereby
agree as follows:
1. GRANT AND PREMISES. For and in consideration of the Rent to be paid by
Sublessee and the other covenants and agreements herein contained to be
performed by Sublessee, Sublessor hereby leases to Sublessee and Sublessee lets
from Sublessor that part of Demised Premises consisting of approximately 38,800
rentable square feet of space, more particularly identified on Exhibit A
attached hereto and made a part hereof ("Subleased Premises"). The rent stated
herein is for the Subleased Premises as a whole regardless of actual square
footage.
2. TERM. The Initial Term of this Sublease shall commence on First day of
December 1999 ("Sublease Commencement Date") and shall expire twenty-four (24)
months thereafter, ("Sublease Expiration Date"), unless sooner terminated or
extended as herein set forth.
3. MASTER LEASE. Sublessee acknowledges and agrees that Sublessor is the tenant
under the Master Lease, a copy of which is attached hereto as Exhibit B. This
Sublease is subject and subordinate to the Master Lease. The terms, conditions
and respective obligations of Sublessor and Sublessee to each other under this
Sublease shall be the terms and conditions on the Master Lease except to those
provisions of the Master Lease which are contradicted by this Sublease, in which
event the terms of this Sublease shall control over the Master Lease. In
addition, but not by way of limitation, the following provisions of the Master
Lease shall not apply to the rights and obligations of Sublessor and Sublessee:
Section 1, Section 3.3, Section 14.5, Section 16.4, Section 16.5 and Section
16.26. For the purposes of this Sublease, wherever in the Master Lease the word
"Lessor" or "Landlord" is used it shall be deemed to mean the Sublessor herein
and wherever in the Master Lease the word "Lessee" or "Tenant" is used it shall
mean the Sublessee herein. During the term of this Sublease and any extensions
or renewals hereof and for all periods subsequent for obligations which have
arisen prior to the termination or expiration of this Sublease, Sublessee
covenants and agrees to assume, abide by and respect all terms of the Master
Lease, excepting those clauses relating to the payment of rent and term or which
are inconsistent with this Sublease. Sublessee agrees to execute any documents
required to demonstrate subordination of this Sublease to the Master Lease or to
make this Sublease subordinate to the lien of any ground lease, mortgage, deed
of trust, or security deed, as the case may be, including specifically a
subordination, non-disturbance and attornment agreement. If requested to do so,
Sublessee agrees to attorn to any person or other entity that acquires title to
the real property encompassing the Subleased Premises, whether through judicial
foreclosure, sale under power, or otherwise, and to any assignee of such person
or other entity, provided that the entity requesting such attornment agrees to
not disturb Sublessee's rights hereunder.
4. CONSENT OF MASTER LESSOR. In the event that the Master Lease requires that
the Sublessor obtain the consent of the Master Lessor or any other party to
sublet, then this Sublease shall not be effective unless, within ten (10) days
of the date of the signature of Sublessor or Sublessee of this Sublease,
whichever is later, the Master Lessor and any other party required by the Master
Lease has given its written consent to sublease.
5. ACCEPTANCE OF PREMISES. Sublessee's acceptance of possession of Subleased
Premises shall be evidence that Sublessee has inspected the Subleased Premises,
that the Subleased Premises are in good order and satisfactory condition at the
time of possession thereof, and that the Sublessee accepts the Subleased
Premises in its present condition, latent defects excepted.
6. BASE RENT. Sublessee shall pay to Sublessor a Base Rent in the amount of
$79,216.67 per month during the Initial and any Renewal Term. The first such
payment shall be due upon the Sublease Commencement Date and a like monthly
installment shall be due and payable, without demand, deduction or setoff, on or
before the first day of each calendar month succeeding the Sublease Commencement
Date, except that all payments due hereunder for any fractional calendar month
shall be prorated. Sublessor shall receive payment of Base Rent and other
charges on or before the due date at the address for notice given below.
7. ADDITIONAL RENT. Sublessee agrees to pay to Sublessor upon demand therefor,
as additional rent, Sublessee's pro rata share of any Excess Real Estate Taxes
and Excess Operating Expenses, as these terms are defined in the Master Lease
and as modified below. Sublessee's prorated amount shall be determined on the
basis of the size of the Subleased Premises. The Parties hereby agree that
Sublessee's pro rata share of any Excess Real Estate Taxes and Excess Operating
Expenses shall be deemed to be percent (19.4%). Notwithstanding anything in the
Master Lease to the contrary, and notwithstanding Master Lease Section 5.1 in
particular, Operating Expenses shall include all electricity, gas, steam, water,
sewer and other utility charges, none of which shall be charged directly to
Sublessee. Notwithstanding anything in Master Lease Section 2.2 to the contrary,
the base year for the purpose of calculating Excess Real Estate Taxes shall be
the calendar Year 2000. The base period for calculating Excess Operating
Expenses in any Sublease Year shall be the sum of the Operating Expenses,
including utilities as noted above, incurred during the first twelve (12) months
after the Sublease Commencement Date. Notwithstanding anything in the Master
Lease to the contrary, and notwithstanding master Lease Section 9.1 in
particular, this Section 7 sets forth the entire financial obligation of
Sublessee beyond Base Rent, it being the intent of the Parties that this is a
fully serviced Sublease. Sublessee shall pay Base Rent and Additional Rent
without demand or setoff.
8. RENT ABATEMENT. Notwithstanding anything else in this Sublease to the
contrary, Sublessor agrees that, as a material consideration for entering into
this Sublease by Sublessee, Base Rent shall abate during the first three (3)
months of the Initial Term (the "Rent Abatement Period").
9. TELECOMMUNICATIONS/SUBLESSOR'S WORK. Subject to Article 8 of the Master
Lease, Sublessor at Sublessor's expense shall timely complete the improvements
set forth in Exhibit C ("Sublessor's Work"). The timetable for the completion of
telecommunications alterations set forth in Exhibit C is not merely a recital
but is a material consideration for Sublessee's execution of this Sublease, the
parties intending to be legally bound thereby. Sublessee shall reimburse
Sublessor for all one time costs associated with the conversion of the
telecommunications switch to a multi-tenant status. Sublessee shall have the
right to amortize at an interest rate of fifteen percent (15%) up to fifty
percent (50%) of the one time costs associated with the conversion of the
telecommunications switch to a multi-tenant status over the two year term of the
Sublease, the remainder will be payable upon receipt of an itemized bill.
Sublessee shall also reimburse Sublessor for its proportionate share of existing
amortization costs related to the Sublessor's prior purchase of the
PAGE 1 OF 4
<PAGE>
telecommunications switch. Sublessor shall provide to Sublessee all pertinent
documentation to demonstrate Sublessor's actual costs thereof. "Proportionate
Share" shall be defined as the percentage of the Sublease Premises versus the
entire Premises. The Proportionate Share shall be calculated by dividing the
area of the Subleased Premises by the area of the entire premises. (Estimated:
38,800/200,000 = .1940 or 19.40%). Sublessee shall have the exclusive use of the
entire telecommunications switch and related systems as they relate to the
Subleased Premises, provided however, that Sublessee shall not have physical
access to the switch and related systems unless accompanied by Sublessor
personnel, which Sublessor shall make reasonably available, taking into
consideration time, place and manner.
10. DELAYED OCCUPANCY. Any delay in occupancy of the Subleased Premises by
Sublessee shall not operate to abate Sublessee's rental obligation hereunder
unless such delay is caused by the fault of Sublessor, or any of its
contractors, agents or employees. Any delay in occupancy of the Subleased
Premises for any reason shall not operate to extend the Sublease Expiration
Date.
11. FAILURE TO DELIVER SUBLEASED PREMISES. Sublessor shall make available to
Sublessee the Subleased Premises on the Sublease Commencement Date in clean
condition and good working order, with all facilities, including plumbing,
electrical fire sprinkler, lighting, air conditioning, heating, elevators,
washrooms, telecommunications items listed in Exhibit C and loading doors, if
any, in good working condition. In the event that the Subleased Premises are not
ready for occupancy by Sublessee on the Sublease Commencement Date, or in the
event of Sublessor's failure to timely complete Sublessor's Work, and except if
any such delay is caused by Sublessee or Sublessee's agents, as Sublessee's sole
remedy the Rent Abatement Period shall be extended by the same number of days as
any such delay continues. In the event that Sublessor has not completed
Sublessor's Work or the Subleased Premises are not ready for occupancy by
Sublessee on or before December 15, 1999, and except if the failure is caused by
Sublessee or Sublessee's agents, Sublessee may, at Sublessee's option and in
addition to any other remedies that may be available to Sublessee at law or in
equity (which shall not include consequential or punitive damages but may
include costs of mitigation such as increased cost of alternative space), advise
Sublessor in writing that Sublessee elects to terminate this Sublease, in which
event this Sublease shall be cancelled and thereupon become null and void, and
any Base Rent or other payment paid by Sublessee to Sublessor shall be refunded
to Sublessee.
12. PERMITTED USES. Sublessee shall use and occupy Subleased Premises only for
general office and related uses, and in accordance with all applicable laws,
ordinances and governmental regulations. Sublesse shall not use the Subleased
Premises for "Public Accommodation" under the Americans with Disabilities Act.
Sublessee shall not make any alterations to the Subleased Premises.
13. COMMON AREAS. All areas situated within Demised Premises that are designated
by Sublessor for common use by Sublessor, Sublessee, other sublessees of the
Demised Premises, and their respective customers, guests and invitees are herein
collectively referred to as "Common Areas". Sublessee's permitted employees,
agents, customers, guests and invitees shall have the non-exclusive right, in
common with Sublessor and all other Sublessees of the Demised Premises, and
their respective employees, agents, customers, guests and invitees, to use
Common Areas.
14. USE OF PARKING AREAS. If a part of the Common Areas is designed to provide
off-street parking for the common use by Sublessor and all sublessees of the
Demised Premises and their respective employees, agents, customers, guests and
invitees, Sublessor agrees that there shall nevertheless be available at all
times to Sublessee, for the use of its employees, agents, customers guests and
invitees, no fewer than one hundred fifty five (155) parking spaces in the
parking area. Surface spaces will be free of charge, and Sublessee shall have
the option to utilize up to twenty (20) garage spaces at a cost of fifteen
dollars ($15) per garage space per month. Sublessee agrees that it shall not use
any part of parking area or permit the use thereof in a manner that will
obstruct driveways serving parking areas.
15. FURNITURE. As a material consideration for entering into this Sublease by
Sublessee, Sublessee shall have full and exclusive use of the office furniture
and fixtures listed in Exhibit A, excluding furniture and fixtures shown in the
conference rooms and offices, for the duration of the Initial and any Renewal
Term. Sublessee shall use such furniture only for its intended purpose and shall
maintain such furniture in the same condition as at the Sublease Commencement
Date, reasonable wear and tear excepted. At the expiration of the Initial Term
or the Renewal Term, Sublessor shall take possession of such furniture at its
expense. Sublessor warrants that it is the lawful and rightful owner of such
furniture and that such furniture is not subject to the security interest of
another party, is not collateral to secure any debt or obligation of Sublessor
or any other party, and that Sublessor shall not use such furniture as
collateral during the Initial or any Renewal Term. Sublessor shall defend,
indemnify and hold harmless Sublessee for any breach of this warranty. Upon
approval by Master Lessor of sublease of the Subleased Premises by Sublessor to
Sublessee, Sublessee shall pay to Sublessor the amount of Twenty Five Thousand
dollars ($25,000) to be used as a Security Deposit on the furniture to be used
by Sublessee during the term of this Sublease. Said Security Deposit shall be
returned to Sublessee upon the termination of this Sublease and the surrender of
the furniture by Sublessee. Deductions from the Security Deposit shall only
occur in the event any furniture is missing, or in the event Sublessee has
caused damage to the furniture beyond normal wear and tear, and in such an event
the deduction will be limited to the then current value of the furniture in
question absent such damage.
16. INSURANCE. Sublessee shall procure and maintain during the term of this
Sublease, at its own cost and expense, a policy or policies of General Public
Liability Insurance insuring Sublessee, and Sublessor and Master Lessor as
additional insureds, against claims for personal injury, including death, and
property damage, including loss of use thereof, in limits of not less than those
set forth in Article 6.4 of the Master Lease. Sublessee shall also carry Workers
Compensation Insurance in accordance with statutory limits. Certificates of such
insurance policies shall be delivered to Sublessor upon request. Sublessor shall
procure and maintain (or ensure that Master Lessor procures and maintains)
during the term of this Sublease, at its own cost and expense, a policy or
policies of insurance insuring the Demised Premises for the benefit of Sublessee
in an amount equal to the full replacement value thereof against loss or damage
by the perils commonly insured under an "all risk" type insurance policy
(including but not necessarily limited to fire, windstorm, hail, explosion,
vandalism, malicious mischief, civil commotion or unrest,) and such other risks
as now are or may be customarily covered with respect buildings and improvements
similar in construction, general location, use, occupancy and design as the
Demised Premises ("Insured Perils").
17. WAIVER OF SUBROGATION. In the event the Demised Premises suffer any loss or
damage or expense resulting from an Insured Peril; and either Sublessor or
Sublessee, as the case may be, is required to insure the Demised Premises in
whole or in part for such loss, cost, damage or expense (or is required to
ensure that Master Lessor insures the Demised Premises); then the party so
insured or required to be insured (including Sublessee, Sublessor and Master
Lessor) hereby releases the other party from any liability it may have on
account of such loss, cost, damage or expense to the extent of any amount
recovered by reason of such insurance, and waives any right of subrogation which
might otherwise exist in or accrue to any person on account thereof.
18. PERSONAL PROPERTY TAXES. During the term hereof Sublessee shall pay, prior
to delinquency, all taxes assessed against and levied upon the fixtures,
furnishings, equipment, and all other personal property of Sublessee contained
in the Subleased Premises and, when possible, Sublessee shall cause said
fixtures, furnishings, equipment and all other personal property of Lessee
contained in Subleased Premises to be assessed and billed separately from the
real property of Sublessor or Master Lessor. In the event any or all of
Sublessee's fixtures, furnishings, equipment and other personal property shall
be assessed and taxed with Sublessor's or Master Lessor's real property, the
Sublessee shall pay to Sublessor or Master Lessor its share of such taxes within
thirty (30) days after delivery to Sublessee by Sublessor or Master Lessor of a
statement in writing setting forth the amount of such taxes applicable to
Sublessee's property. For the purpose of determining said amount, figures
supplied by the County Assessor as to the amount so assessed shall be
conclusive. Sublessee shall comply with the
PAGE 2 OF 4
<PAGE>
provisions of any law, ordinance or rule of the taxing authorities, which
requires Sublessee to file a report of Sublessee's property located in the
Subleased Premises.
19. QUIET ENJOYMENT. Sublessee shall not use, nor shall permit the Leased
Premises to be used, nor shall its employees, agents, guests or invitees commit
any act which may interfere with the right to the quiet enjoyment of any other
tenant in the Subleased Premises and so long as Sublessee pays rent and complies
with all other obligations of this Lease, Sublessee shall quietly and peacefully
have, hold, and enjoy the Leased Premises, and neither Sublessor nor Master
Lessor, nor anyone claiming by, through or under Sublessor or Master Lessor,
shall disturb Sublessee's quiet and peaceful possession of its Leased Premises.
Sublessor warrants that it shall not cause, through action or inaction, the
Master Lease to be terminated prior to the expiration of the Initial Term or any
Renewal Term. Sublessor shall indemnify Sublessee for any costs, damages or
expenses arising out of or related to its breach of said warranty.
20. NOTICE. Any and all notice required or agreed to be given pursuant hereto
shall be sufficient if in writing and mailed by United States Certified or
Registered Mail, postage prepaid, addressed to Sublessor and Sublessee as
follows:
If to Sublessor, at: If to Sublessee, at:
EXE Technologies, Inc. Fritz Companies, Inc.
8787 Stemmons Freeway 706 Mission Street
Dallas, Texas 75247 San Francisco, CA 94103
Attn.: C.F.O. Attn.: Director, Real Estate
21. BROKER COMMISSION. Each party represents to the other that Jackson &
Cooksey, acting on behalf of Sublessor, and Cushman & Wakefield acting on behalf
of Sublessee, are the only brokers in this transaction and that no other brokers
or person are entitled to any leasing commission or other compensation as a
result of the negotiation and execution of this Lease. Sublessor shall pay all
brokerage fees in the amount of Four Percent (4%) of the aggregate rentals for
the Initial Term. In the event that Sublessor fails to so pay the brokers,
Sublessee shall have the right to pay the brokers and deduct the payment from
the Base Rent or other payment obligations due Sublessor. All terms and
conditions of the brokerage fees to be paid by Sublessor to Cushman & Wakefield
are defined in a separate commission agreement.
22. RENEWAL OPTIONS. Provided this Sublease is then in effect and provided
Sublessee is not then in default of this Sublease, Sublessee shall have the
right, in its sole and absolute discretion, to renew this Sublease for one
additional term not to exceed fifteen (15) months (the "Renewal Term") on the
same terms and conditions as herein set forth. Sublessee shall exercise such
option by providing written notice to Sublessor of its intention no later than
one hundred twenty (120) days prior to the expiration of the Initial Term. The
duration of the Renewal Term shall be elected by Sublessee at the time of the
exercise of the option. In the event Sublessee fails to timely notify Sublessor,
Sublessee's renewal option shall terminate and this Sublease shall expire on the
Sublease Expiration Date. Provided this Sublease is then in effect and provided
Sublessee is not then in default of this Sublease, Master Lessor, by its
signature below, hereby consents to such renewal by Sublessee, no additional
approval of Master Lessor being necessary.
23. RIGHT OF FIRST REFUSAL OPTION. Provided this Sublease is then in effect and
provided Sublessee is not then in default of this Sublease, and subordinate to
Voicestream's "Right of First Refusal", Sublessor agrees that, in the event
additional space leased by Sublessor in the Demised Premises is or becomes
available during the Initial or Renewal Term of this Sublease, Sublessee shall
have a right of first refusal to expand into such additional space for use by
Sublessee or any affiliate controlled by Sublessee; provided, however, that
Sublessor shall have the right to itself occupy or leave such space vacant
without obligation therefor to Sublessee. Sublessee shall have the right to
occupy such additional space upon the same terms as are offered by Sublessor to
any third party. Sublessor shall notify Sublessee in writing promptly upon
becoming aware of the availability of additional space. Sublessor shall further
notify Sublessee of any acceptable bona fide offer to lease such additional
space, and shall advise Sublessee of the material terms of such offer. Sublessee
shall exercise its right of first refusal by notifying Sublessor of its
intention within fifteen (15) days after receiving written notice of the
material terms of such bona fide offer. In the event Sublessee fails to notify
Sublessor within such fifteen-day period, Sublessee's right of first refusal for
such additional space shall terminate, but such termination shall be without
prejudice to Sublessee's right of first refusal for such space should it again
become available during the Initial or Renewal Term of this Sublease, or should
the terms under which the additional space is actually leased differ materially
from the bona fide offer (without limitation, any change in description, price
or term to be deemed material), and is without prejudice to Sublessee's right of
first refusal for any other additional space leased by Sublessor in the Demised
Premises. Sublessee shall be under no obligation to lease any additional space
that becomes available.
24. TIME OF THE ESSENCE. The Parties agree that time is of the essence in
performance of the obligations set forth herein.
25. GOVERNING LAW. This Sublease shall be governed and construed in accordance
with the laws of the state governing the Master Lease.
26. ENTIRE AGREEMENT. This instrument, along with any exhibits and attachments
hereto, constitutes the entire agreement between Sublessor and Sublessee
relative to the Subleased Premises. This Sublease and any exhibits and
attachments may be altered, amended or revoked only by an instrument in writing
signed by both Sublessor and Sublessee and approved by Master Lessor. Sublessor
and Sublessee agree hereby that all prior and contemporaneous oral agreements
between and among themselves and their agents or representatives relative to the
leasing of the Subleased Premises are merged in or revoked by this Sublease.
27. RIGHT TO SUBLEASE. Sublessee shall be permitted to assign or sublease all or
any portion of the premises, subject to the approval of Master Lessor (as
required by Article 10 of the Master Lease) and the approval of Sublessor, which
Sublessor approval shall not be unreasonably withheld or delayed.
28. SIGNAGE. Sublessee at Sublessee's expense shall be allowed to construct
monument signage with Sublessor's and Master Lessor's prior approval. The
specifications of such signage shall comply with all municipal codes and
regulations and with the Master Lease.
29. MOVE IN. Move in hours will be Monday through Friday 6:00 p.m. to 6:00 a.m.,
and at any times during the weekend.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed or caused
this Sublease to be executed, and Master Lessor has consented and agreed to this
Sublease, effective as of the day first above written.
SUBLESSEE
FRITZ COMPANIES, INC.
By: /S/ [ILLEGIBLE]
-------------------------
Name: -------------------------
Title: -------------------------
Date: -------------------------
PAGE 3 OF 4
<PAGE>
SUBLESSOR
EXE TECHNOLOGIES, INC.
By: /S/ CHRISTOPHER F. WRIGHT
-----------------------------------
Name: CHRISTOPHER F. WRIGHT
---------------------------------
Title: SVP, ADMINISTRATION
--------------------------------
Date: 11/15/99
---------------------------------
THIS SUBLEASE IS EXECUTED BY BLI-8787, LTD. ("MASTER LESSOR") SOLELY TO EVIDENCE
THE CONSENT OF MASTER LESSOR TO THE SUBLEASE BETWEEN SUBLESSOR AND SUBLESSEE;
PROVIDED, NOTHING HEREIN SHALL IN ANY WAY CHANGE THE TERMS, PROVISIONS AND
CONDITIONS OF THE MASTER LEASE. MASTER LESSOR HEREBY AGREES THAT SUBLESSEE SHALL
RECEIVE FROM MASTER LESSOR THE SAME WRITTEN NOTICE OF DEFAULT AS PROVIDED TO
SUBLESSOR PURSUANT TO ARTICLE 14 OF THE MASTER LEASE .
- ----------------------------------------------
BLI-8787, LTD Master Lessor
By: BARNETT LANE INVESTMENTS, INC.
GENERAL PARTNER
By: /S/ DAVID A. LANE
-----------------------------------
Name: DAVID A. LANE
---------------------------------
Title: PRESIDENT
--------------------------------
Date: 11-17-99
---------------------------------
PAGE 4 OF 4
<PAGE>
EXHIBIT A
[PREMISES MAP]
<PAGE>
EXHIBIT B
[Master Lease Agreement]
<PAGE>
Exhibit C
SUBLESSOR'S WORK
The following describes telecommunications services that will be provided by EXE
Technologies and timeframes for their delivery
December 1
1) 250 individual phone sets (multi-line 8 button handsets)
2) Voice-mail capability for all phone sets
3) Up to 50 analog lines for fax and modem
4) Extending of D-mark from computer room to third floor IDF
5) Category 5 cabling between the third and fourth floor IDFs.
January 1
1) 100 concurrent phone call capability
2) ACD capability for all phone sets
3) 9 supervisor stations for the ACD
4) Adds, Moves, and Changes will be provided for Fritz on Tuesdays and
Thursdays between the hours of 08:00am and 12:00pm Central time.
5) Up-time for phone systems of Sublessee shall be equal to up-time for phone
systems of Sublessor in the Building, Sublessor to use best efforts to
maximum up-time.
Fritz intends to install one T1 and one ISDN line for data communications
Fritz will provide router and LAN switches for third and fourth floor for data
connectivity
Initial
Fritz Companies, Inc. EXE Technologies, Inc.
/S/ [ILLEGIBLE] /S/ CHRISTOPHER F. WRIGHT
- ------------------------- -------------------------
/S/ DAVID A. LANE
-------------------------
<PAGE>
AMENDMENT NO. 1 TO SUBLEASE AGREEMENT
THIS AMENDMENT NO. 1 TO SUBLEASE AGREEMENT ("Sublease
Amendment") is made as of this 28th day of October, 1999, by and between EXE
Technologies, Inc., a Delaware corporation (the "Sublessor") and Cook
Inlet/Voicestream PCS, L.L.C., a Delaware limited liability company (the
"Subtenant").
W I T N E S S E T H:
WHEREAS, Sublessor and BLI-8787, Ltd. as landlord (the
"Landlord") entered into a lease dated May 18, 1999 (the "Lease") pursuant to
which Landlord leased to Sublessor and Sublessor leased from Landlord certain
improved premises known as Floors 1-8 of Tower I of Regal Stemmons Corporate
Center, located at 8787 Stemmons Freeway, Dallas, TX and floors 1-5 of Tower II,
located at 8777 Stemmons Freeway, Dallas, TX (the "Premises"); and
WHEREAS, Sublessor and Subtenant have entered into a Sublease
Agreement dated as of July 7, 1999 (the "Sublease Agreement") pursuant to which
Sublessor leased to Subtenant and Subtenant leased from Sublessor a portion of
the Premises consisting of approximately 13,262 net rentable square feet on the
second floor of Tower II, as more fully set forth on Exhibit "A" attached hereto
(the "Subleased Premises"); and
WHEREAS, Sublessor and Subtenant desire to amend the Sublease
Agreement to provide for the sublease of additional space on the second floor of
Tower II.
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto agree
as follows:
1. SUBLEASE OF ADDITIONAL SPACE. Commencing November 1, 1999,
Sublessor desires to lease to Subtenant approximately 6,936 net rentable square
feet of additional air conditioned office space located on the second floor of
Tower II, as more fully set forth on Exhibit "B" attached hereto (the
"Additional Subleased Premises") for a base rent of $18.75 per
<PAGE>
rentable square feet annually, payable in accordance with the provisions of the
Sublease Agreement.
2. REMOVAL OF DEMISING WALLS. Prior to November 1, 1999,
Sublessor agrees to remove the two demising walls between the Subleased Premises
and the Additional Subleased Premises, at Sublessor's sole cost and expense.
3. DEFINITIONS. All terms used herein which are defined in the
Sublease Agreement shall have the respective meanings ascribed to such terms in
the Sublease Agreement.
4. OTHER TERMS AND CONDITIONS. All terms and conditions of the
Sublease Agreement not expressly altered by this Sublease Amendment shall
continue in full force and effect.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Sublease
Amendment the day and year first above written.
SUBLESSOR:
EXE TECHNOLOGIES, INC.
By: /S/ MICHAEL BURSTEIN
---------------------------
Name: MICHAEL BURSTEIN
-------------------------
Title: CFO
------------------------
SUBTENANT:
COOK INLET/VOICESTREAM PCS, L.L.C.
By: VoiceStream PCS BTA I Corporation,
its agent
By: /S/ [ILLEGIBLE]
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE>
CONSENT OF LANDLORD
Landlord consents to the subletting of the Additional Subleased
Premises from Sublessor to Subtenant in accordance with the terms and conditions
of the Sublease Agreement, as amended by this Amendment No. 1 to Sublease
Agreement, however, Sublessor shall continue to remain primarily liable for the
payment of all rent and other sums and the performance of all covenants required
of Sublessor under the Lease in accordance with the terms of the Lease.
LANDLORD:
BLI-8787, LTD.
By: Barnett Lane Investments, Inc.,
general partner
By: /S/ DAVID A. LANE
--------------------------------
Name: DAVID A. LANE
------------------------------
Title: PRESIDENT
-----------------------------
<PAGE>
AGREEMENT OF LEASE
BETWEEN
BALDWIN TOWERS ASSOCIATES, L.P.
AS LANDLORD
AND
Neptune Systems, Inc.
AS TENANT
<PAGE>
OFFICE LEASE
LEASE made this 3 day of April , 1995 by and between BALDWIN TOWERS
ASSOCIATES, L.P. (hereinafter called "Landlord"), and NEPTUNE SYSTEMS INC. a
Pennsylvania Corporation (hereinafter called "Tenant").
WITNESSETH, THAT:
1. DEMISED PREMISES. Landlord, for the term and subject to the
provisions and conditions hereof, leases to Tenant and Tenant accepts from
Landlord, the space consisting of 5,366 rentable square feet on the SEVENTH
floor known as Suite 700 (hereinafter referred to as the "Demised Premises")
of the building known as 1510 Chester Pike located in Eddystone, Pennsylvania
(hereinafter referred to as the "Building"), and more particularly described
by the cross-hatched area on the floor plans annexed herein as Exhibit "A",
to be used by Tenant for the purpose of GENERAL OFFICES AND SOFTWARE DESIGN
and for no other purpose.
2. TERM. Tenant shall use and occupy the Demised Premises for a term
of TEN (10) years, commencing on the FIRST day of JULY, 1995 and ending on
the THIRTIETH day of JUNE, 2005 unless sooner terminated as herein provided.
3. MINIMUM RENT.
(a) See Rent Rider attached. The first installment to be payable
on the execution of this Lease and subsequent installments to be payable on
the first day of each successive month of term hereof following the first
month of such terms.
(b) If the term of this Lease begins on a day other than the first
day of a month, rent from such day until the first day of the following month
shall be prorated at the rate of one-thirtieth of the fixed monthly rental
for each day of the first full calendar month of the term hereof (and, in
such event, the installment of rent paid at execution hereof shall be applied
to the rent due for the first full calendar month of the term hereof).
(c) All rent and other sums due to Landlord hereunder shall be
payable to BALDWIN TOWERS ASSOCIATES. L.P. and mailed to the office of
Landlord at 555 NORTH LANE, SUITE 6101, CONSHOHOCKEN, PENNSYLVANIA, 19428, or
to such other party or at such other address as Landlord may designate, from
time to time, by written notice to Tenant, without demand and without
deduction, set-off or counterclaim (except to the extent demand or notice
shall be expressly provided for herein).
(d) If Landlord, at any time or times, shall accept said rent or any
other sum due to it hereunder after the same, shall become due and payable such
acceptance shall not excuse delay upon subsequent occasions, or constitute or be
construed as, a waiver of any of Landlord's rights hereunder.
Page-2
<PAGE>
4. ESCALATION IN TAXES, OPERATING COSTS, COSTS OF LIVING: COST OF
ELECTRICITY.
(a) Definitions. As used in this section 4, the following terms
shall be defined as hereinafter set forth.
(i) "TAXES" shall mean all real estate taxes and assessments, general
and special, ordinary or extraordinary, foreseen or unforeseen, imposed upon the
Building or with respect to the ownership thereof and the parcel of land
appurtenant thereto. If, due to a future change in the method of taxation, any
franchise, income, profit or other tax, however designated, shall be levied or
imposed in substitution in whole or in part, for (or in lieu of) any tax which
would otherwise be included within the defined herein.
(ii) "Base year operating expenses" shall be $3.50 per square foot.
(iii) "TENANT'S FRACTION" shall be a fraction, the numerator of
which is the Demised Rentable Square Feet and the denominator of which is the
Rentable Square Feet in the Building. [5,366/175,878]
(iv) (A) "Operating Expenses" shall mean except as hereinafter
limited, Landlord's actual out-of-pocket expenses in respect of the
operation, maintenance and management of the Building (after deducting any
reimbursement, discount, credit, reduction or other allowance received by
Landlord) and shall include, without limitation: (1) wages and salaries (and
taxes imposed upon employers with respect to such employed by Landlord for
rendering service in the normal operation, cleaning, maintenance, and repair
of the Building: (2) contract costs of contractors hired for the operation,
maintenance and repair of the Building; (3) the cost of steam, electricity,
water and sewer and other utilities (except for electricity, which is
separately charged by Landlord as herein provided) chargeable to the
operation and maintenance of the Building; (4) cost of insurance for the
Building including fire and extended coverage, elevator, boiler, sprinkler
leakage, water damage, public liability and property damage, plate glass, and
rent protection, but excluding any charge for increased premiums due to acts
or omissions of other occupants of the Building or because of extra risk
which are reimbursed to Landlord by such other occupants; (5) supplies; and
(6) legal and accounting expenses; (7) real estate taxes (8) management
expense.
The term "Operating Expenses" shall not include: (1) the cost of redecorating
or repairing not provided on a regular basis to tenants of the Building; (2)
the cost of any repair or replacement item which, by standard accounting
practice, should be capitalized; (3) any charge for depreciation, interest or
rents paid or incurred by Landlord; (4) any charge for Landlord's income tax,
excess profit taxes, franchise taxes or similar taxes on Landlord's business;
(5) commissions.
(B) In determining Operating expenses for any year, if less than
ninety-five percent (95%) of the Building rentable area shall have been
occupied by tenants at any time during such year, Operating Expenses shall be
deemed for such year to be an amount equal to the like expenses which
Landlord reasonably determines would normally be incurred had such occupancy
been ninety-five percent (95%) throughout such year.
Page-3
<PAGE>
(C) If, after the Base Year for Operating Expenses, Landlord shall
eliminate any component of Operating Expenses, as a result of the introduction
of a labor saving device or other capital improvement, the corresponding item of
Operating Expenses shall be deducted from the Operating Expenses expended by
Landlord in said Base Year for purposes of calculating Tenant's Proportionate
Share of any increased Operating Expenses.
(vi) "DEMISED RENTABLE SQUARE FEET" shall mean 5,366 square feet.
(vii) "RENTABLE SQUARE FEET IN THE BUILDING" shall mean 175,878 square
feet.
(b) Escalation of Operating Expenses
(i) For and with respect to each calendar year of the term of this
Lease (and any renewals or extensions thereof) subsequent to the Base Year for
Operating Expenses, there shall accrue, as additional rent, an amount equal to
the product obtained by multiplying the Tenant's Fraction by the amount of the
increase, if any, of Operating Expenses for such year over the Base Year
Operating Expenses (appropriately prorated for any partial calendar year
included within the beginning and of the term).
(ii) Landlord shall furnish to Tenant as soon as reasonably possible
after the beginning of each calendar year of the term hereof subsequent to the
Base Year for Operating Expenses;
(A) A statement (the "Expense Statement") setting forth (1) Operating
Expenses for the previous calendar year, and (2) Tenant's Fraction of the
Operating Expenses for the previous calendar year; and
(B) A statement of Landlord's good faith estimate of Operating
Expenses, and the amount of Tenant's Fraction thereof (the "Estimated Share"),
for the current calendar year.
(iii) Beginning with the next installment of minimum rent due after
delivery of the foregoing statements to Tenant, Tenant shall pay to Landlord, on
account of its share of Operating Expenses (or Landlord shall pay to Tenant, if
the following quantity is negative):
(A) One-twelfth of the Estimated Share multiplied by the number of
full or partial calendar months elapsed during the current calendar year up to
and including the month payment is made, plus any amounts due from Tenant to
Landlord on account of Operating Expenses for prior periods of time, less:
(B) The amount, if any, by which the aggregate of payments made by
Tenant on account of Operating Expenses for the previous calendar year exceed
those actually due as specified in the Expense Statement.
Page-4
<PAGE>
(iv) On the first day of each succeeding month up to the time Tenant
shall receive a new Expense Statement and statement of Tenant's Estimated Share,
Tenant shall pay to Landlord, on account of its share of Operating Expenses,
one-twelfth of the then current Estimated Share. Any payment due from Tenant to
Landlord, or any refund due from Landlord to Tenant, on account of Operating
Expenses not yet determined as of the expiration of the term hereof shall be
made within twenty (20) days after submission to Tenant of the next Expense
Statement.
5. UTILITIES SEPARATELY CHARGED TO DEMISED PREMISES. Tenant shall be
responsible for all utilities (including gas and electric) which are consumed
within the Demised Premises. If a separate meter is installed, Tenant shall
pay for the consumption of such utilities based on its metered usage. If no
meter is installed, Tenant shall pay a pro-rata share of any utility charges
covering the Demised Premises and other areas of the Building which pro-rata
share shall be based on the percentage which the Demised Rentable Square Feet
bears to the square footage of the areas of the Building serviced by such
utility. Utility bills shall be paid by Tenant within ten (10) days after the
receipt and non-payment or late payment of such bills shall be considered a
default under this Lease.
6. SECURITY DEPOSIT. As additional security for the full and prompt
performance by Tenant of the terms and covenants of this Lease, Tenant has
deposited with the Landlord the sum of SIX THOUSAND TWO HUNDRED SIXTY DOLLARS
($6,260.00) which shall not constitute rent for any month (unless so applied by
Landlord on account of Tenant's default). Tenant shall, upon demand, restore any
portion of said security deposit which may be applied by Landlord to the cure of
any default by Tenant hereunder. To the extent that Landlord has not applied
said sum on account of a default, the security deposit shall be returned
(without interest) to Tenant promptly at termination of this Lease.
7. SERVICES. Landlord agrees that it shall:
(a) Provide passenger elevator service to the Demised Premises during
all days with one (1) elevator subject to call at all other times. Tenant and
its employees and agents shall have access to the Demised Premises at all times,
subject to compliance with such security measures as shall be in effect for the
Building;
(b) Provide water for drinking, lavatory and toilet purposes drawn
through fixtures installed by Landlord; and
(c) Furnish the Demised Premises with electric for heating, hot and
chilled water and air-conditioning. Tenant shall not install or operate in the
Demised Premises any electrically operated equipment or other machinery, other
than typewriters, adding machine and other machinery and equipment normally used
in modern offices, or any plumbing fixtures, without first obtaining the prior
written consent of the Landlord. Landlord may condition such consent upon the
payment by Tenant of additional rent as compensation for the additional
consumption of water and/or electricity occasioned by the operation of said
equipment, fixtures, or machinery.
Page-5
<PAGE>
Tenant, at Tenant's sole expense, shall be responsible for the installation,
maintenance, and use of any equipment or any kind or nature whatsoever which
would or might necessitate any changes, replacements, or additions to the water
system, plumbing system, heating system, air-conditioning system, or the
electrical system servicing the Demised Premises or any other portion of the
Building without the prior written consent of the Landlord, and in the event
such consent is granted, such replacement, changes or additions shall be paid
for by Tenant. It is understood that Landlord does not warrant that any of the
services referred to in this Section 6 will be free from interruption from
causes beyond the reasonable control of Landlord. No interruption of service
shall ever be deemed an eviction or disturbance of Tenant's use and possession
of the Demised Premises or any part thereof or render Landlord liable to Tenant
for damages by abatement or rent or otherwise relieve Tenant from performance of
Tenant's obligations under this Lease, unless Landlord, after reasonable notice,
shall willfully and without cause fail or refuse to take action within its
control.
8. CARE OF DEMISED PREMISES. Tenant agrees, on behalf of itself, its
employees and agents, that it shall:
(a) Comply at all times with any and all federal, state and local
statutes, regulations, ordinances, and other requirements of any of the
constituted public authorities relating to its use and occupancy of the Demised
Premises;
(b) Give Landlord access to the Demised Premises at all reasonable
times, without charge or diminution of rent, to enable Landlord (i) to examine
the same and to make such repairs, additions and alterations as Landlord may be
permitted to make hereunder or as Landlord may deem advisable for the
preservation of the integrity, safety and good order of the Building or any part
thereof; and (ii) upon reasonable notice, to show the Demised Premises to
prospective mortgagees and purchasers and, during the six (6) months prior to
expiration of the term, to prospective tenants;
(c) Keep the Demised Premises in good order and condition and replace
all glass broken by Tenant, its agents, employees or invitees with glass of the
same quality as that broken, except for glass broken by fire and extended
coverage type risks, and commit no waste in the Demised Premises;
(d) Upon the termination of this Lease in any manner whatsoever,
remove Tenant's goods effects and those of any other person claiming under
Tenant, and quit and deliver up the Demised Premises to Landlord peaceably and
quietly in as good order and condition at the inception of the term of this
Lease or as the same hereafter may be improved by Landlord or Tenant, reasonable
use and wear thereof, damage from fire and extended coverage type risks, and
repairs which are Landlord's obligation excepted. Goods and effects not removed
by Tenant at the termination of this Lease, however terminated, shall be
considered abandoned and Landlord may dispose of and/or store the same as it
deems expedient, the cost thereof to be charged to Tenant;
(e) Not place signs on the Demised Premises except on doors and then
only of a type and with lettering and text approved by Landlord. Identification
of Tenant and Tenant's location shall be provided in a directory in the Building
Lobby;
Page-6
<PAGE>
(f) Not overload, damage or deface the Demised Premises or do any
act which might make void or voidable any insurance on the Demised Premises
or the Building or which may render an increased or extra premium payable for
insurance (and without prejudice to any right or remedy of Landlord regarding
this subparagraph, Landlord shall have the right to collect from Tenant, upon
demand, any such increase or extra premium). Tenant shall maintain at its own
sole cost adequate insurance coverage for all of its equipment, furniture,
supplies and fixtures and provide Landlord with certificates evidencing such
coverage;
(g) Not make any alteration of or addition to the Demised Premises
without the prior written approval of Landlord (except for work of a
decorative nature);
(h) Not install or authorize the installation of any coin operated
vending machine, except for the dispensing of cigarettes, coffee, and similar
items to the employees of Tenant for consumption upon the Demised Premises;
and
(i) Observe the rules and regulations annexed hereto as Exhibit
"C", as the same may from time to time be amended by Landlord for the general
safety, comfort and convenience of Landlord, occupants and tenants of the
Building.
9. SUBLETTING AND ASSIGNING. Tenant shall not assign this Lease or
sublet all or any portion of the Demised Premises without first obtaining
Landlord's prior written consent thereto. If such consent is given, it will
not release Tenant from its obligations hereunder and which will not be
deemed a consent to any further subletting or assignment. if Landlord
consents to any such subletting or assignment, it shall nevertheless be a
condition to the effectiveness thereof that a fully executed copy of the sub
lease or assignment be furnished to Landlord and that any assignee assume in.
writing all obligations of Tenant hereunder., Tenant shall not mortgage or
encumber this Lease.
10. DELAY IN POSSESSION. If Landlord shall be unable to deliver
possession of the Demised Premises to Tenant on the date specified for
commencement of the term hereof because of the holding over or retention of
possession of any tenant or occupant, or if repairs improvements or
decoration of the Demised Premises are not completed, or for any repairs,
improvements or decoration of the Demised Premises are not completed, or for
any other reason. Landlord shall not be subject to any liability to Tenant
Under such circumstances, the rent reserved and covenanted to be paid herein
shall not commence until possession of Demised Premises is given or until
Landlord shall give written notice to Tenant that the Demised Premises are
available for occupancy by Tenant, whichever shall first occur, and no such
failure to give possession shall in any other respect affect the validity of
this Lease or any obligation to extend the term of this Lease.
Notwithstanding the foregoing, if Landlord fails to deliver possession to
Tenant by August 1, 1995, Tenant shall receive one day of free rent for each
day after August 1, 1995, that Tenant is delayed in obtaining possession.
11. FIRE OR CASUALTY. In case of damage to the Demised Premises or the
Building by fire or other casualty, Tenant shall give immediate notice
thereof to Landlord. Landlord shall thereupon cause the damage to be repaired
with reasonable speed, subject to delays which may arise by reason of
adjustment of loss under insurance policies and for delays beyond the
reasonable control of Landlord. To the extent and for the time that the
Demised Premises are thereby rendered untenantable, the rent shall
proportionately abate.
Page-7
<PAGE>
In the event the damage shall be so extensive that Landlord shall decide not
to repair or rebuild, or if any mortgagee, having the right to do so shall
direct that the insurance proceeds are to be applied to reduce the mortgage
debt rather than to the repair of such damage, this Lease shall, at the
option of Landlord, exercisable by written notice to Tenant given within
thirty (30) days after Landlord is notified of the casualty, be terminated as
of a date specified in such notice (which shall not be more than ninety (90)
days thereafter), and the rent (taking into account any abatement as
aforesaid) shall be adjusted to the termination date. Thereafter, Tenant
shall promptly vacate the Demised Premises.
12. LIABILITY. Tenant agrees that Landlord and its building manager and
their officers, employees and agents shall not be liable to Tenant, and
Tenant hereby releases said parties, for any personal injury or damage to or
loss of personal property in the Demised Premise from any cause whatsoever
unless such damage, loss or injury is the result of the willful and gross
negligence of Landlord, its building manager, or their officers, employees or
agents, and Landlord and its building manager and their officers or employees
shall not be liable to Tenant for any such damage or loss whether or not the
result of their willful and gross negligence to the extent Tenant is
compensated therefor by Tenant's insurance. Tenant shall and does hereby
indemnify and hold Landlord harmless of and from all loss or liability
incurred by Landlord in connection with any failure of Tenant to fully
perform its obligations under this Lease and in connection with any personal
injury or damage of any type or nature occurring in or resulting out of
Tenant's use of the Demised Premises, unless due to Landlord's fault.
13. EMINENT DOMAIN. If the whole or a substantial part of the Building
shall be taken or condemned for a public or quasi-public use under an statute
or by right of eminent domain or private purchase in lieu thereof by any
competent authority, Tenant shall have no claim against Landlord and shall
not have any claim or right to any portion of the amount that may be awarded
as damages or paid as a result of any such condemnation or purchase; and all
right of the Tenant to damages therefore are hereby assigned by Tenant to
Landlord. The foregoing shall not, however, deprive Tenant of any separate
award for moving expenses or for any other award which would not reduce the
award payable to Landlord. Upon the date the right to possession shall vest
in the condemning authority, this Lease shall cease and terminate with rent
adjusted to such date, and Tenant shall have no claim against Landlord for
the value of any unexplored term of this Lease.
14. INSOLVENCY.
(a) The appointment of a receiver or trustee to take possession of all
or a portion of the assets of Tenant, or (b) an assignment by Tenant for the
benefit of creditors, or (c) the institution by or against Tenant of any
proceedings for bankruptcy or reorganization under any state or federal law
(unless in the case of involuntary proceedings, the same shall be dismissed
within thirty (30) days after institution), or (d) any execution issued
against Tenant which is not stayed or discharged within fifteen (15) days
after issuance of any execution sale of the assets of Tenant, shall
constitute a breach of this Lease by Tenant. Landlord in the event of such a
breach, shall have, without need of further notice, the rights enumerated in
Section 15 herein.
Page-8
<PAGE>
15. DEFAULT.
(a) If Tenant shall fail to pay rent or any other sum payable to
Landlord hereunder when due, or if Tenant shall fail to perform or observe
any of the other covenants, terms or conditions contained in this Lease
within fifteen (15) days (or such longer period as is reasonably required to
correct any such default, provided Tenant promptly commences and diligently
continues to effectuate a cure), but in any event within thirty (30) days
after written notice thereof by Landlord, or if any of the events specified
in Section 14 occur, or if Tenant vacates or abandons the Demised Premises
during the term hereof or removes or manifests an intention to remove any of
Tenant's goods or property therefrom other than in the ordinary and usual
course of Tenant's business, then and in any of said cases (notwithstanding
any former breach of covenant or waiver thereof in a former instance),
Landlord, in addition to all other rights and remedies available to it by law
or equity or by any other provisions hereof, may at any time thereafter:
(i) upon three (3) days notice to Tenant, declare to be
immediately due and payable, the rent and other charges herein reserved for
the balance of the term of this Lease (taken without regard to any early
termination of said term on account of default), a sum equal to the
Accelerated Rent Component (as hereinafter defined), and Tenant shall remain
liable to Landlord as hereinafter provided; and/or
(ii) whether or not Landlord has elected to recover the Accelerated
Rent Component, terminate this Lease on at least five (5) days' notice to
Tenant and, on the date specified in said notice, this Lease and the term
hereby demised and all rights of Tenant hereunder shall expire and terminate
and Tenant shall thereupon quit and surrender possession of the Demised
Premises to Landlord in the condition elsewhere herein required and Tenant
shall remain liable to Landlord as hereinafter provided.
(b) For purposes herein, the Accelerated Rent Component shall mean the
aggregate of:
(i) all rent and other charges, payments, costs and expenses due
from Tenant to Landlord and in arrears at the time of the election of
Landlord to recover the Accelerated Rent Component;
(ii) the minimum rent reserved for the then entire unexpired
balance of the term of this Lease (taken without regard to any early
termination of the term by virtue of any default), plus all other charges,
payments, costs and expenses herein agreed to be paid by Tenant up to the end
of said term which shall be capable of precise determination at the time of
Landlord's election to recover the Accelerated Rent Component; and
(iii) Landlord's good faith estimate of all charges, payments,
costs and expenses herein agreed to be paid by Tenant up to the end of said
term which shall not be capable to precise determination as aforesaid (and
for such purposes no estimate of any component of the additional rent to
accrue pursuant to the provisions of Section 4 hereof shall be less than the
amount which would be due if each such component continued at the highest
monthly rate or amount in effect during the twelve (12) months immediately
preceding the default).
Page-9
<PAGE>
(c) In any case in which this Lease shall have been terminated, or in
any case in which Landlord shall have elected to recover the Accelerated Rent
Component and any portion of such sum shall remain unpaid, Landlord may
without further notice, enter upon and repossess the Demised Premises, by
force, summary proceedings, ejectment or otherwise, and may dispossess Tenant
and remove Tenant and al! other persons and property from the Demised
Premises and may have, hold and enjoy the Demised Premises and the rents and
profits therefrom. Landlord may, in its own name, as agent for Tenant, if
this Lease has not been terminated, or in its own behalf, if this Lease has
been terminated, relet the Demised Premises or any part thereof for such term
or terms (which may be greater or less than the period which would otherwise
have constituted the balance of the term of this Lease) and on such terms
(which may include concessions of free rent) as Landlord in its sole
discretion may determine. Landlord may, in connection with any such
reletting, cause the Demised Premises to be decorated, altered, divided,
consolidated with other space or otherwise changed or prepared for reletting.
No reletting shall be deemed a surrender and acceptance of the Demised
Premises.
(d) Tenant shall, with respect to all periods of time up to and
including the expiration of the term of this Lease (or what would have been
the expiration date in the absence of default or breach) remain liable to
Landlord as follows:
(i) In the event of termination of this Lease on account of
Tenant's default or breach, Tenant shall remain liable to Landlord for
damages equal to the rent and other charges payable under this Lease by
Tenant as if this Lease Were still in effect, less the net proceeds of any
reletting after deducting all costs incident thereto (including without
limitation all repossession costs, brokerage and' management commission,
operating and legal expenses and fees, alteration costs and expenses of
preparation for reletting ( and to the extent such damages shall not have
been recovered by Landlord by virtue of payment by Tenant of the Accelerated
Rent Component (but without prejudice to the right of Landlord to demand and
receive the Accelerated Rent Component), such damages shall be payable to
Landlord monthly upon presentation to Tenant of a bill for the amount due.
(ii) In the event and so long as this Lease shall not have been
terminated after default or breach by Tenant, the rent and all other charges
payable under this Lease shall be reduced by the net proceeds of any
reletting by Landlord (after deducting all costs incident thereto as above
set forth) and by any portion of the Accelerated Rent Component paid by
Tenant to Landlord, and any amount due to Landlord shall be payable monthly
upon presentation to Tenant of a bill for the amount due.
(e) In the event Landlord shall, after default or breach by Tenant,
recover the Accelerated Rent Component from Tenant and it shall be determined
at the expiration of the term of this Lease (taken without regard to early
termination for default) that a credit is due Tenant because the net proceeds
of reletting, as aforesaid, plus amounts paid to Landlord by Tenant exceed
the aggregate of rent and other charges accrued in favor of Landlord to the
end of said term, Landlord shall refund such excess to Tenant, without
interest, promptly after such determination.
Page-10
<PAGE>
(f) Landlord shall in no event be responsible or liable for any failure
to relet the Demised Premises or any part thereof, or for any failure to
collect any rent due upon a reletting.
(g) As an additional and cumulative remedy of Landlord in the event of
termination of this Lease by Landlord following any breach or default by
Tenant, Landlord, at its option, shall be entitled to recover damages for
such breach in an amount equal to the Accelerated Rent Component (determined
from and after the date of Landlord's election under this subsection (g) less
the fair rental value of the Demised Premises for the remainder of the term
of this Lease (taken without regard to the early termination) and such
damages shall be payable by Tenant upon demand. Nothing contained in this
Lease shall limit or prejudice the right of Landlord to prove and obtain as
damages incident to a termination of this Lease, in any bankruptcy
reorganization or other court proceedings, the maximum amount allowed by any
statute or rule of law in effect with such damages are to be proved.
(h) In the event of any default occurrence by which Landlord shall have
the rights and remedies specified in this Section 15:
(i) Tenant hereby authorizes and empowers any prothonotary or
attorney of any court of record to appear for Tenant and to Confess Judgment
against Tenant (whether by Complaint to Confess Judgment or otherwise) in
favor of Landlord for any amount due to Landlord hereunder (including without
limitation the Accelerated Rent Component), together with interest and costs
and an attorney's commission of five percent (5%) of the amount due; and
(ii) For the purpose of obtaining possession of the Demised
Premises, Tenant hereby authorizes and empowers any prothonotary or attorney
of any court of record to appear for Tenant and to file in any court an
agreement for entering an amicable action and judgment in ejectment for
recovery of possession, and/or to confess judgment for possession against
Tenant and those claiming by, through or under Tenant in favor of Landlord by
Complaint to Confess Judgment or otherwise, and Tenant agrees that upon such
entry or judgment a writ of possession for the Demised Premises may forthwith
issue.
(i) Tenant hereby waives all errors and defect of a procedural nature
in any proceedings brought against it by Landlord under this Lease. Tenant
further waives the right to any notices to quit as may be specified in the
Landlord and Tenant Act of Pennsylvania, as amended, and agrees that five (5)
days' notice shall be sufficient in any case where a longer period may be
statutorily specified.
(j) If rent or any other sum due from Tenant to Landlord shall be over
due for more than five (5) days after notice from Landlord, it shall
thereafter bear interest at the rate of twenty percent (20%) per annum (or,
if lower, the highest legal rate) until paid.
Page-11
<PAGE>
16. SUBORDINATION. This lease is and shall be subject and subordinate
to all the terms and conditions of all underlying mortgages and to all ground
or underlying leases of the entire Building which may now or hereafter be
secured upon the Building, and to all renewals, modifications,
consolidations, replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination, Tenant shall
execute, within fifteen (15) days after request, any certificate that
Landlord may reasonably require acknowledging such subordination.
Notwithstanding the foregoing, the party holding the instrument to which this
Lease is subordinate shall have the right to recognize and preserve this
Lease in the event of any foreclosure sale or possessory action, and in such
case this Lease shall continue in full force and effect at the option of the
party holding the superior lien, and Tenant shall attorn to such party and
shall execute, acknowledge and deliver any instrument that has for its
purpose and effect the confirmation of such attornment.
17. NOTICES. All bills, statements, notices or communications which
Landlord may desire or be required to give to Tenant shall be deemed
sufficiently given or rendered if in writing and either delivered to an
officer of Tenant or sent by registered or certified mail addressed to Tenant
at the Building, and the time of the giving of such notice or communication
shall be deemed to be the time when the same is delivered to Tenant or
deposited in the mail, as the case may be. Any notice by Tenant to Landlord
must be served by registered or certified mail addressed to Landlord at the
address where the last previous rental hereunder was payable, or in the case
of subsequent change upon notice given, to the latest address furnished.
18. HOLDING-OVER. Should Tenant continue to occupy the Demised
Premises after expiration of the term of this Lease or any renewal or
renewals thereof, or after a forfeiture incurred, such tenancy shall (without
limitation of any of Landlord's rights or remedies therefor) be one at
sufferance from month to month at a minimum monthly rental equal to twice the
rent payable for the last month of the term of this Lease.
19. MISCELLANEOUS.
(a) Tenant represents and warrants that it has not employed any
broker or agent as its representative in the negotiation for or the obtaining
of this Lease, and agrees to indemnify and hold Landlord harmless from any
and all cost or liability for compensation claimed by any broker or agent
with whom it has dealt.
(b) The word "Tenant" as used in this Lease shall be construed to
mean tenants in all cases where there is more than one tenant, and the
necessary grammatical changes required to make the provisions hereof apply to
corporations, partnerships or individuals, men or women, shall in all cases
be assumed as though in each case fully expressed. This Lease shall not inure
to the benefit of any assignee, heir , legal representative, transferee or
successor of Tenant except upon the express written consent or election of
Landlord. Subject to the foregoing limitation, each provision hereof shall
extend to and shall, as the case may require, bind and inure to the benefit
of Tenant and its heirs, legal representatives, successors and assigns.
Page-12
<PAGE>
(c) The term "Landlord" as used in this Lease means the fee owner
of the Building or, if different, the party holding and exercising the right,
as against all others (except space Tenants of the Building) to possession of
the entire Building. Landlord above-named represents that it is the holder of
such rights as of the date of execution hereof. In the event of the voluntary
transfer of such ownership or right to a successor-in-interest of Landlord,
Landlord shall be freed and relieved of all liability and obligation
hereunder which shall thereafter accrue (and, as to any unapplied portion of
Tenant's security deposit, Landlord shall be relieved of all liability
therefor upon transfer of such portion to its successor in interest) and
Tenant shall look solely to such successor in interest for the performance of
the covenants and obligations of the Landlord hereunder (either in terms of
ownership or possessory rights). The successor in interest shall not (i) be
liable for any previous act or omission of a prior landlord; (ii) be subject
to any rental offsets or defenses against a prior landlord; (iii) be bound by
any amendment of this Lease made without its written consent, or by payment
by Tenant of rent in advance in excess of one (i) month's rent; or (iv) be
liable for any security not actually received by it. Subject to the
foregoing, the provisions hereof shall be binding upon and inure to the
benefit of the successors and assigns of Landlord. Notwithstanding anything
to the contrary contained in this Lease, any liability of Landlord, its
agents, partners or employees, arising out of or in respect of this Lease,
the Demised Premises or the Building, and if Landlord shall default in the
performance of Landlord's obligation under this Lease or otherwise Tenant
shall look solely to the equity of Landlord in its interest in the Building.
(d) Tenant agrees to execute a memorandum of this Lease in the
form submitted by Landlord, which may be recorded by Landlord. Tenant also
agrees to execute any assignment of this Lease by Landlord, evidencing its
consent to such assignment.
20. LANDLORD IMPROVEMENT. Landlord shall , in a good and workmanlike
manner, cause the Demised Premises to be completed in accordance with the
plans approved by Landlord and Tenant pursuant to Exhibit "A" hereof,
reserving the right to: (a) make substitutions of material of equivalent
grade and quality when and if any specified material shall not be readily and
reasonably available; and (b) make changes necessitated or by conditions met
during the course of construction, provided that Tenant's approval of any
substantial change (and any reduction of cost incident thereto) shall first
be obtained (which approval shall not be reasonably withheld so long as there
shall be general conformity with said working drawings).
21. WAIVER OF SUBROGATION. Each party hereto hereby waives any and
every claim which arises or which may arise in its favor and against the
other party hereto during the term of this Lease, or any extension or renewal
thereof, for any and all loss of; or damage to, any of its property located
within or upon or constituting a part of the Building, to the extent that
such loss or damage is recovered under an insurance policy or policies and to
the extent such policy or policies contain provisions permitting such waivers
of claims. Each party agrees to request its insurers to issue policies
containing such provisions and if any extra premium is payable therefor, the
party which would benefit from the provision shall have the option to pay
such additional premium in order to obtain such benefit.
Page-13
<PAGE>
22. RENT TAX. If; during the term of this Lease or any renewal or
extension thereof; any tax is imposed upon the privilege of renting or
occupying the Demised Premises or upon the amount of rentals collected there
for, Tenant will pay each month, as additional rent, a sum equal to such tax
or charge that is imposed for such month, but nothing herein shall be taken
to require Tenant to pay any income, estate, inheritance or franchise tax
imposed upon Landlord.
23. PRIOR AGREEMENT, AMENDMENTS. Neither party hereto has made any
representations or promises except as contained herein or in some further
writing signed by the party making such representation or promise. No other
agreement hereinafter made shall be effective to change, modify, discharge or
effect an abandonment of this Lease, in whole or in part, unless such
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or abandonment is sought. Tenant agrees
to execute any amendment to this Lease required by a mortgagee of the
Building, which amendment does not materially adversely affect Tenant's
rights or obligation hereunder.
24. CAPTIONS. The captions of the paragraphs in this Lease are
inserted and included solely for convenience and shall not be considered or
given any effect in construing the provisions hereof.
25. MECHANIC'S LIEN. Tenant shall, within ten (10) days after notice
from Landlord, discharge any mechanic's lien for materials or labor claimed
to have been furnished to the Demised Premises on Tenant's behalf (except for
work contracted for by Landlord) and shall indemnify and hold harmless
Landlord from any loss incurred in connection therewith.
26. LANDLORD'S RIGHT TO CURE. Landlord may (but shall not be
obligated), on five (5) days notice to Tenant (except that no notice need be
given in case of emergency) cure on behalf of Tenant any default hereunder by
Tenant, and the cost of such cure (including any attorney's fees incurred)
shall be deemed additional rent payable upon demand.
27. PUBLIC LIABILITY INSURANCE. Tenant shall at all times during the
term hereof maintain in full force and effect with respect to the Demised
Premises and Tenants use thereof; comprehensive public liability insurance,
naming Landlord as an additional insured, covering injury to person in
amounts at least equal to One Million ($1,000,000) Dollars combined single
limit bodily injury and property. Tenant shall lodge with Landlord duplicate
originals or certificates of such insurance at or prior to the commencement
date of the term hereof; together with evidence of paid-up premiums, and
shall lodge with Landlord renewals thereof at least fifteen (15) days prior
to expiration.
Page-14
<PAGE>
28. ESTOPPEL STATEMENT. Tenant shall from time to time, within ten
(10) days after request by Landlord, execute, acknowledge and deliver to
Landlord a statement certifying that this Lease is unmodified and in full
force and effect (or that the same is in full force and effect as modified,
listing any instruments or modifications), the dates to which rent and other
charges have been paid, and whether or not, to the best of Tenant's
knowledge, Landlord is in default or whether Tenant has any claims or demands
against Landlord (and, if so, the default, claim and/or demand shall be
specified).
29. RELOCATION OF TENANT. Landlord, at its sole expense, on at least
sixty (60) days prior written notice, may require Tenant to move from the
Demised Premises to another suite of comparable size and decor in order to
permit landlord to consolidate the Premises with other adjoining space leased
or to he leased to another tenant in or coming into the Building. In the
event of any such relocation, Landlord will pay all the expenses of preparing
and decorating the new premises so that they will be substantially similar to
the premises and the expense of moving Tenant's furniture and equipment to
the relocated premises. Occupancy of the new Premises shall be under and
pursuant to the terms of this lease. Tenant will have right of first offer to
lease contiguous space after initial lease-up of such space.
30. TENANT'S APPROVAL. Prior to installation, Tenant shall have the
right to inspect the following items that are included as Tenant
Improvements:
1. All telephone and data cable within the Demised Premises (to meet
specifications provided by Tenant).
2. All pinouts to be used on end connectors prior to being punched
down within the Demised Premises (to meet specifications provided
by Tenant).
3. All lighting fixtures within the Demised Premises
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused this Lease to be executed by their duly authorized representatives the
day and year first above written.
LANDLORD: BALDWIN TOWERS ASSOCIATES, L.P.
BY: /s/ [illegible]
-------------------------------------
DATE: 4/3/95
--------
TENANT: NEPTUNE SYSTEMS, INC.
BY: /s/ [illegible]
-------------------------------------
DATE: 4/3/95
--------
Page-15
<PAGE>
SCHEDULE "A"
RENT RIDER
<TABLE>
<CAPTION>
PERIOD ANNUALLY MONTHLY PER SQ.FT.
------ -------- ------- ----------
<S> <C> <C> <C>
7/1/95 - 6/30/96 $59,026.00 $4,18.33 $11.00
7/1/96 - 6/30/00 $80,490.00 $6,707.50 $15.00
7/1/00 - 6/30/05 $85,856.00 $7,154.67 $16.00
</TABLE>
Page-16
<PAGE>
EXHIBIT "C"
BUILDING RULES AND REGULATIONS
1. The sidewalks, entryways, passages, corridors, stairways and elevators
shall not be obstructed by any of the tenants, their employees or agents, or
used by them for purposes other than ingress or egress to and from their
respective suites. All safes or other heavy articles shall be carried up or into
the leased premises only at such times and in such manner as shall be prescribed
by the Landlord and the Landlord shall in all cases have the right to specify a
maximum weight and proper position or location of any such safe or other heavy
article. Any damage done to the Building by taking in or removing any safe or
from overloading any floor in any way shall be paid by the Tenant. The cost of
repairing or restoring any part of the Building which shall be defaced or
injured by a tenant, its agents or employees, shall be paid for by the Tenant.
2. Each Tenant will refer all contractors, contractors representatives
and installation techniques rendering any service on or to the leased premises
for the tenant to Landlord for Landlord's approval and supervision before
permanence of any contractual service. This provision shall apply to all work
performed in the Building, including installation of telephones, telegraph
equipment, electrical devices and attachments and installations of any nature
affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any
other physical portion of the Building.
3. No, sign, advertisement or notice shall be inscribed, painted or
affixed on any part of the inside or outside of the Building unless of such
color, size and style and in such place upon or in the Building as shall first
be designated by Landlord; there shall be no obligation or duty on Landlord to
allow any sign, , advertisement or notice to be inscribed, painted or affixed on
any part of the inside or outside of the Building except as specified in a
tenant's lease. Signs on or adjacent to doors shall be in color, size and style
approved by Landlord, the cost to be paid by the tenants. A directory in a
conspicuous place, with the names of tenants, will be provided by Landlord; any
necessary revision in this will be made by Landlord within a reasonable time
after notice from the tenant of an error or of a change making revision
necessary. No furniture shall be placed in front of the Building or in any lobby
or corridor without written consent of Landlord.
4. No tenant shall do or permit anything to be done in its leased
premises, or bring to keep anything therein, which will in any way increase the
rate of fire insurance on the Building, or on property kept therein, or obstruct
or interfere with the rights of other tenants, or in any way injure or annoy
them, or conflict with the laws relating to fire prevention and safety, or with
any regulations of the fire department, or with any rules or ordinances of any
Board of Health or other governing bodies having jurisdiction over the Building.
5. The janitor of the Building may at all times keep a pass-key, and he
and other agents of the Landlord shall at all times, be allowed admittance to
the leased premises for purposes permitted in Tenant's lease.
Initial [ILLEGIBLE]
---------------
[ILLEGIBLE]
---------------
Page-17
<PAGE>
6. No additional locks shall be placed upon any doors without the written
consent of the Landlord. All necessary keys shall be furnished by the Landlord,
and the same shall be surrendered upon the termination of this Lease, and the
Tenant shall then give the Landlord or his agents explanation of the combination
of all locks upon the doors of vaults.
7. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or abuse by a tenant or its agents, employees or
invitees, shall be borne by the Tenant.
8. No person shall disturb the occupants of the Building by the use of
any musical instruments, the making or transmittal of noises which are audible
outside the leased premises, or any unreasonable use. No dogs or other animals
or pets of any kind will be allowed in the Building.
9. No bicycles or similar vehicles will be allowed in the building.
10. Nothing shall be thrown out the windows of the building or down the
stairways or other passages.
11. Tenants shall not be permitted to use or to keep in the Building any
kerosene, camphene, burning fluid or other illuminating materials.
12. If any tenant desires telegraphic, telephonic or other electric
connections, Landlord or its agents will direct the electricians as to what and
how the wires may be introduced, and without such directions no boring or
cutting for wires will be permitted.
13. If a tenant desires shades, they must be of such shape, color,
materials and make as shall be prescribed by Landlord. No outside awning shall
be permitted.
14. No portion of the Building shall be used for the purposes of lodging
rooms or for any immoral or unlawful purposes.
15. No tenant shall store anything outside the building or in any common
areas in the building.
Initial [ILLEGIBLE]
---------------
[ILLEGIBLE]
---------------
Page-18
<PAGE>
[MAP]
<PAGE>
LEASE AMENDMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Agreement dated JULY 6, 1995 to be made part of a certain Lease dated
APRIL 3, 1995 between BALDWIN OFFICE ASSOCIATES, L.P. (henceforth called
"Landlord") and NEPTUNE SOFTWARE (henceforth called "Tenant") for OFFICE
space in the BALDWIN TOWERS OFFICE BUILDING, EDDYSTONE, PENNSYLVANIA as more
particularly described below:
1. The Commencement Date noted in Section 1 of the Lease shall change to
September 1, 1995 or later by XXXXXXXXXXXX three weeks prior written notice
to Tenant.
2. Schedule "A" of the Lease shall change to the following:
<TABLE>
<CAPTION>
PERIOD MONTHLY ANNUALLY PER SQ. FT.
------ ------- -------- -----------
<S> <C> <C> <C>
Months 01-04 $0 $0 $0
Months 05-12 $4,918.83 $59,026.00 $11.00
Months 13-60 $6,707.50 $80,490.00 $15.00
Months 61-120 $7,154.67 $85,856.00 $16.00
</TABLE>
3. Upon Tenant occupancy, Landlord shall issue a payment to Tenant of
$5,000.00 as additional XXXXXXXXX.
4. The XX sentence of Section 10. DELAY IN POSSESSION, noted with an
asterisk, becomes void and unenforceable.
5. All other terms and conditions of the Lease shall remain in full force and
effect.
6. Provided Tenant is XXX in Default of any of the terms or conditions of this
Lease XXXXXXXX this Lease on the date of the sixth anniversary of the
Commencement Date by XXXXXXXXXXXXXX months' prior written notice of such
intention and delivering a fee (the XXXXXXXXXXX eight months rent plus all
Landlord's costs associated with the lease transaction XXXXXXXXX to be
amortized over the remaining Lease Term assuming an interest rate of twelve
percent (12%).
7. Landlord shall be known as Baldwin Office Associates, L.P.
AGREED AND ACCEPTED
/s/ [illegible]
- ----------------------------------- -----------------------------------
NEPTUNE SOFTWARE BALDWIN OFFICE ASSOCIATES, L.P.
DATE: 7/6/95 DATE:
<PAGE>
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE ("AMENDMENT") is made this 17th day of June, 1996
between BALDWIN OFFICE ASSOCIATES, L.P. ("LANDLORD") and NEPTUNE SYSTEMS,
INC. ("TENANT").
BACKGROUND
A. Landlord and Tenant are parties to that certain Lease dated April 3,
1995 (the "Lease"), pursuant to which Landlord leased to Tenant approximately
5,366 square feet of space (the "Original Leased Premises") on the sixth
(6th) floor of the building ("Building") known as Baldwin Tower located at
1510 Chester Pike, Eddystone, Pennsylvania.
B. The parties desire to relocate the premises leased to Tenant under the
Lease from the sixth (6th) floor to the third (3rd) floor and to increase the
total leased square footage to thirteen thousand nine hundred eighty (13,980)
rentable square feet (the "New Demised Premises").
C. The parties desire to amend the Lease to provide for the New Demised
Premises and to make certain other amendments to the Lease as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. The Demised Premises defined in Section 1 of the Lease changes to the New
Demised Premises containing 13,980 rentable square feet located on the
third floor of the Building, known as suite 640.
2. The Term defined in Section 2 of the Lease shall be ten (10) years and
nine days commencing on July 22, 1996 and ending on July 31, 2006.
3. The Schedule "A" Rent Rider to the Lease changes to the following:
<TABLE>
PERIOD MONTHLY ANNUALLY
<S> <C> <C>
July 15, 1996 - July 31, 1997 $15,757.50 $189,090.00
August 1, 1997 - July 31, 2001 $19,222.50 $230,670.00
August 1, 2001 - July 31, 2006 $20,387.50 $244,650.00
</TABLE>
4. Tenant's fraction defined in Section 4(a)(iii) of the Lease changes to
13,980/166,250 (i.e. 8.41%).
5. Landlord shall improve the New Demised Premises according to the plan
drawn by T. E. Hall Architects dated May 28, 1996, Revision #2, a copy
of which Plan is attached hereto as EXHIBIT "A" and made a part hereof.
The cost of improving the New Demised Premises (the "Relocation Cost")
which includes a contribution for office furniture of $27,995.20, a
moving allowance of $5,000.00 and an improvement allowance of $15.00 per
rentable square foot ($209,000.00) shall be borne by the Landlord. In
the event that the actual Relocation Cost is greater than $242,695.50
but less than $271,303.00, the portion which is greater than $242,695.50
will be paid 50% by the Landlord and 50% by the Tenant. In the event the
actual Relocation Cost is greater than $271,303.00, the portion which is
greater than $271,303.00 will be paid entirely by the Tenant.
6. Tenant shall be notified and offered any space in the Buiding which
becomes available on the second, third or fourth floor of the Building
prior to such space being leased to a third party. However, Tenant shall
not have a right of first refusal with regard to such space.
<PAGE>
SCHEDULE "A"
RENT RIDER
PERIOD ANNUALLY MONTHLY PER SQ. FT.
- ---------------- ---------- --------- -----------
7/1/95 - 6/30/96 $59,026.00 $4,918.33 $11.00
7/1/96 - 6/30/00 $80,490.00 $6,707.50 $15.00
7/1/00 - 6/30/05 $85,856.00 $7,154.67 $16.00
Page-16
<PAGE>
THIRD AMENDMENT TO LEASE
- -------------------------------------------------------------------------------
THIS THIRD AMENDMENT TO LEASE ("THIRD AMENDMENT") is made this 26th day of
June, 1996 between BALDWIN OFFICE ASSOCIATES, L.P. ("LANDLORD") and NEPTUNE
SYSTEMS, INC. ("TENANT").
BACKGROUND
A. Landlord and Tenant are parties to that certain Lease ("LEASE") dated April
3, 1995, pursuant to which Landlord leased to Tenant approximately 5,366
square feet of space (the "ORIGINAL LEASED PREMISES") on the sixth floor of
the building ("BUILDING") known as Baldwin Tower located at 1510 Chester
Pike, Eddystone, Pennsylvania. The Lease was amended pursuant to that
certain Lease Amendment dated July 6, 1995 (the "FIRST AMENDMENT") and was
further amended pursuant to that certain Amendment to Lease dated June 17,
1996 (the "SECOND AMENDMENT").
B. The Second Amendment expanded and relocated the Demised Premises to 13,980
square feet on the third floor of the Building which was referred to as the
"NEW DEMISED PREMISES", and the Tenant relinquished its rights in the
Original Leased Premises.
C. The Tenant desires to include the Original Leased Premises with the New
Demised Premises as part of Tenant's leasehold interest under the Lease.
D. The parties desire to amend the Lease to provide for the inclusion of the
Original Leased Premises and to make certain other amendments to the Lease
as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. The Demised Premises under the Lease shall include the Original Leased
Premises and the New Demised Premises totaling 19,346 rentable square feet.
2. The Schedule "A" Rent Rider to the Lease changes to the following:
<TABLE>
<CAPTION>
PERIOD MONTHLY ANNUALLY
------ ------- --------
<S> <C> <C>
July 15, 1996 - September 15, 1996 $15,757.50 $189,090.00
September 16, 1996 - July 31, 1997 $22,465.00 $269,580.00
August 1, 1997 - July 31, 2001 $25,930.00 $311,160.00
August 1, 2001 - July 31, 2006 $27,542.17 $330,506.04
</TABLE>
<PAGE>
3. Tenant's Fraction defined in Section 4 of the Lease changes to
19,346/166,250 (i.e. 11.6%).
4. The first sentence of Paragraph 5 of the Second Amendment is deleted.
Tenant shall select its own architect to design the New Demised Premises
("TENANT'S ARCHITECT'S DESIGN"). The Relocation Cost shall be allocated as
specified in the Second Amendment. Provided that Landlord approves of
Tenant's Architect's Design, in Landlord's sole and absolute discretion,
Landlord shall complete the improvement of the New Demised Premises in
accordance with Tenant's Architect's Design within sixty (60) days of such
approval. In the event Landlord disapproves of Tenant's Architect's Design,
Landlord shall deliver the sum of $257,695.20 to be paid as the
construction is completed to Tenant, and Tenant shall complete the
improvement of the New Demised Premises in accordance with Tenant's
Architect's Design at Tenant's sole cost and expense within sixty (60) days
of such disapproval. The cost of architectural services associated with the
Tenant's Architect's Design shall be included as part of the Relocation
Cost.
5. Section 8 of the Second Amendment is deleted.
6. The terms and conditions of the Lease as modified hereby shall remain in
full force and effect and are hereby ratified, confirmed, and reaffirmed
for all purposes and in all respects. All capitalized words not otherwise
defined herein shall have the meanings as defined in the Lease, the First
Amendment or the Second Amendment.
AGREED AND ACCEPTED
/s/ [illegible] /s/ [illegible]
- ----------------------------------- -----------------------------------
NEPTUNE SYSTEMS, INC. BALDWIN OFFICE ASSOCIATES, L.P.
DATE: 6/25/96 DATE: 6/26/96
<PAGE>
EXPANSION, EXTENSION & RELOCATION
AMENDMENT
- -------------------------------------------------------------------------------
This Amendment dated ___________ to be made part of a certain Lease
("Lease")dated APRIL 3, 1995 between BALDWIN OFFICE ASSOCIATES, L.P. (henceforth
called "Landlord") and NEPTUNE SOFTWARE (henceforth called "Tenant") for OFFICE
space in the BALDWIN TOWER OFFICE BUILDING, EDDYSTONE, PENNSYLVANIA as more
particularly described below:
1. The Demised Premises defined in Section 1 of the Lease changes to 13,980
rentable square feet on the third floor of the Building, known as suite
640.
2. The Term defined in Section 2 of the Lease shall be ten (10) years and two
(2) weeks commencing on July 15, 1996 and ending on July 31, 2006.
3. Schedule "A" Rent Rider changes to the following:
<TABLE>
PERIOD MONTHLY ANNUALLY
<S> <C> <C>
July 15, 1996 - July 31, 1997 $15,757.50 $189,090.00
August 1, 1997 - July 31, 2001 $19,222.50 $230,670.00
August 1, 2001 - July 31, 2006 $20,387.50 $244,650.00
</TABLE>
4. Tenant's fraction defined in Section 4(a)(iii) changes to 13,980/166,250
(i.e. 8.41%)
5. Landlord shall improve the Demised Premises according to the attached plan
drawn by T. E. Hall Architects dated May 28, 1996, Revision #2. The cost of
such buildout which includes a contribution for office furniture of
$27,995.20, a moving allowance of $5,000.00 and an improvement allowance of
$15.00 per rentable square foot ($209,000.00) shall be borne by the
Landlord.
In the event that the actual costs for improvements are greater than
$242,695.50 but less than $271,303.00, the portion which is greater than
$242,695.50 will be paid 50% by the Landlord and 50% by the Tenant. In the
event the actual costs for improvements is greater than $271,303.00, the
portion which is greater than this amount will be paid entirely by the
Tenant.
6. Tenant shall be notified of any unit which becomes available on the second,
third or fourth floor of the Building - prior to such space being leased to
a third party. However, Tenant shall not have a right of first refusal with
regard to such space.
<PAGE>
7. Provided that Tenant is not in default of any of the terms or conditions of
the Lease; as amended hereby, and Landlord is unable to provide additional
square footage in the Building sufficient to accommodate the reasonable
expansion needs of Tenant, Tenant may buy out of this Lease by providing
one year's prior written notice to Landlord, of Tenant's intention to
terminate the Lease and paying, at the time of such notice, an amount equal
to:
A. The cost of improvements, commissions, and free rent period
associated with this Amendment that will remain unamortized
over the balance of the lease term assuming an interest rate
of ten percent (10%) at the time of the notice; plus
B. A Lease Cancellation Payment in accordance with the following
schedule:
<TABLE>
LEASE YEAR DURING WHICH NOTICE IS GIVEN PAYMENT AMOUNT
<S> <C>
1 2 1/2 yrs. rent
2 2 1/4 yrs. rent
3 2 years rent
4 1 3/4 yrs. rent
5 1 1/2 yrs. rent
6 1 1/4 yrs. rent
7 1 years rent
8 3/4 years rent
9 1/2 years rent
10 0 years rent
</TABLE>
8. Upon Tenant's relocation to the third floor, all partition furniture in the
sixth floor space will become the property of the Landlord.
9. All other terms and conditions of the Lease shall remain in full force and
effect.
AGREED AND ACCEPTED
- -------------------------- ------------------------------
NEPTUNE SOFTWARE BALDWIN OFFICE ASSOCIATES, L.P.
Date: / / Date: / /
<PAGE>
BALDWIN OFFICE, INC.
SUBCONTRACT
THIS SUBCONTRACT ("Subcontract") is made the day of , 1995, by
(hereinafter) referred to as the ("Subcontractor") and BALDWIN
OFFICE, INC. (hereinafter referred to as the ("Contractor").
The subcontractor and the Contractor, in consideration of the mutual
promises contained herein, and intending to be legally bound hereby, agree as
follows:
1. THE SUBCONTRACT WORK.
A. The Subcontractor shall furnish all labor and material for
equipment for, and perform all services necessary to complete the Subcontract
Work (as hereinafter described) in connection with the rehabilitation of the
existing Baldwin Towers general office building located in the Borough of
Eddystone, Delaware County, Pennsylvania (hereinafter referred to as the
"Project"). The Subcontract Work shall be performed in accordance with the
Construction Agreement between Baldwin Office, Inc.(hereinafter referred to as
the "Owner") and the Contractor, the exhibits thereto, drawings, plans
specifications and other contract documents referred to therein and dated the
January 22, 1991, all of which documents are hereinafter referred to as the
"Principal Contract" and are incorporated herein by reference. The Subcontract
Work shall consist of the items listed on Exhibit "A" attached hereto.
B. The Subcontractor acknowledges that he has completely reviewed
all drawings, specifications, addenda and other contact documents with regard to
the Project and is satisfied that it can complete all Subcontract Work in
accordance with this Subcontract and the Principal Contract.
C. The Subcontractor shall perform the Subcontract Work in strict
accordance with the Principal Contract as it relates to the Subcontract Work and
assumes all the responsibilities and obligations which the Contractor, by the
Principal Contract, has assumed and agreed to perform for the Owner. Any work
not specifically referred to in this Subcontract but which may be reasonably
inferred therefrom shall also be performed and completed when and as required by
the Subcontractor. To the extent that the Principal Contract imposes standards
that are stricter than those in this Subcontract, the provisions of the
Principal Contract shall be given effect.
D. The Subcontractor acknowledges that it has taken steps reasonably
necessary to ascertain the nature and location of the Subcontract Work, and that
it has investigated and satisfied itself as to the general and local conditions
which can effect the Subcontract Work or its cost, including but not limited to
(1) conditions bearing upon transportation, disposal, handling, and storage of
materials; (2) the availability of labor, water, electric power, and roads; (3)
uncertainties of weather; (4) the confirmation of conditions of the ground; and
(5) the character of equipment and facilities needed preliminary to and during
performance. The Subcontractor also acknowledges that it has satisfied itself
as to the character, quality, and quantity of surface and subsurface materials
or obstacles and assumes all responsibilities for all such conditions. Any
failure of the Subcontractor to take the actions described and acknowledged in
this paragraph will not relieve the Subcontractor from responsibility for
estimating properly the difficult and cost of successfully performing the
Subcontract Work, or for proceeding to successfully perform the Subcontract Work
without additional expense to the Subcontractor. The Contractor assumes no
responsibility for any conclusions or interpretations made the Subcontractor
based on the information made available by the Contractor, any engineer or
Owner. Nor does the Contractor assume the Subcontract Work by any of its
officers or agents before the execution of this Subcontract, unless that
understanding or representation is expressly stated in this subcontract.
<PAGE>
E. The contractor may at any time issue written orders requiring
alterations or additions to the Subcontract Work. The Subcontractor shall not
alter or perform additions to the Subcontract Work except upon receipt of such
written orders.
2. TIME OF PERFORMANCE
A. Time being of the essence hereunder, the Subcontractor shall
begin, prosecute, and complete the Subcontract Work at the times required by the
Contractor.
B. If the Subcontractor shall be delayed in beginning, prosecuting
or completing the Subcontract Work by the act, omission, neglect or default of
the Contractor, the Owner, or any contractor subcontractor performing work upon
the Project, or by any damage caused by fire or other casualty for which the
Subcontractor is not responsible, the time of the completion of the Subcontract
Work shall be extended for such period of time as the time lost by reason of any
of the aforesaid causes. Such an extension shall be the Subcontractor's sole
and exclusive remedy for such delay and the Contractor shall not be responsible
for any increased costs, charges, expenses or damages of any kind resulting from
such delay.
C. No allowance of an extension of the time for performance of the
Subcontract Work will be granted, unless a claim therefore is presented to the
Contractor in writing within forty-eight hours of the occurrence of the cause
hereof.
D. If the contractor shall at any time be behind in the Subcontract
Work, or if in the opinion of the Contractor, the Subcontractor is delaying the
progress of the work necessary to complete the Project, then and in either such
event, if requested by the Contractor, the Subcontractor, at its sole cost and
expense, shall perform such overtime work as may be necessary to keep abreast
with the general progress of the work at the Project, and/or to complete the
Subcontract Work at the time required by the Contractor and Subcontractor is set
forth on Exhibit "A" together with the description of the Subcontract Work.
3. PAYMENT
A. The space Contractor shall pay the Subcontractor for the
performance of the Subcontract Work the Sum of
($ )(hereinafter referred to as the "Subcontract Price"), subject
to such additions and deductions for alterations or additions to the
Subcontract Work as may be ordered by the Contractor. The Subcontract Price
shall be paid to the Subcontractor as hereinafter provided.
B. Before beginning the Subcontract Work, the Subcontract shall
prepare and submit to the Contractor for approval an itemized breakdown of the
Subcontract Price, allocating amounts thereof to the several items of work and
material of the Subcontract Work conforming to the breakdown of items designated
by the Contractor, which itemized breakdown, upon approval by the Contractor,
shall be used as the basis for all requisitions for payment submitted by the
Subcontractor to the Contractor.
C. The Subcontractor, unless otherwise directed by the Contractor,
shall submit to the Contractor on or about the tenth (10th) day of each calendar
month a requisition containing an itemized estimate of the Subcontract Work done
and materials furnished and incorporated into the Project during the recent
calendar month which shall be in such form and be supported by such information,
certificates and documents as the contractor shall require. The amount to which
the Subcontractor shall be entitled upon any such monthly requisition shall be
the amount approved by the Owner's construction lender.
2
<PAGE>
D. It is the intent of the Contractor and the Subcontract that:
(1) payments to the Subcontractor shall be made from a fund, the sole source
of which shall be funds paid by the Owner to the Contractor, and (2) the risk
of the Owner's insolvency and/or failure to make such payments shall be borne
by the Subcontractor. With the foregoing in mind, the Contractor and
Subcontractor agree that the Contractor shall pay to the Subcontractor within
five (5) days after receipt of the corresponding payment from the Owner,
ninety percent (90%) of the amount approved by the Owner's construction
lender.
E. The balance due or final payment to the Subcontractor shall be
paid by the Contractor to the Subcontractor within five (5) days after receipt
of final payment from the Owner for the Subcontract Work. Before issuance of the
final payment, the Subcontractor shall submit evidence satisfactory to the
Contractor that all payrolls, bills for materials and equipment, and all known
indebtedness connected with the Subcontractor's Work have been satisfied.
F. The Subcontractor agrees to and does hereby accept full and
exclusive liability for the payment of any and all contributions, taxes or
insurance of any description whatsoever, now or hereafter imposed by any
authority, which are measured by the wages, salaries or other remuneration's
paid to persons employed by the Subcontractor on work performed pursuant to the
terms of this Subcontract. Furthermore, the Subcontractor agrees to and does
hereby accept full and exclusive liability for payment of any all personal
property taxes, inventory taxes, sales taxes, use taxes, excise taxes, fuel
taxes, transportation taxes, franchise taxes, and all other taxes and/or tax
assessments in any manner whatsoever relating to the materials, supplies, tools,
machinery, equipment and plant which may be purchased, acquired, rented or used
by Subcontractor relating to all work performed under this Subcontract as is or
may be imposed or assessed by any Federal, State, Local, or other political
subdivision or agency. Notwithstanding the foregoing, the Contractor shall have
the right, but not the obligation to pay directly to anyone performing any part
of the Subcontract Work any amount due for labor, materials, equipment or
services supplied in connection with the performance of the Subcontract Work. In
such event, the Contractor shall also have the right but not the obligation to
pay directly to any tax authority or agency any tax or other payment or charge
which the Contractor would have been required to pay or to have withheld and
pay. All such payments made by the Contractor shall be credited against the
payment then due the Subcontractor. This provision is not intended to and shall
not create any third party beneficiary rights in any third party nor shall it
impose any obligation upon the Contractor to supervise payments due by the
Subcontractor to any of its subcontractors, materialmen, laborers, suppliers or
taxing authorities.
G. The Contractor may deduct from amounts due or to become due to
the Subcontractor, any sums due or to become due to the Contractor from the
Subcontractor whether or not said sums are in any way related to this
Subcontract or Project. Contractor may apply such deducted funds to any account
related or unrelated to this Subcontract or Project, wherein the obligations of
the Subcontractor have not been discharged and wherein the Contractor's
interests are directly or indirectly involved.
If the Subcontractor is in default of, or breaches or fails to
comply with any provision, covenant or requirement of this Subcontract; or
any person assets, or indicates that he will assert, any lien, claim, demand
or charge against the Project or land or improvements or funds related to the
Project, or against the Owner or the Contractor, arising from Subcontractor's
performance of this Subcontract, the Contractor may, at this option, withhold
out of any payments due or to become due to the Subcontractor such amounts as
the Contractor, in its sole discretion, may deem sufficient to completely
protect and indemnify the Contractor and the Owner from any and all loss,
damage and/or expense therefore, including attorney's fees and litigation
costs, until the condition requiring such measures has been remedied by the
Subcontractor. If the offending condition is not remedied by the
Subcontractor within a reasonable period of time, the Contractor may, in its
discretion, determine as being in the best interest of itself and/or the
Owner. If the Contractor is compelled to expend monies in defending,
discharging or otherwise disposing of any claim or lien or other demand in
excess of retained or withheld sums, the Subcontractor shall, upon demand,
reimburse the Contractor for the excess amount so expended, including
reasonable attorney fees and costs incurred by Contractor incident to such
defense, discharge or disposition and/or incident to Contractor's collection
from Subcontractor of such excess.
3
<PAGE>
H. Payments made hereunder shall not be evidence of the acceptance
of performance of this Subcontract, either wholly or in part, and no payment
shall be construed to be an acceptance of the Subcontract Work, or any part
thereof. Acceptance by the Subcontractor of the final payment hereunder shall be
deemed to be a complete and unconditional release of any and all existing or
future claims or demands by the Subcontractor against the Contractor, known or
unknown, hereunder or in connection herewith, whatever they may be or howsoever
they may arise, as well as for every action and neglect of the Contractor and
any person or firm for whom the Contractor shall or may be deemed responsible.
I. The Subcontract Price includes all federal, state, municipal and
local taxes including but not limited to sales and or use taxes applicable to
the performance of the Subcontract Work.
4. INSURANCE
A. The Subcontractor, before beginning the Subcontract Work, shall
procure from such insurance company or companies and/or its or their affiliated
companies as may be approved by the Contractor, policies with such limits of
liability as the Contractor shall deem necessary to protect the Contractor from
claims under Workmen's Compensation, Public Liability, Property Damage, and such
other insurance or coverage as required by the Contractor or the Principal
Contract, including without limitation claims for damages for personal injury,
including death, which may arise from operations under this Subcontract carried
on either by the Subcontractor or by any of its subcontractors. The
Subcontractor shall, by making all payments of the premiums due thereon,
maintain said insurance policies in full force and effect until such time as all
the Subcontract Work shall have been entirely completely and accepted in
accordance with the Principal Contract. Certificates evidencing that such
required insurance is in with the Principal Contract. Certificates evidencing
that such required insurance is in effect shall be furnished by the
Subcontractor to the Contractor promptly after such insurance has been procured.
Such certificates shall not be altered, amended or terminated until the
insurance company which has issued said policy has given the Contractor notice
thereof and thirty (30) days have elapsed from the date of Contractor's receipt
of said notice.
B. In case of the failure of the Subcontractor to provide or
maintain such insurance and policies in full force and effect as aforesaid,
the Subcontractor hereby authorizes the Contractor, without any notice of its
intention to do so, to provide such required policies of insurance and other
coverage, on behalf for the account of the Subcontractor and to pay any and
all premiums due thereon, and to deduct the aggregate amount of such premiums
so paid by the Contractor from any monies, which may be due or thereafter
become due to the Subcontractor under this Subcontract.
C. This Subcontractor, by compliance with the foregoing requirements
as to insurance, shall not be relieved from any liability whatsoever imposed by
the provisions of this Subcontract, the Principal Contract or otherwise.
5. INDEMNIFICATIONS.
A. The Subcontractor hereby agrees to indemnify and hold harmless
the Contractor and its officer's directors, agents, representatives, employees,
successors and assigns from and against any and all claims, loss, damage, costs,
suits, actions, causes of action, expenses and liability of any kind which it or
any of them may incur, suffer, sustain or be required to pay by reason of the
injury or death of any person or the damage to any property whatsoever, caused
or alleged to have been caused by any act or omission of the Subcontractor or
any of its suppliers or subcontractors, or the employees, agents or
representatives of the Subcontractor or any of its suppliers or subcontractors,
arising out of, or in any manner connected with the performance of the
Subcontract Work.
B. The Subcontractor agrees to indemnify and hold harmless the
Contractor from and against any and all actions, suits, proceedings, claims
or demands arising out of, or alleged to have arisen out of the performance
of, or the operations under this Subcontract. If any action, suit or
proceeding is instituted against
4
<PAGE>
the Contractor based upon any liability or defect arising out of or alleged
to have risen out of the performance or the operations under this Subcontract,
the Contractor shall, within thirty (30) days, give notice in writing thereof
to the Subcontractor. Upon the receipt of such notice, the Subcontractor, at
its own cost and expense, shall defend against such action, suit proceeding,
claim, counterclaim, set-off, recoupment or other defense and take all such
steps as the Contractor may deem necessary to prevent the obtaining of
Judgment against or the successful maintenance of such claim, counterclaim,
set-off, recoupment or other defense against the Contractor. Notwithstanding
the foregoing, the Contractor shall be permitted to be represented by its own
counsel should Contractor so desire.
C. If any action, suit, proceeding, claim or demand is made against
the Contractor, its officers, directors, agents, representatives, employees,
successors or assigns against which the Subcontractor has herein agreed to
indemnify the Contractor, then the Contractor may withhold from any payment due
or hereafter to become due to the Subcontractor hereunder, an amount sufficient
in its sole judgment to protect and indemnify it from such action, suit,
proceeding, claim or demand, together with legal fees ad disbursements.
6. ADDITIONAL OBLIGATIONS OF THE SUBCONTRACTOR
A. The Subcontractor shall:
(1) provide and supply, in the performance of the Subcontract Work
a sufficient number of properly skilled and other workmen and whatever
material, tools, equipment, machines, services, storage sheds, workshops,
offices, other temporary structures and other facilities which shall be
necessary to the performance of the Subcontract Work. The Subcontractor
agrees that the Contractor's equipment shall be available to the
Subcontractor only at the Contractor's discretion and on mutually agreeable
terms. All equipment, materials and articles incorporated in the Subcontract
Work shall be new and of the most suitable grade for the purpose intended,
otherwise specifically provided in this Subcontract or the contract documents
for the Project. References in the contract, documents for the Project to
equipment, material, articles, or patented processes by trade, make, or
catalog number shall be regarded as establishing a standard of quality. The
Subcontractor at its option, may use any equipment, material, article or
process that, in the sole judgment of the Contractor, is equal to that named
in the Specifications provided in the Principal Contract. The Contractor may
withhold such approval for any reason.
(2) obtain the Contractor's approval of the machinery and mechanical
and other equipment to be incorporated into the Subcontract Work. Machinery,
equipment, material and articles that are not approved shall be installed or
used at the risk of subsequent rejection.
(3) give all notices and comply with all laws, ordinances, rules and
regulations and orders of any public authority bearing on the performance of the
Subcontract Work. The Subcontractor shall secure and pay for permits and
governmental fees, licenses and inspections necessary for the proper execution
and completion of the Subcontract Work. The Subcontractor shall also comply
with federal, state and local tax laws, social security acts, unemployment
compensation acts and worker's or workmen's compensation acts insofar as
applicable to the performance of this Subcontract.
5
<PAGE>
(4) within twenty-four hours after receiving written notice from
the Contractor to that effect, proceed to remove from the Project site all
materials condemned by the Contractor or the Owner's construction lender,
whether worked or unworked, and to take down all portions of the Subcontract
Work which the Contractor or the Owner's construction lender shall by like
written notice condemn as unsound or improper, or which in any way fails to
conform to the drawings or specifications for the Project. The Subcontractor
shall make good all work damaged or destroyed thereby.
(5) at all times keep the Project site free from accumulation of
waste material and rubbish resulting from operations under this Subcontract
and shall at completion clean up and remove from the Project site all rubbish
and debris resulting from the performance of the Subcontract Work.
(6) coordinate the Subcontract Work with all subcontractors
provided however that the Contractor may, at its election, control and direct
such coordination. In carrying out its Subcontract Work the Subcontractor
shall take all necessary precautions to protect the finished work of other
trades from damage caused by its operation.
(7) not employ any persons in the performance of this Subcontract
whose employment might be reasonably objected by the Contractor or Owner. In
the interest of harmonious relations and to facilitate the orderly and
efficient progress of the work on this Project, the Subcontractor hereby
agrees to promptly remove from the Project any supervisor, employee, workman
or subcontractor to whom the Contractor reasonably objects and such person or
party shall not again be employed in an portion of the Subcontract Work.
(8) abide by the safety rules and regulations established by the
Contractor or promulgated by any federal, state or local government body or
agency with appropriate jurisdiction.
B. The Subcontractor shall not sell, let, assign or transfer this
Subcontract, or any part of the Subcontract Work, or any balances or sums of
money due or to become due and payable hereunder, without the written consent
of the Contractor which consent may be withheld by the Contractor for any
reason or no reason.
C. In the event of any failure of the Subcontractor to complete the
Subcontract Work within the required time or upon the dates set forth on
Exhibit "A", the Subcontractor shall pay to the Contractor such damages as
the Contractor may sustain by reason of any such delay directly or indirectly
attributable to or caused by the Subcontractor, including but not limited to,
recovery of the Contractor's overhead and expense related to managing and
supervising the Principal Contract work during or equal to any period of time
resulting from such delay of the Subcontractor; and the Subcontractor further
agrees that neither the payment of such damages nor any liability incurred
for the payment of such damages shall release the Subcontractor from its
obligation to otherwise fully perform this Subcontract; provided however,
that the Contractor, in its sole discretion, may in addition to and not in
lieu of any foregoing right or remedy immediately and without further notice
to the Subcontractor terminate this Subcontract. The Subcontractor further
agrees that the Contractor may set-off against any sums due from the
Contractor to the Subcontractor for work performed, all damages or
reimbursements payable from the Subcontractor to the Contractor pursuant to
the terms of this Agreement.
6
<PAGE>
D. If at any time the Contractor in its sole discretion determines
that the Subcontractor's financial condition has become impaired, unstable or
unsatisfactory, the Contractor shall have the option to immediately cancel
this Subcontract or to initiate such other action as the Contractor may, in
its sole discretion, deem necessary for the protection or preservation of its
interests and/or the prevention of delay in the efficient and or delay
progress of work on the Project, including but not limited to that portion of
such work to be performed by Subcontractor hereunder. In the event of such
cancellation, the rights of the Contractor shall be the same as if the
Subcontractor has willfully refused to further perform this Subcontract.
E. It is acknowledged that the Subcontract Work provided for in this
Subcontract constitutes only a part of the work being performed on this
Project for the Owner by the Contractor and other subcontractors. The
Subcontractor therefore agrees to perform the Subcontract Work in such a
manner that it will not injure or damage any other work performed by the
Contractor or any other subcontractor, and Subcontractor further agrees:
(1) to furnish continuous and effective protection at all times
for its work in place and all materials stored for use under this Subcontract
and to bear and be solely liable for all loss and/or damage of any kind to it
in connection with said work and [ILLEGIBLE] liable for all loss and/or
damage of any kind to or in connection with said work and materials at any
time [ILLEGIBLE] final completion and acceptance thereof unless said loss or
damage is caused solely by the negligence [ILLEGIBLE] and is subject to
recovery [ILLEGIBLE] applicable insurance policies as may be in effect.
(2) to furnish [ILLEGIBLE] be required to adequately protect the
work in place and the property of the [ILLEGIBLE] other subcontractors from
damage or injury as a result of its execution of this [ILLEGIBLE] from its
operations hereunder.
(3) to report to [ILLEGIBLE] any damage to its property or work
in place, describing such damage and circumstances [ILLEGIBLE] available, an
estimate of the cost of restoration and identification of the [ILLEGIBLE]
(4) to repay or [ILLEGIBLE] any damage or injury to the work or
property of the Owner, the Contractor and [ILLEGIBLE] to the work or the
property of the Owner, the Contractor and other [ILLEGIBLE] by or arising
from the performance of its subcontract work, including the cost of
replacing, [ILLEGIBLE] removed or displaced in the course of correcting or
repairing work [ILLEGIBLE] rejected by the Owner or the Owner's construction
lender or which are [ILLEGIBLE] of this [ILLEGIBLE].
F. Whenever it may [ILLEGIBLE] Contractor to [ILLEGIBLE] Contractor
shall be permitted to occupy and/or use any [ILLEGIBLE] of the Subcontract
Work which has been either partially or fully completed by the Subcontractor
before [ILLEGIBLE] inspection and acceptance thereof by the Owner, but such
use and/or occupation shall not relieve the Subcontractor of its guarantee of
said work and materials nor of its obligation to make good at its own expense
any defect in materials and workmanship which may occur or develop prior to
the Contractor's release from responsibility to the Owner, provided, however,
the Subcontractor shall not be responsible for the maintenance of such
portion of work as may be used and/or occupied by the Contractor, not for
any damage thereto that is due to or caused by the Contractor during such
period of use.
7. MECHANICS' LIEN AND CLAIMS.
A. The Subcontractor any person or persons acting through or
under the Subcontractor shall not file or maintain any mechanics' claims or
liens against the Project, or any of the building included in the he Project,
or the ground which the Subcontract Work is to be performed, for or on
account of any work done or materials furnished by the Subcontractor and any
such person or persons as aforesaid for the Subcontract Work under this
Subcontract, or otherwise. The Subcontractor, for and on behalf of the
Subcontractor any other person or persons as aforesaid, hereby expressly
waive and relinquish the right to have, file or maintain any mechanics'
7
<PAGE>
claim or lien against the Project, the buildings included in the Project and
the ground upon which the Subcontract Work is to be performed, or any of
them, which waiver shall be and hereby is made an independent covenant and
shall operate and be effective also with respect to work and labor done and
materials furnished under any supplemental agreement between the Contractor
and Subcontractor, or any agreement for extra work done, performed, furnished
or supplied in and about the Project, although not therein referred to as
work and labor performed and materials furnished under this Subcontract.
Upon the execution of this Subcontract, the Subcontractor shall properly
execute and deliver to the Contractor a waiver of liens in the form supplied
to it by the Contractor.
B. The Subcontractor when required by the Contractor as a
condition precedent to the making of the final payment hereunder, shall
furnish to the Contractor a full and complete release and discharge, in a form
satisfactory to the Contractor, of all liens, claims, and demands arising out
of or relation to the Subcontract Work and any and all materials furnished,
work done and equipment used in connection therewith. Furthermore, if, prior
to final payment, the Owner or any party providing financing for the Project
requests a release of liens from the Subcontractor, the Subcontractor shall
execute and deliver such release of lien in a form satisfactory to the Owner
or such other party.
8. DEFAULT.
A. If the Subcontractor fails to comply, or becomes unable to
comply, or with reasonable probability (as determined solely by Contractor)
will become unable to comply with any of the provisions of this Subcontract;
or if the Subcontractor fails at any time to supply a sufficient number of
properly skilled workmen or sufficient supplies, materials, machines,
equipment or plant of proper quality or fails in any respect to prosecute the
Subcontract Work with promptness and diligence, or cause by any action or
omission a stoppage of, delay in, or interference with the work of the
Contractor or other subcontractors of the Contractor; or if the Subcontractor
abandons the Subcontract Work, or any part thereof, the Contractor may, in
addition to and without prejudice to any other right or remedy, terminate
this Subcontract and immediately without notice to Subcontractor take over
and complete the performance of the Subcontract Work to have been performed
hereunder at the expense of the Subcontractor, or the Contractor may, without
terminating this Subcontract taking over the Subcontract Work, immediately
and without notice to the Subcontractor, furnish the necessary materials and
labor by itself or through others, to remedy the situation, all at the
expense of the Subcontractor. The parties hereto further agree that any of
the following shall, without limitation, at the option of the Contractor,
constitute inability to comply with the provisions of this Subcontract for
purposes of this Article: (a) the filing of a petition in bankruptcy or a
petition for the appointment of a receiver by or against the Subcontractor;
or (b) the insolvency of the Subcontractor or its inability to meet its debts
as they mature; or (c) the establishment of a committee of creditors
involving the Subcontractor's business or assets, or the making of an
assignment for the benefit of Subcontractor's creditors, or (d) the failure
or refusal of the Subcontractor to respond by written reply to or by
satisfactory compliance with, any written order or notice duly issued by the
Contractor.
B. If the Subcontractor shall be adjudged bankrupt, or make a
general assignment for the benefit of creditors, or a Receiver be appointed
on account of the insolvency of the Subcontractor, or if the Subcontractor at
any time refuses or neglects to supply a sufficient number of properly
skilled and other workmen and equipment or an adequate amount of materials of
the proper quality, as required by the Contractor, or fails to make prompt
payment for materials, labor or equipment furnished and supplied in the
performance of the Subcontract Work, or fails to submit to the Contractor
satisfactory evidence of the payment by the Subcontractor of all indebtedness
incurred for material labor and equipment included in any previous monthly
statement or fails in the performance of any of the agreements herein
contained, the Contractor has the right, without prejudice to any other right
or remedy available to the Contractor on forty-eight (48) hours written
notice to the Subcontractor, either to provide any such labor, materials or
equipment and deduct the cost thereof from any payments then or thereafter
due to the Subcontractor, or to terminate the employment of the Subcontractor
for the Subcontract Work and to enter upon the Project site and take
possession, for the purpose of completing the Subcontract Work, of all
materials, tools and appliances thereon and to employ any other person or
persons to finish the Subcontract
8
<PAGE>
Work and to provide the materials therefor; and in case of such
discontinuance of the employment of the Subcontractor, the Subcontractor
shall not be entitled to receive any further payment under this Subcontract.
After the work under the principal contract has been finished and accepted, if
the expense incurred by the Contractor in finishing the Subcontract Work exceeds
the unpaid balance of the amount to be paid under this Subcontract, the
Subcontractor shall pay the difference to the Contractor.
9. MISCELLANEOUS
A. The waiver by the Contractor of any breach or default of this
Subcontract by the Subcontractor shall not be construed as a waiver of any other
breach or default of the same or any other terms, conditions, provisions or
covenants of this or any other agreement between the parties hereto. Forbearance
from demanding strict compliance with any term or provision of this Subcontract
or any other agreement between the parties hereto shall not operate as a waiver
and shall not prevent the Contractor from subsequently demanding strict
compliance therewith.
B. Disputes which may arise hereunder between the Contractor and the
Subcontractor shall not interfere with the diligent performance by the
Subcontractor of the Subcontract Work.
C. The laws of the Commonwealth of Pennsylvania shall be applicable
to this Subcontract and shall be used to decide any dispute related to this
Subcontract.
D. The Subcontractor agrees that the sole and exclusive venue for
any suit brought by it against the Contractor shall be Delaware County,
Pennsylvania.
E. The Contractor and the Subcontractor, and their heirs, executors,
administrators, successors and assigns shall be bound by and shall fully perform
the covenants herein contained.
F. Any and all notices given hereunder shall be in writing and shall
be sent by certified mail, return receipt requested, addressed as follows:
If to Contractor:
BALDWIN OFFICE, INC.
555 NORTH LANE, SUITE # 6101
CONSHOHOCKEN, PA 19428
If to Subcontractor:
______________________________
______________________________
______________________________
9
<PAGE>
or to such other address or addresses as either of the parties hereto shall
notify the other in accordance with the terms of this Agreement.
CONTRACTOR
BALDWIN OFFICE, INC.
ATTEST:__________________ BY: ____________________
SUBCONTRACTOR
ATTEST: ________________ BY: ____________________
10
<PAGE>
GUARANTEE
The undersigned hereby jointly and severally guarantee to the Contractor
the performance of all of the Subcontractor's obligations at the time and in the
manner provided for in the foregoing Subcontract including, but not limited to,
payment of any sums which the Subcontractor may be required to pay the
Contractor because of the Subcontractor's breach of the foregoing Subcontract.
The undersigned hereby irrevocably authorize and empower any attorney or
attorneys or the Prothonotary or Clerk of the Court of record in the
Commonwealth of Pennsylvania or elsewhere if the Subcontractor becomes obligated
to pay any sum to the Contractor under the terms of the foregoing Subcontract
and fails or refuses to do so within ten (10) days of receipt of notice of
demand for such payment to appear for and to confess judgment therein against
the undersigned for the unpaid amount due the Contractor, together with
interest at the rate of twelve percent (12%) per annum from the date of judgment
until actual payment is obtained by the Contractor. The undersigned hereby
waivers and relinquishes all errors, defects and imperfections in the entry of
judgment as aforesaid, or in any proceeding pursuant thereto. If a copy hereof,
verified by affidavit, shall be filed in said proceedings, it shall not be
necessary to file the original as a warrant of attorney. The Warrant of Attorney
to Confess Judgment hereunder shall not be extinguished by one or more exercises
thereof, but may be exercised from time to time until all of the Subcontractor's
obligations to the Contractor under the foregoing Subcontract are paid in full.
Witnessed by:
____________________________________ __________________________________(SEAL)
____________________________________ __________________________________(SEAL)
11
<PAGE>
EXHIBIT "A"
DESCRIPTION OF SUBCONTRACT WORK AND
DATE FOR COMPLETION OF THE SUBCONTRACT WORK
A. DATE OF COMPLETION.
The Subcontractor shall complete the Subcontract Work on or before the
31st day of August, 1995.
B. The Subcontract Work shall consist of the following:
12
<PAGE>
IN THE COURT OF COMMON PLEAS
DELAWARE COUNTY, PENNSYLVANIA
BALDWIN OFFICE ASSOCIATES, L. P. :
A Pennsylvania Limited Partnership :
:
Owner-Plaintiff :
v. :
:
- ----------------------------------- :
Subcontractor-Defendant :
:
AND :
- ----------------------------------- :
Subcontractor-Plaintiff :
v. :
:
BALDWIN OFFICE ASSOCIATES, L. P. :
A Pennsylvania Limited Partnership :
:
Owner-Defendant :
WAIVER OF LIENS
THIS WAIVER OF LIENS ("Waiver") is made this _______ day of______________,
1995 by _________________ (the "Subcontractor") in favor of BALDWIN OFFICE
ASSOCIATES, L. P. (the "Owner").
WHEREAS, the Owner is the legal owner of the real estate located in the
BOROUGH OF EDDYSTONE, with an address of 1510 CHESTER PIKE, EDDYSTONE, PA
(the "Property"); and
WHEREAS, by an agreement dated July 7, 1995 ("Agreement"), Owner and Baldwin
Office, Inc. ("General Contractor") contracted for the construction and
completion of certain improvements on the Property as more fully described in
the Agreement ("Improvements"); and
WHEREAS, by the terms of the Agreement, General Contractor has agreed that no
mechanics or materialman's lien or claim would be filed or maintained on the
Property or any part thereof, either by itself or anyone else for or on
account of any work, labor, or materials supplied in the performance of the
Agreement, or under any supplemental contract for extra work, in the
construction or completion of the Improvements on the Property; and
WHEREAS, prior to the date of this Waiver, General Contractor has executed
and delivered to Owner a waiver of liens similar to this Waiver; and
WHEREAS, the Subcontractor excecuted a contract with the General Contractor
(the "Contract") to provide labor, work, materials and/or supplies at the
Property, and the Contract requires the Subcontractor to execute a waiver of
liens.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Contract, the parties hereto, intending to be
legally bound hereby, agree as follows:
13
<PAGE>
1. The Subcontractor, for itself and anyone else acting or claiming
through or under it, hereby waives and relinquished all right to file a
mechanics' lien, claim or notice of intention to file any lien or claim, and
hereby covenants, promises and agrees that no mechanics' lien or claim or
other lien or claim of any kind whatsoever shall be filed or maintained
against the Improvements or the estate of title of Owner in the Property or
curtilage or curtilages appurtenant thereto, by or in the name of
Subcontractor or any subcontractor, materialmen or laborers for work done or
materials furnished under the Contract or by any of them for and about the
Improvements or the Property or any part thereof, or on credit thereof, so
that there shall not be any legal or lawful claim of any kind whatever
against the Owner for any work done or labor or materials furnished under the
Contract for and about the erection, construction and completion of the
Improvements, or under any contract for extra work, or for work supplemental
thereto, or otherwise.
2. This Waiver waiving the right of lien shall be an independent covenant
and shall operate and be effective as well with respect to work done and
materials furnished under any supplemental contract for extra work in the
erection, construction and completion of the Improvements as to any work and
labor done and materials furnished under the Contract.
3. In order to give the Owner full power and authority to protect
themselves, the Improvements, the Property, the estate or title of the Owner
therein, and the curtilage or curtilages appurtenant thereto against any and all
liens or claims filed by the Subcontractor or anyone acting under or through him
in violation of the foregoing covenant, the Commonwealth of Pennsylvania, to
appear as attorney for it, them, or any of them, in any such Court and in its or
their name or names, (a) to the extent permitted by law, mark satisfied of
record at the cost and expense of the Subcontractor or of any subcontractor,
materialman, any and all claim or claims, lien or liens, filed in violation of
the foregoing covenant, or (b) cause to be filed and served in the name of
Subcontractor or any subcontractor or anyone else acting under or through if any
pleading or instrument, or any amendment to any pleasing or instrument
previously filed by it or them, to incorporate therein, as part of the record,
the waiver contained in this instrument, and for such act or acts, a copy of
this executed instrument shall be good and sufficient warrant and authority, and
a reference to the court, term and number in which and where this Waiver stall
have been filed shall be sufficient exhibit of the authority herein contained to
warrant such action, and the Subcontractor does hereby remise, release and
quitclaim all rights and all manner of errors, defects and imperfections
whatsoever in entering such satisfaction or in filing such pleading, instrument
or amendment, or in any way concerning them.
4. The Subcontractor hereby warrants that no work or labor of whatsoever
kind or nature, has as yet been done and that no materials or services
whatsoever have as yet been furnished by anyone, under, towards or in connection
with the execution or performance of said Contract.
5. This Waiver shall bind the Subcontractor and its successors and
assigns.
IN WITNESS WHEREOF, the Subcontractor has caused this Waiver of Liens to be
duly executed the day and year first written above written.
CORPORATE SUBCONTRACTOR
ATTEST ---------------------------
By:
- ---------------------- -----------------------
Its:
-----------------------
[CORPORATE SEAL]
WITNESS: INDIVIDUAL SUBCONTRACTOR
(SEAL)
- --------------------------- ---------------------------
PRINTED INDIVIDUAL SUBCONTRACTOR NAME
14
<PAGE>
FOURTH AMENDMENT TO LEASE
- -------------------------------------------------------------------------------
THIS FOURTH AMENDMENT TO LEASE ("FOURTH AMENDMENT") is made this 29 day of
October, 1996 between BALDWIN OFFICE ASSOCIATES, L.P. ("LANDLORD") and
NEPTUNE SYSTEMS, INC. ("TENANT").
BACKGROUND
A. Landlord and Tenant are parties to that certain Lease ("LEASE") dated April
3, 1995, pursuant to which Landlord leased to Tenant approximately 5,366
square feet of space (the "ORIGINAL LEASED PREMISES") on the sixth floor of
the building ("BUILDING") known as Baldwin Tower located at 1510 Chester
Pike, Eddystone, Pennsylvania. The Lease was amended pursuant to that
certain Lease Amendment dated July 6, 1995 (the "FIRST AMENDMENT") and was
further amended pursuant to that certain Amendment to Lease dated June 17,
1996 (the "SECOND AMENDMENT"), and was further amended pursuant to that
certain Amendment to Lease dated June 26, 1996 (the "THIRD AMENDMENT").
B. The Second Amendment expanded and relocated the Demised Premises to 13,980
square feet on the third floor of the Building which was referred to as the
"NEW DEMISED PREMISES", and the Tenant relinquished its rights in the
Original Leased Premises.
C. The Third Amendment includes the Originals Leased Premises with the New
Demised Premises as part of Tenant's leasehold interest under the Lease for
a total size of the Demised Premises of 19,346 sq. ft.
D. The parties desire to amend the Lease to revise the construction procedures
for the New Demised Premises and the payment for those improvements.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Tenant will hire a third party (the "TENANT'S GENERAL CONTRACTOR") to
oversee the construction of the New Demised Premises to be built in
accordance with the plans and specifications drawn by Collaborative Design
dated September 20, 1996. Landlord will not be responsible for any portion
of the construction or any timing delays that may occur. Prior to any work
being commenced, Tenant's General Contractor and any subcontractors they
may employ must sign a Waiver of Liens for the Landlord and deliver
certificates of insurance confirming Tenant's General Contractor is
adequately insured in Landlords reasonable opinion. All work must be
coordinated with the building manager.
2. Landlord shall pay Tenant's General Contractor for work completed, on a
monthly basis, an amount not to exceed the Relocation Cost plus an
additional Seventy Five Thousand Dollars ($75,000.00) for a total of
$332,695.20. Landlord may retain ten percent of this amount until all work
is completed and final inspection by proper authorities have been made and
passed. Tenant's General Contractor must submit completed draw forms "AIA
G702" and "AIA G703" to Landlord in order to receive payment.
<PAGE>
3. Tenant agrees to pay, as additional rent, One Thousand Ninety Dollars and
Forty Cents per month ($1,090.40) for the remainder of the Lease Term as
repayment for Landlord's additional contribution of $75,000.00, plus 12%
interest amortized over the balance of the Lease Term.
4. Tenant's General Contractor is obligated to pay all subcontractors for work
completed, and Landlord shall have the right to pay all subcontractors
directly for work performed in lieu of Tenant's General Contractor.
5. Tenant's Fraction noted in the Lease shall be 19,346/166,250 (i.e. 11.6%).
6. The Term of the Lease shall end on July 31, 2006 unless sooner terminated
as provided in the Lease and/or Third Amendment.
7. The Schedule "A" Rent Rider to the Lease and Lease Amendment dated July 6,
1995, Second Amendment dated June 17, 1996 and Third Amendment dated June
26, 1996 changes to the following:
<TABLE>
<CAPTION>
PERIOD MONTHLY ANNUALLY
------ ------- --------
<S> <C> <C>
November 1, 1996 - July 31, 1997 $23,555.40 $282,664.80
August 1, 1997 - July 31, 2001 $27,020.40 $324,244.80
August 1, 2001 - July 31, 2006 $28,632.57 $343,590.84
</TABLE>
This schedule includes the additional rent noted in section 3 of this
Fourth Amendment.
8. The terms and conditions of the Lease as modified hereby shall remain in
full force and effect and are hereby ratified, confirmed, and reaffirmed
for all purposes and in all respects. All capitalized words not otherwise
defined herein shall have the meanings as defined in the Lease, the First
Amendment, the Second Amendment or the Third Amendment.
9. Landlord shall guarantee that existing HVAC (heating and cooling) units
supply enough tonnage to properly cool the Premises to a maximum of 80
degrees Fahrenheit. In the event that the HVAC units prove inadequate to
the task (as determined by and independent engineering consultant selected
jointly by Landlord and Tenant), Landlord shall, at Landlord's expense
provide additional cooling units to achieve the 80 degree threshold.
AGREED AND ACCEPTED
/s/ [illegible] /s/ [illegible]
- ----------------------------------- -----------------------------------
NEPTUNE SYSTEMS, INC. BALDWIN OFFICE ASSOCIATES, L.P.
DATE: 10/29/96 DATE: 10/23/96
<PAGE>
EXPANSION, EXTENSION & RELOCATION
AMENDMENT
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This Amendment dated ___________ to be made part of a certain Lease ("LEASE")
dated APRIL 3, 1995 between BALDWIN OFFICE ASSOCIATES, L.P. (henceforth called
"Landlord") and NEPTUNE SOFTWARE (henceforth called "Tenant") for OFFICE space
in the BALDWIN TOWER OFFICE BUILDING, EDDYSTONE, PENNSYLVANIA as more
particularly described below:
1. The Demised Premises defined in Section 1 of the Lease changes to 13,980
rentable square feet on the third floor of the Building, known as suite
640.
2. The Term defined in Section 2 of the Lease shall be ten (10) years and two
weeks commencing on July 15, 1996 and ending on July 31, 2006.
3. Schedule "A" Rent Rider changes to the following:
<TABLE>
<CAPTION>
PERIOD MONTHLY ANNUALLY
------ ------- --------
<S> <C> <C>
July 15, 1996 - July 31, 1997 $15,757.50 $189,090.00
August 1, 1997- July 31, 2001 $19,222.50 $230,670.00
August 1, 2001 - July 31, 2006 $20,387.50 $244,650.00
</TABLE>
4. Tenant's fraction defined in Section 4(a)(iii) changes to 13,980/166,250
(i.e. 8.41%)
5. Landlord shall improve the Demised Premises according to the attached plan
drawn by T. E. Hall Architects dated May 28, 1996, Revision #2. The cost of
such buildout which includes a contribution for office furniture of
$27,995.20, a moving allowance of $5,000.00 and an improvement allowance of
$15.00 per rentable square foot ($209,000.00) shall be borne by the
Landlord.
In the event that the actual costs for improvements are greater than
$242,695.50 but less than $271,303.00, the portion which is greater than
$242,695.50 will be paid 50% by the Landlord and 50% by the Tenant. In the
event the actual costs for improvements is greater than $271,303.00, the
portion which is greater than this amount will be paid entirely by the
Tenant.
6. Tenant shall be notified of any unit which becomes available on the second,
third or fourth floor of the Building - prior to such space being leased to
a third party. However, Tenant shall not have a right of first refusal with
regard to such space.
<PAGE>
7. Provided that Tenant is not in default of any of the terms or conditions of
the Lease; as amended hereby, and Landlord is unable to provide additional
square footage in the Building sufficient to accommodate the reasonable
expansion needs of Tenant, Tenant may buy out of this Lease by providing
one year's prior written notice to Landlord, of Tenant's intention to
terminate the Lease and paying, at the time of such notice, an amount equal
to:
A. The cost of improvements, commissions, and free rent period
associated with this Amendment that will remain unamortized over
the balance of the lease term assuming an interest rate of ten
percent (10%) at the time of the notice; plus
B. A Lease Cancellation Payment in accordance with the following
schedule:
<TABLE>
<CAPTION>
Lease year during which notice is given Payment amount
--------------------------------------- --------------
<S> <C>
1 2 1/2 yrs. rent
2 2 1/4 yrs. rent
3 2 years rent
4 1 3/4 yrs. rent
5 1 1/2 yrs. rent
6 1 1/4 yrs. rent
7 1 years rent
8 3/4 years rent
9 1/2 years rent
10 0 years rent
</TABLE>
8. Upon Tenant's relocation to the third floor, all partition furniture in the
sixth floor space will become the property of the Landlord.
9. All other terms and conditions of the Lease shall remain in full force and
effect.
AGREED AND ACCEPTED
- ----------------------------------- -----------------------------------
NEPTUNE SOFTWARE BALDWIN OFFICE ASSOCIATES, L.P.
DATE: / / DATE: / /
<PAGE>
RELOCATION AMENDMENT
This Amendment dated MARCH 25, 1997 to be made part of a certain Lease dated
APRIL 3, 1995 between BALDWIN OFFICE ASSOCIATES, L.P. (henceforth called
"Landlord") and NEPTUNE SYSTEMS INC. (henceforth called "Tenant") for OFFICE
space in the BALDWIN TOWER BUILDING, EDDYSTONE, PA as more particularly
described below:
1. Tenant shall return 5,366 rentable square feet in the southwing of the 6th
floor of the building and shall lease an additional 3,090 rentable square
feet in the southwing of the 3rd floor of the building.
2. The Commencement Date for this Amendment shall be May 1, 1997.
3. Tenant's proportionate share shall noted in Section 4(a)(iii) shall change
to 17,070/166,250.
4. Minimum Rent shall be based on the following schedule:
<TABLE>
<CAPTION>
PERIOD MONTHLY ANNUALLY PER SF
------ ------- -------- ------
<S> <C> <C> <C>
5/1/97-7/31/97 $20,783 $249,396 $14.61
8/1/97-7/31/01 23,842 286,104 16.76
8/1/01-7/31/06 25,264 303,168 17.76
</TABLE>
5. Tenant shall lease the space in "AS IS" condition.
6. All other terms and conditions contained in the Lease shall remain in full
force and effect, including but not limited to the default provisions
contained in Section 15.
7. Four parking spaces dedicated to Neptune.
/s/ [illegible] /s/ [illegible]
- ------------------------------- ------------------------
BALDWIN OFFICE ASSOCIATES, L.P. NEPTUNE SYSTEMS INC.
Date: 4/29/97 Date: 4/18/97
<PAGE>
FIFTH AMENDMENT TO LEASE REVISED
This Revised Fifth Amendment to Lease ("Fifth Amendment Revised") is made
this 23 day of March, 1998 between BALDWIN OFFICE ASSOCIATES, L.P
("Landlord") and EXE TECHNOLOGIES, INC. ("Tenant").
BACKGROUND
A. Landlord and Tenant are parties to that certain Lease ("Lease") dated
April 3, 1995, pursuant to which Landlord leased to Tenant approximately
5,366 square feet of space (the "Original Leased Premises") on the sixth
floor of the building ("Building") known as Baldwin Tower located at
1510 Chester Pike, Eddystone, Pennsylvania. The Lease was amended pursuant
to that certain Lease Amendment dated July 6, 1995 (the "First Amendment")
and was further amended pursuant to that certain Amendment to Lease dated
June 17, 1996 (the "Second Amendment"), and was further amended pursuant to
that certain Amendment to Lease dated June 26, 1996 (the "Third
Amendment").
B. The Second Amendment expanded and relocated the Demised Premises to 13,980
square feet on the third floor of the Building which was referred to as the
"New Demised Premises", and the Tenant relinquished its rights in the
Original Leased Premises.
C. The Third Amendment includes the Original Leased Premises with the New
Demised Premises as part of Tenant's leasehold interest under the Lease for
a total size of the Demised premises of 19,345 square feet.
D. The Fourth Amendment amended the Lease to revise the construction
procedures for the New Demised Premises and the payment for those
improvements.
E. The Relocation Amendment changed the Tenant's proportionate share to
17,070/166,250.
F. The Fifth Amendment to Lease amended the Lease to add 2,908 square feet
located on the sixth floor to the Demised Premises for a total of 22,254
square feet.
G. The parties derive to correct the square footage and rent schedule noted in
the Fifth Amendment to the following.
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NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. As of March 9, 1998 the 2,908 square feet on the sixth floor of the
building (Exhibit "A" attached) will become part of the Demised Premises
as outlined in the Lease. The total space known as the Demised Premises
will become 19,978 square feet.
2. The Schedule "A" Rent Rider of the Lease and Lease Amendment dated July 6,
1995, Second Amendment dated June 17, 1996, Third Amendment dated June 26,
1996, Fourth Amendment dated October 29, 1996 and Relocation Amendment
dated March 25, 1997 changes to the following:
<TABLE>
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PERIOD MONTHLY ANNUALLY
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<S> <C> <C>
April 1, 1998 - July 31, 2001 $27,737.82 $332,853.84
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August 1, 2001 - July 31, 2006 $29,402.65 $352,831.80
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</TABLE>
3. Tenant's Fraction noted in the Lease shall be 19,978/166,250. (i.e 12.02%)
4. The term of the Lease shall end on July 31, 2006 unless
sooner terminated as provided in the Lease and/or Third Amendment.
5. The terms and conditions of the Lease as modified hereby shall remain in
full force and effect and are hereby ratified, confirmed and reaffirmed
for all purposes and in all respects. All capitalized words not otherwise
defined herein shall have the meanings as defined in the Lease. The
First Amendment, the Second Amendment, the Third Amendment or the Fourth
Amendment.
AGREED AND ACCEPTED:
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
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EXE Technologies, Inc. Baldwin Office Associates, L.P
Date: March 23, 1998 Date: March 23, 1998
<PAGE>
EXHIBIT A
[MAP]
BALDWIN TOWERS - SIXTH FLOOR
------------------------------------------
1510 Chester Pike, Eddystone, PA
Preferred Real Estate Investments, Inc.
(610) 834-1969
[LOGO] THOMAS E. HALL, ARCHITECTS
<PAGE>
AMENDMENT
This Amendment to the Lease dated April 3, 1995 between Neptune Systems, Inc.
and Baldwin Tower Associates, L.P. is dated November 8, 1999. EXE Technologies,
Inc. is the successor by merger to Neptune Systems, Inc.
Whereas EXE intends to lease storage space located in the basement of the
premises.
Now, therefore, both parties agree to the following:
1. EXE shall lease approximately 120 square feet of storage space as of
11/1/99.
2. EXE shall remit $70.00 a month for the above space.
3. The term of the lease for the storage space shall be coterminous with the
original lease.
4. All other terms and conditions contained in the lease and any other
amendment shall remain in full force and effect including but not limited
to the default provisions contained in Section 15.
Baldwin Office Associates, LP EXE Technologies, Inc.
By: /s/ [illegible] By: /s/ Christopher F. Wright
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Date: 11/11/99 Date: 11/5/99
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<PAGE>
November 27, 1996
Neptune Systems, Inc.
640 Baldwin Tower
Eddystone, PA 19022
Attn: Jonie Parker
RE: AGREEMENT OF LEASE DATED APRIL 3, 1995, AS AMENDED ("LEASE")
BETWEEN NEPTUNE SYSTEMS, INC. ("TENANT") AND BALDWIN OFFICE
ASSOCIATES, L.P. ("LANDLORD")
Dear Joni:
The purpose of this letter is to clarify the following inconsistancies
that have arisen as a result of the many amendments that have been made to the
Lease:
1) Tenant's termination option set forth in the Amendment to Lease
dated June 17, 1996 supercedes and replaces Tenant's termination
option set forth in the Lease Amendment dated July 6, 1995.
2) Tenant's right of first offer to lease contiguous space on the
sixth floor has been terminated and replaced with Tenants right
to be a first offered available space on the second, third or
fourth floors.
Please confirm that the foregoing is accurate by signing the enclosed
copy of this letter and return it to me.
Sincerely,
/s/ John McGee
----------------------------
John McGee
Acknowledged and Agreed
this ____ day of December, 1996
NEPTUNE SYSTEMS, INC.
By: /s/ Raymond R. Hood
--------------------------
Its: President
--------------------------
<PAGE>
SUBLEASE
THIS SUBLEASE is made and entered into as of the 29th day of December, 1999, by
and between EXE Technologies, Inc., a Delaware corporation ("Sublessor"), and
iOpen.com, LLC, a Delaware limited liability company ("Subtenant").
WITNESSETH, that Sublessor is leasing certain space (the "Main Premises") in an
office building located at 1510 Chester Pike, Eddystone, PA (the "Building"),
pursuant to that certain Lease Agreement dated April 3, 1995, as amended,
between Baldwin Office Associates, L.P. ("Master Lessor"), as landlord, and
Sublessor, as tenant, (the "Master Lease"), a copy of which has been furnished
to Subtenant. Subtenant desires to sublease from Sublessor 2,908 square feet of
rentable area on the sixth floor of the Building (the "Subleased Premises"). The
Subleased Premises are depicted as Area A on the floor plan attached hereto as
EXHIBIT A. Sublessor is agreeable to subleasing the Subleased Premises to
Subtenant upon the terms and conditions hereinafter set forth. This Sublease is
made in consideration of the execution and delivery of a Subscription Agreement
of even date herewith, between Sublessor and Subtenant (the "Subscription
Agreement"), and in conjunction with the execution and delivery of a Warrant of
even date herewith, issued by Subtenant to Sublessor (the "Warrant" and,
together with the Subscription Agreement, the "Transaction Documents").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and of the execution and delivery of the Subscription
Agreement, and intending to be legally bound, the parties hereto agree as
follows:
PREMISES. Sublessor hereby subleases the Subleased Premises to Subtenant upon
the terms and conditions set forth herein. Subtenant hereby rents the Subleased
Premises from Sublessor in accordance with the terms and conditions set forth
herein. This Sublease includes the right, together with Sublessor, other tenants
and subtenants of the Building, Master Lessor and members of the public, to use
the common and public areas within the Building to the extent such rights are
made available by Master Lessor pursuant to the Master Lease (the "Common
Areas") and subject to any rules and regulations promulgated by Master Lessor
with respect to such use, but includes no other rights not specifically set
forth herein. Sublessor and Subtenant agree that the rentable square footage of
the Subleased Premises for all purposes under this Sublease shall equal 2,908
square feet.
INITIAL TERM. The term of this Sublease (the "Initial Term") shall commence on
the date hereof and shall expire on December 31, 2000, unless sooner terminated
pursuant to any right of termination provision herein. Notwithstanding the
foregoing, if Subtenant commences beneficial use of the Subleased Premises for
the operation of its business prior to the Sublease Commencement Date, then the
Sublease Commencement Date shall be the date Subtenant commences such use. For
the purposes of this Sublease, the term "Sublease Year" shall mean a period of
twelve (12) consecutive months, commencing on the Sublease Commencement Date,
and each successive twelve (12) month period thereafter; except that, if the
Sublease
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<PAGE>
Commencement Date is not the first day of a calendar month, then the first
Sublease Year shall consist of the twelve (12) month period beginning on the
first day of the month immediately following the month in which the Sublease
Commencement Date occurs and shall also include the period commencing on the
Sublease Commencement Date and ending on the first day of the following month.
RENEWAL TERM. Subtenant shall not have any option to renew the Initial Term or
otherwise extend the term of this Lease for any additional period (a "Renewal
Term") (the Initial Term and the Renewal Term are hereinafter collectively
referred to as the "Term") unless Sublessor and Subtenant shall sign a written
amendment hereto providing for such renewal or extension on or before August 15,
2000 (a "Renewal Amendment"). If Sublessor and Subtenant do not sign a Renewal
Amendment on or before August 15, 2000, Subtenant shall thereafter permit
Sublessor to enter the Subleased Premises during business hours, at times
pre-arranged in advance for the purposes of reletting.
RENT. As base rent for the entire initial term, Subtenant has paid, and
Sublessor has received, the sum of ten dollars ($10.00) ("Base Rent") and the
execution and delivery of the Subscription Agreement. Subtenant shall pay as
additional rent all other amounts which it is required to pay hereunder
("Additional Rent" and, together with Base Rent, "Rent"). If Subtenant installs
or uses in the Subleased Premises any electrically-operated machinery or
equipment other than that which is customarily used in operating an office, or
if Sublessor otherwise reasonably determines that Subtenant's electrical
consumption is excessive, Sublessor may, at its option, submeter or separately
meter the Subleased Premises at Subtenant's expense, or devise some other
reasonable method (reasonably acceptable to Subtenant) of determining
Subtenant's excess electricity consumption, and Subtenant shall thereafter pay
as Additional Rent its actual consumption of electricity, as so determined.
USE. Subtenant shall use and occupy the Subleased Premises solely for office
purposes and uses incidental thereto in accordance with the uses permitted under
applicable zoning regulations and shall not use the Subleased Premises for any
other purpose without the prior written consent of Sublessor. Subtenant shall
not use or occupy the Subleased Premises for any unlawful purpose and shall
comply with the laws, ordinances, regulations and orders of all governmental
agencies and other public authorities having jurisdiction over the Subleased
Premises relating to the manner of use of the Subleased Premises. Nothing herein
contained shall obligate Subtenant to make any structural or mechanical
alterations, additions or repairs to the Building or to the Subleased Premises
nor shall the Subtenant be required to make any other alternations, additions or
repairs which, pursuant to any provision of the Master Lease, are the obligation
of Master Lessor. Subtenant shall not use the Subleased Premises, or permit the
Subleased Premises to be used, in any manner that is impermissible under the
Master Lease, that constitutes a public or private nuisance or that interferes
with the lawful use of the Building by Master Lessor, Sublessor or any other
tenant of the Building. Subtenant shall observe and abide by all rules and
regulations that are established by Master Lessor with respect to the use of the
Subleased Premises or any part of the Building. Subtenant shall pay any business
taxes that are now or
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<PAGE>
hereafter levied upon Subtenant's business at the Subleased Premises, or
Subtenant's equipment, fixtures or personal property. In the event that any such
taxes are enacted, changed or altered so that any of such taxes are levied
against Master Lessor or Sublessor, or the mode of collection of such taxes is
changed so that Master Lessor or Sublessor is responsible for collection or
payment of such taxes, Subtenant shall pay any and all such taxes to Master
Lessor or Sublessor, as the case may be, upon written demand from Sublessor.
IMPROVEMENTS. Subtenant agrees to accept the Subleased Premises in their current
"as is" condition, Sublessor having no obligation to make any improvements to
the Subleased Premises of any kind whatsoever. Occupancy of the Subleased
Premises by Subtenant shall constitute acceptance and approval by Subtenant of
the Subleased Premises. Subtenant shall not make or install any additions,
renovations, alterations, improvements or changes in or to the Subleased
Premises, including the walls, floors, ceilings and fixtures located therein
(collectively, "Improvements"), without first obtaining the prior written
approval of Sublessor, which approval may be withheld in Sublessor's sole
discretion and may be conditioned upon the satisfaction of any conditions or
restrictions that Sublessor deems appropriate, including without limitation,
obtaining the prior approval of Master Lessor, if, to the extent and in the
manner required pursuant to the Master Lease. All Improvements made to the
Subleased Premises shall remain upon and be surrendered with the Subleased
Premises at the end of the Term, unless Sublessor shall have notified Subtenant,
as a condition of granting consent thereto, that it will require Subtenant to
remove certain Improvements at the end of the Term, in which event such
Improvements shall be removed and the Subleased Premises restored to their
condition prior to the installation of the Improvements. All work done by or for
Subtenant with respect to the Subleased Premises, including, but not limited to,
any removal or restoration work done at the expiration or termination of the
Sublease, shall be at Subtenant's sole cost and expense.
REPAIRS AND MAINTENANCE. Throughout the Term, Subtenant shall, at its sole cost
and expense, keep and maintain the Subleased Premises, every part thereof and
all property located therein in good condition and repair, ordinary wear and
tear excepted but Subtenant's responsibility for repair and maintenance shall
not exceed with respect to the Subleased Premises, Sublessor's obligation with
respect to the Main Premises. Subject to the waiver of subrogation hereinafter
set forth, all damage or injury to the Subleased Premises which is caused by
Subtenant or any of its employees, agents, guests or invitees, or its or their
use of the Subleased Premises shall promptly be repaired by Subtenant at its
sole cost and expense. Sublessor shall have the right to make any repairs to the
Subleased Premises which Subtenant does not make within ten (10) days after
written notice from Master Lessor or Sublessor of the need for such repairs
(except in the event of emergencies, in which event Sublessor shall have the
right to make such repairs without prior notice other than oral notice or notice
by facsimile, if practicable), and Subtenant shall reimburse Sublessor for all
reasonable, documented costs and expenses incurred in connection with such
repairs. Upon the expiration or termination of this Sublease, Subtenant shall
surrender the Subleased Premises broom clean and in as good condition as they
were in at the Sublease Commencement Date, reasonable wear and tear, fire and
casualty and responsibilities of Sublessor or Master Lessor excepted.
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<PAGE>
INSURANCE. Throughout the Term, Subtenant shall obtain and maintain, with a
company or companies licensed to do business in the Commonwealth of Pennsylvania
and reasonably approved by Sublessor, a broad form comprehensive general
liability insurance policy with minimum coverage amounts reasonably required by
Sublessor from time to time. On or before the Sublease Commencement Date,
Subtenant shall obtain such insurance in the minimum amount of One Million
Dollars ($1,000,000) combined single limit per occurrence. In addition,
Subtenant shall obtain and maintain fire and extended coverage insurance with a
company or companies approved by Sublessor covering all of Subtenant's personal
property and all of Subtenant's improvements in the Subleased Premises at full
replacement value. Each policy of liability insurance required to be maintained
by Subtenant hereunder shall name Master Lessor (and its property manager
Equivest Management, Inc.) and Sublessor as additional insureds thereunder and
shall contain an endorsement prohibiting cancellation or reduction of coverage
as it pertains to the Subleased Premises without first giving Master Lessor (and
its property manager Equivest Management, Inc.) and Sublessor at least thirty
(30) days' prior written notice. Receipts evidencing payment of the premiums for
such insurance shall be delivered to Sublessor on or before the Sublease
Commencement Date and thereafter upon request.
WAIVER AND INDEMNIFICATION. Subtenant hereby waives all rights of recovery
against Sublessor and its shareholders, partners and employees for any loss or
damage to any property of or harm to the business of Subtenant or its partners,
employees, agents, guests, or invitees which occurs in or arises out of the use
or occupancy of the Subleased Premises or the Common Areas by Subtenant or which
results from the action or inaction of Master Lessor or its agents or employees,
except to the extent such loss, damage or injury is the result of the gross
negligence or willful misconduct of Sublessor or Sublessor's shareholders,
partners or employees; provided, however, that in no event shall Sublessor have
any liability to Subtenant for any claims based on the interruption of or loss
to Subtenant's business. Furthermore, Subtenant agrees to indemnify and hold
Sublessor and its shareholders, partners and employees harmless from and against
any and all losses, damages, liabilities, actions, claims, costs and expenses,
including court costs and reasonable attorneys' fees, arising out of or relating
to: (i) Subtenant's use or occupancy of the Subleased Premises, or use of any
other portion of the Building; (ii) any act or omission by Subtenant or any of
its partners, employees, agents, guests or invitees; (iii) the making or
installation of Improvements in or to the Subleased Premises by or at the
direction of Subtenant; and (iv) any failure by Subtenant to observe or perform
any of the covenants or obligations required of Subtenant under this Sublease.
BUILDING SERVICES. Master Lessor has agreed to furnish certain utilities and
services to Sublessor, as set forth in the Master Lease. Sublessor agrees that,
to the extent any such utilities and services are furnished to the Main
Premises, Subtenant shall be entitled to the use and benefit of such utilities
and services; however, Sublessor shall not have any liability or responsibility
to Subtenant for the quality or quantity of such utilities and services
(including electricity and gas, even if Sublessor contracts directly with the
utility for them), for any interruption, failure or disruption in the provision
of such utilities and services or for any other action or omission of Master
Lessor. In the event that Master Lessor fails to furnish such utilities and
services to the
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<PAGE>
Subleased Premises in accordance with the Master Lease, Sublessor agrees that it
will use its reasonable efforts to cause the Master Lessor to do so. In the
event Subtenant desires air-conditioning or heat beyond the normal hours of
operation of the Building, as established by Master Lessor or Sublessor,
Subtenant shall give Sublessor a reasonable amount of advance notice to enable
Sublessor to notify Master Lessor of Subtenant's request within the time frames,
if any, established by Master Lessor in connection with the provision of such
services. Subtenant shall reimburse Sublessor for such after-hours services in
accordance with the then current payment schedule established by Master Lessor
or Sublessor for such services. Subtenant shall contract and pay directly for
all other utilities, including without limitation telephone, internet and
additional cleaning services not provided by Master Lessor under the Master
Lease. To the extent that any such other utilities are not separately metered
from those consumed by Sublessor, Sublessee shall pay a pro rata portion to
reflect the portion of such utilities consumed on the Subleased Premises.
ASSIGNMENT AND SUBLETTING. Except as hereinafter provided, without the prior
written approval of Sublessor, which approval Sublessor may grant or withhold in
its sole discretion, Subtenant shall not assign, pledge, or encumber this
Sublease or any interest herein, further sublease the Subleased Premises or any
part thereof or permit anyone other than Subtenant's employees or invitees to
use the Subleased Premises. Except as hereinafter provided, any change in
control of Subtenant shall be deemed an assignment of this Sublease for purposes
of this Agreement. Except as hereinafter provided, any attempted assignment,
pledge or hypothecation of this Sublease or subletting of the Subleased
Premises, whether voluntary or involuntary, without Sublessor's approval shall
be void and shall, at the option of Sublessor, terminate this Sublease. Except
with respect to transactions not requiring Sublessor's consent, if any sublease
or assignment provides that the subtenant or assignee thereunder is to pay any
amount in excess of the rental and other changes due under this Sublease,
whether such excess be in the form of an increased rental or in any other form,
Sublessor shall be paid any such excess applicable to the sublease or
assignment. It is understood and agreed, however, that acceptance of any such
payments by Sublessor shall not be deemed to constitute approval by Sublessor of
any sublease or assignment, nor shall such acceptance waive any rights of
Sublessor hereunder. Notwithstanding anything contained in this Sublease to the
contrary, nothing in this Sublease shall limit or prohibit (a) the contemplated
conversion of Subtenant from a Delaware limited liability company to a Delaware
corporation, or (b) the initial public offering or subsequent trading of
Subtenant's stock or other equity interests on a recognized securities exchange
or market, or any change in stock ownership or control resulting therefrom.
SUBLEASE SUBJECT TO MASTER LEASE. Notwithstanding anything to the contrary in
this Sublease, Subtenant acknowledges that the rights it is hereby acquiring in
and to the Subleased Premises are derived from the Master Lease and that the
rights, terms and conditions of this Sublease are in all respects subordinate
and subject to the terms and conditions of the Master Lease. Subtenant agrees to
be bound by each term, condition and covenant of the Master Lease that governs
the use of the Subleased Premises, and to perform with respect to the Subleased
Premises each and every obligation of Sublessor pursuant to the Master Lease
(other than the
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payment of rent), as if each such term, condition, covenant and obligation were
set forth in full in this Sublease. Notwithstanding anything to the contrary
herein, it is further agreed that, in the event the Master Lease terminates for
any reason, this Sublease and all rights of Subtenant in and to the Subleased
Premises shall automatically terminate on the date the Master Lease terminates,
and Sublessor shall not have any liability to Subtenant whatsoever as a result
of such termination; provided, that Sublessor shall not terminate, or by its act
or omission cause the termination of the Master Lease with respect to the
Subleased Premises, unless satisfactory arrangements are made for Subtenant to
continue to occupy, on an uninterrupted basis, the Subleased Premises in
accordance with this Sublease or on financial terms no less favorable to
Subtenant than this Sublease. Master Landlord's consent to this Sublease shall
not relieve Sublessor of any of its obligations under the Master Lease.
SUCCESSORS AND ASSIGNS. Subject to the restrictions of assignment and subletting
by Subtenant, this Sublease shall be binding upon and shall inure to the benefit
of the parties hereto and their successors, assigns and legal representatives
(including, without limitation, the corporation resulting from the contemplated
conversion of Subtenant from a Delaware limited liability company into a
Delaware corporation).
DEFAULT. The following events shall each constitute a default by Subtenant
hereunder: (a) Subtenant's failure to pay, when due, any payment required to be
paid by Subtenant hereunder, which failure continues for five (5) days after
notice from Sublessor that the same is past due, in the instance of any
regularly recurring charges in the same amount, and for thirty (30) days after
notice in all other instances; (b) Subtenant's failure to observe or perform any
covenant, obligation or condition required to be observed or performed by
Subtenant hereunder, which is not also a violation of any term, condition,
covenant or obligation of Sublessor under the Master Lease, if such failure
continues for thirty (30) days after written notice thereof from Sublessor to
Subtenant unless such default cannot be cured within such thirty (30) day
period, in which case Subtenant shall be entitled to a reasonable time to cure
such default provided that Subtenant promptly commences to cure such default
within such thirty (30) day period and proceeds diligently thereafter to
complete such cure; (c) Subtenant's failure to observe or perform any covenant,
obligation or condition required to be observed or performed by Subtenant
hereunder, which is also a violation of any term, condition, covenant or
obligation of Sublessor under the Master Lease, if such failure continues for
five (5) business days after written notice thereof from Sublessor to Subtenant
(provided, however, that Sublessor may at any time after notice to Subtenant
elect to cure such failure); (d) if Subtenant, any of its members or any
guarantor of Subtenant's obligations hereunder makes an assignment for the
benefit of creditors, or if a receiver shall be appointed for any such parties,
or if any of such parties is the subject of a bankruptcy, reorganization or
insolvency proceeding (voluntarily or involuntarily) and, in the case of an
involuntary proceeding under the Federal Bankruptcy Code, if such proceeding
shall not be dismissed within thirty (30) days after the commencement thereof;
or (e) Subtenant's material breach of any representation or warranty, or failure
to observe or perform (after the giving of any applicable notice and the
expiration of any applicable cure period) any covenant, obligation or condition
required to be observed or performed by Subtenant, under any other
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agreement between Subtenant and Sublessor, or any other document or instrument
executed by Subtenant payable to or for the benefit of Sublessor (including,
without limitation, the Transaction Documents).
REMEDIES. In the event of any default by Subtenant, Sublessor shall have all of
the rights and remedies set forth in the Master Lease with respect to a default
by "Tenant" thereunder, in addition to all other rights and remedies available
to Sublessor at law and in equity. In the event that Subtenant fails to observe
or perform any covenant, obligation or condition required to be observed or
performed by Subtenant, subject to the delivery of any required notice and the
expiration of any applicable grace period, Sublessor may cure such failure and
by written notice to Subtenant, charge to Subtenant all reasonable, documented
costs and expenses (including but not limited to, attorneys' fees) incurred in
curing such failure of Subtenant as Additional Rent hereunder. Such Additional
Rent, if not paid on the date specified in Sublessor's notice to Subtenant
(which shall in no event be fewer than five (5) days for regularly recurring
charges of a like amount; thirty (30) days in all other instances), shall be
subject to the late charge (defined in the next paragraph), and with such late
charge shall bear interest until paid, as provided herein. Sublessor and
Subtenant agree that Sublessor shall have the right to injunctive or other
equitable relief in the event of a breach or threatened breach by Subtenant of
any of the agreements, conditions, covenants or terms hereof. All rights and
remedies of Sublessor shall be cumulative, and the exercise of any one or more
of such rights or remedies shall not impair Sublessor's right to exercise any
other right or remedy, either concurrently or at any later time. Subtenant
hereby expressly waives any and all rights of redemption granted by or under any
present or future law in the event this Sublease is terminated or Subtenant is
evicted or dispossessed by reason of violation by Subtenant of any of the
provisions of this Sublease.
LATE CHARGE. If Subtenant fails to make any payment hereunder on or before the
date such payment is due and payable (without regard to any grace periods
specified herein) (but which due date shall in no event be fewer than five (5)
days for regularly recurring charges of a like amount; thirty (30) days in all
other instances), Subtenant shall pay to Sublessor, as Additional Rent
hereunder, a late charge equal to five percent (5%) of the amount of such late
payment. In addition, such payment shall bear interest at an interest rate equal
to two (2) whole percentage points above the prime rate published from time to
time in the Money Rates Section of the Wall Street Journal from the date such
payment or late charge, respectively, became due and payable through the date of
payment thereof by Subtenant; provided, however, that nothing contained herein
shall be construed as permitting Sublessor to charge or receive interest in
excess of the maximum rate then allowed by law.
CONFESSION OF JUDGMENT FOR POSSESSION. UPON THE EXPIRATION OF THE THEN CURRENT
TERM OF THIS SUBLEASE OR THE EARLIER TERMINATION OR SURRENDER HEREOF AS PROVIDED
IN THIS SUBLEASE, IT SHALL BE LAWFUL FOR ANY ATTORNEY TO APPEAR AS ATTORNEY FOR
SUBTENANT AS WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER SUBTENANT AND
TO SIGN AN AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN AMICABLE ACTION
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IN EJECTMENT AGAINST SUBTENANT AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER
SUBTENANT AND THEREIN CONFESS JUDGMENT FOR THE RECOVERY BY SUBLESSOR OF
POSSESSION OF THE HEREIN SUBLEASED PREMISES, FOR WHICH THIS SUBLEASE SHALL BE
ITS SUFFICIENT WARRANT, WHEREUPON, IF SUBLESSOR SO DESIRES, A WRIT OF POSSESSION
OR OTHER APPROPRIATE WRIT UNDER THE RULES OF CIVIL PROCEDURE THEN IN EFFECT MAY
ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS; PROVIDED, HOWEVER, IF
FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED, THE SAME SHALL BE
DETERMINED AND THE POSSESSION OF THE PREMISES HEREBY DEMISED REMAIN IN OR BE
RESTORED TO SUBTENANT, SUBLESSOR SHALL HAVE THE RIGHT FOR THE SAME DEFAULT AND
UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS
SUBLEASE UNDER ANY OF THE TERMS OF THIS SUBLEASE TO BRING ONE OR MORE FURTHER
AMICABLE ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF
THE SAID SUBLEASED PREMISES AND CONFESS JUDGMENT FOR THE RECOVERY OF POSSESSION
OF THE SUBLEASED PREMISES AS HEREINABOVE PROVIDED.
GENERAL PROVISIONS RELATING TO CONFESSION OF JUDGMENT. IN ANY AMICABLE ACTION OF
EJECTMENT, SUBLESSOR SHALL FIRST CAUSE TO BE FILED IN SUCH ACTION AN AFFIDAVIT
MADE BY IT OR SOMEONE ACTING FOR IT, SETTING FORTH THE FACTS NECESSARY TO
AUTHORIZE THE ENTRY OF JUDGMENT, AND, IF A TRUE COPY OF THIS SUBLEASE (AND OF
THE TRUTH OF THE COPY SUCH AFFIDAVIT SHALL BE SUFFICIENT EVIDENCE) BE FILED IN
SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF
ATTORNEY, ANY RULE OF COURT, CUSTOM OR PRACTICE TO THE CONTRARY NOTWITHSTANDING.
SUBTENANT HEREBY RELEASES TO SUBLESSOR AND TO ANY AND ALL ATTORNEYS WHO MAY
APPEAR FOR SUBTENANT ALL PROCEDURAL ERRORS IN SAID PROCEEDINGS AND ALL LIABILITY
THEREOF. IF PROCEEDINGS SHALL BE COMMENCED BY SUBLESSOR TO RECOVER POSSESSION
UNDER THE ACTS OF ASSEMBLY AND RULES OF CIVIL PROCEDURE, EITHER AT THE END OF
THE TERM OR EARLIER TERMINATION OF THIS SUBLEASE, SUBTENANT WAIVES THE RIGHT TO
ANY NOTICE WHICH MAY BE REQUIRED UNDER APPLICABLE LAW AND AGREES THAT 30 DAYS
NOTICE SHALL BE SUFFICIENT IN EITHER OR ANY SUCH CASE.
ACCESS. In addition to Master Lessor's rights of access pursuant to the Master
Lease, at all times during the Term, Sublessor and its employees and
representatives shall have the right, upon reasonable notice, and during
business hours to enter the Subleased Premises for the purposes of inspecting or
making repair, alterations or additions to the Subleased Premises or to any
other portion of the Building. In addition, Sublessor shall have the right to
enter the Subleased Premises to exhibit same to prospective subtenants after
July 15, 2000, if the parties have not signed a Renewal Amendment. Subtenant
shall at all times have the right to have a
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<PAGE>
representative of Subtenant accompany Sublessor during the course of any entry
on or at the Premises.
DAMAGE TO SUBLEASED PREMISES. In the event of any damage to or destruction of
the Subleased Premises which does not render the Subleased Premises wholly or
partially untenantable, this Sublease shall not terminate and the rent and other
sums payable hereunder shall not be abated or reduced. Any such damage or
destruction to the Subleased Premises shall be repaired by Sublessor or by
Master Lessor, if the Master Lease requires Master Lessor to make such repairs,
but in no event shall either Sublessor or Master Lessor have any responsibility
for repairing, replacing or compensating Subtenant for any damage to or loss of
any decorations, trade fixtures, furniture, equipment or other property of
Subtenant. In the event of any damage to or destruction of the Subleased
Premises renders the Subleased Premises so untenantable that they cannot be made
tenantable within one hundred sixty (60) days after the date of such damage, as
determined by Master Lessor in accordance with the Master Lease, Sublessor and
Subtenant each shall have the right, in its sole discretion, to terminate this
Sublease by written notice to the other party within thirty (30) days after
receipt of Master Lessor's determination. If either party delivers written
notice of termination within said thirty (30) day period, or if Master Lessor
exercises its right of termination pursuant to the Master Lease, this Sublease
shall terminate as of the date of such damage or destruction and any rent and
other sums payable by Subtenant hereunder shall be prorated as of such date of
termination. If Master Lessor does not terminate the Master Lease and neither
Sublessor nor Subtenant elects to terminate this Sublease within said thirty
(30) day period, this Sublease shall continue in full force and effect and
Sublessor shall have such damage or destruction repaired either by itself or by
Master Lessor under the Master Lease. In such an event, all rent and other sums
payable hereunder shall be abated (or, in case the Subleased Premises are only
partially untenantable, abated on a pro rata basis) until such time as the
Subleased Premises are rendered tenantable. In repairing such damage or
destruction, Sublessor or Master Lessor, as the case may be, shall be required
to restore the Subleased Premises to their condition prior to such damage or
destruction; provided, however, that neither Sublessor nor Master Lessor shall
have any responsibility for repairing, replacing or compensating Subtenant for
any damage to or loss of any decorations, trade fixtures, furniture, equipment
or other property of Subtenant. In the event of any damage to or destruction of
the Subleased Premises which renders the Subleased Premises untenantable but
under such circumstances that the Subleased Premises can be made tenantable
within sixty (60) days, as determined by Master Lessor in accordance with the
Master Lease, neither party shall have the right to terminate this Sublease, and
Sublessor shall have such damage or destruction repaired either by itself or by
Master Lessor under the Master Lease. In such an event, this Sublease shall
continue in full force and effect and all rent and other sums payable hereunder
shall be abated (or, in case the Subleased Premises are only partially
untenantable, abated on a pro rata basis) until such time as the Subleased
Premises are rendered tenantable. In repairing such damage or destruction,
Sublessor or Master Lessor, as the case may be, shall be required to restore the
Subleased Premises to their condition prior to such damage or destruction;
provided, however, that neither Sublessor nor Master Lessor shall have any
responsibility for repairing, replacing or
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<PAGE>
compensating Subtenant for any damage to or loss of any decorations, trade
fixtures, furniture, equipment or other property of Subtenant.
WAIVER OF SUBROGATION. Each party, for itself and its insurers, waives all
rights of recovery against the other party, its shareholders, partners and
employees, to the extent of any insurance either maintained by such party or
required to be maintained by such party pursuant to this Sublease.
CONDEMNATION. If the whole or any substantial part of the Subleased Premises, or
the use or occupancy thereof, shall be taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
(including a sale thereof under threat of such a taking), then this Sublease
shall terminate on the date title thereto vests in such governmental or
quasi-governmental authority, and all rent payable hereunder shall be
apportioned as of such date. If less than a substantial part of the Subleased
Premises, or the use or occupancy thereof, is taken or condemned by any
governmental or quasi-governmental authority for any public or quasi-public use
or purpose, then provided Subtenant finds the remaining portion to be suitable
for the continued normal operation of Subtenant's business this Sublease shall
continue in full force and effect as to the portion of the Subleased Premises
not so taken or condemned, except that, as of the date title vests in the
governmental or quasi-governmental authority, Subtenant shall not be required to
pay Base Rent or Additional Rent with respect to the portion of the Subleased
Premises taken or condemned. For purposes of this paragraph, a substantial part
of the Subleased Premises shall be considered to have been taken if such taking
has the effect of preventing Subtenant from efficiently utilizing the remaining
portion of the Subleased Premises for the normal conduct of its business. All
awards, damages and other compensation paid by the condemning authority on
account of such taking or condemnation shall belong to Sublessor, and Subtenant
hereby assigns to Sublessor all rights to such awards, damages and compensation.
Subtenant agrees not to make any claim against Master Lessor, Sublessor or the
condemning authority for any portion of such award or compensation attributable
to damages to property, the value of the unexpired Term, the loss of profits or
goodwill, leasehold improvements or severance damages. Nothing contained herein,
however, shall prevent Subtenant from pursuing a separate claim against the
condemning authority for relocation expenses and the value of furnishings,
equipment and trade fixtures installed in the Subleased Premises at Subtenant's
expense and which Subtenant is entitled pursuant to the provisions hereof to
remove at the expiration or earlier termination of the Term, provided that such
claim shall in no way diminish the award or compensation payable to or
recoverable by Master Lessor and Sublessor in connection with such taking or
condemnation.
TERMINATION DUE TO DAMAGE OR CONDEMNATION. Anything herein to the contrary
notwithstanding, in the event that this Sublease shall be terminated by any
party due to damage or condemnation as hereinabove provided, then in that event,
Sublessor shall: (a) immediately make available to Subtenant office space
reasonably equivalent to the Subleased Premises on the terms set forth herein;
or (b) immediately remit to Subtenant an amount equal to $150 per day multiplied
by the aggregate number of days that the Initial Term shall have been diminished
by reason of such
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<PAGE>
termination; such sum to accrue interest at the default rate hereinabove
specified under the caption "Late Charge," to the extent not paid in full within
thirty (30) days next following Subtenant's demand therefor.
HOLDING OVER. Any holding over by Subtenant after the expiration or termination
of the Term shall be subject to the prior written approval of Sublessor, which
approval may be granted or withheld in Sublessor's sole discretion. If Sublessor
shall consent to Subtenant's holding over, such holding over shall be construed
as a month-to-month tenancy subject to the rental terms and all other terms,
conditions and obligations set forth in this Sublease. Sublessor may terminate
any such month-to-month tenancy by giving Subtenant written notice to vacate,
which notice may be given on any day during a month, and Subtenant shall vacate
the Subleased Premises within thirty (30) days after receipt of such notice.
Sublessor hereby advises Subtenant of, and Subtenant acknowledges, the
importance to Sublessor of regaining possession of the Subleased Premises
promptly at the expiration of this Sublease. Therefore, in the event Subtenant
shall fail to vacate the Subleased Premises at the expiration or earlier
termination of this Sublease without having obtained Sublessor's prior written
approval, or if Subtenant shall hold over with Sublessor's approval and
subsequently shall fail to vacate the Subleased Premises within thirty (30) days
after receipt of Sublessor's notice to vacate the Subleased Premises, then, in
either such event, Sublessor, at its option, shall have the right to re-enter
forthwith and take possession of the Subleased Premised without process or to
institute proceedings for the eviction or removal of Subtenant and the recovery
of possession of the Subleased Premises. In addition, at Sublessor's option,
Subtenant's holding over shall be construed as a month-by-month tenancy subject
to all the terms, conditions and obligations set forth in this Sublease, except
that Base Rent payable by Subtenant shall equal 125% of the rent payable by
Sublessor for the Subleased Premises under the Master Lease. Nothing in this
paragraph or in this Sublease to the contrary shall limit Sublessor's remedies
hereunder or Sublessor's right to recover damages from the Subtenant in the
event Subtenant holds over in the Subleased Premises after the expiration of the
Term, including, without limitation, any rent obligations for the ENTIRE Main
Premises which Sublessor may incur pursuant to the Master Lease as a result of
Sublessor's inability to surrender the Main Premises to Master Lessor because of
Subtenant's holdover.
DIRECTORY SPACE. Sublessor shall use all reasonable efforts to cause Master
Lessor to display the name of Subtenant on the directory of the Building;
providing that, Subtenant shall reimburse Sublessor for any costs that may be
incurred by Sublessor in connection therewith.
BROKER'S COMMISSIONS. Sublessor represents and warrants that Sublessor has
employed no broker, and Subtenant represents and warrants that Subtenant has
employed no broker in connection with this Sublease. Sublessor and Subtenant
each agrees to indemnify and hold harmless the other party from any claims,
damages and expenses, including reasonable attorneys' fees, incurred by the
other party as a result of any alleged breach by such party of its
representation and warranty set forth in this paragraph.
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<PAGE>
SECURITY DEPOSIT. Simultaneously with the execution of this Sublease, Subtenant
shall deposit with Sublessor a security deposit in the amount of five thousand
dollars ($5,000.00), to be commingled with Sublessor's other funds in an
interest bearing bank account. Such security deposit shall be security for the
performance by Subtenant of all of Subtenant's obligations, covenants,
conditions and agreements under this Sublease. Within approximately thirty (30)
days after the later of (a) the expiration or earlier termination of the Term of
this Sublease, or (b) Subtenant's vacating the Subleased Premises, Sublessor
shall return such security deposit to Subtenant with interest, less such portion
thereof as Sublessor shall have appropriated to satisfy any default under this
Sublease by Subtenant, as hereinafter provided. If there shall be any default
under this Sublease by Subtenant, then Sublessor shall have the right, but shall
not be obligated, after notice to Subtenant and Subtenant's failure to timely
cure to use, apply or retain all or any portion of the security deposit for the
payment of any (a) Base Rent, Additional Rent or any other sum as to which
Subtenant is in default, or (b) amount Sublessor may spend or become obligated
to spend, or for the compensation of Sublessor for any losses incurred, by
reason of Subtenant's default, including, but not limited to, any damage or
deficiency arising in connection with the reletting of the Subleased Premises.
If any portion of the security deposit is so used or applied, then within three
(3) business days after written notice to Subtenant of such use or application,
Subtenant shall deposit with Sublessor cash in an amount sufficient to restore
the security deposit to its original amount, and Subtenant's failure to do so
shall constitute a default under this Sublease.
EQUIPMENT, FURNITURE AND SUPPORT. Sublessor shall supply to Subtenant, at not
cost to Subtenant, with the following, in "as is" condition: (i) Sublessor's
furniture and chairs currently in the Subleased Premises; (ii) the use if six
telephones on Sublessor's telephone system, three of which shall be direct dial
telephone numbers and three of which shall be extensions, all of which shall be
supported in the same manner as other similar telephones on Sublessor's
telephone system. Sublessor shall not supply any other equipment, furniture or
support to Subtenant. Subtenant shall return all such equipment and furniture to
Sublessor in the same condition as on the date hereof, reasonable wear and tear
excepted, at the expiration or earlier termination of the Term of this Sublease.
QUIET ENJOYMENT. Subtenant, upon paying all rent and other charges required
hereunder and observing and keeping all covenants, agreements and conditions of
this Sublease, shall quietly have and enjoy the Subleased Premises during the
Term without hindrance or molestation by anyone claiming by or through
Sublessor, subject, however, to the exceptions, reservations and conditions of
this Sublease.
GENERAL PROVISIONS. The waiver by either party of a breach of any covenant,
obligation or condition set forth herein shall not be deemed to be a waiver of
any subsequent breach of any covenant, obligation or condition of this Sublease.
This Sublease shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania without reference to principles of conflicts of
law. This Sublease constitutes the entire agreement between the parties hereto
and may not be modified except by a written instrument executed by the parties
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<PAGE>
hereto. If any provision of this Sublease is declared invalid or unenforceable,
the remainder of the Sublease shall continue in full force and effect. All
notices required or permitted to be given to Sublessor hereunder shall be
hand-delivered, delivered by a nationally recognized overnight courier, or
mailed by certified mail, return receipt requested to such individual at such
address as Sublessor shall from time to time designate. All notices required or
permitted to be given to Subtenant hereunder shall be hand delivered, delivered
by a nationally recognized overnight courier, or mailed by certified mail,
return receipt requested to such individual at such address as Subtenant shall
from time to time designate. Paragraph headings are used herein solely for
reference purposes and are not to be construed as part of this Sublease. This
Sublease may be executed in counterpart copies, each of which shall constitute
an original but all of which together shall constitute one and the same
instrument. Time is of the essence under this Sublease. Sublessor and Subtenant
each hereby waives trial by jury in any action, proceeding or counterclaim
brought by either party against the other in connection with any matter arising
out of or connected with the Sublease, Subtenant's use or occupancy of the
Subleased Premises and/or any claim of injury or damage. In the event of
litigation between the parties to resolve any dispute arising under this
Sublease or otherwise in connection with Subtenant's use or occupancy of the
Subleased Premises, the losing party shall pay reasonable attorneys fees and
court costs incurred by the prevailing party in connection with the dispute. If
any payment hereunder is due after the end of the Term, such payment shall be
made by Subtenant to Sublessor not later than fifteen (15) days after Sublessor
notifies Subtenant of the amount of such payment to be made by Subtenant. Any
liability of Sublessor or Subtenant to the other party existing hereunder at the
expiration or earlier termination of the Sublease shall survive such expiration
or termination. Wherever the consent or approval of either party is requested or
required hereunder, such consent shall not, in the absence of an alternative
standard for consent being expressly set forth in this Sublease, be unreasonably
withheld, delayed or conditioned.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the day
and year first above written.
EXE Technologies, Inc.
By: /S/ MICHAEL BURSTEIN
------------------------
Name: MICHAEL BURSTEIN
Title: Vice President - CFO
iOpen.com, LLC,
By: /S/ PATRICK J. CARNEY
------------------------
Name: Patrick J. Carney
Title: Manager and President
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<PAGE>
EXHIBIT A
DIAGRAM OF SUBLEASED PREMISES
[to be attached]
A-1
<PAGE>
[EXE LETTERHEAD]
October 27, 1999
LAB Holdings, Inc.
12740 Hillcrest Road
Dallas, Texas 75230
Attention: Lyle A. Baack, President
Dear Lyle:
Pursuant to our recent conversations and your e-mail of October 21, 1999, EXE
proposes the following settlement of all matters between EXE and LAB Holdings
relating to (i) the Lease Agreement, dated August 15, 1997, as amended by
letters dated February 10, 1998 and July 21, 1998 (the "Lease"), between EXE (as
successor to Dallas Systems Corporation) and LAB Holdings and (ii) any assets or
the proceeds of any assets (collectively, "Assets") now or previously located on
or related to the Premises (as defined in the Lease):
EXE will pay to LAB Holdings an aggregate of $852,047 as follows:
1. An aggregate of $346,276 in respect of rent under the Lease for
the months of July, August, September and October 1999, with such
amount to be paid by November 1, 1999;
2. An aggregate of $5,771 as interest on the amounts due from EXE as
referred to in paragraph 1 above, with such amount to be paid by
November 1, 1999; and
3. An aggregate of $500,000 in respect of any additional amounts that
EXE owes or will owe to LAB Holdings in respect of the Lease, with
such amount to be paid in five (5) equal monthly installments of
$90,000 each by the 5th of each month beginning January 5, 2000
and ending May 5, 2000, and one (1) final installment of $50,000
on June 5, 2000.
By acceptance of the terms of this letter as described below, LAB Holdings
acknowledges that payment of the above amounts will represent payment in full by
EXE in respect of the Lease and in respect of any Assets. Upon acceptance of the
terms of this letter, the Lease will terminate and EXE and LAB Holdings each
release the other from any and all claims against the other and the other's
agents, employees, officers, directors, stockholders and affiliates arising
under or relating to the Lease or any Assets, except as otherwise explicitly
provided in this letter.
Please sign in the appropriate space below to acknowledge and agree to the terms
of this letter and return your signed copy to me by fax and overnight mail or
hand delivery at your earliest convenience.
Sincerely,
/s/ Michael Burstein
Michael Burstein
Director--Corporate Finance and Assistant Treasurer
ACKNOWLEDGED AND AGREED:
LAB HOLDINGS, INC.
By: /s/ Lyle A. Baack
------------------------------
Lyle A. Baack
President
cc: Adam C. Belsky
<PAGE>
================================================================================
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
among
EXE TECHNOLOGIES, INC.,
GENERAL ATLANTIC PARTNERS 41, L.P.,
GENERAL ATLANTIC PARTNERS 57, L.P.,
GAP COINVESTMENT PARTNERS, L.P.,
GAP COINVESTMENT PARTNERS II, L.P.,
MSD 1998 GRAT #6,
TRIPLE MARLIN INVESTMENTS LLC,
ROTHKO INVESTMENTS LLC,
MSD PORTFOLIO L.P. - INVESTMENTS,
TCV III (GP),
TCV III, L.P.,
TCV III (Q), L.P.,
TCV III STRATEGIC PARTNERS, L.P.,
and
THE STOCKHOLDERS NAMED HEREIN
---------------------------
Dated as of: September 29, 1999
---------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions................................................................2
2. General; Securities Subject to this Agreement..............................7
(a) Grant of Rights...................................................7
(b) Registrable Securities............................................8
(c) Holders of Registrable Securities.................................8
3. Demand Registration........................................................8
(a) Request for Demand Registration...................................8
(b) Incidental or "Piggy-Back" Rights with Respect
to a Demand Registration........................................9
(c) Effective Demand Registration.....................................9
(d) Expenses.........................................................10
(e) Underwriting Procedures..........................................10
(f) Selection of Underwriters........................................10
4. Incidental or "Piggy-Back" Registration...................................11
(a) Request for Incidental Registration..............................11
(b) Expenses.........................................................12
5. Form S-3 Registration.....................................................12
(a) Request for a Form S-3 Registration..............................12
(b) Form S-3 Underwriting Procedures.................................12
(c) Limitations on Form S-3 Registrations............................13
(d) Expenses.........................................................13
(e) No Demand Registration...........................................14
6. Holdback Agreements.......................................................14
(a) Restrictions on Public Sale by Designated Holders................14
(b) Restrictions on Public Sale by the Company.......................14
7. Registration Procedures...................................................15
(a) Obligations of the Company.......................................15
(b) Seller Information...............................................18
(c) Notice to Discontinue............................................18
(d) Registration Expenses............................................18
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8. Indemnification; Contribution.............................................19
(a) Indemnification by the Company...................................19
(b) Indemnification by Designated Holders............................19
(c) Conduct of Indemnification Proceedings...........................20
(d) Contribution.....................................................20
9. Rule 144..................................................................21
10. Miscellaneous.............................................................21
(a) Recapitalizations, Exchanges, etc. ..............................21
(b) No Inconsistent Agreements.......................................22
(c) Remedies.........................................................22
(d) Amendments and Waivers...........................................22
(e) Notices..........................................................23
(f) Successors and Assigns; Third Party Beneficiaries................25
(g) Counterparts.....................................................25
(h) Headings.........................................................26
(i) Governing Law....................................................26
(j) Severability.....................................................26
(k) Entire Agreement.................................................26
(l) Further Assurances...............................................26
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<PAGE>
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is hereby
made on this 29th day of September, 1999 by and among EXE Technologies, Inc., a
Delaware corporation (the "Company"), General Atlantic Partners 57, L.P., a
Delaware limited partnership ("GAP 57"), General Atlantic Partners 41, L.P., a
Delaware limited partnership ("GAP LP"), GAP Coinvestment Partners, L.P., a New
York limited partnership ("GAP Coinvestment"), GAP Coinvestment Partners II,
L.P., a Delaware limited partnership ("GAP Coinvestment II"), MSD 1998 GRAT #6
("MSD"), Triple Marlin Investments LLC, a Delaware limited liability company,
("Triple Marlin"), Rothko Investments LLC, a Delaware limited liability company
("Rothko"), MSD Portfolio L.P. - Investments, a Delaware limited partnership
("MSD Portfolio"), TCV III (GP), a Delaware general partnership, TCV III, L.P.,
a Delaware limited partnership, TCV III (Q), L.P., a Delaware limited
partnership, TCV III Strategic Partners, L.P., a Delaware limited partnership
(together with TCV III (GP), TCV III, L.P. and TCV III (Q), L.P. collectively,
the "TCV Purchasers"), Lyle Baack ("Baack"), and Nigel Bahadur, Adam Belsky and
Raymond Hood (the "Neptune Stockholders," and collectively with Baack, the
"Major Stockholders").
PRELIMINARY STATEMENTS
A. The Company, GAP LP, GAP Coinvestment, MSD, Triple Marlin, Rothko, and
the Major Stockholders are parties to that certain Amended and Restated
Registration Rights Agreement, dated as of July 10, 1998 (the "Amended and
Restated Registration Rights Agreement").
B. GAP LP and GAP Coinvestment own all of the issued and outstanding shares
of the Company's Series A Convertible Participating Preferred Stock, par value
$0.01 per share (the "Series A Preferred Stock"), and of the Company's Series B
Convertible Preferred Stock, par value $0.01 per share (the "Series B Preferred
Stock").
C. MSD, Triple Marlin, and Rothko own all of the issued and outstanding
shares of the Company's Series C Convertible Preferred Stock, par value $0.01
per share (the "Series C Preferred Stock").
D. The EXE Stockholders (as defined below) own a majority of the issued and
outstanding shares of the Company's Class A Common Stock (as defined below).
E. Each of GAP 57, GAP Coinvestment II, the TCV Purchasers, and MSD
Portfolio have agreed to purchase shares of the Company's Series D Convertible
Preferred Stock, par value
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<PAGE>
$0.01 per share (the "Series D Preferred Stock"), pursuant to that certain
Series D Preferred Stock Purchase Agreement dated of even date herewith (the
"Series D Stock Purchase Agreement").
F. Concurrently with the execution and delivery of this Agreement, the
Company, GAP LP, GAP Coinvestment, MSD, Triple Marlin, Rothko, MSD Portfolio,
the EXE Stockholders, GAP 57, GAP Coinvestment II and the TCV Purchasers are
entering into a Second Amended and Restated Stockholders Agreement (the "Second
Amended and Restated Stockholders Agreement"), pursuant to which the parties
have agreed, among other things, to certain first offer, tag-along and
preemptive rights and corporate governance rights and obligations.
G. Each of the Company, GAP LP, GAP Coinvestment, MSD, Triple Marlin,
Rothko and the Major Stockholders deems it desirable (a) to enter into this
Agreement to induce GAP 57, GAP Coinvestment II, the TCV Purchasers and MSD
Portfolio to purchase the shares of Series D Preferred Stock pursuant to the
Series D Stock Purchase Agreement and to enter into the Second Amended and
Restated Stockholders Agreement, and (b) to amend and restate the Amended and
Restated Registration Rights Agreement.
IN CONSIDERATION of the foregoing and of the mutual covenants and
agreements set forth in this Agreement and for good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties to this Agreement, intending to be legally bound, hereby agree as
follows:
1. Definitions. As used in this Agreement the following terms have the
meanings indicated:
"AFFILIATE" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. The
following shall be deemed to be Affiliates of GAP LP and GAP 57: (a) GAP LLC,
the members of GAP LLC, the limited partners of GAP LP, and the limited partners
of GAP 57; (b) any Affiliate of GAP LLC, the members of GAP LLC, the limited
partners of GAP LP, and the limited partners of GAP 57; and (d) any limited
liability company or partnership a majority of whose members or partners, as the
case may be, are members, former members, consultants or key employees of GAP
LLC. GAP 57, GAP LP, GAP Coinvestment and GAP Coinvestment II shall be deemed to
be Affiliates of one another. The following shall be deemed to be Affiliates of
MSD: (x) Michael Dell; (y) the limited partners of MSD L.P.; and (z) any
Affiliate of Michael Dell, including MSD Capital, L.P., and the limited partners
of MSD Capital, L.P. The following shall be
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<PAGE>
deemed to be Affiliates of Triple Marlin: (I) the members of Triple Marlin; and
(II) any Affiliate of the members of Triple Marlin. The following shall be
deemed to be Affiliates of Rothko: (A) the members of Rothko; and (B) any
Affiliate of the members of Rothko. The following shall be deemed to be
Affiliates of MSD Portfolio: (X) the members of MSD Portfolio; and (Y) any
Affiliate of the members of MSD Portfolio. MSD, Triple Marlin, Rothko and MSD
Portfolio shall be deemed to be Affiliates of one another. The following shall
be deemed to be Affiliates of each of the TCV Purchasers: (1) Technology
Crossover Management III, L.L.C.; (2) the members of Technology Crossover
Management III, L.L.C.; (3) any Affiliate of Technology Crossover Management
III, L.L.C.; and (4) the limited partners of each of the TCV Purchasers.
"ALLOCATION SHARES" shall have the meaning set forth in that certain
Allocation Agreement entered into of even date herewith among the Company and
GAP 57, GAP Coinvestment II and the TCV Purchasers.
"APPROVED UNDERWRITER" has the meaning set forth in Section 3(f) of
this Agreement.
"BAACK" has the meaning set forth in the recitals to this Agreement.
"BOARD OF DIRECTORS" means the Company's Board of Directors.
"CLASS A COMMON STOCK" means the Company's Class A Common Stock, par
value $.01 per share, or any other equity securities of the Company into which
such securities are converted, reclassified, reconstituted or exchanged.
"CLASS B COMMON STOCK" means the Company's Class B Common Stock, par
value $.01 per share, or any other equity securities of the Company into which
such securities are converted, reclassified, reconstituted or exchanged.
"CLOSING PRICE" means, with respect to the Registrable Securities, as
of the date of determination: (a) the closing price per share for Registrable
Securities on such date published in the WALL STREET JOURNAL or, if no such
closing price on such date is published in the WALL STREET JOURNAL, then the
average of the closing bid and asked prices on such date, as officially reported
on the principal national securities exchange (including, without limitation,
The Nasdaq Stock Market, Inc.) on which the Registrable Securities are then
listed or admitted to trading; (b) if the Registrable Securities are not then
listed or admitted to trading on any national securities exchange but are
designated as national market system securities by the NASD, then the last
trading price per share for Registrable Securities on such date; (c) if there
shall have been no trading on such date or if the Registrable Securities are not
so designated, then the average of the reported closing bid and asked prices of
the Registrable Securities on such date as shown by The Nasdaq Stock Market,
Inc. (or its successor) and reported by any member firm of the New York Stock
Exchange, Inc. selected by the Company; or (d) if none of (a), (b) or (c) is
applicable, then a market price per share reasonably determined in good faith by
the Board of Directors or, if such determination is not reasonably satisfactory
to the Designated Holder for whom such
<PAGE>
determination is being made, then by a nationally recognized investment banking
firm selected by the Company and such Designated Holder, the expenses for which
shall be borne equally by the Company and such Designated Holder.
"COMPANY" has the meaning set forth in the preamble to this Agreement.
"COMPANY UNDERWRITER" has the meaning set forth in Section 4(a) of
this Agreement.
"DELL STOCKHOLDERS" means MSD, Triple Marlin, Rothko and MSD Portfolio
and any Affiliate thereof to which Registrable Securities are transferred in
accordance with Section 2.2 of the Second Amended and Restated Stockholders
Agreement.
"DEMAND REGISTRATION" has the meaning set forth in Section 3(a) of
this Agreement.
"DESIGNATED HOLDER" means each of the EXE Stockholders, the General
Atlantic Stockholders, the Dell Stockholders and the TCV Stockholders and any
transferee of any of them to whom Registrable Securities have been transferred
in accordance with the provisions of the Second Amended and Restated
Stockholders Agreement and Section 10(f) of this Agreement, other than a
transferee to whom such securities have been transferred pursuant to a
Registration Statement under the Securities Act or Rule 144 or Regulation S
under the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXE STOCKHOLDERS" means the Major Stockholders and any Permitted
Transferee (as defined in the Second Amended and Restated Stockholders
Agreement) thereof to which Registrable Securities are transferred in accordance
with Section 2.2 of the Second Amended and Restated Stockholders Agreement.
"GAP COINVESTMENT" has the meaning set forth in the preamble to this
Agreement.
"GAP COINVESTMENT II" has the meaning set forth in the preamble to
this Agreement.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and GAP 57, and any
successor to such entity.
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"GAP 57" has the meaning set forth in the preamble to this Agreement.
"GAP LP" has the meaning set forth in the preamble to this Agreement.
"GENERAL ATLANTIC STOCKHOLDERS" means GAP 57, GAP LP, GAP
Coinvestment, GAP Coinvestment II and any Affiliate thereof to which Registrable
Securities are transferred in accordance with Section 2.2 of the Second Amended
and Restated Stockholders Agreement.
"HOLDERS' COUNSEL" has the meaning set forth in Section 7(a)(i) of
this Agreement.
"INCIDENTAL REGISTRATION" has the meaning set forth in Section 4(a) of
this Agreement.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(c) of this
Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(c) of this
Agreement.
"INITIAL PUBLIC OFFERING" means a firm commitment underwritten initial
public offering pursuant to an effective Registration Statement filed under the
Securities Act.
"INITIATING HOLDERS" has the meaning set forth in Section 3(a) of this
Agreement.
"INVESTOR STOCKHOLDERS" means, collectively, the Dell Stockholders,
the General Atlantic Stockholders and the TCV Stockholders.
"INSPECTOR" has the meaning set forth in Section 7(a)(viii) of this
Agreement.
"IPO EFFECTIVENESS DATE" means the closing date of the Company's
Initial Public Offering.
"MAJOR STOCKHOLDERS" has the meaning set forth in the recitals to this
Agreement.
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"MARKET PRICE" means, on any date of determination, the average of the
daily Closing Price of the Registrable Securities for the immediately preceding
thirty (30) days on which the national securities exchanges are open for
trading.
"NASD" has the meaning set forth in Section 7(a)(xiv) of this
Agreement.
"NEPTUNE STOCKHOLDERS" has the meaning set forth in the preamble to
this Agreement.
"PERSON" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, limited liability company, government (or an
agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
"PREFERRED STOCK" means, collectively, the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock.
"RECORDS" has the meaning set forth in Section 7(a)(viii) of this
Agreement.
"REGISTRABLE SECURITIES" means each of the following: (a) any and all
shares of Class A Common Stock owned by the Designated Holders or issued or
issuable to a Designated Holder upon conversion of shares of Class B Common
Stock or Preferred Stock, including, without limitation, any shares of Class A
Common Stock issued or issuable upon conversion of any shares of preferred stock
acquired by any of the Designated Holders after the date hereof; (b) any other
shares of Class A Common Stock acquired or owned by any of the Designated
Holders prior to the IPO Effectiveness Date, or acquired or owned by any of the
Designated Holders after the IPO Effectiveness Date if such Designated Holder is
an Affiliate of the Company; and (c) any shares of Class A Common Stock or
voting common stock issued or issuable to any of the Designated Holders with
respect to shares of Class A Common Stock, Class B Common Stock or Preferred
Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise and shares of Class A Common Stock or voting common
stock issuable upon conversion, exercise or exchange thereof.
"REGISTRATION EXPENSES" has the meaning set forth in Section 7(d) of
this Agreement.
"REGISTRATION STATEMENT" means a Registration Statement filed pursuant
to the Securities Act.
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"SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" has the meaning
set forth in the Preliminary Statements to this Agreement.
"S-3 INITIATING HOLDERS" has the meaning set forth in Section 5(a) of
this Agreement.
"S-3 REGISTRATION" has the meaning set forth in Section 5(a) of this
Agreement.
"SEC" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SERIES A PREFERRED STOCK" has the meaning set forth in the
Preliminary Statements to this Agreement.
"SERIES B PREFERRED STOCK" has the meaning set forth in the
Preliminary Statements to this Agreement.
"SERIES C PREFERRED STOCK" has the meaning set forth in the
Preliminary Statements to this Agreement.
"SERIES D PREFERRED STOCK" has the meaning set forth in the
Preliminary Statements to this Agreement.
"TCV PURCHASERS" has the meaning set forth in the preamble to this
Agreement.
"TCV STOCKHOLDERS" means the TCV Purchasers and any Affiliate thereof
to which Registrable Securities are transferred in accordance with Section 2.2
of the Second Amended and Restated Stockholders Agreement.
2. GENERAL; SECURITIES SUBJECT TO THIS AGREEMENT.
(a) GRANT OF RIGHTS. The Company hereby grants registration rights to
the EXE Stockholders, the Dell Stockholders, the General Atlantic Stockholders
and the TCV Stockholders upon the terms and conditions set forth in this
Agreement.
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<PAGE>
(b) REGISTRABLE SECURITIES. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities when (i) a
Registration Statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective Registration Statement, (ii)
the entire amount of Registrable Securities proposed to be sold in a single
sale, in the opinion of counsel satisfactory to the Company and the Designated
Holder, each in their reasonable judgment, may be distributed to the public
without any limitation as to volume pursuant to Rule 144 (or any successor
provision then in effect) under the Securities Act or (iii) the Registrable
Securities are proposed to be sold or distributed by a Person not entitled to
the registration rights granted by this Agreement.
(c) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns of record Registrable
Securities, or holds an option to purchase, or a security convertible into or
exercisable or exchangeable for, Registrable Securities whether or not such
acquisition or conversion has actually been effected and disregarding any legal
restrictions upon the exercise of such rights. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, then the Company may act upon the
basis of the instructions, notice or election received from the registered owner
of such Registrable Securities. Registrable Securities issuable upon exercise of
an option or upon conversion of another security shall be deemed outstanding for
the purposes of this Agreement.
3. Demand Registration.
(a) REQUEST FOR DEMAND REGISTRATION. At any time after the IPO
Effectiveness Date, each of (i) the Investor Stockholders holding a majority of
the Registrable Securities held by the Investor Stockholders, acting as a group
through their written designee, or (ii) the EXE Stockholders holding a majority
of the Registrable Securities held by the EXE Stockholders, acting as a group
through their written designee (the "Initiating Holders") may make a written
request to the Company to register, under the Securities Act (other than
pursuant to a Registration Statement on Form S-4 or S-8 or any successor
thereto) and under the securities or "blue sky" laws of any jurisdiction
designated by such holder or holders (a "Demand Registration"), the number of
Registrable Securities stated in such request; PROVIDED, HOWEVER, that the
Company shall not be obligated to effect more than two (2) Demand Registrations
for the Investor Stockholders and two (2) Demand Registrations for the EXE
Stockholders pursuant to this Section 3. For purposes of the preceding sentence,
two (2) or more Registration Statements filed in response to one (1) demand
shall be counted as one (1) Registration Statement. If at the time of any
request to register Registrable Securities pursuant to this Section 3(a), the
Company is engaged in, or has fixed plans to engage in, within thirty (30) days
of the time of such request, a registered public offering or is engaged in any
other activity which, in the good faith determination of the Board of Directors,
would be adversely affected by the requested
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<PAGE>
registration to the material detriment of the Company, then the Company may at
its option direct that such request be delayed for a reasonable period not in
excess of (i) three (3) months from the effective date of such offering or (ii)
the date of completion of such other material activity, as the case may be;
provided the Company is actively employing in good faith all reasonable efforts
to cause such registration to become effective or such other activity to be
completed, such right to delay a request to be exercised by the Company not more
than once in any one (1) year period. In addition, the Company shall not be
required to effect any registration within sixty (60) days after the effective
date of any other Registration Statement of the Company (other than a
registration on Form S-8). Each request for a Demand Registration by the
Initiating Holders shall state the amount of the Registrable Securities proposed
to be sold and the intended method of disposition thereof. Upon a request for a
Demand Registration, the Company shall promptly take such steps as are necessary
or appropriate to prepare for the registration of the Registrable Securities to
be registered.
(b) INCIDENTAL OR "PIGGY-BACK" RIGHTS WITH RESPECT TO A DEMAND
REGISTRATION. Each of the Designated Holders (other than the Initiating Holders)
may offer its or his Registrable Securities under any Demand Registration
pursuant to this Section 3. Within ten (10) days after the receipt from an
Initiating Holder of a request for a Demand Registration, the Company shall (i)
give written notice thereof to all of the Designated Holders (other than the
Initiating Holders) and (ii) subject to Section 3(e), include in such
registration all of the Registrable Securities held by such Designated Holders
from whom the Company has received a written request for inclusion therein
within ten (10) days of the receipt by such Designated Holders of such written
notice referred to in clause (i) above. Each such request by such Designated
Holders shall specify the number of Registrable Securities proposed to be
registered and the intended method of disposition thereof. The failure of any
Designated Holder to respond within such 10-day period referred to in clause
(ii) above shall be deemed to be a waiver of such Designated Holder's rights
under this Section 3 with respect to such Demand Registration, PROVIDED that any
Designated Holder may waive its rights under this Section 3 prior to the
expiration of such 10-day period by giving written notice to the Company, with a
copy to the Initiating Holder.
(c) EFFECTIVE DEMAND REGISTRATION. The Company shall use its best
efforts to cause any such Demand Registration to become and remain effective not
later than ninety (90) days after it receives a request under Section 3(a)
hereof. A registration shall not constitute a Demand Registration until it has
become effective and remains continuously effective for the lesser of (i) the
period during which all Registrable Securities registered in the Demand
Registration are sold or (ii) 120 days; PROVIDED, HOWEVER, that a registration
shall not constitute a Demand Registration if (x) after such Demand Registration
has become effective, such registration or the related offer, sale or
distribution of Registrable Securities thereunder is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court for any reason not attributable to the Initiating Holders and
such
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<PAGE>
interference is not thereafter eliminated or (y) the conditions specified
in the underwriting agreement, if any, entered into in connection with such
Demand Registration are not satisfied or waived, other than by reason of a
failure by the Initiating Holders.
(d) EXPENSES. In any registration initiated as a Demand Registration,
the Company shall pay all Registration Expenses (other than underwriting
discounts and commissions) in connection therewith, whether or not such Demand
Registration becomes effective.
(e) UNDERWRITING PROCEDURES. If the Initiating Holders holding a
majority of the Registrable Securities held by all of the Initiating Holders to
which the requested Demand Registration relates so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of a firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter (as
defined below) selected in accordance with Section 3(f). In connection with any
Demand Registration under this Section 3 involving an underwriting, none of the
Registrable Securities held by any Designated Holder making a request for
inclusion of such Registrable Securities pursuant to Section 3(b) hereof shall
be included in such underwriting unless such Designated Holder accepts the terms
of the underwriting as accepted by the Company, the Initiating Holders and the
Approved Underwriter. If the Approved Underwriter advises the Company in writing
that in its opinion the aggregate amount of such Registrable Securities
requested to be included in such offering is sufficiently large to have a
material adverse effect on the success of such offering, then the Company shall
include in such registration only the aggregate amount of Registrable Securities
that in the opinion of the Approved Underwriter may be sold without any such
material adverse effect and shall reduce the amount of Registrable Securities to
be included in such registration, FIRST as to the Company, SECOND as to the
class of Designated Holders who are not members of the class of Designated
Holders (the Investor Stockholders or the EXE Stockholders, as the case may be)
that initiated such registration and who requested to participate in such
registration pursuant to Section 3(b) hereof as a group, if any, and THIRD as to
the class of Designated Holders that initiated such registration as a group, pro
rata within each group based on the number of Registrable Securities entitled to
be included therein owned by each Designated Holder participating in such Demand
Registration.
(f) SELECTION OF UNDERWRITERS. If any Demand Registration or S-3
Registration, as the case may be, of Registrable Securities is in the form of an
underwritten offering, the Initiating Holders or S-3 Initiating Holders, as the
case may be, holding a majority of the Registrable Securities held by all such
Initiating Holders or S-3 Initiating Holders shall select and obtain an
investment banking firm of national reputation to act as the managing
underwriter of the offering (the "Approved Underwriter"); PROVIDED, HOWEVER,
that the Approved Underwriter shall, in any case, be acceptable to the Company
in its reasonable judgment.
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<PAGE>
4. INCIDENTAL OR "PIGGY-BACK" REGISTRATION.
(a) REQUEST FOR INCIDENTAL REGISTRATION. At any time after the IPO
Effectiveness Date, if the Company proposes to file a Registration Statement
under the Securities Act with respect to an offering by the Company for its own
account (other than a Registration Statement on Form S-4 or S-8 or any successor
thereto), then the Company shall give written notice of such proposed filing to
each of the Designated Holders of Registrable Securities at least thirty (30)
days before the anticipated filing date, and such notice shall describe the
proposed registration and distribution and offer such Designated Holders the
opportunity to register the number of Registrable Securities as each such holder
may request (an "Incidental Registration"); PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Neptune Stockholders may exercise their
rights to an Incidental Registration in respect of the Company's Initial Public
Offering for an aggregate number of shares not to exceed twenty percent (20%) of
the total number of Registrable Securities held by the Neptune Stockholders (or
their Permitted Transferees, as defined in the Second Amended and Restated
Stockholders Agreement) as a group. The Company shall, and shall use its best
efforts (within ten (10) days of the notice provided for in the preceding
sentence) to cause the managing underwriter or underwriters of a proposed
underwritten offering (the "Company Underwriter") to permit each of the
Designated Holders who have requested in writing to participate in the
Incidental Registration to include its or his Registrable Securities in such
offering on the same terms and conditions as the securities of the Company
included therein. In connection with any Incidental Registration under this
Section 4(a) involving an underwriting, the Company shall not be required to
include any Registrable Securities in such underwriting unless the holders
thereof accept the terms of the underwriting as agreed upon between the Company
and the Company Underwriter, and then only in such quantity as will not, in the
opinion of the Company Underwriter, jeopardize the success of the offering by
the Company. If in the written opinion of the Company Underwriter the
registration of all or part of the Registrable Securities which the Designated
Holders have requested to be included would materially adversely affect such
offering, then the Company shall be required to include in such Incidental
Registration, to the extent of the amount that the Company Underwriter believes
may be sold without causing such adverse effect, FIRST, all of the securities to
be offered for the account of the Company; SECOND, in connection with an
Incidental Registration with respect to the Company's Initial Public Offering,
20% of the Registrable Securities to be offered for the accounts of the Neptune
Stockholders (or their Permitted Transferees, as defined in the Second Amended
and Restated Stockholders Agreement) as a group pursuant to this Section 4, pro
rata within such group based on the number of such Registrable Securities
included in the request for such Incidental Registration; THIRD, the Registrable
Securities to be offered for the account of the Designated Holders (including
the Registrable Securities of the Neptune Stockholders other than those, if any,
included in an Incidental Registration with respect to the Company's Initial
Public Offering pursuant to the immediately preceding clause) pursuant to this
Section 4, pro rata based on the number of Registrable Securities entitled to be
included therein owned by each Designated
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<PAGE>
Holder participating in such Incidental Registration; and FOURTH, any other
securities requested to be included in such underwriting.
(b) EXPENSES. The Company shall bear all Registration Expenses (other
than underwriting discounts and commissions) in connection with any Incidental
Registration pursuant to this Section 4, whether or not such Incidental
Registration becomes effective.
5. FORM S-3 REGISTRATION.
(a) REQUEST FOR A FORM S-3 REGISTRATION. Notwithstanding the
limitations on the obligations of the Company set forth in Section 3(a) of this
Agreement, in the event that the Company shall receive from (i) any of the
Investor Stockholders or (ii) the EXE Stockholders holding a majority of the
Registrable Securities held by the EXE Stockholders, acting as a group through
their written designee (the "S-3 Initiating Holders") a written request that the
Company register, under the Securities Act and the securities and "blue sky"
laws of any jurisdiction reasonably designated by such holder or holders, on
Form S-3 (or any successor form then in effect) (an "S-3 Registration"), all or
a portion of the Registrable Securities owned by such S-3 Initiating Holders,
the Company shall give written notice of such request to all of the Designated
Holders (other than the S-3 Initiating Holders) at least thirty (30) days before
the anticipated filing date of such Form S-3, and such notice shall describe the
proposed registration and offer such Designated Holders the opportunity to
register the number of Registrable Securities as each such Designated Holder may
request in writing to the Company, given within fifteen (15) days after their
receipt from the Company of the written notice of such registration. The Company
shall (i) take such steps as are necessary or appropriate to prepare for the
registration of the Registrable Securities to be registered and (ii) use its
reasonable best efforts to (x) cause such registration pursuant to this Section
5(a) to become and remain effective as soon as practicable, but in any event not
later than ninety (90) days after it receives a request therefor and (y) include
in such offering the Registered Securities of the Designated Holders (other than
the S-3 Initiating Holders) who have requested in writing to participate in such
registration on the same terms and conditions as the Registrable Securities of
the S-3 Initiating Holders included therein.
(b) FORM S-3 UNDERWRITING PROCEDURES. If the S-3 Initiating Holders
holding a majority of the Registrable Securities held by all of the S-3
Initiating Holders to which the requested S-3 Registration relates so elect, the
Company shall use its reasonable efforts to cause such S-3 Registration pursuant
to this Section 5 to be in the form of a firm commitment underwritten offering
and the managing underwriter or underwriters selected for such offering shall be
the Approved Underwriter selected in accordance with Section 3(f). In connection
with any S-3 Registration under Section 5(a) involving an underwriting, the
Company shall not be required to include any Registrable Securities in such
underwriting unless the Designated
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Holders thereof accept the terms of the underwriting as agreed upon between the
Company, the Approved Underwriter and the S-3 Initiating Holders, and then only
in such quantity as will not, in the opinion of such underwriter, jeopardize the
success of such offering by the S-3 Initiating Holders. If in the written
opinion of the Approved Underwriter the registration of all or part of the
Registrable Securities which the S-3 Initiating Holders and the other Designated
Holders have requested to be included would materially adversely affect such
public offering, then the Company shall be required to include in the
underwriting, to the extent of the amount that the Approved Underwriter believes
may be sold without causing such adverse effect, FIRST, the Registrable
Securities to be offered for the account of the S-3 Initiating Holders and the
Registrable Securities to be offered for the account of the other Designated
Holders who requested inclusion of their Registrable Securities pursuant to
Section 5(a), pro rata based on the number of Registrable Securities entitled to
be included therein owned by each Designated Holder participating in such S-3
Registration, and SECOND, any other securities requested to be included in such
underwriting.
(c) LIMITATIONS ON FORM S-3 REGISTRATIONS. If at the time of any
request to register Registrable Securities pursuant to Section 5(a), the Company
is engaged in, or has fixed plans to engage in within thirty (30) days of the
time of such request, a registered public offering or is engaged in any other
activity which, in the good faith determination of the Board of Directors, would
be adversely affected by the requested S-3 Registration to the material
detriment of the Company, then the Company may at its option direct that such
request be delayed for a reasonable period not in excess of three (3) months
from the effective date of such offering or the date of completion of such other
material activity, as the case may be; provided the Company is actively
employing in good faith all reasonable efforts to cause such registration to
become effective or such other activity to be completed, such right to delay a
request to be exercised by the Company not more than once in any one (1) year
period. In addition, the Company shall not be required to effect any
registration pursuant to Section 5(a) (i) within three (3) months after the
effective date of any other Registration Statement of the Company (other than a
registration on Form S-8), (ii) if within the 12-month period preceding the date
of such request, the Company has effected two (2) registrations on Form S-3
pursuant to Section 5(a) and all of the Registrable Securities registered
therein have been sold, (iii) if Form S-3 is not available for such offering by
the S-3 Initiating Holders or (iv) if the S-3 Initiating Holders, together with
the Designated Holders (other than the S-3 Initiating Holders) registering
Registrable Securities in such registration, propose to sell their Registrable
Securities at an aggregate price (calculated based upon the Market Price of the
Registrable Securities on the date of filing of the Form S-3 with respect to
such Registrable Securities) to the public of less than $1,000,000.
(d) EXPENSES. In connection with any registration pursuant to this
Section 5, the Company shall pay all Registration Expenses (other than
underwriting discounts and commissions), whether or not such registration
becomes effective; PROVIDED, HOWEVER, that
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the Company shall not be required to pay the Registration Expenses for a
registration pursuant to this Section 5 if the Company has paid the Registration
Expenses of another registration pursuant to this Section 5 in the preceding
12-month period. All Registration Expenses incurred in connection with any
registration pursuant to this Section 5 for which the Company has no obligation
to pay such Registration Expenses shall be borne by the Designated Holders who
participate in such registration on a pro rata basis according to the number of
Registrable Securities owned by the Designated Holders that are included in such
registration at the time that such registration becomes effective.
(e) No Demand Registration. No registration requested by any
Designated Holder pursuant to this Section 5 shall be deemed a Demand
Registration pursuant to Section 3.
6. Holdback Agreements.
(a) RESTRICTIONS ON PUBLIC SALE BY DESIGNATED HOLDERS. If and to the
extent requested by the Company, the Initiating Holders or the S-3 Initiating
Holders, as the case may be, in the case of a non-underwritten public offering
or if and to the extent requested by the Approved Underwriter or the Company
Underwriter, as the case may be, in the case of an underwritten public offering,
each Designated Holder of Registrable Securities agrees not to effect any public
sale or distribution of any Registrable Securities or of any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Securities Act, during the
90-day period or such shorter period agreed upon by such Designated Holder and
the requesting party beginning on the effective date of such Registration
Statement (except as part of such registration); PROVIDED HOWEVER, that the
foregoing shall not be applicable to (i) any Designated Holder holding less than
one percent (1%) of the shares of Common Stock outstanding on a fully diluted
basis as of the effective date of the Registration Statement with respect to any
such public offering, and (ii) any shares of Common Stock of the Company that
have been registered under the Securities Act (other than the Allocation Shares)
or otherwise purchased in open market transactions.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company agrees not
to effect any public sale or distribution of any of its securities, or any
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to registrations on Form S-4 or S-8 or any successor thereto),
during the period beginning on the effective date of any Registration Statement
in which the Designated Holders of Registrable Securities are participating and
ending on the earlier of (i) the date on which all Registrable Securities
registered on such Registration Statement are sold and (ii) 120 days after the
effective date of such Registration Statement (except as part of such
registration).
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<PAGE>
7. REGISTRATION PROCEDURES.
(a) OBLIGATIONS OF THE COMPANY. Whenever registration of Registrable
Securities has been requested pursuant to Section 3, Section 4 or Section 5 of
this Agreement, the Company shall use its best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
intended method of distribution thereof as quickly as practicable, and in
connection with any such request, the Company shall, as expeditiously as
possible:
(i) use its best efforts to prepare and file with the SEC a
Registration Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of such Registrable Securities in accordance with the intended
method of distribution thereof, and use its best efforts to cause such
Registration Statement to become effective; PROVIDED, HOWEVER, that (x) before
filing a Registration Statement or prospectus or any amendments or supplements
thereto, the Company shall provide counsel selected by the Designated Holders
holding a majority of the Registrable Securities being registered in such
registration ("Holders' Counsel") and any other Inspector (as defined below)
with an adequate and appropriate opportunity to participate in the preparation
of such Registration Statement and each prospectus included therein (and each
amendment or supplement thereto) to be filed with the SEC, which documents shall
be subject to the review of Holders' Counsel, and (y) the Company shall notify
the Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC and take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(ii) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
the lesser of (x) 120 days and (y) such shorter period which will terminate when
all Registrable Securities covered by such Registration Statement have been
sold, and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement;
(iii) as soon as reasonably possible, furnish to each seller of
Registrable Securities, prior to filing a Registration Statement, copies of such
Registration Statement as is proposed to be filed, and thereafter such number of
copies of such Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
Registration Statement (including each preliminary prospectus) and such other
documents as each such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
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<PAGE>
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or "blue sky" laws of such jurisdictions
as any seller of Registrable Securities may request, and to continue such
qualification in effect in such jurisdiction for as long as permissible pursuant
to the laws of such jurisdiction, or for as long as any such seller requests or
until all of such Registrable Securities are sold, whichever is shortest, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable any such seller to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such seller; PROVIDED, HOWEVER, that the
Company shall not be required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 7(a)(iv), (y) subject itself to taxation in any such jurisdiction or (z)
consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause the Registrable Securities
covered by such Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) notify each seller of Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration Statement contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, and the
Company shall promptly prepare a supplement or amendment to such prospectus and
furnish to each seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, after delivery to the
purchasers of such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made;
(vii) enter into and perform customary agreements (including an
underwriting agreement in customary form with the Approved Underwriter or
Company Underwriter, if any, selected as provided in Section 3, Section 4 or
Section 5, as the case may be) and take such other actions as are prudent and
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;
(viii) make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition pursuant
to such Registration Statement, Holders' Counsel and any attorney, accountant or
other agent retained by any such seller or any managing underwriter (each, an
"Inspector" and collectively, the "Inspec-
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<PAGE>
tors"), all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (x)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement, (y) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or (z) the information in such Records was known to the Inspectors
on a non-confidential basis prior to its disclosure by the Company or has been
made generally available to the public. Each seller of Registrable Securities
agrees that it shall, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(ix) if such sale is pursuant to an underwritten offering, use
its best efforts to obtain a "cold comfort" letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by "cold comfort" letters as Holders' Counsel or
the managing underwriter reasonably request;
(x) use its best efforts to furnish, at the request of any seller
of Registrable Securities on the date such securities are delivered to the
underwriters for sale pursuant to such registration or, if such securities are
not being sold through underwriters, on the date the Registration Statement with
respect to such securities becomes effective, an opinion, dated such date, of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as such seller may reasonably request and are
customarily included in such opinions;
(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable but no later than fifteen (15) months after the
effective date of the Registration Statement, an earnings statement covering a
period of twelve (12) months beginning after the effective date of the
Registration Statement, in a manner which satisfies the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(xii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed, PROVIDED that the applicable listing requirements are satisfied;
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<PAGE>
(xiii) keep Holders' Counsel advised in writing as to the
initiation and progress of any registration under Section 3, Section 4 or
Section 5 hereunder;
(xiv) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
(xv) cooperate with each seller of Registrable Securities and
each underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD"); and
(xvi) use best efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
(b) SELLER INFORMATION. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing.
(c) NOTICE TO DISCONTINUE. Each Designated Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 7(a)(vi), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Designated Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 7(a)(vi) and, if so
directed by the Company, such Designated Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
7(a)(ii)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 7(a)(vi) to and including the date
when the Designated Holder shall have received the copies of the supplemented or
amended prospectus contemplated by and meeting the requirements of Section
7(a)(vi).
(d) REGISTRATION EXPENSES. Subject to the limitations set forth in
Section 5(d), the Company shall pay all expenses (other than underwriting
discounts and commissions) arising from or incident to the performance of, or
compliance with, this Agreement, including, without limitation, (i) SEC, stock
exchange and NASD registration and
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<PAGE>
filing fees, (ii) all fees and expenses incurred in complying with securities or
"blue sky" laws (including reasonable fees, charges and disbursements of counsel
in connection with "blue sky" qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) the fees, charges and
disbursements of counsel to the Company and of its independent public
accountants and any other accounting fees, charges and expenses incurred by the
Company (including, without limitation, any expenses arising from any "cold
comfort" letters or any special audits incident to or required by any
registration or qualification) and any legal fees, charges and expenses incurred
by the Company and, in the case of a Demand Registration, the Initiating Holders
and (v) any liability insurance or other premiums for insurance obtained in
connection with any Demand Registration or piggy-back registration thereon,
Incidental Registration or registration on Form S-3 pursuant to the terms of
this Agreement, regardless of whether such Registration Statement is declared
effective. All of the expenses described in this Section 7(d) are referred to
herein as "Registration Expenses."
8. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, each Designated
Holder, its officers, directors, trustees, partners, shareholders, members,
employees, advisors and agents and each Person who controls (within the meaning
of the Securities Act or the Exchange Act) such Designated Holder from and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue, or
allegedly untrue, statement of a material fact contained in any Registration
Statement, prospectus or preliminary prospectus or notification or offering
circular (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information concerning
such Designated Holder furnished in writing to the Company by such Designated
Holder expressly for use therein. The Company shall also provide customary
indemnities to any underwriters of the Registrable Securities, their officers,
directors and employees and each Person who controls such underwriters (within
the meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Designated Holders of
Registrable Securities.
(b) INDEMNIFICATION BY DESIGNATED HOLDERS. In connection with any
Registration Statement in which a Designated Holder is participating pursuant to
Section 3, Section 4 or Section 5 hereof, each such Designated Holder shall
furnish to the Company in writing such information with respect to such
Designated Holder as the Company may reasonably request or as may be required by
law for use in connection with any such Registration Statement or prospectus and
each Designated Holder agrees to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, any underwriter retained by the Company
and
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<PAGE>
their respective directors, officers, employees and each Person who controls
the Company or such underwriter (within the meaning of the Securities Act and
the Exchange Act) to the same extent as the foregoing indemnity from the Company
to the Designated Holders, but only with respect to any such information with
respect to such Designated Holder furnished in writing to the Company by such
Designated Holder expressly for use therein; PROVIDED, HOWEVER, that the total
amount to be indemnified by such Designated Holder pursuant to this Section 8(b)
shall be limited to the net proceeds received by such Designated Holder in the
offering to which the Registration Statement or prospectus relates.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; PROVIDED, HOWEVER, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder unless, and only to the
extent that, such failure results in the Indemnifying Party's forfeiture of
substantive rights or defenses. If notice of commencement of any such action is
given to the Indemnifying Party as above provided, the Indemnifying Party shall
be entitled to participate in and, to the extent it may wish, jointly with any
other Indemnifying Party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees
to pay the same, (ii) the Indemnifying Party fails to assume the defense of such
action with counsel satisfactory to the Indemnified Party in its reasonable
judgment or (iii) the named parties to any such action (including any impleaded
parties) have been advised by such counsel that either (x) representation of
such Indemnified Party and the Indemnifying Party by the same counsel would be
inappropriate under applicable standards of professional conduct or (y) there
may be one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party. In either of such
cases, the Indemnifying Party shall not have the right to assume the defense of
such action on behalf of such Indemnified Party. No Indemnifying Party shall be
liable for any settlement entered into without its written consent, which
consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnification provided for in this Section
8 from the Indemnifying Party is unavailable to an Indemnified Party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses in such
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<PAGE>
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative faults of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Sections 8(a), 8(b) and 8(c), any legal or other
fees, charges or expenses reasonably incurred by such party in connection with
any investigation or proceeding; PROVIDED that the total amount to be
indemnified by such Designated Holder shall be limited to the net proceeds
received by such Designated Holder in the offering.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person.
9. RULE 144. The Company covenants that it shall (a) file any reports
required to be filed by it under the Exchange Act and (b) take such further
action as each Designated Holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rules 144
and 144A under the Securities Act), all to the extent required from time to time
to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the SEC. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
10. MISCELLANEOUS.
(a) RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to (i)
the shares of Class A Common Stock, (ii) any and all shares of voting common
stock of the Company into which the shares of Class A Common Stock or Class B
Common Stock are converted, exchanged or substituted in any recapitalization or
other capital reorganization by the Company and (iii) any and all equity
securities of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in
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<PAGE>
conversion of, in exchange for or in substitution of, the shares of Class A
Common Stock or Class B Common Stock and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations, recapitalizations and the
like occurring after the date hereof. The Company shall cause any successor or
assign (whether by sale, merger or otherwise) to enter into a new registration
rights agreement with the Designated Holders on terms substantially the same as
this agreement as a condition of any such transaction.
(b) NO INCONSISTENT AGREEMENTS. The Company represents and warrants
that it has not granted to any Person the right to request or require the
Company to register any securities issued by the Company, other than the rights
granted to the Designated Holders herein, except as set forth on Schedule 10(b).
The Company shall not enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Designated Holders in this
Agreement or grant any additional registration rights to any Person or with
respect to any securities which are not Registrable Securities which are prior
in right to or inconsistent with the rights granted in this Agreement.
(c) REMEDIES. The Designated Holders, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, shall be
entitled to specific performance of their rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.
(d) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless consented to in writing by each of (i) the Company, (ii) the EXE
Stockholders holding Registrable Securities representing (after giving effect to
any adjustments) at least sixty percent (60%) of the aggregate number of
Registrable Securities owned by all of the EXE Stockholders, (iii) the Investor
Stockholders holding Registrable Securities representing (after giving effect to
any adjustments) at least sixty percent (60%) of the aggregate number of
Registrable Securities owned by all of the Investor Stockholders other than the
TCV Stockholders, and (iv) the Investor Stockholders holding at least sixty
percent (60%) of the aggregate number of Registrable Securities (after giving
effect to any adjustments) which are issuable upon conversion of the Series D
Preferred Stock or have been issued upon conversion of the Series D Preferred
Stock; PROVIDED, HOWEVER, that if any amendment, supplement, modification or
waiver could reasonably be expected to have a material adverse effect on the
rights of a particular class or series of the Investor Stockholders, then such
amendment, supplement, modification or waiver shall not be effective unless
approved by the holders of the affected class or series representing (after
giving effect to any adjustments) at least sixty percent (60%) of the aggregate
number of Registrable Securities owned by such
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<PAGE>
affected class or series. Any such written consent shall be binding upon the
Company and all of the Designated Holders.
(e) Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be made by
registered or certified first-class mail, return receipt requested, telecopier,
courier service, overnight mail or personal delivery:
(i) if to the Company or the Major Stockholders:
c/o EXE Technologies, Inc.
8787 Stemmons Freeway
Dallas, Texas 75247
Telecopy: (214) 775-0912
Attention: Mr. Raymond Hood, President and
Chief Executive Officer
with a copy to:
Pepper Hamilton LLP
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312-2401
Telephone: (610) 640-7800
Telecopy: (610) 640-7835
Attention: Michael P. Gallagher, Esquire
(ii) if to any of the General Atlantic Stockholders:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Telephone: (203) 629-8600
Telecopy: (203) 622-8818
Attention: Mr. Steven A. Denning
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telephone: (212) 373-3000
Telecopy: (212) 757-3990
Attention: Matthew Nimetz, Esquire
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<PAGE>
(iii) if to any of the Dell Stockholders:
Triple Marlin Investments LLC
145 West 67th Street, Number 40-G
New York, New York 10023
Telephone:
Telecopy: (212) 721-6197
Attention: Mr. John Phelan
- and to -
MSD Capital L.P.
780 3rd Avenue, 43rd Floor
New York, NY 10017-2024
Telephone: (212) 303-1760
Telecopy: (212) 303-1622
Attention: Marc Lisker, Esquire
with a copy to:
Haynes and Boone, LLP
600 Congress Ave., Suite 1600
Austin, TX 78701-3236
Telephone: (512) 867-8400
Telecopy: (512) 867-8470
Attention: Paul A. Wehrmann, Esquire
(iv) if to any of the TCV Purchasers:
Technology Crossover Ventures
56 Main Street, Suite 210
Millburn, NJ 07041
Telephone: (973) 467-5320
Telecopy: (973) 467-5323
Attention: Robert C. Bensky
with a copy to:
Technology Crossover Ventures
575 High Street, Suite 400
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<PAGE>
Palo Alto, CA 94301
Telephone: (650) 614-8210
Telecopy: (650) 614-8222
Attention: Jay C. Hoag
(v) if to any other Designated Holder, at its address as it
appears on the record books of the Company.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier or
overnight mail, if delivered by commercial courier service or overnight mail;
five (5) business days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is mechanically acknowledged, if telecopied.
(f) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto. The Demand Registration rights of the
General Atlantic Stockholders, the Dell Stockholders, the TCV Stockholders and
the EXE Stockholders contained in Section 3 of this Agreement and the other
rights of each of the General Atlantic Stockholders, the Dell Stockholders, the
TCV Stockholders and the EXE Stockholders with respect thereto shall be, with
respect to any Registrable Security, (i) automatically transferred, in the case
of such rights of the General Atlantic Stockholders, among the General Atlantic
Stockholders, in the case of such rights of the Dell Stockholders, among the
Dell Stockholders, in the case of such rights of the TCV Stockholders, among the
TCV Stockholders, and, in the case of such rights of the EXE Stockholders, among
the EXE Stockholders and (ii) in all other cases, transferred only with the
consent of the Company. The incidental or "piggy-back" registration rights of
the Designated Holders contained in Sections 3(b) and 4 of this Agreement, its
Form S-3 registration rights contained in Section 5 of this Agreement and the
other rights of each of the Designated Holders with respect thereto shall be,
with respect to any Registrable Security, automatically transferred by such
Designated Holder to any Person who is the transferee of such Registrable
Security. All of the obligations of the Company hereunder shall survive any such
transfer. No Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of any of the rights granted
hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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<PAGE>
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law of any jurisdiction
(j) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, then the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Designated Holders shall be enforceable to
the fullest extent permitted by law.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and in the Stock Purchase Agreements. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter including, without limitation, the Amended and Restated Registration
Rights Agreement.
(l) FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed, or have caused
to be executed, this Agreement on the date first written above.
EXE TECHNOLOGIES, INC.
By: /s/ Raymond Hood
----------------------------------------
Print Name: RAYMOND HOOD
--------------------------------
Title: PRESIDENT
-------------------------------------
GENERAL ATLANTIC PARTNERS 41, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ Steven A. Denning
----------------------------------------
Print Name: Steven A. Denning
Title: A Managing Member
GENERAL ATLANTIC PARTNERS 57, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ Steven A. Denning
----------------------------------------
Print Name: Steven A. Denning
---------------------------------
Title: A Managing Member
-------------------------------------
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Steven A. Denning
----------------------------------------
Print Name: Steven A. Denning
---------------------------------
Title: A General Partner
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Steven A. Denning
----------------------------------------
Print Name: Steven A. Denning
---------------------------------
Title: A General Partner
-------------------------------------
<PAGE>
MSD 1998 GRAT #6
By: /s/ Michael Dell
----------------------------------------
Michael Dell, Trustee
TRIPLE MARLIN INVESTMENTS LLC
By: /s/ Glenn Fuhrman
----------------------------------------
Glenn Fuhrman, Manager
ROTHKO INVESTMENTS LLC
By: /s/ Glenn Fuhrman
----------------------------------------
Glenn Fuhrman, Manager
MSD PORTFOLIO L.P. - INVESTMENTS
By: /s/ Glenn Fuhrman
----------------------------------------
Name: Glenn Fuhrman
Title: Managing Principal
TCV III (GP)
By: TECHNOLOGY CROSSOVER MANAGEMENT III,
L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
----------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV III, L.P.
By: TECHNOLOGY CROSSOVER MANAGEMENT III,
L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
----------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
<PAGE>
TCV III (Q), L.P.
By: TECHNOLOGY CROSSOVER MANAGEMENT III,
L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
----------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV III STRATEGIC PARTNERS, L.P.
By: TECHNOLOGY CROSSOVER MANAGEMENT III,
L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
----------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
/s/ Lyle Baack
--------------------------------------------
Lyle Baack
/s/ Nigel Bahadur
--------------------------------------------
Nigel Bahadur
/s/ Adam C. Belsky
--------------------------------------------
Adam Belsky
/s/ Raymond Hood
--------------------------------------------
Raymond Hood
-29-
<PAGE>
SCHEDULE 10(B)
Mutual Reseller and Marketing Partner Agreement and Development Agreement, dated
as of March 30, 1999, between i2 Technologies, Inc. and EXE Technologies, Inc.
(Paragraph 34).
-30-
<PAGE>
ALLOCATION AGREEMENT
THIS ALLOCATION AGREEMENT (this "Agreement") is made on this 29th day of
September, 1999, by and among EXE Technologies, Inc., a Delaware corporation
(the "Company"), and the purchasers of the Company's Series D Convertible
Preferred Stock ("Series D Preferred Stock") whose names appear on the signature
pages hereof (the "Purchasers").
PRELIMINARY STATEMENTS
A. The Company and the Purchasers are parties to that certain Series
D Preferred Stock Purchase Agreement dated of even date herewith (the "Stock
Purchase Agreement").
B. In connection with the Company's issuance of Series D Preferred
Stock pursuant to the Stock Purchase Agreement, the Company has agreed to enter
into this Agreement in order to further induce the Purchasers to enter into the
Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
conditions contained herein, the Company and each of the Purchasers hereby agree
as follows:
1. ALLOCATION OF SHARES TO PURCHASERS.
In connection with the first offering of the Company's shares of common
stock in a firm commitment underwritten public offering on a Registration
Statement on Form S-1, if any (the "Offering"), the Company shall use its
reasonable best efforts to cause the managing underwriters of such Offering to
offer to the Purchasers the right to purchase, at the offering price per share
at which such shares of common stock are first offered to the public (the
"Offering Price") and upon the same terms and conditions upon which such
securities are offered to the public, a number of shares in such Offering
determined pursuant to the terms of this Agreement. Such requirement shall be
subject to the consent of the managing underwriters (which consent shall not be
unreasonably withheld) after taking into account and giving priority to the
allocation of up to five percent (5%) of the shares offered in the Offering to
"friends and family" and employees of the Company. Subject to such consent, the
number of shares that shall be subject to the Purchasers' rights herein (the
"Allocation Shares") shall be determined by dividing (a) $10,000,000 by (b) the
price per share equal to the midpoint of the filing range on the cover of the
Company's red herring preliminary prospectus first distributed to investors in
connection with the Offering (the "Initial Allocation Price"); provided,
however, that the aggregate number of Allocation Shares shall not exceed ten
percent (10%) of the shares of common stock offered to the public in the
Offering.
<PAGE>
2. INITIAL ALLOCATION NOTICE.
Promptly after the Company determines the Initial Allocation Price, the
Company shall provide a written notice to each Purchaser (the "Initial
Allocation Notice"), which notice shall indicate (a) the total number of
Allocation Shares; (b) the number of Allocation Shares that each Purchaser
initially is entitled to purchase (each Purchaser's "Pro-Rata Portion"); and (c)
the Initial Allocation Price. A particular Purchaser's Pro-Rata Portion shall be
determined by multiplying the number of Allocation Shares by a fraction, the
numerator of which shall be the number of shares of Series D Preferred Stock
held by a particular Purchaser and the denominator of which shall be the total
number of outstanding shares of Series D Preferred Stock then held by all
Purchasers.
3. INITIAL INTEREST NOTICE
As promptly after receipt of the Initial Allocation Notice as possible,
taking into account such time deadlines as the managing underwriters shall
reasonably impose under the circumstances, each Purchaser that is interested in
purchasing Allocation Shares shall provide to the Company a written notice
stating such Purchaser's interest, which notice shall be non-binding and shall
indicate: (a) the amount of such Purchaser's Pro-Rata Portion that such
Purchaser is interested in purchasing; (b) whether such Purchaser is interested
in purchasing shares in excess of such Purchaser's Pro-Rata Portion; and (c) if
such Purchaser is interested in purchasing shares in excess of such Purchaser's
Pro-Rata Portion, then the aggregate number of Allocation Shares the Purchaser
is interested in purchasing.
4. FINAL ALLOCATION NOTICE.
Promptly after the Company receives notice from the U.S. Securities and
Exchange Commission that the Registration Statement filed in connection with the
Offering is effective, the Company shall provide notice to each Purchaser (the
"Final Allocation Notice"), which notice shall indicate: (a) the total number of
Allocation Shares; (b) the Purchaser's Pro Rata Portion; and (c) the Offering
Price, or if the Offering Price has not yet been determined, the price or range
of prices that the Company reasonably believes will be the Offering Price
("Expected Price(s)").
5. ELECTION TO PURCHASE.
As promptly as possible after receipt of the Final Allocation Notice,
taking into account such time deadlines as the managing underwriters shall
impose under the circumstances, each Purchaser that desires to purchase
Allocation Shares shall provide notice to the Company of such Purchaser's
election to purchase all or part of its respective Pro-Rata Portion (the
"Purchase Election"), which notice shall indicate (a) the amount of such
Purchaser's Pro-Rata Portion that such Purchaser is electing to purchase at the
Offering Price or at each particular Expected Price, as the case may be; (b) if
such Purchaser has elected to purchase all of such Purchaser's Pro Rata
-2-
<PAGE>
Portion at the Offering Price or at any particular Expected Price, as the case
may be, then whether such Purchaser is also electing to purchase shares in
excess of such Purchaser's Pro-Rata Portion, if such shares become available at
the Offering Price or at each such Expected Price, as the case may be; and (c)
if such Purchaser is electing to purchase shares in excess of such Purchaser's
Pro-Rata Portion, then the aggregate number of Allocation Shares the Purchaser
is electing to purchase in excess of the Purchaser's Pro-Rata Portion at the
Offering Price or at each such Expected Price, as the case may be. Shares
available for purchase in excess of a Purchaser's Pro-Rata Portion are referred
to herein as "Additional Allocation Shares."
6. ADDITIONAL ALLOCATION SHARES PURCHASE RIGHT.
Subject to the managing underwriter's consent as set forth in Section 1
hereof, each Purchaser that elects to purchase Allocation Shares at the Offering
Price, or at an Expected Price that is greater than or equal to the Offering
Price (or in the event the Offering Price is greater than the highest Expected
Price, each Purchaser that elected to purchase Allocation Shares at the highest
Expected Price), shall have the right to purchase that number of shares equal to
(a) the portion of such Purchaser's Pro-Rata Portion that such Purchaser elected
to purchase in the Purchase Election, plus (b) for each Purchaser that elected
to purchase its entire Pro-Rata Portion (an "Allocation Purchaser"), such
Allocation Purchaser's Pro-Rata Portion of the Additional Allocation Shares, up
to the aggregate number of shares indicated in the Purchase Election. For
purposes of determining the respective Pro-Rata Portion of the Additional
Allocation Shares available for purchase by each Allocation Purchaser, the
number of Additional Allocation Shares shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Series D Preferred Stock
held by a particular Allocation Purchaser who shall have elected to purchase
Additional Allocation Shares, and the denominator of which shall be the total
number of outstanding shares of Series D Preferred Stock held by all of the
Allocation Purchasers who shall have elected to purchase the Additional
Allocation Shares.
7. MISCELLANEOUS.
(a) Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement shall be in writing and shall be
made by personal delivery, telecopier or overnight courier, and shall be
properly addressed to the party to be notified as set forth 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 hereto; provided, however,
that the notices contemplated in Sections 2, 3, 4, 5 and 6 hereof may be made
by telephone or electronic mail message confirmed by telecopier, as promptly
as possible under the circumstances.
(b) This Agreement and the rights and obligations of the
parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.
-3-
<PAGE>
(c) In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(d) Any amendment, modification or waiver of any provision of
this Agreement shall be effective if in writing and approved by the Company and
the holder or holders of at least a majority of the shares of Series D Preferred
Stock held by Purchasers.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
conflicts of laws principles of any jurisdiction.
(f) This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original; and all such counterparts together shall constitute one and the same
instrument.
(g) The Purchaser's right to purchase his or its percentage of
the Allocation Shares is subject to and shall be limited by: (i) compliance with
all federal and state securities laws (including Rule 134 and Regulation M
promulgated under the Securities Act of 1933, as amended); (ii) compliance with
all rules of the National Association of Securities Dealers (including the Rules
of Fair Practice regarding "hot issues" and "free-riding"); and (iii) compliance
with the rules of NASDAQ NMS (or the appropriate exchange, if applicable).
(h) Subject to all other provisions of this Agreement, each
Purchaser shall have the right to apportion its participation herein among any
of its partners, members or affiliates.
(i) This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
in the Stock Purchase Agreement. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(j) In the event any party notifies the other parties to this
Agreement in writing that legal or regulatory restrictions prohibit the
transactions contemplated by this Agreement, the parties agree to use reasonable
efforts to effect mutually satisfactory arrangements in the alternative, in
light of and consistent with such legal or regulatory restrictions.
[SIGNATURE PAGES FOLLOW]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
EXE TECHNOLOGIES, INC.
By: /s/ RAYMOND R. HOOD
-------------------------------------------
Name: RAYMOND R. HOOD
----------------------------------------
Title: PRESIDENT
----------------------------------------
PURCHASERS:
TCV III (GP)
a Delaware General Partnership
By: Technology Crossover Management III, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
-------------------------------------------
Name: Robert C. Bensky
------------------------------------
Title: Chief Financial Officer
-----------------------------------
TCV III, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
-------------------------------------------
Name: Robert C. Bensky
------------------------------------
Title: Chief Financial Officer
-----------------------------------
TCV III (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
-------------------------------------------
Name: Robert C. Bensky
------------------------------------
Title: Chief Financial Officer
-----------------------------------
-5-
<PAGE>
TCV III STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
------------------------------------------
Name: Robert C. Bensky
------------------------------------
Title: Chief Financial Officer
------------------------------------
GENERAL ATLANTIC PARTNERS 57, L.P.
By: General Atlantic Partners, LLC
Its: General Partner
By: /s/ Steven A. Denning
-------------------------------------------
Name: Steven A. Denning
------------------------------------------
Title: A Managing Member
-----------------------------------------
Address: c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Steven A. Denning
-------------------------------------------
Name: Steven A. Denning
-----------------------------------------
Title: A General Partner
-----------------------------------------
Address: c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
MSD PORTFOLIO L.P. - INVESTMENTS
By: /s/ Glenn Fuhrman
-------------------------------------------
Print Name: Glenn Fuhrman
-------------------------------------------
Title: Managing Partner
-------------------------------------------
Address: 780 Third Avenue, 43rd Floor
New York, NY 10017
-6-
<PAGE>
CLASS B COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF CLASS B COMMON STOCK WHICH MAY BE
PURCHASED PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES") WILL BE,
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
(TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND OF
ANY APPLICABLE STATE SECURITIES LAWS.
EXE TECHNOLOGIES, INC.
WARRANT TO PURCHASE 375,000 SHARES OF CLASS B COMMON STOCK
----------
THIS CERTIFIES THAT, for value received, 52nd Street Associates, Inc.,
a Delaware corporation (the "HOLDER"), is entitled to subscribe for and purchase
from EXE TECHNOLOGIES, INC., a Delaware corporation (the "COMPANY"), 375,000
shares (as adjusted pursuant to Section 3 hereof) of the fully paid and
nonassessable Class B Common Stock, $0.01 par value (the "SHARES"), of the
Company at the price of $4.00 per share (the "EXERCISE Price") (as adjusted
pursuant to Section 3 hereof), subject to the provisions and upon the terms and
conditions hereinafter set forth.
1. METHOD OF EXERCISE; PAYMENT.
---------------------------
(a) EXERCISE PERIOD. The purchase rights represented by this
Warrant may be exercised by the Holder during the term of this Warrant (as set
forth in Section 12 hereof), in whole or in part, at any time after the date of
issuance by the surrender of this Warrant (with the notice of exercise form (the
"NOTICE OF EXERCISE") attached hereto as EXHIBIT A duly executed) at the
principal office of the Company, pursuant to the following schedule: this
Warrant may be exercised in whole or in part at any time on or after November
19, 1999.
(b) CASH EXERCISE. This Warrant may be exercised by the
payment to the Company of an amount equal to the Exercise Price multiplied by
the number of the Shares being purchased, at the election of the Holder, by wire
transfer or certified check payable to the order of the Company. Subject to
Section 11 hereof, the person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised.
<PAGE>
(c) NET ISSUE EXERCISE.
------------------
i) In lieu of exercising this Warrant pursuant to
Section 1(b) above, the Holder may elect to receive a number of Shares equal to
the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with Notice of Exercise indicating the method of exercise. In such
event, the Company shall issue to the Holder a number of Shares computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares subject to this Warrant (or the
portion thereof being canceled).
A = the fair market value of one share of the Company's
Common Stock.
B = the Exercise Price (as adjusted to the date of such
calculation).
(d) FAIR MARKET VALUE. For purposes of this Section 1, the
fair market value of the Company's Common Stock shall mean:
i) The average of the closing bid and asked prices of
the Company's Common Stock quoted in the over-the-counter market summary or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of THE WALL STREET
JOURNAL for the ten trading days prior to the date of determination of fair
market value; or
ii) If the Company's Common Stock is not traded
over-the-counter or on an exchange, fair market value of the Class B Common
Stock per share shall be the price per share as determined reasonably and in
good faith by the Company's Board of Directors. Receipt and formal
acknowledgment by a duly authorized representative of the Holder of the Shares
issued upon exercise of this Warrant by the Holder shall be conclusively deemed
to be an acknowledgment and acceptance of any such fair market value
determination by the Company's Board of Directors as the final and binding
determination of such value for purposes of this Warrant.
(e) STOCKHOLDERS AGREEMENT. Prior to the Company effecting any
exercise of this Warrant, the Holder shall execute a Stockholders Agreement
("Stockholders Agreement") as mutually agreed by the parties based upon the
sample attached in Exhibit B hereto, which the Company represents is consistent
with the Stockholders Agreements signed by other minority stockholders in the
Company.
(f) STOCK CERTIFICATES. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Class B
Common Stock so purchased shall be delivered to the Holder within a reasonable
time and, unless this Warrant has been fully exercised or has expired, a new
Warrant representing the shares with respect to which this Warrant shall not
have been exercised shall also be issued to the Holder within such time.
-2-
<PAGE>
2. STOCK FULLY PAID; RESERVATION OF SHARES. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges with respect to the issuance thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Class B Common Stock to provide for the exercise of the rights represented by
this Warrant.
3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. Subject to the
provisions of Section 11 hereof, the number and kind of Shares purchasable upon
the exercise of this Warrant and the Exercise Price therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of any
reclassification of the Class B Common Stock (other than a change in par value,
or as a result of a subdivision or combination), or in case of any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger with another corporation in which the Company is a
continuing corporation and in which the Company's shareholders immediately
preceding such consolidation or merger own at least 50% of the voting securities
of the Company following such consolidation or merger and which does not result
in any reclassification of the Shares issuable upon exercise of this Warrant),
or in case of any sale of all or substantially all of the assets of the Company,
the Company, or such successor or purchasing corporation as the case may be,
shall execute a new Warrant, providing that the holder of this Warrant shall
have the right to exercise such new Warrant, and procure upon such exercise and
payment of the same aggregate Exercise Price, in lieu of the Shares of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, consolidation, sale of all or substantially all of the
Company's assets or merger by a holder of an equivalent number of shares of
Common Stock. Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3. The provisions of this subsection (a), subject to Section 11 hereof,
shall similarly apply to successive reclassifications, consolidations, mergers,
and the sale of all or substantially all of the Company's assets.
(b) STOCK SPLITS, DIVIDENDS AND COMBINATIONS. In the event
that the Company shall at any time subdivide the outstanding shares of Class B
Common Stock, or shall issue a stock dividend on its outstanding shares of Class
B Common Stock, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Class B Common Stock, the number of Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may be.
(c) CERTAIN EVENTS. If any change in the outstanding Class B
Common Stock of the Company or any other event occurs as to which the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would, in the good faith judgment of the Board of Directors of the
Company, not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Exercise Price or the application of such provisions, so as to
protect such purchase rights as aforesaid. The adjustment shall be such as will
give the Holder of the Warrant upon exercise for the same aggregate Exercise
Price the total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.
-3-
<PAGE>
4. NOTICES.
-------
(a) Upon any adjustment of the Exercise Price and any increase
or decrease in the number of Shares purchasable upon the exercise of this
Warrant in accordance with Section 3 hereof, then, and in each such case, the
Company, within thirty (30) days thereafter, shall give written notice thereof
to the Holder at the address of such Holder as shown on the books of the Company
which notice shall be signed by the Company's Chief Financial Officer and state
the Exercise Price as adjusted and, if applicable, the increased or decreased
number of Shares purchasable upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation of each and the factors upon which
such calculations are based.
(b) Any written notice by the Company required or permitted
hereunder shall be given by hand delivery or first class mail, postage prepaid,
addressed to the Holder at the address shown on the books of the Company for the
Holder.
5. OTHER NOTICES. If at any time:
-------------
(a) the Company shall declare any cash dividend upon its
Class B Common Stock;
(b) the Company shall declare any dividend upon its Class B
Common Stock payable in stock or make any special dividend to the holders of its
Class B Common Stock;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation;
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) there shall be any public offering of the Company's
securities;
then, in any one or more of said cases, the Company shall give, by fax or first
class mail, postage prepaid, addressed to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company, (a) at least thirty
(30) days' prior written notice of the date on which the books of the Company
shall close or a record shall be taken for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or public offering, at least thirty (30) days' prior
written notice of the date when the same shall take place; PROVIDED, however,
that the Holder shall make reasonable best efforts attempt to respond to such
notice as early as possible after the receipt thereof; and PROVIDED further that
the Company shall be required to give prior written notice at least fifteen (15)
days in advance of any action contemplated by Sections 5(a), 5(b) and 5(e)
above. Any notice given in accordance with the foregoing sentence shall also
specify, in the case of any such dividend or distribution, the date on which the
holders of Common Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Class B Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, conversion or public offering, as the case may be.
6. TRANSFER OF WARRANT. This Warrant may only be transferred in
compliance with federal and state securities laws and, except as provided below,
may not be transferred except with the prior written consent of the Company,
which shall not be unreasonably withheld or delayed, and any purported transfer
-4-
<PAGE>
without such prior written consent shall be null and void; PROVIDED, however,
that the Company may withhold its consent to transfer or assignment of this
Warrant to any person or entity who is deemed to be a competitor or prospective
competitor of the Company, such determination to be made in the reasonable
judgment of the Board of Directors of the Company. Notwithstanding the
foregoing, Holder may freely transfer this Warrant or portion thereof, subject
to compliance with federal and state securities laws, (i) to subsidiaries and
affiliates of Holder, or (ii) at any time after the 180-day period following the
closing of an initial firm commitment underwritten public offering pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "INITIAL PUBLIC OFFERING"). The Holder of the Warrant shall be responsible
for any Stock transfer taxes payable in connection with the transfer of this
Warrant.
7. CONDITION TO EXERCISE OF WARRANT. Each certificate evidencing the
Shares issued upon exercise of this Warrant shall be stamped or imprinted with a
legend substantially in the following form and any additional legends required
by the Stockholders Agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
8. FRACTIONAL SHARES. No fractional shares of Class B Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Exercise Price then in effect.
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for issuance
by the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, a true and complete copy of which has
been delivered to the original Holder of this Warrant; and
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or Bylaws, as amended.
10. REPRESENTATIONS AND WARRANTIES BY THE HOLDER. The Holder
represents and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the
-5-
<PAGE>
Securities Act. Upon exercise of this Warrant, the Holder shall, if so requested
by the Company, confirm in writing, in a form reasonably satisfactory to the
Company, that the Shares issuable upon exercise of this Warrant are being
acquired for investment and not with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares
have not been registered under the Securities Act by reason of their issuance in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) thereof, and that they must be
held by the Holder indefinitely, and that the Holder must therefore bear the
economic risk of such investment indefinitely, unless a subsequent disposition
thereof is registered under the Securities Act or is exempted from such
registration. The Holder further understands that the Shares have not been
qualified under any applicable state securities laws by reason of their issuance
in a transaction exempt from the qualification requirements of any such laws and
which exemption depends upon, among other things, the bona fide nature of the
Holder's investment intent expressed in this Section 10.
(c) The Holder has such knowledge and experience in financial
and business matters generally and has such knowledge of the Company that it is
capable of evaluating the merits and risks of the purchase of this Warrant and
the Shares purchasable pursuant to the terms of this Warrant and of protecting
its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the
purchase of the Shares pursuant to the terms of this Warrant.
(e) The Holder is an accredited investor within the meaning of
Regulation D promulgated under the Securities Act of 1933.
11. RIGHTS OF SHAREHOLDERS. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Class B Common Stock or any other securities of the Company which may
at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a shareholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable and any applicable taxes shall have been paid, as provided herein.
12. EXPIRATION OF WARRANT. This Warrant shall expire and shall no
longer be exercisable as of 5:00 p.m., Eastern time, on November 19, 2003, or
as of 5:00 p.m., Eastern time, two (2) years after the Company's Initial Public
Offering, whichever is earlier.
13. REGISTRATION RIGHTS. The Company hereby grants piggyback
registration rights junior to existing rights holders ("Existing Holders") but
on a PARI PASSU basis with any future holders of piggyback registration rights
under the Second Amended and Restated Registration Rights Agreement dated
September 29, 1999 (as the same shall be amended from time to time, the "Rights
Agreement") and consistent with (but still junior to) the piggyback registration
rights in that agreement. The Company and the Holder of this Warrant will enter
into a separate definitive registration rights agreement as consistent as
reasonably possible with the relevant provisions of the Rights Agreement as
promptly as reasonably practicable after issuance of this Warrant. Such
registration rights shall not apply to the Company's Initial Public Offering.
The Holder of this Warrant shall be cutback from participation in any offering
prior to any cutbacks from Existing Holders. To the extent Holder becomes a
party to the Rights Agreement, no waiver or amendment of any
-6-
<PAGE>
such Rights Agreement shall have any effect on any Holder of this Warrant unless
such holder or holders have agreed to such waiver or amendment in writing. The
registration rights granted to each Holder shall terminate as to such Holder at
such time as the Holder shall be able to sell all such Holder's shares within
one three-month period pursuant to Rule 144.
14. LOCK-UP. In connection with the Company's Initial Public Offering
of its common stock, each Holder hereby agrees to enter into a market standoff
agreement in form and substance substantially similar to a market standoff
agreement entered into by all of the officers, directors, and greater than five
percent shareholders of the Company; provided, that under no circumstances shall
any Holder be bound by such agreement (except partially, if applicable) after
the first holder of the Company's securities with holdings at least as great as
the Holder of this Warrant that has entered into a market standoff agreement has
been released, either completely or partially, from such a market standoff
agreement.
15. MISCELLANEOUS.
-------------
(a) This Warrant is being delivered in the State of New York
and shall be construed and enforced in accordance with and governed by the laws
of such State.
(b) The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof.
(c) The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company and of any
permitted holder or holders hereof and of the Shares issued or issuable upon the
exercise hereof.
(d) This Warrant and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
(e) The Company shall not, by amendment of its Certificate of
Incorporation, or through any other means, directly or indirectly, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant and
shall at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of this Warrant against impairment.
(f) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver to the holder of record, in
lieu thereof, a new Warrant of like date and tenor.
(g) This Warrant and any provision hereof may be amended,
waived or terminated only by an instrument in writing signed by the Company and
the Holder.
(h) Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
16. NOTICES.
-------
Any notice or other document required or permitted to be given
or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at: c/o Virginia L. Molino, 55 East
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<PAGE>
52nd Street, 21st Floor, New York, NY 10022 or to such other address as shall
have been furnished to the Company in writing by the holder. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered at, or sent by certified or registered mail to, the Company at: 8787
Stemmons Freeway, Dallas, Texas 75247, Attention: Chief Financial Officer, with
a copy to EXE Technologies, Inc., 300 Baldwin Tower Boulevard, Eddystone, PA
19022, Attention: General Counsel or to such other address as shall have been
furnished in writing to the holder by the Company. Any notice so addressed and
mailed by registered or certified mail shall be deemed to be given when so
mailed. Any notice so addressed and otherwise delivered shall be deemed to be
given when actually received by the addressee.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued as of the 19th day of November, 1999.
EXE TECHNOLOGIES, INC.
By: /s/ Michael Burstein
-------------------------------------
Name: Michael Burstein
-----------------------------------
Title: SVP - Chief Financial Officer
----------------------------------
ACKNOWLEDGED AND ACCEPTED:
By: /s/ Gregory W. Hughes
Name: Gregory W. Hughes
___________________________________
Title: Principal
___________________________________
Warrant Holder: 52nd Street Associates, Inc.
Address: c/o Virginia L. Molino
55 East 52nd Street, 27th Floor
New York, NY 10022
Telephone: 212-446-7000
Fax: 212-759-1954
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: EXE TECHNOLOGIES, INC. [ADDRESS]
1. In lieu of exercising the attached Warrant for cash or check, the
undersigned hereby elects to effect the net issuance provision of Section 1(c)
of this Warrant and receive _________ (leave blank if you choose Alternative No.
2 below) shares of Class B Common Stock pursuant to the terms of this Warrant.
(Initial here if the undersigned elects this alternative). _______.
2. The undersigned hereby elects to purchase ______ (leave blank if you
choose alternative No. 1 above) shares of Class B Common Stock of EXE
TECHNOLOGIES, INC. pursuant to the terms of this Warrant, and tenders herewith
payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said shares
of Class B Common Stock in the name of the undersigned or in such other name as
is specified below:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
4. [APPLICABLE ONLY IF THE SHARES OF CLASS B COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT ARE NOT REGISTERED FOR RESALE UNDER THE SECURITIES ACT
OF 1933, AS AMENDED] The undersigned hereby represents and warrants that the
aforesaid shares of Class B Common Stock are being acquired for the account of
the undersigned for investment and not with a view to, or for resale, in
connection with the distribution thereof, and that the undersigned has no
present intention of distributing or reselling such shares, and that all
representations and warranties of the undersigned set forth in Section 10 of the
attached Warrant are true and correct as of the date hereof. In support thereof,
the undersigned agrees to execute an Investment Representation Statement in a
form to be mutually agreed by the parties.
--------------------------------
(Signature and Date)
Title:
-------------------------
<PAGE>
Exhibit B
SAMPLE STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of
______________________ (this "Agreement"), is between EXE Technologies, Inc., a
Delaware corporation (the "Company"), and 52nd Street Associates (the
"Stockholder").
WHEREAS, the Stockholder owns, or is acquiring in connection
with the execution of this Agreement, shares of Class B Common Stock, par value
$.01 per share, of the Company together with any securities into which such
shares may be converted or for which such shares may be exchanged (the
"Shares").
WHEREAS, the parties hereto wish to restrict the transfer of
the Shares and to provide for, among other things, first offer, bring-along and
certain other rights under certain conditions.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. RESTRICTIONS ON TRANSFER OF SHARES.
----------------------------------
1.1 PERMITTED TRANSFERS. Notwithstanding anything to
the contrary contained in this Agreement, but subject to Sections 1.2 and 1.3,
the Stockholder may transfer all or a portion of its Shares to its subsidiaries
and affiliates (a "Permitted Transferee"). A Permitted Transferee of Shares
pursuant to this Section 1.1 may transfer its Shares pursuant to this Section
1.1 only to the transferor Stockholder or to a Person that is a Permitted
Transferee of such transferor Stockholder. Notwithstanding anything to the
contrary contained in this Agreement, if any Permitted Transferee of a
Stockholder to whom or which Shares have been transferred in accordance with
this Section 1.1 ceases to be a Permitted Transferee of such Stockholder, then,
prior to such event, such Stockholder may repurchase such Shares or, if such
Stockholder does not wish to repurchase such Shares, then such Permitted
Transferee shall offer such Shares to the Company, its designee, or assignee in
accordance with Section 2.2.
1.2 PERMITTED TRANSFER PROCEDURES. If any Stockholder
wishes to transfer Shares to a Permitted Transferee under Section 1.1, such
Stockholder shall give notice to the Company of its intention to make any
transfer permitted under Section 1.1 not less than ten (10) days prior to
effecting such transfer, which notice shall state the name and address of each
Permitted Transferee to whom such transfer is proposed and the number of Shares
proposed to be transferred to such Permitted Transferee.
1.3 TRANSFERS IN COMPLIANCE WITH LAW; SUBSTITUTION OF
TRANSFEREE. Notwithstanding any other provision of this Agreement, no transfer
may be made pursuant to this Section 1 or Section 2 unless (a) the transferee
has agreed in writing to be bound by the terms
B-1
<PAGE>
and conditions of this Agreement (whereupon such transferee shall be substituted
for, and shall enjoy the same rights and be subject to the same obligations, as
its, his, or her predecessor hereunder) and (b) the transfer complies in all
respects with the applicable provisions of this Agreement and (c) the transfer
complies in all respects with applicable federal and state securities laws,
including, without limitation, the Securities Act. Upon becoming a party to this
Agreement, the Permitted Transferee of a Stockholder shall be substituted for,
and shall enjoy the same rights and be subject to the same obligations as, the
transferring Stockholder hereunder with respect to the Shares transferred to
such Permitted Transferee.
2. RIGHT OF FIRST OFFER AND BRING-ALONG RIGHTS.
-------------------------------------------
2.1 PROPOSED VOLUNTARY TRANSFERS.
2.1.1 OFFERING NOTICE. Subject to Section 1, if the
Stockholder (the "Selling Stockholder") wishes to transfer all or any portion of
its, his, or her Shares to any person or other entity (other than to a Permitted
Transferee or other than to a competitor of EXE, including without limitation,
Catalyst, Manhattan Associates, McHugh Corporation and Optum, to whom transfers
shall be prohibited (the "Prohibited Transferees") (a "Third Party Purchaser"),
such Selling Stockholder shall offer such Shares first to the Company, by
sending written notice (the "Offering Notice") to the Company, which shall state
(a) the number of Shares proposed to be transferred (the "Offered Securities")
and (b) the proposed purchase price per Share which the Selling Stockholder is
willing to accept (the "Offer Price"). Upon delivery of the Offering Notice,
such offer shall be irrevocable unless and until the rights of first offer
provided for herein shall have been waived or shall have expired.
2.1.2 OPTION: EXERCISE. For a period of sixty (60)
days after the giving of the Offering Notice pursuant to Section 2.1.1 (the
"Option Period"), the Company and/or the Designees shall have the right (the
"Option") to purchase all of the Offered Securities at a purchase price equal to
the Offer Price and upon the terms and conditions set forth in the Offering
Notice. The right of the Company and/or its Designees to purchase any or all of
the Offered Securities under this Section 2.1.2 shall be exercisable by
delivering written notice of the exercise thereof, prior to the expiration of
the 60-day period referred to above, to the Selling Stockholder, which notice
shall state the purchaser of the Shares and the number of Offered Securities
proposed to be purchased by such purchaser. The failure of the Company and/or
the Designees, if any, to respond within such 60-day period shall be deemed to
be a waiver of the Company's and the Designees' rights under this Section 2.1.2,
PROVIDED that the Company and/or the Designees may waive their rights under this
Section 2.1.2 prior to the expiration of such 60day period by giving written
notice to the Selling Stockholder.
2.1.3 CLOSING. The closing of the purchase of Offered
Securities subscribed for by the Company and/or the Designees under Section
2.1.2 shall be held at the principal office of the Company at 11:00 a.m., local
time, on the seventy-fifth (75th) day after the giving of the Offering Notice
pursuant to Section 2.1.1 or at such other time and place as the
B-2
<PAGE>
parties to the transaction may agree. At such closing, the Selling Stockholder
shall deliver certificates representing the Offered Securities, duly endorsed
for transfer and accompanied by all requisite transfer taxes, if any, and such
Offered Securities shall be free and clear of any Liens (other than those
arising hereunder and those attributable to actions by the purchasers) and the
Selling Stockholder shall so represent and warrant, and further represent and
warrant that it, he, or she is the sole beneficial and record owner of such
Offered Securities. The Company and/or the Designees, shall deliver at the
closing payment in full in immediately available funds for the Offered
Securities purchased by it, him or her. At such closing, all of the parties to
the transaction shall execute such additional documents as are otherwise
necessary or appropriate.
2.1.4 SALE TO A THIRD PARTY PURCHASER. If neither the
Company nor the Designees elect to purchase all, but not less than all, of the
Offered Securities under Section 2.1.2, the Selling Stockholder may, subject to
Section 2.3 sell the Offered Securities to a Third Party Purchaser on the terms
and conditions set forth in the Offering Notice; PROVIDED, HOWEVER, that such
sale is bona fide and made pursuant to a contract entered into within forty-five
(45) days of the earlier to occur of (a) the waiver by the Company and/or the
Designees of their respective options to purchase the Offered Securities and (b)
the expiration of the Option Period (the earlier of such dates being referred to
herein as the "Contract Date"); and PROVIDED FURTHER, that such sale shall not
be consummated unless and until all of the following conditions are met:
(a) The Selling Stockholder shall deliver to the
Company a certificate of a Third Party Purchaser, in form and substance
reasonably satisfactory to the Company, stating that (i) such Third Party
Purchaser is aware of the rights of the Company, contained in Section 2.1 and
(ii) prior to the purchase by such Third Party Purchaser of any of such Offered
Securities, such Third Party Purchaser shall become a party to this Agreement
and agree to be bound by the terms and conditions hereof in accordance with
Section 1.3 hereof; and
(b) A Third Party Purchaser shall have furnished
evidence satisfactory to the Company, in its reasonable judgment, as to the
financial ability of such Third Party Purchaser to consummate the proposed
purchase.
If such sale is not consummated within forty-five (45) days of the Contract Date
for any reason, then the restrictions provided for herein shall again become
effective, and no transfer of such Offered Securities may be made thereafter by
the Selling Stockholder without again offering the same to the Company, in
accordance with this Section 2.1.
2.2 BRING ALONG RIGHT.
-----------------
If General Atlantic Partners 41, L.P., a
Delaware limited partnership ("GAP LP"), GAP Coinvestment Partners, L.P., a New
York limited partnership ("GAP Coinvestment"), Lyle Baack, Nigel Bahadur, Adam
Belsky and Raymond Hood (the "EXE Stockholders" and collectively with GAP LP and
GAP Coinvestment, the "Major
B-3
<PAGE>
Stockholders") shall have received a bona fide offer from a person or other
entity that is not an affiliate of a Major Stockholder (or shall have entered
into a bona fide written agreement with such person or entity) relating to the
sale to such person or entity of all or substantially all of the issued and
outstanding securities of the Company held by the Major Stockholders (the
"Sale"), the Major Stockholders shall be entitled to deliver a notice (a "Buyout
Notice") to the Stockholder stating that they propose to effect (or cause the
Company to effect) such transaction, and specifying the name and address of the
proposed parties to such transaction, the consideration payable in connection
therewith, and attaching a copy of all writings between the Major Stockholders
(or the Company) and the other parties to such transaction necessary to
establish the terms of such transaction. The Stockholder agrees that, upon
receipt of a Buyout Notice, it, he, or she shall be obligated to sell the Shares
held by it, him, or her and to use its, his or her best efforts to cause the
Shares owned by their Permitted Transferees to be sold upon the terms and
conditions of such transaction (and otherwise take all necessary action to cause
the Company to consummate the proposed transaction, including voting such Shares
in favor of such transaction), PROVIDED, that, the Stockholder shall only be
obligated as provided above in this Section 2.2 if the Stockholder and its, his,
or her Permitted Transferee receives the same per Share consideration as the
Major Stockholders and all other stockholders selling shares of the Company in
the Sale.
3. RESTRICTIONS ON PUBLIC SALE BY HOLDERS. If and to the
extent requested by the Company or other holders of Company securities
exercising registration rights, as the case may be, in the case of a
non-underwritten public offering, or if and to the extent requested by the
underwriter, in the case of an underwritten public offering, Stockholder agrees
not to effect any public sale or distribution of any Shares or of any securities
convertible into or exchangeable or exercisable for such Shares, including a
sale pursuant to Rule 144 under the Securities Act, during the 90-day period
(180-day period in the case of an Initial Public Offering) beginning on the
effective date of such Registration Statement.
4. MISCELLANEOUS.
-------------
4.1 STOCK CERTIFICATE LEGEND. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company. Each certificate representing Shares now held or
hereafter acquired by any Stockholder shall for as long as this Agreement is
effective bear legends substantially in the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM
THE
B-4
<PAGE>
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS OR
PURSUANT TO A WRITTEN OPINION OF COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR
OTHER DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
THE TERMS OF THE STOCKHOLDERS AGREEMENT, DATED __________,
2000, BETWEEN EXE TECHNOLOGIES, INC. (THE "COMPANY") AND THE
STOCKHOLDER NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT
THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER
THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY
UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH
THE TERMS OF THE STOCKHOLDERS AGREEMENT.
4.2 NOTICES. All notices, demands or other
communications provided for or permitted hereunder shall be made in writing and
shall be by registered or certified first class mail, return receipt requested,
courier service, overnight mail or personal delivery:
(a) if to the Company:
EXE Technologies, Inc.
8787 Stemmons Freeway
Dallas, Texas 75247
Attention: CFO
(b) if to the Major Stockholders to each
of them:
EXE Technologies, Inc.
8787 Stemmons Freeway
Dallas, Texas 75247
B-5
<PAGE>
(c) if to GAP LP or GAP Coinvestment:
c/o General Atlantic Service
Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Mr. Stephen A. Denning
(d) if to the Stockholder, to its, his,
or her address as it appears in
the record books of the Company.
Any party may, by notice given in accordance with this Section 4.2, designate
another address or Person for receipt of notices hereunder. All such notices and
communications shall be deemed to have been duly given when delivered by hand,
if personally delivered; when delivered by courier or overnight mail, if
delivered by commercial courier service or overnight mail; and five (5) business
days after being deposited in the mail, postage prepaid, if mailed.
4.3 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors, heirs, legatees and legal representatives. This Agreement is not
assignable except in connection with a transfer of Shares in accordance with
this Agreement.
4.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
parties hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any party from the terms of any
provision of this Agreement, shall be effective only if (i) it is made or given
in writing, (ii) signed by all the parties thereto, and (iii) only in the
specific instance and for the specific purpose for which made or given. Any such
amendment, supplement, modification, waiver or consent shall be binding upon the
Company, the Major Stockholders, and the Stockholder.
4.5 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument.
B-6
<PAGE>
4.6 GOVERNING LAW. This agreement shall be governed
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of law of any jurisdiction.
4.7 SEVERABILITY. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
4.8 ENTIRE AGREEMENT. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits hereto, supersede all prior agreements and understandings between
the parties with respect to such subject matter.
4.9 TERM OF AGREEMENT. This Agreement shall become
effective upon the execution hereof and shall terminate upon the earlier of: (i)
the date on which the Company commences a firm commitment underwritten initial
public offering pursuant to an effective Registration Statement filed pursuant
to the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder and (ii) the closing of an acquisition or merger
transaction involving the Company in which the Company is not the surviving
entity and the stockholders of the Company prior to the transaction own less
than 50% of the outstanding stock of the surviving entity; provided, however,
that Sections 3 and 4 hereof shall survive termination of this Agreement.
4.10 SUCCESSORS AND ASSIGNS, THIRD PARTY
BENEFICIARIES. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of the parties hereto. Except for the
Designees and the Major Stockholders, no person other than the parties hereto
and their successors and permitted assigns is intended to be a beneficiary of
any of the rights granted hereunder.
4.11 FURTHER ASSURANCES. Each of the parties shall,
and shall cause their respective Affiliates to, execute such instruments and
take such action as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
B-7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to
be signed by its duly authorized officer.
Issued as of the 19th day of November, 1999.
EXE TECHNOLOGIES, INC.
By: /s/ Michael Burstein
----------------------------------
Name: Michael Burstein
--------------------------------
Title: SVP-Chief Financial Officer
-------------------------------
ACKNOWLEDGED AND ACCEPTED:
By: /s/ Gregory Hughes
Name: Gregory W Hughes
Title: Principal
Warrant Holder:
52nd Street Associates
c/o Virginia L. Molino
55 East 52nd Street, 21st Floor
New York, NY 10022
Telephone: 212-446-7000
Fax: 212-759-1954
<PAGE>
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement") is made as
of this 21st day of May, 1998, by and among Lexye Sumantri (the "Seller"),
Astrid Holdings, Inc., a Delaware corporation ("Astrid"), and EXE Technologies,
Inc., a Delaware corporation (the "Company").
BACKGROUND
The Seller, who is the sole shareholder of Astrid, currently
owes the Company $200,000 pursuant to a Promissory Note dated __________, 1997
in favor of the Company (the "Seller's Note"). Astrid owes the Company
$1,103,000 (the "Astrid Debt") pursuant to a long-term loan from the Company to
Astrid in the amount of $750,000 (the "Astrid Loan") and certain other
inter-company receivables in the amount of $353,000 (the "Astrid Receivables").
The Seller owns 487,037 shares of Class A Common Stock, par value $.01 per
share, of the Company (the "Shares").
The Seller desires to sell the Shares to the Company, and the
Company desires to repurchase the Shares from the Seller, on the terms and
conditions set forth herein. The Seller desires to repay to Seller's Note, and
Astrid desires to repay the Astrid Debt.
Intending to be legally bound, and in consideration of the
mutual agreements contained herein, the parties agree as follows:
1. SALE AND REPURCHASE OF THE SHARES. The Seller hereby sells, assigns,
delivers and transfers to the Company, and the Company hereby repurchases and
acquires from the Seller, all right, title and interest in and to the Shares for
a purchase price per share of $4.46 and an aggregate purchase price of
$2,172,185.02 (the "Purchase Price").
2. SURRENDER OF CERTIFICATES. Promptly after execution of this
Agreement, the Seller shall surrender and deliver to the Company the
fully-endorsed stock certificates representing the Shares, together with one or
more fully-executed stock powers in a form reasonably acceptable to the Company.
3. CONSIDERATION. Promptly after satisfaction of the obligations set
forth in Section 2, as payment in full of the Purchase Price, the Company shall:
3.1 credit the amount of $200,000 against the outstanding balance
on the Seller's Note, which shall constitute payment in full of the Seller's
Note;
3.2 credit the amount of $750,000 against the outstanding balance
on
<PAGE>
the Astrid Loan, which shall constitute payment in full of the Astrid Loan;
3.3 credit the amount of $353,000 against the outstanding
balance of the Astrid Receivables, which shall constitute payment in full of the
Astrid Receivables; and
3.4 pay to the Seller the net amount of $869,185.02 by delivery
of the Company's check or by wire transfer.
4. ASTRID OPTION AGREEMENT. Upon satisfaction of the obligations set
forth in Section 2, the Astrid Agreement dated September 15, 1997 among the
Company, Astrid and the stockholders named therein shall terminate and be of no
further force and effect.
5. INTERCOMPANY AGREEMENT. Upon satisfaction of the obligations set
forth in Section 2, the Intercompany Services and Facilities Agreement dated
__________, 1997 between Astrid and Neptune Systems, Inc., a predecessor of the
Company, shall terminate and be of no further force and effect.
6. SELLERS'S REPRESENTATIONS AND WARRANTIES. The Seller and Astrid,
jointly and severally, represent and warrant to the Company as follows:
6.1 The Seller is the owner of the Shares, free and clear of all
liens, security interests, pledges, claims, liabilities and restrictions of any
nature whatsoever.
6.2 The Company shall acquire good and marketable title to the
Shares being repurchased by the Company free and clear of any liens, security
interests, pledges, claims, liabilities and restrictions of any nature
whatsoever.
6.3 There are no judgments, orders, decrees, injunctions or suits
existing, pending or threatened involving or relating to the Shares.
6.4 The Seller and Astrid each have full legal right and power to
enter into and perform this Agreement and each other agreement, document,
instrument or writing contemplated by this Agreement.
6.5 Upon execution of this Agreement and satisfaction by the
parties of their respective obligations hereunder, there shall be no outstanding
debts or obligations between the Company, on the one hand, and the Seller and
Astrid, on the other hand.
6.6 This Agreement, and each other agreement, document, instrument
or writing contemplated by this Agreement, after execution and delivery by the
Seller and Astrid, shall constitute the valid and binding obligation of the
Seller and Astrid, enforceable in
-2-
<PAGE>
accordance with its terms. Neither the execution and delivery of this Agreement,
or any of the other agreements, documents, instruments or writings contemplated
by this Agreement, by the Seller or Astrid nor the consummation by the Seller or
Astrid, of the transactions contemplated hereby or thereby (i) require the
consent of any Person, (ii) give any Person any right or in the Shares, or (iii)
violate any agreement or instrument to which the Seller or Astrid is a party.
"Person" as used herein means a natural person, joint venture, corporation, sole
proprietorship, trust estate, partnership, cooperative, association, non-profit
organization, government (including any branch, agency, subdivision or
department thereof) or other entity.
7. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Seller and Astrid as follows:
7.1 The Company has all requisite power and authority to enter
into this Agreement and each other agreement, document, instrument or writing
contemplated by this Agreement.
7.2 This Agreement has been duly and validly authorized by the
Company.
7.3 Upon execution of this Agreement and satisfaction by the
parties of their respective obligations hereunder, there shall be no outstanding
debts or obligations between the Company, on the one hand, and the Seller and
Astrid, on the other hand.
7.4 This Agreement, and each other agreement, document, instrument
or writing contemplated by this Agreement, after execution and delivery by the
Company, shall constitute the valid and binding obligation of the Company
enforceable in accordance with its terms. Neither the execution and delivery of
this Agreement, or any of the other agreements, documents, instruments or
writings contemplated by this Agreement, by the Company nor the consummation of
the transaction contemplated hereby or thereby will (i) require the consent of
any Person, or (ii) violate any agreement to which the Company is a party.
8. INDEMNIFICATION.
8.1 The Seller and Astrid jointly and severally shall indemnify,
defend and hold harmless the Company, from and after the date hereof, against
any and all actions, causes of action, suits, claims, demands, settlements,
judgments, losses, damages, expenses and any other liabilities (including, but
not limited to, reasonable attorneys' fees, costs of investigation, interest and
penalties), arising out of, relating to, connected with or with respect to any
of the following:
8.1.1 Any misrepresentation or breach or failure of any
-3-
<PAGE>
representation, warranty, covenant or agreement made by the Seller or Astrid in
this Agreement or in any other agreement, document, instrument or writing
delivered or to be delivered pursuant to this Agreement; and/or
8.1.2 Any actions, causes of action, claims, demands, suits,
settlements, judgments, damages, losses, costs and legal and other expenses
incident to the foregoing.
8.2 The Company shall indemnify, defend and hold harmless the
Seller, from and after the date hereof, against any and all actions, causes of
action, suits, claims, demands, settlements, judgments, losses, damages,
expenses and any other liabilities (including, but not limited to, reasonable
attorneys, fees, costs of investigation, interest and penalties), arising out
of, relating to, connected with or with respect to any of the following:
8.2.1 Any misrepresentation or breach or failure of any
representation, warranty, covenant or agreement made by the Company in this
Agreement or in any other agreement, document, instrument or writing delivered
or to be delivered pursuant to this Agreement; and/or
8.2.2 Any actions, causes of action, claims, demands, suits,
settlements, judgments, damages, losses, costs and legal and other expenses
incident to the foregoing.
9. NOTICES. All notices, consents and other communications required or
permitted under this Agreement shall be in writing, and shall be deemed to have
been duly given (a) when delivered personally, (b) seven (7) business days after
being mailed by first class certified mail, postage prepaid, return receipt
requested, or (c) one (1) business day after being sent by an internationally
recognized overnight delivery service, postage or delivery charges prepaid, to
the parties at their respective addresses stated on the signature page of this
Agreement. Notices may also be given by prepaid telegram or facsimile and shall
be effective on the date transmitted if confirmed within twenty-four (24) hours
thereafter by a signed original sent in the manner provided in the preceding
sentence. Any party may change its address for notices by giving notice of a new
address to each other party in accordance with this Section 9, except that any
such change of address notice shall not be effective unless and until received.
10. MISCELLANEOUS.
10.1 This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes any and all
prior written or oral communications and agreements, and all contemporaneous
oral communications among the parties concerning the subject matter hereof.
-4-
<PAGE>
10.2 No provision of this Agreement may be amended, changed or
modified in any manner, orally or otherwise, except by an instrument in writing
signed by all parties affected by such provision.
10.3 This Agreement shall be binding upon and inure to the benefit
of the parties and their respective beneficiaries, heirs, executors,
administrators, successors and assigns. No party shall in any manner assign any
of is rights or obligations under this Agreement without the express prior
written consent of the other parties.
10.4 This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of law of any jurisdiction.
10.5 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, and in pleading or proving any provision
of this Agreement, it shall be necessary to produce more than one such
counterpart.
10.6 All agreements, representations and warranties made in this
Agreement or pursuant hereto shall survive the date hereof, any investigation,
and the consummation of the transactions herein contemplated.
10.7 If any term or provision of this Agreement or the application
thereof to any Person or circumstances shall to any extent, be invalid or
unenforceable, then the remainder of this Agreement or the application of such
term or provision to Persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
10.8 As used in this Agreement, all pronouns and any, variations
thereof shall refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person or entity may require.
10.9 Headings and captions herein are inserted for convenience, do
not constitute a part of this Agreement, and shall not be admissible for the
purpose of proving the intent of the parties.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Repurchase
Agreement as of the date first above written.
SELLER:
By: /S/ LEXYE SUMANTRI
-----------------------------------
Lexye Sumantri
Address: 4314 MARINA CITY DR 416
MARINA DEL REY, CA 90292
ASTRID HOLDINGS, INC.
By: /S/ LEXYE SUMANTRI
-----------------------------------
Lexye Sumantri
Address: 4314 MARINA CITY DR 416
MARINA DEL REY, CA 90292
EXE TECHNOLOGIES, INC.
By: /S/ AC BELSKY
-----------------------------------
Name: AC BELSKY
---------------------------------
Title: VICE PRESIDENT, CFO
---------------------------------
Address: 12740 Hillcrest Road
Dallas, Texas 75230
<PAGE>
SUBSIDIARIES
1. EXE Technologies (UK) plc in the United Kingdom.
2. EXE Technologies (S.E.A.) Pte. Ltd. in Singapore.
3. EXE Technologies (Malaysia) Sdn. Bhd. in Malaysia.
4. EXE Technologies (China) Limited in Hong Kong.
5. EXE Technologies - Middle East (FZE) in Dubai.
6. EXE Technologies K.K. in Japan.
7. EXE Technologies Korea Ltd. in Korea.
8. EXE Technologies (European Holdings) B.V. in the Netherlands.
This subsidiary is the parent of:
EXE Technologies (Benelux) B.V. in the Netherlands.
EXE Technologies (France) S.A.S. in France.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 24, 2000 with respect to the consolidated
financial statements of EXE Technologies, Inc. for the three years ended
December 31, 1999 and to the use of our report dated July 10, 1998 with
respect to the consolidated financial statements of Dallas Systems
Corporation for the eight and one-half month period ended September 15, 1997,
in the Registration Statement (Form S-1) and related Prospectus of EXE
Technologies, Inc. for the registration of shares of its common stock filed
with the Securities and Exchange Commission on April 19, 2000.
ERNST & YOUNG LLP
Dallas, Texas
April 17, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXE
TECHNOLOGIES, INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,932,073
<SECURITIES> 0
<RECEIVABLES> 30,617,523
<ALLOWANCES> 5,534,000
<INVENTORY> 0
<CURRENT-ASSETS> 42,024,591
<PP&E> 17,108,633
<DEPRECIATION> 7,112,180
<TOTAL-ASSETS> 67,670,298
<CURRENT-LIABILITIES> 41,104,556
<BONDS> 0
0
52,000,000
<COMMON> 171,465
<OTHER-SE> (30,939,859)
<TOTAL-LIABILITY-AND-EQUITY> 21,232,606
<SALES> 32,697,007
<TOTAL-REVENUES> 96,800,269
<CGS> 6,104,674
<TOTAL-COSTS> 59,578,293
<OTHER-EXPENSES> 59,147,957
<LOSS-PROVISION> 6,973,886
<INTEREST-EXPENSE> 1,877,297
<INCOME-PRETAX> (23,956,024)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,956,024)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,956,024)
<EPS-BASIC> (1.49)
<EPS-DILUTED> (1.49)
</TABLE>
